Calculating Social Commerce Performance

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?

  • What is your UGC quantity? (The number of customer reviews you have on your product pages.)
  • How effective are you at generating UGC? (Measured as the percentage of transactions that have UGC. Minimum performance is 2 percent of transactions. Best practice is 5 percent-plus of transactions.)
  • What is your UGC SKU coverage? (Minimum performance is 35 percent-plus of your core catalog.)
  • Is your content displayed correctly to drive SEO and conversion? (Must be indexed directly on your product page.)
  • What is the rate at which that UGC quantity is shared on the social web? And what is the referral traffic and resulting conversion? (The value of a review shared to Facebook is $15.72 with a $132 AOV.)

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:

    1. Just ask. Promote the areas where you’d like to build your UGC on-site and off. Include calls to participate in on-site marketing, emails, in packaging, on in-store displays, and on Facebook. On average, retailers and brands that send an automated post-transactional email asking customers to share their opinion on a product see three times as much user-generated content compared to those who don’t. Send the post-transactional email twice (two weeks apart) to secure content from those who didn’t respond to the first email. And, if you’re a multichannel retailer, send the post-transactional email to your in-store customers (transaction volume in stores significantly outpaces transaction volume online).


    2. Make it easy. Don’t make your customers work too hard. Provide clear, concise instructions on how to contribute, and functionality that helps direct the customer to produce richer, higher quality content. Ask for feedback on-site, provide guiding questions asking about specific characteristics of a product/service, and invite a contributor to include photos, videos, and related links. On Facebook, when attempting to increase fans or initiate some conversation, be clear about how fans can contribute and, if applicable, what’s in it for them.


    3. Simple sharing. Help your customers to share the content that they produce and invite others to contribute as well. On Facebook, actions such as “liking” a brand or commenting on a fan page wall are inherently shared. The challenge is figuring out how to make a seamless connection of activities on your own site and the social network. To start, experiment with the “like” button and give users the ability to endorse your products or brand with the click of a button. Then, take things a step further with Facebook Connect functionality that will provide an integrated sharing experience, so when contributing content or commenting, it’s effortless for customers to share their on-site activity with Facebook.


This column was originally published on August 9, 2011.

Related reading