In a previous column, I outlined the reasons why the business case for social is unclear. One of the top reasons is the confusion around which social tool to apply to achieve the desired business outcome (brand, marketing, sales, service, or insight). While many CMOs can rattle off how many Facebook fans one has, very few can cite the following stats, which drive traffic, conversion, and therefore, sales in social.
Social is the creation and exchange of user-generated content (UGC). Consumers have consistently indicated that the UGC with the greatest impact on their buying behavior is customer reviews. Therefore, social programs designed to drive sales must be fueled by customer reviews. Do you know your UGC quantity and coverage?
If you're not measuring and driving the performance to generate, display, and distribute UGC, you're not driving social commerce results.
Here's a range of UGC quantity and coverage for Internet Retailer Top 100 businesses (online revenue above $180 million).
Calculating the impact of social commerce is straightforward when you know this data. The following is an illustrative example for a business that has 100 million visits annually, 75,000 SKUs, generates content at 0.62 percent of transactions, and has 10 percent coverage. Increasing UGC generation to 5 percent of transactions, and coverage to 35 percent on the same traffic yields a $5 million increase in sales.
UGC quantity and coverage are core to social commerce performance. The following are best practices to increase your UGC quantity and coverage:
This column was originally published on August 9, 2011.
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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