ForeSee Results Report on Social Media Marketing

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For its Social Media Marketing Report, ForeSee Results surveyed almost 10,000 visitors to the UK's top 40 websites (by traffic volume, as defined by IMRG and Hitwise) to determine what led them to visit the website.

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ForeSee Results Report on Social Media Marketing

  1. 1. The ForeSee Results Report on Social Media Marketing(U.S. Edition)Social Media Marketing:Do Retail Results Justify Investment? February 3, 2011 by Larry Freed President and CEO of ForeSee Results © 2011 ForeSee Results
  2. 2. 2 • The ForeSee Results Report on Social Media Marketing (U.S. Edition) Recently I heard the following question posed at a trade show: if you had to choose (with the proverbial gun to your head), would you put money into a Facebook e-commerce site or a tra- ditional e-commerce site? It’s a bit of a false dichotomy; most of us can do both. Anyway, the answer depends on a lot of fac- tors, including product line, company size, existing Facebook presence and more. Still the question is getting at something we’re all dealing with. Despite the exponential, widespread, and breathlessly- documented rise in social media activity and usage, many of us don’t have a great way to quantify the value of social media marketing to bottom-line business results. As part of our annual ForeSee Results E-Retail Satisfaction Index (U.S. Holiday Edition), we asked more than 10,000 online shoppers what most influenced their visit to a retail website. For three years now, we’ve asked about a full range of traffic and sales influencers, from intangibles like brand familiarity and word-of-mouth to more traditional marketing tools like advertising and promotional emails. We then used the scientific methodology of the American Customer Satisfaction Index (ACSI) to analyze which sources drove the best quality traffic. The sources that drive the greatest numbers of people are not always the same as the sources that drive people who are the most likely to purchase. As we all struggle to understand the impact of social networks and other online marketing initiatives on our brands, it’s helpful to have some hard data. Our data shows that in terms of pure volume, social media still trails traditional customer acquisition sources (like promotional emails) significantly. However, customers who come to a website because of a social media interaction (either with a friend or a company) are highly likely to purchase. Now, that could be because social media is influencing them to purchase, or it could be because the custom- ers who are interacting with us on social sites are the ones who were more likely to purchase in the first place. The point is that the marketing mix for every company will vary, but understanding the patterns can help guide further research and investment. Social Media Research Findings FINDING #1: Look for quantity and quality of traffic. Social Media: Only about 5% of online holiday shoppers report being primarily influenced to visit top retailer sites by social media, yet retailers continue to devote considerable attention to this chan- nel based on the promise of potential big results. Meanwhile, 19% of website visitors came to the website primarily as a result of a promotional email and 8% visited as a result of search engine re- sults, suggesting that we shouldn’t give short shrift to tried-and-true online marketing tactics in favor of newer media.www.ForeSeeResults.com
  3. 3. 3 • The ForeSee Results Report on Social Media Marketing (U.S. Edition) MARKETING MIX: IS SOCIAL MEDIA WORTH THE COST? Primary Influence On Website Visit % of Respondents (U.S.) Familiarity with Brand 38% Promotional Emails 19% Search Engine Results 8% TV, Newspaper, Radio or Magazine Ads 8% Word-of-Mouth Recommendation 8% Traditional marketing Internet Advertising 7% Private Sectr Websites 2009/2010 techniques still Interaction on Social Network 5% drive more traffic. Blogs or Discussion Forums 3% Shopping Comparison Website 2% Product Review Website 2% 0% 10% 20% 30% 40% 50% In the preceding chart, “interaction on social network” includes getting a message or recommendation from a friend or family member (2%), an interaction or message from a company on a social network (2%), or watching a relevant YouTube video (1%). “Internet advertis- ing” includes advertising on all websites, including social media sites. See the following chart for further breakdown and specificity. However, looking only at the volume of traffic from any given source can be misleading; we also need to look at the quality of the traffic. In the following chart, we see all the traffic acquisition sources broken out individually and assigned scores on our methodology’s 100-point scale for satisfaction, likelihood to buy online, and likelihood to buy offline. • Some of the most satisfied site visitors arrived at the site because of previous familiarity with a brand, promotional emails, word-of-mouth, product review websites, advertising on social net- works, and instant messages from a friend or colleague. • Consumers whose site visits were most influenced by advertising on social networks, messages directly from the company on social networks, or mobile phone text messages or alerts are highly likely to buy offline. • Site visitors who arrived because of product review websites or word-of-mouth recommenda- tions are highly likely to buy online.www.ForeSeeResults.com
  4. 4. 4 • The ForeSee Results Report on Social Media Marketing (U.S. Edition) % of Likelihood Likelihood What most influenced your visit to the website? Respondents Satisfaction to Purchase to Purchase Offline Online MARKETING MIX: IS SOCIAL MEDIA WORTH THE COST? THE COST?75 MARKETING MIX: IS SOCIAL MEDIA WORTH 71 Familiarity with site/company/brand38% 80 Promotional e-mail(s) from the company 19% 79 71 75 Search engine results 8% 75 65 71 Primary Influence On Website Visit % of On Website Visit % of Respondents (U.S.) Primary Influence Respondents (U.S.) TV, radio, newspaper, or magazine advertising 8% 77 72 76 Familiarity with Brand I Familiarity with Brand Word-of-mouth/recommendation from someone know 8% 79 38% 70 38%78 Internet advertising Promotional Emails 5%19% Promotional Emails 77 19% 71 74 Search Engine Results Search Engine Results Internet blogs or discussion forums 8% 3% 8% 73 73 74 TV, Newspaper, Radio or Magazine Ads Radio or Magazine Ads TV, Newspaper, Link from a shopping comparison website 8% 2% 8% 76 66 72 Word-of-Mouth Recommendation Word-of-Mouth Recommendation 8% 8% Message/recommendation from a friend on a social network 2% 77 72 76 Traditional marketing Traditional marketing Internet Advertising 7% Internet Advertising 7% Product review website Sectr Websites 2009/2010 Websites 2009/2010 Private Private Sectr 2% techniques still 79 73 techniques still 78 Interaction on 5% Interaction on Social Network Social Network 5% Advertising on social networks 2% drive more traffic. 79 drive76 traffic. more 75 3% Blogs or Discussion Forums or Discussion Forums Blogs 3% Message directly from the company on a social network 2% 78 76 75 Shopping 2% Shopping Comparison Website Comparison Website 2% Video I saw on YouTube 1% 75 74 76 2% Product Review WebsiteProduct Review Website 2% Instant Message from a friend or colleague 1% 79 75 77 Mobile phone text messages or alerts 0% 10% 1% 20% 0% 30% 76 10% 40% 20% 76 50% 30% 40% 75 50% The groups most likely to purchase offline come from some of the acquisition sources that drive the LEAST traffic: advertising on social networks, messages from the retailer on social networks, text messages or alerts, and instant messages from friends or colleagues. These scores represent average findings from recent visitors to the top 40 online retailers’ websites (by sales volume, as measured by Internet Retailer). Each retailer is likely to have a different picture of which acquisition sources drive the most traffic and which drive the best traffic. But if we’re only looking at what drives the most traffic, we’re missing key information that could serve as a huge com- petitive advantage, since success is often found at the margins. We’re missing some opportunities for real volume. When I look at this chart, what I see is that promotional emails are delivering tremendous bang for the buck. Emails are driving a large proportion of people that are relatively high-quality traffic. Based solely on this data, I would be tempted to put my resources into really understanding what can be done to make promotional emails more effective. Social media has yet to blow me away as a driver of website traffic, store traffic or sales. That doesn’t mean we should ignore it; that means we should keep it in perspective as one of many tools at our disposal. Yes, the data shows that some of the people who are most likely to buy come to our sites be- cause of social media. But that doesn’t necessarily mean that it was participation in social media that made this group more likely to buy. It is likely that social media-influenced visitors are already some of the best, most loyal customers to begin with.www.ForeSeeResults.com
  5. 5. 5 • The ForeSee Results Report on Social Media Marketing (U.S. Edition) FINDING #2: Our customers want to hear from us! We asked people how they wanted to hear from retailers, and traditional channels win again. Only 10% of our customers don’t want to hear from us; the other 90% have definite opinions on what channel they like best. Are you asking your customers how they want to hear from you? Once you know the answers, are you digging deeper to find out if you are effectively communicating through those preferred channels and driving the sales and loyalty you want?MARKETING MIX: IS SOCIAL MEDIA WORTH THE COST? How do you prefer to hear about sales and promotions? % of Primary Influence On Website Visit % of Respondents (U.S.) Respondents Promotional emails with Brand Familiarity 38% 64% Promotional Emails 19% This company’s website 21% Search Engine Results 8% Postal mail TV, Newspaper, Radio or Magazine Ads 25% 8% Don’t want communications Word-of-Mouth Recommendation 8% 10% Traditional marketing Television Internet Advertising 7% Private Sectr Websites 2009/2010 techniques still 11% Interaction on Social Network 5% drive more traffic. Social media websites (Facebook, Twitter, YouTube) 8% Blogs or Discussion Forums 3% Mobile phone text messages or alerts Shopping Comparison Website 2% 5% Radio Product Review Website 2% 3% Other 0% 10% 20% 30% 2% 40% 50% I think as retailers, we sometimes assume that since “everyone” is using social media these days, “ev- eryone” wants to hear from us on Facebook. In fact, only 8% of all of our site visitors prefer to hear from us on social media. Most prefer emails, our websites, and even snail mail. Though only 8% said social media was their preferred way to hear from us, more than half seem to be willing to connect with us in some way on social media. When we asked all of the survey respon- dents which social media site would be their first choice, 40% chose Facebook. Twitter, an industry darling in the last few years, especially for technical and product support, registered only 4%. www.ForeSeeResults.com
  6. 6. 6 • The ForeSee Results Report on Social Media Marketing (U.S. Edition)MARKETING MIX: IS SOCIAL MEDIA WORTH THE COST? Primary Influence On Website Visit % of Respondents (U.S.) Which social media website would be your first choice for % of receiving communications from this company? Familiarity with Brand Respondents 38% None Promotional Emails 19% 47% Search Engine Results 8% Facebook 40% TV, Newspaper, Radio or Magazine Ads 8% Twitter Word-of-Mouth Recommendation 8% 4% Traditional marketing Internet Advertising A website not listed here 7% 2% Private Sectr Websites 2009/2010 techniques still Interaction on Social Network 5% drive more traffic. 2% YouTube Blogs or Discussion Forums 3% LinkedIn Comparison Website Shopping 2% 2% MySpace Product Review Website 2% 2% Flickr 0% 10% 20% 30% 1% 40% 50% FINDING #3: Facebook still rules, but is not as big a factor as we might think. Yet. We already know Facebook is becoming the number one website in the world in terms of traffic; this research shows that it is also the social network preference—by far—of the shoppers at the Top 40 retail websites. Two-thirds (66%) of online shoppers are regularly visiting Facebook this year (com- pared to 56% last year), and only one-quarter of online shoppers report that they don’t use any social websites (down from one-third of respondents last year). These numbers are growing so fast that while we don’t see social media (and Facebook in particular) as a huge driver of sales and traffic yet, it could soon be a game-changer. MARKETING MIX: IS SOCIAL MEDIA WORTH THE COST? THE COST? MARKETING MIX: IS SOCIAL MEDIA WORTH Which social media websites do you use regularly? 2010 2011 Primary Influence On Website Visit On Website Visit (U.S.)Respondents (U.S.) Primary Influence % of Respondents % of Facebook Familiarity with Brand Familiarity with Brand 56% 38% 66% 38% 18% increase Promotional EmailsPromotional Emails 19% 19% YouTube 22% 23% Search Engine Results Search Engine8% Results 8% Twitter 11% 13% TV, Newspaper, Radio or Magazine Ads or Magazine Ads TV, Newspaper, Radio 8% 8% LinkedIn Word-of-Mouth Recommendation Recommendation Word-of-Mouth 8% 8% 8% 11% Traditional marketing Traditional marketing MySpace Internet Advertising 7% Internet Advertising 7%15% Private Sectr Websites 2009/2010 Private Sectr Websites 2009/2010 techniques still techniques33% decrease 10% still 5% Interaction on Social Network on Social Network Interaction 5% drive more traffic. drive more traffic. Flickr 5% 5% 3% Blogs or Discussion Blogs or Discussion Forums Forums 3% Yelp Shopping Comparison Website 2% Shopping Comparison Website 2% 2% 3% Product Review Product 2% A social website not listed hereWebsite Review Website 2% 2% 3% I don’t use social websites 0% 10% 20% 0% 31% 30% 10% 40% 20% 24% 30% 50% 22% decrease 40% 50% www.ForeSeeResults.com
  7. 7. 7 • The ForeSee Results Report on Social Media Marketing (U.S. Edition) Here’s an interesting twist. Ask people how they rate Facebook itself, and they give it, on average, a 64, according to a report from the ACSI last July. That’s a terrible score; people are not very satisfied with Facebook itself. Ask people how they rate the top 40 retail websites, and they give them, on av- erage, a 78. Ask people how they rate Top 40 retailers’ presence on Facebook, and it averages an 80! This is a bit confusing, but basically, people are more satisfied with retailers’ Facebook pages than they are with the retail websites themselves or with Facebook itself. This information could mean that while Facebook stumbles as a website, it provides retailers with a valuable customer touchpoint that can actually be very satisfying. Customer Touchpoints Satisfaction Score Facebook.com 64 Top 40 Retailers’ Presence on Facebook 80 Top 40 Retail Websites 78 50 60 65 70 75 80 Private Sectr Websites 2009/2010 FINDING #4: Let the customers be your guide. This research represents aggregate findings for the Top 40 retailers. All of us should know how many of our own customers are influenced by promotional emails or advertising on Facebook or word-of- mouth recommendations, and furthermore, we should know which group is most likely to buy. We should also know how people want to hear from us and how well we’re doing when it comes to com- municating through those channels. We need to ask ourselves if social media is worth the investment. If we discover that the answer is yes, we need to make the most of it by making sure that everything about our interactions on social media meets the needs and expectations of our customers. Other- wise, the effort is wasted, and could even be detrimental. About the Author As President and CEO of ForeSee Results, Larry Freed is an expert on customer satisfaction and au- thors dozens of research papers and reports on the subject every year. Larry speaks extensively on the topic at private and public sector industry events and has been quoted in numerous publications and media, including CNN, Wall Street Journal, Washington Post, New York Times, Investor’s Business Computer Week and Government Executive, among many others. Daily, Internet Retailer, Internet Retailing, Multichannel Merchant, DM News, Computerworld, Federalwww.ForeSeeResults.com
  8. 8. 8 • The ForeSee Results Report on Social Media Marketing (U.S. Edition) About the Research Team Rhonda Berg, Research Manager at ForeSee Results, led the research team that worked on the 2010 ForeSee Results E-Retail Satisfaction Index (U.S. Holiday Edition). Rhonda manages many research initiatives, such as the annual Top 100 and Top 40 Retail Satisfaction Indices (both U.S. and U.K.) and the quarterly E-Government Satisfaction and Transparency Indices. She also serves as an internal consultant regarding statistics, methodology, and survey design. Rhonda has been a research profes- sional for 20 years in a number of industries and holds advanced degrees in business and sociology. About the Research Methodology The social media findings reported in this paper are based on a survey of almost 12,000 visitors to the Top 40 e-retail websites (determined according to sales revenue as reported by Internet Retailer’s 2010 Top 500 Guide). Survey responses were collected by FGI Research’s Smart Panel. The study measured satisfaction among shoppers who visited the site, regardless of whether they ultimately executed a purchase online, providing insight into the performance of retail websites as research and purchase channels. ForeSee Results used the methodology of the American Customer Satisfaction In- dex (ACSI), developed at the University of Michigan, to determine the scores. The ACSI is the national standard for customer satisfaction and has been proven to have a direct link with stock prices and other measures of financial performance. About ForeSee Results As the leader in customer satisfaction measurement, ForeSee Results captures and analyzes voice of customer data to help organizations increase loyalty, recommendations and marketing value. Using a patented, scientific methodology developed at the University of Michigan, ForeSee Results identi- fies improvements across all channels and touch points that drive customer satisfaction. With more than 58 million survey responses collected to date and benchmarks across dozens of industries, ForeSee Results offers unparalleled expertise in customer satisfaction measurement and manage- ment around the globe. ForeSee Results, a privately held company, is located in Ann Arbor, Michigan and at www.ForeSeeRe- sults.com. Connect with ForeSee Results at http://www.foreseeresults.com/blogs-community/www.ForeSeeResults.com

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