Social Media Marketing u.s. 2011 Foresee

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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


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2 The ForeSee Results Report on Social Media Marketing (U.S. Edition)

www.ForeSee.com

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?

Its 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 were all dealing with. Despite the exponential, widespread, and breathlessly-

documented rise in social media activity and usage, many of us dont 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 Sasfacon Index(U.S. Holiday Edition), we asked more

than 10,000 online shoppers what most inluenced their visit to a retail website. For three years now,

weve asked about a full range of trafic and sales inluencers, from intangibles like brand familiarity

and word-of-mouth to more traditional marketing tools like advertising and promotional emails. We

then used the scientiic methodology of the American Customer Satisfaction Index (ACSI) to analyzewhich sources drove the best quality trafic. 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, its 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) signiicantly. 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 inluencing 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

irst 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 andquality of trafic.

Social Media: Only about 5% of online holiday shoppers report being primarily inluenced 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 shouldnt give short shrift to tried-and-true online marketing tactics in favorof newer media.
http://www.foreseeresults.com/http://www.foreseeresults.com/


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Familiarity with Brand

Promotional Emails

Search Engine Results

TV, Newspaper, Radio or Magazine Ads

Word-of-Mouth Recommendation

Internet Advertising

Interaction on Social Network

Blogs or Discussion Forums

Shopping Comparison Website

Product Review Website

% of Respondents (U.S.)

Private Sectr Websites 2009/2010

0% 10% 20% 30% 40% 50%

Primary Influence On Website Visit

38%

19%

8%

8%

8%

7%

5%

3%

2%

2%

Traditional marketing

techniques still

drive more traffic.

MARKETING MIX: IS SOCIAL MEDIA WORTH THE COST?

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 speciicity.

However, looking only at the volume of trafic from any given source can be misleading; we also need

to look at the quality of the trafic. In the following chart, we see all the trafic acquisition sources

broken out individually and assigned scores on our methodologys 100-point scale for satisfaction,

likelihood to buy online, and likelihood to buy ofline.

Some of the most satisied 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 inluenced 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 ofline.

Site visitors who arrived because of product review websites or word-of-mouth recommenda-

tions are highly likely to buy online.


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What most inuenced your visit to the website? % ofRespondents SatisfactionLikelihood

to PurchaseOine

Likelihoodto Purchase

Online

Familiarity with site/company/brand 38% 80 71 75

Promotional e-mail(s) from the company 19% 79 71 75

Search engine results 8% 75 65 71

TV, radio, newspaper, or magazine advertising 8% 77 72 76

Word-of-mouth/recommendation from someone I know 8% 79 70 78

Internet advertising 5% 77 71 74

Internet blogs or discussion forums 3% 73 73 74

Link from a shopping comparison website 2% 76 66 72

Message/recommendation from a friend on a social network 2% 77 72 76

Product review website 2% 79 73 78

Advertising on social networks 2% 79 76 75

Message directly from the company on a social network 2% 78 76 75

Video I saw on YouTube 1% 75 74 76

Instant Message from a friend or colleague 1% 79 75 77

Mobile phone text messages or alerts 1% 76 76 75

The groups most likely to purchase ofline come from some of the acquisition sources that drive the LEAST trafic: 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 indings 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 trafic and which drive the best trafic. But if were only

looking at what drives the most trafic, were missing key information that could serve as a huge com-

petitive advantage, since success is often found at the margins. Were 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 trafic. 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 trafic, store trafic or sales. That doesntmean 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 doesnt necessarily mean that it was participation in social media that

made this group more likely to buy. It is likely that social media-inluenced visitors are already some

of the best, most loyal customers to begin with.


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FINDING #2: Our customers want to hear from us!

We asked people how they wanted to hear from retailers, and traditional channels win again. Only10% of our customers dont want to hear from us; the other 90% have deinite 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 ind out if you are effectively communicating through

those preferred channels and driving the sales and loyalty you want?

How do you prefer to hear about sales and promotions? % ofRespondents

Promotional emails 64%

This companys website 21%

Postal mail 25%

Dont want communications 10%

Television 11%

Social media websites (Facebook, Twitter, YouTube) 8%

Mobile phone text messages or alerts 5%

Radio 3%

Other 2%

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 irst choice, 40% chose Facebook. Twitter, an industry

darling in the last few years, especially for technical and product support, registered only 4%.


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Which social media website would be your rst choice forreceiving communications from this company?

% ofRespondents

None 47%

Facebook 40%

Twitter 4%

A website not listed here 2%

YouTube 2%

LinkedIn 2%

MySpace 2%

Flickr 1%

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 trafic; this

research shows that it is also the social network preferenceby farof 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 dont use any social

websites (down from one-third of respondents last year). These numbers are growing so fast that

while we dont see social media (and Facebook in particular) as a huge driver of sales and trafic yet,

it could soon be a game-changer.

Which social media websites do you use regularly? 2010 2011

Facebook 56% 66% 18% increase

YouTube 22% 23%

Twitter 11% 13%

LinkedIn 8% 11%

MySpace 15% 10% 33% decrease

Flickr 5% 5%Yelp 2% 3%

A social website not listed here 2% 3%

I dont use social websites 31% 24% 22% decrease


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Heres 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. Thats a terrible score; people are not very satisied

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 satisied 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.

FINDING#4: Let the customers be your guide.

This research represents aggregate indings for the Top 40 retailers. All of us should know how many

of our own customers are inluenced 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 were 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, Investors BusinessDaily, Internet Retailer, Internet Retailing, Multichannel Merchant, DM News, Computerworld, Federal

Computer Weekand Government Executive, among many others.

Facebook.com

Top 40 Retailers Presence on Facebook

Top 40 Retail Websites

Satisfaction Score

Private Sectr Websites 2009/2010

50 60 65 70 75 80

Customer Touchpoints

64

80

78


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About the Research Team

Rhonda Berg, Research Manager at ForeSee Results, led the research team that worked on the 2010ForeSee 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 indings 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 Retailers

2010 Top 500 Guide). Survey responses were collected by FGI Researchs Smart Panel. The studymeasured 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 inancial performance.

About ForeSee Results

As the leader in customer satisfaction measurement, ForeSee Results captures and analyzes voice ofcustomer data to help organizations increase loyalty, recommendations and marketing value. Using

a patented, scientiic methodology developed at the University of Michigan, ForeSee Results identi-

ies 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/
http://www.foreseeresults.com/http://www.foreseeresults.com/http://www.foreseeresults.com/http://www.foreseeresults.com/blogs-community/http://www.foreseeresults.com/blogs-community/http://www.foreseeresults.com/blogs-community/http://www.foreseeresults.com/http://www.foreseeresults.com/

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Social Media Marketing u.s. 2011 Foresee