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Calculating the Value of a Review Shared on Facebook

  |  April 19, 2011   |  Comments

Three steps for increasing the number of "shares" to Facebook.

When Facebook and commerce are in the same sentence, passions ignite! Most are provocative opinions (very good for getting attention). However, most of these opinions fall short, missing key insights and data (a balanced perspective that informs good decision making).

In my three previous columns, I laid out a practical approach, and data, taking the position that the case for commerce is emerging: Traffic x Conversion x Average order sale = Sales.

I have more data to share that contributes to the emerging case for commerce.

The value of a customer review shared on Facebook is $15.72. Below is the calculation detail.

facebook-referral

Download an interactive version of this calculator and plug in your own numbers.

The Case for Commerce Is Emerging

A Forrester report, "Will Facebook Ever Drive eCommerce?" by Sucharita Mulpuru, a woman with deep expertise and someone I very much respect, provides an interesting perspective. She rightly points out bringing Facebook into the e-commerce experience yields results as evidenced by Amazon, PowerReviews, Quorus, Fluid, TurnTo, and others referenced in her report. However (and I know she appreciates a spirited, supported debate), I believe she missed key points, framed the analysis within a declining model (overreliance on Google traffic), and omitted the data that demonstrates there are elements of an emerging case for commerce. The New York Times and The Wall Street Journal also missed very key points.

In addition to points made in my earlier three columns, consider this:

Facebook is a net new source of traffic.

  • The data around referral traffic from Facebook has been reported on since last August. All are missing this critical point. Every site wants traffic and is overreliant on Google. Most are struggling to increase efficacy of affiliate, comp shop, and email programs. Even if that traffic referred from Facebook converts at a lower rate than Google, it is a net new source of traffic and therefore sales. Comparing Facebook only in the context of Google traffic and performance is a false positive. It's an and not an or. Sucharita misses this critical point. With Google occupying more real estate on the SERP and taking commerce traffic that used to go to retail sites and directing it to its shopping destination, Google Shopping, retailers need this net new source of traffic.
  • Amazon received 7.7 percent and eBay received 4.7 percent of traffic referred from Facebook in October 2010. Even if that traffic converted at 25 percent of their conversion rate (but I suspect it was higher), that's real money.

Customer Reviews Are Driving Referral Traffic and Sales

The following have published the sales value of a "share" to Facebook:

  • Eventbrite: Every link shared on Facebook generated $2.52 in ticket sales.
  • Ticketmaster: Every time a user posted in their newsfeed that they bought a ticket from Ticketmaster, friends spent an additional $5.30 on Ticketmaster (presumably for the same event).
  • Our experience (statistically significant sample of 1,100 U.S. clients): When a customer review is shared, $15.72 sales is generated.

Some of the other data revealed in our analysis of reviews and Facebook:

Steps to Increase the Number of "Shares" to Facebook

  1. Generate more reviews that then can be shared:
    • Post-purchase emails represent 90+ percent of customer review generation. Sending a second post-purchase email to non-responders increases review quantity (as CSN is doing).
    • A/B test the post-purchase email to get increased email open rate and review submissions (as Gap, Room & Board, Evo, and Onlineshoes.com are doing).
    • Solicit reviews from in-store purchasers (as Staples, Room & Board, Ulta, and Borders are doing).
    • Lower the barriers to writing a review by having an easy-to-start-and-complete Write a Review form. (Please don't make registered customers complete an additional login to write a review!)
  2. Make it easy for your customers to share while in the write-a-review process, on a product page, or on social networks.
  3. Make it easier for your consumers to engage at deeper levels with you, increasing the rate at which they share. Consumers who use Facebook Connect share their reviews on Facebook five times more than consumers who do not.

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ABOUT THE AUTHOR

Cathy Halligan

Cathy has over 20 years of experience in both multichannel and online retail and a deep understanding of consumer needs and goals. Cathy's proven track record spans a range of industries and companies, from start-up ventures to multibillion dollar operations. Cathy is currently a Board Member at Ulta Beauty (ULTA), the largest beauty retailer that provides one-stop shopping for prestige, mass, and salon products and salon services in the United States. She has served as SVP, marketing & sales at PowerReviews, the world's most widely deployed social commerce platform, where she was responsible for overseeing the company's rapid customer and revenue growth. Prior to PowerReviews, Cathy held executive-level positions at Walmart: chief marketing officer Walmart.com, vice president of market development, global e-commerce, and vice president of product management and multichannel integration. Ms. Halligan has also held executive positions with leading retailers Williams-Sonoma, Gymboree, and Blue Nile, and was an associate partner at Prophet, a leading management consulting firm. She started her career as a marketing coordinator at Lands' End.

For real-time social commerce news and updates, follow Cathy on Twitter at @CathyHalligan.

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