Daily Dose of iQ: The ROI of Social Commerce

Jan 30, 2012 — Anne Forkutza

"With mobile and social quickly emerging as the new consumer focal points, retailers need to fully understand these channels to develop a cross-channel strategy that maximizes the strengths and potential ROI of both," wrote Hillary Prey of TheMobileRetailBlog.com (Jan. 24).

Prey provided the following stats to outline this potential:

  • Twitter has 175 million users and counting.
  • Facebook has over 500 million users and counting.
  • People spend over 700 billion minutes a month on Facebook.
  • Since social plug-ins launched in April 2010, an average of 10,000 new websites integrate with Facebook every day.
  • Over 250 million users engage with Facebook monthly through external website.
  • Over 200 million users access Facebook via mobile phone.

What retailers need to know: Retailers need to leverage Twitter and Facebook in a meaningful way, not only to engage with their customers, but also to have their customers work for them. If a customer likes your company and expresses through his/her social network, that's free, quality advertising right there.

“By enabling social integration (Share to Facebook, Twitter and e-mail) in their mobile optimized web site and rich app, a retailer allows customers to share products and services immediately with their entire social network,” Prey writes. Customers get the peer approval they need to make purchases and also help retailers promote their products, sale items, etc.

By being “social," retailers get more than just typical brand and marketing benefits. Traditional advertising has always been a one-way street, with marketing conveying a desired message to customers. Enabling social integration makes it more of a conversation. In other words, rather than a brand "telling you" what they want you to hear, social media tools allow customers to respond back. Thus, a relationship is built through interaction. Customer engagement is the first step toward true customer loyalty.

For social commerce to work, customers must be incentivized. Of course, customers won't just engage with a brand or retailer for free. If you want your customers to retweet something, you better give them a good reason why and reward them for it.

By interacting with you via social media, they are looking for:

  • peer reviews (of products or services you offer)
  • status (exclusive offers they can flaunt to their friends and family)
  • discounts (upon which Groupon and most loyalty programs are based)
  • news (upcoming deals, new products and promotions)
  • opportunities to provide feedback (ratings and reviews to improve products or services you offer)

Customer loyalty depends on a quality experience that extends beyond a simple transaction. Social media allows you to maintain a relationship with customers and offer them the value (incentives) they want. In return, customers will help you extend your promotional reach across their social networks. It's simple word-of-mouth marketing... amplified by technology.

Topics: Retail Operations, Mobile Industry, Customer Experience, e-Commerce, Retail Marketing

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