Retail TouchPoints: Retailers Invest In Social Networks Despite Limited ROI
Through a special arrangement, presented here for discussion is a summary of a current article from the Retail TouchPoints website.
Retailers are banking more on the qualitative advantages of a social media presence, versus a quantitative ROI, according to The State Of Retailing Online 2011: Marketing, Social, and Mobile report conducted by Forrester Research for Shop.org. "On average, retailers report that only a small single-digit percent of sales can be attributed to social media at this juncture," the report stated. "Close to two-thirds (62 percent and 61 percent, respectively) of retailers surveyed also note that the ROI associated with social is unclear and that the primary ROI is around listening."
Results from Facebook investments, for example, rank below investments in paid search, email and affiliate marketing. The most popular social network also does not retain customers or attract new customers, survey respondents noted. Only six percent said Facebook improves the lifetime value of existing customers and one percent use it for customer acquisition. Brand building (40 percent) and listening to customers (37 percent) currently are the top two benefits of Facebook spending, according to the report.
Nevertheless, retailers are increasing their social network investments. Approximately 72 percent of retailers surveyed said they will increase spending on social networks in 2011, although SEO/natural search (75 percent) remains the top area receiving an increase in marketing spend.
Sixteen percent of retailers reported an increase in wireless/mobile marketing for 2011, although the number may be under-represented because 61 percent of retailers are increasing their investment in paid search, which also includes mobile. The tablet industry is helping to push mobile investments up, with retailers reporting that 21 percent of all mobile traffic is coming from tablets, even though the iPad was launched just one year prior to the survey.
Generally, retailers are only in the initial stages of a refined mobile strategy. Only 29 percent of retailers who have a strategy currently are working to refine it, and another 28 percent are just implementing a mobile strategy and/or starting to work on it.
The top goals for mobile are improving customer satisfaction (64 percent) and developing brand loyalty (64 percent). Just over 57 percent are hoping to improve customer acquisition with mobile and 55 percent are planning to improve customer retention.
"The data indicates that significant investments in social and mobile tactics will be in place this year," added Sucharita Mulpuru, vice president, principal analyst, Forrester Research. "Retail executives should have modest expectations for the benefits of social commerce. With regard to mobile, retailers should be working to increasingly integrate features and functionality into the physical store experience. While consumers may not be extensively exploring product information yet, basic store information, transparent pricing, and easy checkout capabilities are likely to be the most pressing opportunities for most sites in the near term."