Evidence that Social Media Really Does Drive Sales

The question of whether or not social media can result in sales is pretty much as old as social media itself. What we’re seeing recently is an increase in social commerce – where both aspects are able to live happily next to each other and companies can track ROI for time and money invested in social media.

For a number of reasons people now seem to be more comfortable with their social and purchasing behaviour moving closer together, as social technologies work their way into different platforms instead of just living in social networks themselves. This isn’t necessarily commerce as we know it though. The potential for social commerce to transform the way we purchase our products and services is huge. Just as consumers are now social, the products they buy and the companies they interact with have to be as well. It’s not just about having a presence on Twitter or Facebook, but using this to change the traditional purchasing process.

Sony increase sales through Twitter

Sony have proved the power of Twitter with a fairly covert social media campaign that incentivised people to purchase their products. They offered over 1,500 Twitter users the chance to build a customised Sony Vaio laptop, as well as offering them a 10% discount. And it worked, as they reported an increase in Sony Vaio sales from Twitter in that period of $1.5 million. This is a pretty impressive figure and also puts into action this new way of buying – social commerce. Sony offered their consumers a more personliased shopping experience, where they had a real influence on the end product. What I like about this campaign is its simplicity, and the clear focus on sales. While many social media efforts focus on giveaways and competitions, this had a clear sales target at the core that offered something a little bit extra to users – in the customisation of the laptop. The users on Twitter feel privileged because they’re getting something no-one else can, with an added incentive of the discount to complete the purchase.

IBM – sales in B2B

Social media in the business to business sector is rarely written about, and even less so with any evidence of ROI. This is likely due to the higher value of a sale in the b2b sector. One sale could justify hundreds of hours spent on social networks and might not prove a very interesting headline. But IBM have claimed the business case for social media. In an interview, the senior marketing manager at IBM – Ed Linde II claims that they’ve raised millions of dollars through using social media. This is achieved, he explains, by simply ‘listening for leads’. This may sound simple enough, but as the interview shows, it’s not as simple as you think. While many companies now have a permanent social media presence, the person in charge often sits in the marketing department, or customer service team. As Ed explains, IBM have a careful process of using the conversation maker to identify the potential lead and manage the social media part of the process, before the sales team start to drive the conversion.

From what I can see, not many organisations have such a clear strategy in moving a consumer from conversation to transaction. While many are fantastic at brand-building, the co-ordination of the sales team, which is perhaps even more crucial in the b2b sector, isn’t so clear. This is the most fundamental aspect of using social media to drive sales – putting the different skills you have together, and making sure there is a clear communication channel between the two. And there is a very valid use case for social media channels in the b2b sector. Sales Intelligence service Inside View recently announced that their business customers access the social intelligence tool more frequently than email. This shows how sales teams are becoming increasingly interested in social, which in itself is indicative of the huge growth in this area recently.

Foursquare & McDonalds – don’t believe the hype

As much as there are encouraging case studies that prove the point of social media driving sales, we still have a long way to go in determining the accuracy of this. And this often comes down to simply understanding social technologies. McDonalds recently made a claim that a promotion they ran on Foursqure in April had resulted in an increase of 33% in foot traffic to stores. As reported in Read Write Web, this isn’t actually the case. Rick Won, the head of social media at MdDonalds has since clarified that the increase was in fact Foursquare checkins and not footfall. You need to make sure that you understand the metrics you’re reporting on – a 33% increase in checkins is significantly different to a 33% increase in overall footfall. There’s a difference of millions of customers between the two.

Intent to purchase through social media

Encouraging sales through social media is nothing new. Dell’s big announcement that they tracked $3 million in sales through their Twitter account came over a year ago in June 2009. What we are seeing now though, is a shift in user behaviour that shows we’re now more likely to purchase through social media. This is partly due to the fact that companies are making it easier to purchase in social networks- such as Delta Airlines introducing their booking option through their Facebook page. What’s also at play however is users becoming more and more used to social media, trusting it more, and responding to ways it can enhance the purchasing process, such as social shopping or group buying.

A recent study by Comscore found that not only had online retail spending in Q1 2010 increased by 10% from the previous year, but that social had a big part to play in this. They found that users on Facebook and Twitter spent more online, in monetary terms, than average internet consumers. Heavy users of Facebook spent an average of $67 online which outperforms the average spent by an internet user which stands at approximately $50. Now you might argue that a heavy social network user is obviously going to spend more online because of the amount of time they spend on there and how comfortable they will be with the internet in general. But this only serves to prove the point of companies interacting in this space. People on social networks clearly have an intent to spend and the best thing you can do as a company is to be in front of them, encouraging them to purchase your product, albeit in the right way.

How do you do it?

Of course there’s no magic formula to driving sales through social media, it’s a combination of having a good product in the first place, using social media effectively and being able to track and optimise your click-through traffic. It also has to not be the first thing you try and do when you use social media. The trick is to make it easy for yourself. The Sony example above shows that people will be receptive for sales if there’s a good enough offering there, and incentivising your customers is one of the easiest things you can do. If I announce on Twitter that I’m thinking of buying a DVD on Amazon and I get a tweet from them that offers me a 10% discount or similar, the chances are I’ll take it. Of course as the business, you have to think about the strategy behind this and who you want to offer the discount to.

Embracing new social technologies is also key to this. Gap proved the point of this recently when they ran an offer with Groupon that offered users the chance to purchase a $50 giftcard at $25. This earned them $11 million in revenue and while you have to balance this with the potential loss of giving away $25 per user, this has generated them valuable business that might otherwise not have gone to the store, in a low-cost marketing campaign. This proves the case of making your business available through other social channels, and not always forcing the sale through your own real-estate (be it virtual or physical).

Having watched closely the trends in social commerce recently, I really believe we’re getting to a point where this is reaching the mainstream. This isn’t commerce as we currently know it, but commerce.2 which involves the social technologies and capabilities that people now come to expect from an online experience. We’re going to see plenty more case studies coming through and it’s encouraging for companies that operate in this space, as well as the individuals who are a part of the process.