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by Darby Williams, VP Marketing

Insights from our 2009 Community and Social Media Study

According to a well re-tweeted presentation by Social Evangelist Marta Z. Kagan, most of you reading this have some sort of involvement in social media. Kagan points us to the fact that three-fourths of Americans use social technology (Forrester, The Growth of Social Technology Adoption, 2008). And, among the legions of users of social media technologies, 93% believe companies should have a presence in social media (Cone, Inc. Business in Social Media Study, September 2008). So what social media platforms are your customers using?  And how are you going to leverage the involvement and insights of your customer communities in order to stay relevant to your customers and drive real business value?

PowerReviews commissioned a social media study with the e-tailing group to answer these vital questions and find out how far social media adoption has come. And, of equal importance, to uncover the problems businesses are trying to solve with the use of social media tools. The study surveyed 117 companies, including multi-channel retailers (44%), brands/manufacturers (26%), pure-play retailers (12%), catalogers (9%), and suppliers/agencies (9%).

Adoption of Social Media Tools. The How and the Why.

How are merchants and brands engaging in social media? According to the survey, social media tools are already part of the customer experience and marketing mix for most merchants, where 5 out of 10 tools have a  50%+ usage penetration, with top contenders being Facebook Fan Page (86%), Twitter Publishing (65%), Customer Reviews (55%), Blogs (55%), and Viral Videos (50%).

When asked what tools brands and merchants plan to use within the next twelve months, the responses were significant: the highest growth in social media adoption by Merchants & Brands is expected in Facebook Connect (31%), Social Listening tools (31%) and Customer Reviews (26%).

After uncovering what social media platforms are most commonly employed, this still begs the question: what are brands’ and merchants’ primary goals in using social media?

The study reveals that apart from the objective of increasing sales, brands’ and merchants’ responses point to the following social media trinity at the top of the list: greater customer engagement, mobilizing advocates to drive “word of mouth”, and increasing brand loyalty, in priority order.

The study’s findings reveal that Kagan could be onto something. As are the hundreds of thousands of others who have felt, witnessed, or realized that ‘social media’ is fundamentally changing the way we communicate and sell, especially in ecommerce.  But what problems are merchants and brands trying to address?

What’s The Problem Anyway? Brand and Merchant Pain Points Concerning Social Media.

As stated above, we set out not only to identify the patterns of adoption with social media tools today, but also to find out what problems brands and merchants are trying to solve by using them.  The top three are:

1)      Business risk: “People can trash my products in front of a large audience” (49%)

2)      Career risk: “I am using outdated marketing/merchandising techniques” (34%)

3)      Competitive risk: “Customers might leave my site to find a more socially-engaging site” (26%)

As “pain points” go, these are very significant.  In my experience, the rate of adoption is directly related to the severity of the problem people face.  With the widespread use of social media tools by consumers, marketers and merchandisers are faced with a very different set of rules to succeed.  As a result, this study shows that they are faced with business and competitive risks, as well as career risks, given the degree of change that is occurring.  We interpret these as the primary drivers of such a dramatic movement to assess and actively embrace social media tools they believe will “engage” their shoppers and significantly grow their sales.

Consensus: Reviews Are The #1 Social Media Tool for Driving Both Engagement and Sales

When asked about social media tools that drive the most sales and customer engagement, customer reviews came out on top by a wide margin for both, as 78 percent of those polled list customer reviews as the #1 social media tool for generating sales, and 61 percent list customer reviews #1 in driving customer engagement. Plus, in addition to the 55% of respondents who have already deployed customer reviews, another 26% plan to deploy reviews in the next 12 months, and 13% plan to do so the year after that. This means that 94% of all brands and merchants will have reviews on their sites within 2 years.

Impact on Customer Engagement

Impact on Sales

The Implications: What’s Next

What does all this mean? Of the study’s findings, Lauren Freedman, President of the e-tailing group, remarks, “The integration of community and social networking within e-commerce has reached critical mass and as such is now a benchmark that we will be tracking annually. Customer engagement has become a metric to be reckoned with, where failing to engage consumers via community and social media will have brand and bottom-line implications. All merchants must test and understand how to effectively deploy it for their brands to retain customers, encourage sales, and avoid abandonment to competitors who’ve better embraced its marketing potential.”

Freedman’s comment underlines the core concept that customer engagement will play a critical role in marketing strategy for brands and merchants moving forward. Forrester has proposed that customer engagement be added to the traditional marketing funnel model – on par with the “sale”.  So not only is engagement a key strategy, but a key objective along with sales, as measured by influencers/advocates that will drive another wave of sales through word-of-mouth they generate.  We are a firm believer in this updated view of the marketing model and marketing philosophy, as you will see with two products we just announced at Shop.org – BrandConnect (social listening and analytics) and Social Megaphone (Facebook Connect and Twitter “amplifiers”).  As it happens, these two areas came out to be the top two types of social media tools that brands and merchants plan to deploy within the next 12 months. It’s important to note that we didn’t have the results of the e-tailing group study when we committed to these projects, but in speaking with our customers within the last six months, it became very apparent that these social media tools would be at or close to the top. And because we make it our business to identify your needs and create solutions to address them – it sure feels good getting it right.

To download the PDF of the “Topline Findings” for the 2009 Community and Social Media Study, please click here. (We ask that you leave your contact information before you download; thank you.)