Show me the sales. How does social media impact the bottom line?

 

Almost every agency in this space, ourselves included, is often asked to prove a direct link between social media and sales / conversions.

Indeed though awareness for the need for social media marketing campaigns is without a doubt higher than 3-4 years ago, questions about measurement and tangible benefits remain the same.

I’ll come back to whether the ‘show me the sales’ question is useful to ask on its own.   But the fact is there is research out that shows social media does impact the bottom line.   I’ve distilled some of these into ten key points, included in the presentation below.

[scribd id=78040874 key=key-nxcgmimlr3bhagqr6e6 mode=slideshow]

They are as follows:

1 – 83% of consumers globally are likely to visit a website are likely to visit a website recommended by a friend on Facebook, and more than half say comments posted on retailers’ Facebook and Twitter pages, whether positive or negative, also influence their opinions (2011 Global Consumer Shopping Habits Survey – Channel Advisor)

2 – Consumer opinions posted online (70%) are more trusted than information on TV (62%), newspapers (61%) and online banner ads (33%) (Nielsen)

3 – In Europe over 50 percent of respondents aged 16 – 64 with access to the Internet, use social networks to assist with shopping decisions and of those that would be likely to follow a retailer on a social network, 35 percent stated they use social media platforms to read reviews or rank products and services (IBM)

4 – “Customers who engage with companies over social media spend 20 percent to 40 percent more money with those companies than other customers.” (Bain & Co)

5 – A study in South Korea (a mature social media market) found that social impacts sales among moderate and heavy users.  Recommendations shared among moderate social media users increased brand sales by 5%.

However, heavy social media users also listen to negative chatter.  Brands talked about negatively experienced a 14% sales drop among this grow (Harvard Business School)

6 – The heaviest Facebook users are also the biggest spenders online - the top 20% of users spend $67 per quarter, compared to $27 for non Facebook users (Comscore)

7 – According to a Kantar Media study in the US, 35% of social media users say Twitter has influenced their purchasing decisions (Twitter links also result in more clicks than Facebook)

8 – Even concentrating on smaller social networks can be commercially beneficial.  Radio Shack in the US found that customers checking into their stores on Foursquare spend 3.5x more than those that don’t

9 – Super fans and advocates on your social channels are 50% more likely to create content that influences a purchase (ComBlu)

10 -  The picture is the same if you look at individual industries.   In the ‘quick serve industry’, consumers exposed to social media have a 7x greater likelihood of ‘higher spend’ (WPP / Ogilvy)

Meanwhile, 60% of consumers say they factor other travellers’ online reviews into their plans when booking a vacation / holiday (eyefortravel / Simpliflying)

Is that the right question to ask?

That’s a selection of evidence that provides a direct link between the tweet or Facebook post and the cash register or online check-out.   But, as I said earlier, that may not be the right question to ask in isolation.

Yes, social media needs to provide a return on investment just like any marketing spend.   But the danger is seeing social media as the brand marketing equivalent of a slot machine – put the coin in and get an instant return.

By and large social campaigns don’t (and shouldn’t) work like that for a number of reasons:

1 – Social works best in tandem with other marketing disciplines.   The WPP study mentioned above shows that social campaigns are particularly effective when integrated in the overall marketing mix.   Similarly there is evidence that combining search and social marketing campaigns are particularly effective

2 – Social media has a key role to play in protecting a brand’s reputation.   There is plenty of evidence of what can happen if you don’t see and respond to negative comments.   Indeed, one bad tweet or post can cost you 30 customers (Convergys)

49% of people would be much less likely to buy from a brand which had a page where customer questions went unanswered (Conversocial)

Related to that, a large % of consumers now feel empowered to blast out about companies online (EURO RSCG)

3 – Rather than look at how social media directly drives sales, it is more fruitful to look at how social media can support the whole sales and conversion cycle.

This infographic from Get Satisfaction is a favourite.   This illustrates how social media comes into play all the way from the information gathering stage to converting new customers into fans who will talk up your products and services online

4 – Finally rather than ‘how does social media impact sales’, I actually prefer the question ‘how does social media impact behaviour’, which is much more powerful.

To take one high profile example, there has been a direct link between men taking part in the annual ‘Movember’ campaign and social media activity

(Above image, Martin Deutsch / Featured post image – 401k)

 

 

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8 comments

  1. Hi Stephen,

    I don’t have any specific stats for non profits as such, but I would say that some of the stats I present here are just as relevant as ultimately they are less about sales and more about social reinforcement and recommendations leading to a certain action (whether that’s buying a product or supporting a cause)

    • Thanks Dirk, I think that’s true for the most part, a product can be consumable or an ideal…Problem with nonprofits is they have less money to spend, and the results are not as tangible (tough to sell that to the board, even though I believe the intangibles are what drive nonprofits). I have just taken over OperationKids.org and am looking for a social media strategy piece (I don’t believe for a minute it’s all we need, but rather a piece of the whole effort). I’ll keep reading, love the info…

  2. Thanks for the article, very informative. Any thoughts on how this translates into higher traffic/awareness for nonprofits, and how online donations can be boosted?

  3. Hi Tokumuto,

    No offence taken, I am glad you’ve decided to comment!

    The Facebook stat you’ve mentioned concerned all Internet users. However, given that most Internet users in the US and UK now have Facebook accounts, I accept that the $67 / $27 comparison may not be the best one.

    Someone who is on the Internet and not on Facebook may well be someone aged 65+ who exhibits different online behaviour overall than someone even 15 years younger than him / her

    As a result, a better comparison from the same Comscore figures could be this:

    Heavy Facebook users spend $67 per quarter, light users $50. Not as much of a dramatic difference, but still a difference. Absolutely, many of those heavy users will have liked brand pages and will have certain behaviours and tastes reinforced, but I think that is actually the point.

    Thanks again for the comments, appreciate it!

  4. Thanks for the reply! I get your point but i wonder if we’re seeing a correlation-causation problem that makes this numbers a misleading source of information and in turn, decision making.
    The top 20% of Facebook spent $67 per quarter versus $27 for non Facebook users. I might be led to believe that because I’m a heavy user of Facebook I spend almost 200% more per quarter than my friends who are not in that social network. But there are two reasons I might do that:
    1. I’m already a heavy user of the category, hence I spend more and since we are inclined to reinforce our previous behaviors and love certain brand I am a fan of say Coca-Cola or Snickers. This is why, Facebook fansize is consecuence of market share, not the other way around.
    2. Since Facebook is by a long way the largest social network, if I don’t have a Facebook account I might no even have an internet connection because of I can’t pay for it. This might well be a proxy of my income and purchase capability. So it’s highly likely that my lower purchase on the category is not because of using social media, but because I just don’t have the money to buy stuff.
    I like your blog, I hope you don’t find this comments as a direct attack of your work.
    Regards,
    Tokumoto

  5. Hi Tokumoto,

    Thanks for stopping by and commenting, you raise a number of important points. To take some of them in turn:

    1 – If by ‘is social media making the path to purchase easier?’ you are saying that the whole sales cycle and overall brand reputation need to be factored in, I completely agree.

    You can’t reduce social media efforts into a form of marketing instant gratification measured in conversions, targets and products flying off shelves. Its impact is both more complex, and potentially more powerful than that.

    2 – Absolutely, different marketing disciplines need to work together. You can’t look at digital in a vacuum. Social media can amplify existing marketing campaigns, and similarly a lot of creative concepts can start in the social realm first.

    3 – Different marketing disciplines are as much evaluated on their own as they are together. So, does ‘social media marketing work’ is as much of a valid question as ‘does advertising work’ or ‘does sales promotion work.’

    I agree that many different factors are at play when it comes to the success of (say) a major TV advertising or PR campaign. The reality is, their successes or otherwise will often be looked at in isolation – after all, whole marketing industry award ceremonies are built on that premise!

    As I say all the way at the front, awareness of social media is much higher than what it once was but the potential benefits (and dangers) are not universally understood. These are the circumstances when things are often simplified down to ‘show me the big number’ or as the title of my presentation has it ‘show me the sales.’

    On that level, those of us who work in this space have plenty of evidence we can draw on, though it isn’t always easy to find. So my aim was to try and compile the equivalent of a greatest hits in a series of slides.

    And as those studies show, consumers do pay attention to what is being said about brands online and often act accordingly with their credit cards.

  6. I got two issues that worries me about this data, one you have already taken into account in this post. The other not so much:
    1. Taken this numbers as if digital was a closed system (isolated), and therefore assume that is able to deliver sales results because of its success in that medium seems like pretty weak logic to me.
    2. As the WPP study already noted, digital marketing efforts add up to the results of integrated campaigns. It seems that it doesn’t work any other way. What worries me is that most of this numbers can be well integrated to customer service system’s hence the digital medium is not working as a sales delivery channel but as thermometer of customer satisfaction.
    I strongly believe that sales are delivered by creating physical and mental product availability (Sharp, 2010) and it seems that most digital, specially social media is not creating sales. Also I suspect that most of the “social media success” is actually a traditional media success, I think that any brand’s fanbase on any social network is directly correlated with it’s market share and the ammount of organic activity (not based on promotions or complains about product or service) is based on it’s loyalty levels which do not vary that much through different companies in the same market.
    I guess the right question to ask is: “Is social media making the path to purchase easier for the consumer or not?”

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