Consumers Force Retailers to Adopt Social Strategy

Confusion about ROI, disagreement about performance indicators

For most web users, online shopping is not a fully social activity. A few leading-edge retailers have begun allowing transactions to occur on sites like Facebook, but social media users do not typically report starting a search for a product on social sites.

Still, they do use social networks and other tools like Twitter to discuss brands and products and to get advice and feedback from friends and family on potential purchase decisions—and retailers have noticed.

According to August 2010 data from Aberdeen Group, more than half of retailers felt they had been pushed into using social media because more consumers were using it as a primary shopping vehicle. The second-largest pressure causing them to adopt social media marketing was increased use by the competition.

Social networks are a clear winner of retailers’ attention. The top social media tools used by the retailers surveyed by Aberdeen included social networks (85%), microblogging (51%) and blogging (43%). In Q1 2010, the e-tailing group also found that social networks were the top community or social tool retailers used or planned to use in the next year; Facebook fan pages specifically were cited by 91% of respondents to that survey. Four in five used or planned to use Twitter, 72% blogs and 71% Facebook Connect. The e-tailing survey was conducted before Facebook introduced its “like” feature, which has also been widely adopted by retailers including Levi’s and Sephora.

But like many marketers in other industries, retailers don’t yet have a clear picture of what social media success will mean. The top key performance indicator respondents to Aberdeen’s survey looked at was the quality of consumer insights they gleaned from social efforts, followed closely by number of repeat visitors and quality of new sales leads.

The report noted that some disagreement on key performance indicators is to be expected, since their usefulness is likely to differ from retailer to retailer. “Retailers would be wise to explore which KPI provides the most value to the retailer, and use accordingly,” the report said.