Social Media Primarily Attracting Loyal Customers
By Tom Ryan
A new study confirms that consumers are increasingly connecting
with their favorite online retailers through social media sites, particularly
Facebook. But most of those "friending" or "following" online retailers are
already loyal customers.
The study of nearly 10,000 visitors to the biggest
e-retail websites in the U.S. by ForeSee Results found that 69 percent of online
shoppers use social media sites. Of those active with social media, 56 percent
choose to proactively interact with companies on social sites by "friending"
or "following" at least one retailer. Broken down further, 61 percent of online
shoppers who interact with companies on social media sites "friend" or "follow"
fewer than five companies and nearly one-fifth of social media users interact
with 11 or more retailers on social sites.
Of those who "friend" or "follow"
companies, 49 percent use it to learn about special deals and options, 45 percent
to learn about products, and only five percent for customer support.
Not surprisingly,
Facebook ranked as the dominant social media medium. Of those that used social
websites regularly, 81 percent said they use Facebook; 31 percent, YouTube;
22 percent, MySpace; and 16 percent, Twitter.
But in an "an unofficial look"
at the Facebook pages of the Top 100 online retailers (based on sales volume),
the study concluded that one-quarter do not have any formal Facebook presence
and another quarter have fewer than 10,000 fans.
In the report, Kevin Ertell,
vice president of retail strategy, ForeSee Results, wrote that the highest
levels of satisfaction with retailers’ own sites were found among shoppers
who interacted on the largest numbers of social media sites. Site visitors
who also interact with a company on a social media site are more satisfied,
more committed to the brand, and more likely to make future purchases from
that company. But Mr. Ertell noted this presents a challenge since these social
sites are predominantly reaching loyal customers.
"This is a bit of a chicken-and-egg
phenomenon," said Mr. Ertell. "It is likely that the customers who are more
satisfied and loyal to begin with are the ones who will friend us on Facebook
or subscribe to our YouTube channels. However, research shows that when retailers
provide rewarding social media experiences, our customers become even more
satisfied and loyal."
Discussion
Questions: Should social media tools such as Facebook be predominantly seen
as a way to reinforce loyalty with existing customers? What’s
the opportunity around social media in reaching new customers?
These forms of interaction will only grow as young people start families and evolve their shopping patterns while continuing to use Facebook, etc. Retailers who are primarily using these to dialogue with existing customers should be looking for creative ways to expand the base to new customers that they can then maintain. This type of evolution has historic precedent from window signs to flyers to newspaper ads to TV & Radio to in store ads, etc. Social media is the next step.
The opportunity in social media is loyal customers talking about your brand, the basics of word-of-mouth. What seems to be missing in most of the discussions is social media covers the top 10% of people raving about your brand as well as the lower 10% of people raging against your brand. That middle 80% is what gets everyone excited trying to prove how great or rotten it is for ROI; I suspect the truth is somewhere in the middle and it’s very early to say what that is–despite such “studies.”
Well, certainly it is important to understand which of your customers are using social channels. If it turns out that they are already “fans,” then you need to use that medium to reinforce that. The worst thing you could do would be to treat them as fresh new customers that know nothing about the brand, or relentlessly sell in those channels without acknowledging the social/community aspects of what those channels enable.
But I would shy away from blanket statements–how consumers choose to engage with one retailer isn’t necessarily a guarantee for how they engage with all retailers. That’s the beauty of customer centricity. What’s right for you isn’t what your competitors are doing, it’s what your customers are demanding. It’s how you respond to those demands that will make the difference, these days.
This is such a relevant topic. What if marketers just owned the assumption as truth (social media is most powerful as a retention and engagement tool with existing customers), then went on to focus relentlessly on making that aspect the best it can be? I think that would cut out a lot of confusion and pay off big time. I’ve been talking about the dynamic of “cyberpolarization” quite a bit lately: the fact that social media and the Internet don’t foster diversity of thought nearly as much as they reinforce existing thought. Folks used to have to get up, get dressed and get to a meeting in order to join in discussions with other feminists, moderates or collectors of Mickey Mouse paraphernalia; these days, one can hang with thousands of like-minded friends sitting at home in house shoes…and that’s exactly what they love doing. Exploring new brands? Not so much.
Back on terra firma…Walmart is one retailer that has demonstrated an understanding of how this can be leveraged. A while back, they decided to put their “loyalist” customers and moms first under the premise that, until she was delighted, they didn’t have any business focusing on anyone else. How narrow when there are so many other options, right?
Perhaps leveraging social media, like retail, isn’t as complicated as it’s made it out to be.
Consumer fan communities on Facebook are essential sources for brands to understand why consumers have loyalty, and to explore what’s relevant today and going forward. They should be seen as the ultimate roots of the kind of involvement consumers are seeking with brands. To me, they represent the ultimate opportunity to listen, to interact and to respond appropriately in the broader marketplace.
Social Media is of course useful, but the most powerful media which increases sales is retailers using their stores as their #1 Media.
For every study, there is almost always an opposite study. An AdAge article I read recently says that an Edelman study revealed, “In some cases, social networks themselves may be contributing to the decline in trust. Platforms such as Facebook and Twitter have allowed people to maintain larger circles of casual associates, which may be diluting the credibility of peer-to-peer networks. In short, the more acquaintances a person has, the harder it can be to trust him or her. Mr. Edelman believes the Facebook component has “absolutely” played a role in diluting trust levels.”
First and foremost, social media should be used to enforce loyalty. Its secondary purpose might be to attract new customers, but I think there are other forms of engagement that do that better.
There seems to be a primary opportunity for retailers to engage and retain loyal shoppers with social media. Consumers want to tell what they like, want more of and very importantly, how the use products. There is a lot of rich information available from your core shoppers, who want to participate and develop their shopping experience with you.
If you looked out the front doors of your store one day and there were 10,000 people in the parking lot holding up signs that said “we love you,” would your first instinct be to determine who is a loyal and who isn’t? Maybe it would be good enough to know there’s 10,000 people in your parking lot.
As soon as we turn social media into a scientific exercise, we’ve then lost the point.
The challenge with social media is defining a real strategy and then executing it. There are some companies, both retail and CPG that do not dedicate the necessary resources to analyze the social media outlet activity. Facebook, Twitter and YouTube aren’t the only outlets of value. There are dozens of sites that may have far more relevance to your customer audience. Also, don’t limit discussion, and ensure that you employ competent social media managers to respond to negative posts on the Web.
Without an entire web strategy, simply creating a Facebook, et al page for connection could do more damage than good. With a strategy, dependent upon what that is, it could be a significant connection to your customers. However, that is all that it is–a connection–good or bad.
I maintain that the greatest opportunity for creation of and maintaining loyalty is the customer experience. Just as with an in-store experience or a web based experience, delivering on your promises is the greatest leverage towards customer loyalty.
It must be kept in mind that the customer owns their loyalty, not the retailer. They express that loyalty not by being your ‘friend’ on Facebook but by their continued purchases.
As Toyota is learning, they don’t own their customers’ loyalty. They had earned it without question. However, the experiences of their customers now will determine if they can maintain it. No matter how many Facebook friends they have today, the numbers that return to their showrooms and how they deal with restoring trust with their customers experience will determine on-going loyalty.
Certainly, maintaining a connection with your customers is good. How you execute daily–day in, day out–determines whether or not they return again and again. If you fail to deliver experience, a cool Facebook page and tweets might last even less time than it took for these forms of media to transform how we think. You can tell customers anything you’d like in any form you choose. Telling them so doesn’t create or maintain loyalty. Delivering does. Nevertheless, carrying your message is important. Yet, care in how that is done is critical.
There is a degree of self-selection taking place as those active with social media are likely to seek out the brands they frequent and prefer.
Rather than try to provoke a conclusion from this, e.g. “is social media only for loyalty customers,” we should be ticking the box, marking the card of retailers to say ‘yes, we’ve got a presence out there and our most ardent customers have noticed and have taken part.”
I would expect this to be a pattern to occur. The challenge for retailers is to deliver messaging and content through their SM sites that further engage the loyalists but also give newbies a reason to drop by.
When Mr. Ertell says “Research shows that when retailers provide rewarding social media experiences, our customers become even more satisfied and loyal,” he might want to add that retailers should “reward” customers for participating in the online dialogue.
There is evidence of this with Foursquare & Twitter as each delivering value to customers within a customer loyalty program construct to reward customers and build dialogue.