FREEDyourMind

Top 100: Social Media

Here is more information from our Top 100 Online Retail Satisfaction Index released earlier this month. Today's topic is social media.

Social media is turning out to be a touchpoint with enormous potential for satisfying shoppers and building loyalty and relationships. When we study our own clients using our Social Media Value Calculation, we see that social media has little direct impact on web traffic. In fact, in our most recent Social Media Value Calculation benchmark we saw that only 1% of site visitors came direct from a social media site.  However, 18% of the site visitors indicated that social media was an influence on their visit to the website. When applying this methodology we are able to attribute how much revenue is influenced by social media, helping companies truly understand the return on investment for their social media marketing efforts and also the value that the viral effect of social media is having on their business.   

Back to our Top 100 Online Retail Satisfaction Index.  First, when customers rate their satisfaction with various touchpoints, they are actually more satisfied with their interactions on Facebook and Twitter than many other customer touchpoints, including the website!

 
 

What social sites are most e-retail shoppers using? No surprise here. Facebook.

 

But where do they want to hear from retailers? 42% don't want to hear from retailers at all on social sites.

 
42% of survey respondents say they don't want to interact with retailers on social sites, but the next question indicates that only 29% aren't actually interacting with any retailers, which mean there are some people who SAY they don't want to interact with retailers on Facebook who are already doing so. That's why it's important to have a methodology that dig a little deeper. In fact, 69% of online shoppers are interacting with at least one retailer on social networks. This is a huge growth area for retail, and as people begin to be able to make purchases on Facebook and other social sites, understanding how this experience is impacting first-time and loyal customers will be critical.

 
 
Most people choose to friend, follow, or like a retailer on a social site to learn about sales, special offers and products. Very few do so for customer support. Understanding what your customers are coming to your site for can help you with the content on your social pages.

We also see that more than half of those who are interacting with a retailer on a social site have made a purchase because of it. Wow! This is a real testament to the power of those offers you're posting on your Facebook pages and Twitter accounts.

 

One final point of data related to the value of social media. We always ask about customer acquisition sources, and there are some major shifts year-over-year.

• Internet advertising and traditional media are both way down as a driver of traffic to websites.
• Social media, along with email marketing, are both way up.
• Company familiarity is also up (and could be due to more exposures/touch points on social media).

This data tells me we need to be doing a better job, as an industry, getting at the real value of social media.

What value does Social Media bring to your business?

This is the question that I hear from CMOs pretty frequently.  While there are some great tools to measure how much activity there is about your company on the social networks, understanding the value is another thing altogether.  There is clearly value of positive buzz that can happen on the networks, but is it driving real business? 

That question is what drove us at ForeSee Results to create the Social Media Value Calculation and we have some interesting data in our benchmark to share.

The Social Media Value Calculation allows us to measure the impact that Social Media has on driving visitors to your website and shoppers into your stores.  Not only understanding the impact of your marketing efforts on social networks but also the impact that the viral aspect of social media can have on your business.  By understanding both the direct referrals to your website and the influence that social media has you can really start to understand the business value it can bring to your business.

In our most recent benchmark we evaluated 188 websites and and over 295,000 responses from individual consumers last month alone.  We found that only 1% of the site visitors came direct from a social media network via a referring url.  Yet 18% of site visitors were influenced by social media. 

For the retailers in the benchmark we find that those influenced by social media had higher average order size than those not influenced to visit by social media. For individual companies that can get down to the actual dollars influenced by social media -- understanding the value tha social media brings to their business.  When we examine the purchase behavior of those driven to the site direct from a social network via a referring url we find that while they are more satisfied than the rest of the visitors and more likely to purchase they generally have a lower average order size than the rest of the purchasers.  That might sound strange at first, but the reality is they are often being driven to the site by a discount or promotion and have a tendency to be more of a discount shopper with smaller number of items purchased.

This approach is helping CMOs truly understand the value that social media can bring to their business.

Social Media Segments

Social Media, the often talked about and yet still very gray and fuzzy area.  Wikipedia defines Social Media as follows:

"Social media is online content created by people using highly accessible and scalable publishing technologies. At its most basic sense, social media is a shift in how people discover, read and share news, information and content. It's a fusion of sociology and technology, transforming monologues (one to many) into dialogs (many to many) and is the democratization of information, transforming people from content readers into publishers. Social media has become extremely popular because it allows people to connect in the online world to form relationships for personal, political and business use. Businesses also refer to social media as user-generated content (UGC) or consumer-generated media (CGM)."

So, using wikipedia, a form of social media, to define social media.  Hmmmm...
This is a very broad definition and many things will fall underneath this definition. What should marketers do about social media?  The first step is to add some segmentation to the definition.

I would categorize social media into 3 areas:

1. Controlled Social Media: This is sponsored content within your own domain. This includes content that is sponsored by the company (site owner) such as interactive customer reviews on your own website, company blogs, etc.You can oversee and moderate this type of environment.
2. Sponsored Social Media: This is sponsored content outside your domain.  A company Facebook, Twitter page, YouTube channel, or a LinkedIn group are good examples.  You are in control of the messages in this segment of social media.
3. Viral Social Media: This is non-sponsored content outside your domain.  This is the category that keeps us all up at night--the comments and blog posts people are making about us  and the discussions that our customers are having about us  They are having them everywhere and we have no control over what is being said and what is being read.  We can try to monitor it, but we cannot control it.

The Controlled Social Media segment and the Sponsored Social Media segment are marketing driven.  Some efforts have been successful and although we have better ways to measure and manage these segments, many are still struggling to understand the value and impact these efforts have.

The Viral Social Media segment is out of our control.  Some have figured out how to monitor it and some have figured out how to count it.  But very few have figured out how to measure the impact it has and the value it provides us.

It is important as you move more down the social media path, you understand the difference between the three segments and adjust your plans, objectives and measurements to take into account all three segments.

Word of Mouth, Twitter and the WeinerMobile

I am at the Word of Mouth Marketing Association Summit (WOMMA).  A great group of people that are at the forefront of the word of mouth marketing movement.  And with that cutting edge thinking the experience of being at WOMMA is an experience.  People are twittering, blogging and who knows what else thorughout the conference (search for #WOMMA on twitter). 

While at times I have wondered about the value of twitter, I saw some value here at the WOMMA show.  You get instant feedback on the presentations.  It kind of reminded me of the CNN coverage of the presidential debate.  As I was a participant in a debate on the ACSI vs. NPS, the twitter traffic gave me instant feedback on the debate.  Now debating against NPS is fun and easy.  NPS is a great example of a BAD METRIC.  No accuracy, precision or reliability. You might be better off using a dart board then NPS.

And I had another experience of a lifetime.  As an example of word of mouth marketing, the WeinerMobile from Oscar Mayer was at the conference.  And as my luck would have it, one of my colleagues, Gavin Hewitt, won us a trip in the WeinerMobile.

Now, imagine this, cruising down the Las Vegas strip in the WeinerMobile.  Talk about word of mouth.  Although I am not sure what they were saying.  Check out www.hotdoggerblog.com. 

Off to WOMMA

I am off to speak at the Word of Mouth Marketing Association's (WOMMA) annual summit in Las Vegas.  It should be an exciting conference.  Word of mouth can have a powerful impact.  I think the focus on word of mouth is a very important effort and I applaud those that got the WOMMA started.

But I also think there is a lot of misinformation on the metrics around word of mouth.  I will be participating in a debate about NPS, an often used proxy or metric of word of mouth.  It is also a very misleading metric. Join me at WOMMA in Las Vegas and you can learn more.

New Businesses Take Advantage of Power of Word of Mouth

I'm seeing more and more businesses pop up that are designed to capitalize on the time-honored fact that people rely more on recommendations from others than on advertising and marketing when making purchase decisions.

The latest is MarketplaceStories.com, a social media website where shoppers can make connections with each other, share opinions and recommendations, and help each other research products and services. It looks like you can get a very basic level of access with a free membership or a more robust set of features and benefits for a paid premium membership.

It seems they have set it up so that it will be hard for companies to game the system, which is always my first concern when it comes to formalized word-of-mouth systems (like Amazon reviews, for example, which are littered with suspicious product reviews that really seem like they were written by the manufacturer or author). But I will be curious to see if people are willing to pay for word-of-mouth advice, which theoretically is available for free all over the internet.

UK Puts Restrictions on WOM Marketing

Starting May 26, the U.K. is putting strict restrictions on word-of-mouth marketing and making it a criminal offense for marketers to misrepresent themselves as consumers, according to Ad Age. A new law will make it illegal for brands to seed positive messages online without making the origin of the message clear. Apparently this legislation has already been in place throughout the rest of Europe since January 1.

This is pretty interesting and pretty revolutionary. I think there would be a lot of people in jail right now or fined to the hilt if such a law were passed in the U.S.!

Word of mouth marketing has become such a difficult area to navigate precisely because so many companies participate dishonestly. Just look at reviews on Amazon.com and ask yourself how many of them are real and not from the company itself, trying to drum up support and interest.

I think usually, consumers can tell when they’re being duped, and the loss of loyalty and the backlash from being discovered is worse than any fine the government might impose. But I also think marketers get away with this A LOT of times when consumers don’t necessarily figure it out. There are ad agencies and marketing agencies that have made a name for themselves by designing and implementing campaigns that are designed to look “grassroots” and “viral.” It’s a whole industry here in the U.S.

I still think that at the end of the day, people will take advantage of any open system—it’s human nature. For now, WOM still works, and as a result, it’s valuable. As long as WOM recommendations are a valuable commodity, there will be people manipulating it for their own means, just like everything else in human history.

Measuring Word of Mouth

I have a longer version of the article on measuring Word of Mouth that I wrote for DM News available if this is a topic of interest to you. We had to cut the one that appeared in print a bit for space reasons. Just shoot me an email or leave a comment and I'll send it to you. It should also be available soon on our website.

Okay, I'll Bite

Richard Owen, CEO of Satmetrics has issued a response, of sorts, to the numerous criticisms of the Net Promoter methodology that have come from us, in a published paper by IPSOS, and from folks like Ron Shevlin, other academics, and scores of other critics. I’ve seen NPS fans in the blogosphere practically begging Fred Reichheld or someone from Satmetrics to address the criticisms point-by-point and put them to rest once and for all.

But the only defense they really offer is that a) the critics have something to gain from the attacks b) companies wouldn’t be using NPS if it didn’t work (right, because companies never do stuff that doesn’t work!), and c) NPS may not work as well as more complex and comprehensive metrics, but it’s so simple and easy that it doesn’t really need to.

I saw Fred Reichheld also has a new blog post up about how you can consider yourself a user of Net Promoter even if 1) you aren’t asking only one question 2) the question you ARE asking isn’t “the ultimate question” and 3) you are doing anything at all to increase promoters and decrease detractors.

By this definition, we are all NPS users, which I guess is his point. Though when the concept set forth in a very specific book is diluted down that much, I don’t really get the point of calling it “Net Promoter.” It’s a bit like Coke going out there and saying that you can consider yourself a Coke drinker if you’re drinking any liquid, whether or not it is sweet, carbonated, and brown.

I guess the criticism is starting to sink in a little, so they’re doing their best to bring the issue back to the idea that measuring promoters and detractors is important, no matter how you do it. But it seems like they are just changing definitions around so that anything can be considered a Net Promoter system rather than addressing the criticisms of the specific plan they have been suggesting for years now.

Here’s the bottom line: likelihood to recommend is EXTREMELY IMPORTANT, but it is NOT the only thing you need to measure. And both of these blog posts are kind of missing that key point. We all agree that people should be paying attention to word of mouth. We all agree that one positive aspect of Net Promoter is that it’s gotten a lot of companies to rally around the concept of the customer, which many were not previously doing.

But #1, promoters and detractors are not the only think you need to keep track of. That metric, no matter how you measure it (NPS or some other system) is not going to predict growth. There are just too many variables—not all products lend themselves to recommendation, not all people are the sort to talk about their experiences, etc.

And #2, NPS just isn’t the best way to measure recommending because it overstates detractor behavior and has high margins of error.

So kudos to Reichheld and Satmetrics for getting the conversation started. But it’s time to stop holding on to this notion of NPS as a brand that must be protected and defended at all costs, and start getting at what actually works. Sure, one of the things we should all be paying attention to is how many people will recommend our company or not. But that issue is not the singular issue facing companies today. Continuing to hold on to this outdated concept is going to hurt far more companies than it helps.

There is apparently a roundtable at the WOMMA Research Symposium this morning, led by Walter Carl and including representatives from both sides of the NPS debate on whether you would recommend NPS as a metric. They’re going to make the audio recording available after the event, so I’ll be interested to hear that discussion. It seems there are still very specific criticisms of NPS that have not been addressed by the practitioners who promote it.

Is Anyone Really Surprised?

The latest mini-corporate scandal-in-the-making is CEO’s who participate anonymously in online message boards, lauding their own companies and disparaging competitors, all while pretending to be someone else with no vested interest in the company’s fortunes. The Whole Foods CEO started the trend (of getting caught, at least).

It’s fun to wag our fingers and chastise leaders who should know better, and we ALL agree this wasn’t smart, especially the bits about trying to influence investment in your own company vs. in a competitor.

But what it really points out is a lack of transparency in word of mouth (WOM) marketing–a tool that more and more companies are relying on and looking at as scientific. At the end of the day, people will take advantage of any open system no matter how much hand-wringing the WOM community does about ethics and best practices. WOM is valuable, and for now it still works. As long as that’s true, there will be people manipulating it for their own means, just like everything else in human history.

Most savvy internet users know that when they’re reading reviews on Amazon.com, a decent proportion of them come from BzzzAgent, a company that pays readers to review certain books that want to create a word of mouth buzz. When you read reviews on iTunes, how many of them came from the marketing department of the band’s record label? And when you read a Yahoo! investment message board lauding one stock over another, did it really come from your average Joe investor (as seems to be the case) or from an anonymous board member, CEO, or shareholding employee pretending to have no unusual interest in the subject at hand?

The point is that you don’t know and you can’t know. Reading opinions on a message board isn’t like chatting with your neighbors at a cookout, where you can see who is saying what and have at least some vague sense of any ulterior motives when they pick or pan some book or restaurant or cell phone or stock.

Internet users need to take all anonymous WOM recommendations they read with a huge grain of salt, and marketers need to prepare for the day when these kinds of tactics won’t work anymore because people are on to the fact that they’re essentially being gamed.