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Social: Sales or Snake Oil?

  |  July 12, 2011   |  Comments

Some key insights and data that provide a balanced perspective regarding the business case for social.

The debate around the business case for social continues to rage. Respectable business figures are arguing both sides of the issue with unbridled passion.

While some of these positions are provocative and garner a lot of attention, they're not terribly useful for informing good decision making, as they largely miss the kind of key insights and data that provide a balanced perspective.

In my previous columns, I laid out a practical approach and data supporting the business case for using social to drive sales. In this column, I expand the frame to include an applied framework for brand, marketing, customer service, and insights.

The need for such a discussion became apparent during a recent reading of Forrester Analyst Sucharita Mulpuru's "State of Retailing Online 2011" study. There were two statistics that stayed with me because they indicate widely held misperceptions about the value of social. In the study, when online retailers were asked, "To what extent do you agree with the following statements?"

  • 62 percent responded the returns on social marketing were unclear
  • 68 percent responded that if Facebook went away tomorrow, it would not adversely affect web sales.

These responses are due in large part to poor strategies, a lack of programming coordination, and a failure to capture real business return. I'm betting Amazon and eBay were not included in this study, given that in October 2010, they received 7.7 percent and 4.7 percent of traffic from Facebook, respectively. Even if that traffic converted at 25 percent of their conversion rate (but I suspect it was higher), that's real money to be plugged into a business case model!

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The reasons the business case for social is unclear include:

  • Marketers are overly focused on social media, rather than social commerce. In the executive suite, a business case for media is not credible; the business case for sales is very credible.
  • CMOs are too enamored with ad agency-driven programs. Ad agencies are more adept at brand building and marketing communications than driving sales.
  • No one in the organization is accountable for social business performance, and no formal coordination exists across brand marketing, corporate communication, and the online division of a multichannel effort. Therefore, no coordinated mechanism for measurement and learning across social programming exists.
  • Resources are not deliberately applied in a structured way to achieve a strategic outcome. No executive can tell a cohesive, fact-based story.
  • Confusion exists around which social tool to apply to achieve the desired outcome. The organization is not operating within a framework that drives to the desired business outcome.

The organizations that are getting real business results from social have made meaningful traction to solve these key issues.

I've introduced two key frameworks that have been adopted by executives at financial services, media, retail, travel, B2B, and branded manufacturing companies. These frameworks address all the key issues listed above.

  • The "Themes in Social" framework (see below). Deconstructing "social" into the core themes demystifies an overly broad category and structures the approach to deriving business value.
  • The "Social Programming" framework. This framework, which I'll publish in a future post, applies these themes to actionable, in-market programming, with examples of who is doing it well.

In summary, a business case in social is emerging. I advise executives to:

  1. Be coordinated. Use a framework to coordinate the conversation and programming across the range of groups internally that are deploying resources against "social." One framework that resonates across industries and functions is included above.
  2. Be deliberate. Recognize that there are many social programs that can be deployed against a range of brand, marketing, sales, customer service, and insights outcomes. Deploy the right program for the right outcome.
  3. Learn and adjust. It is early days. Executives are testing a wide range of programming, which I encourage. Test and learn in a deliberate way such that patterns of performance are seen. Make adjustments by stopping what's not working, starting where you haven't tested, and continuing where performance results emerge - the basic input required for a business case.

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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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