Calculating the Value of a Review Shared on 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.
    • Is Google Taking Your Traffic? Google is the consumers’ choice when searching for information. Will Google be the consumers’ choice when shopping?
  • 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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