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Study: For Retail, Social Media Doesn't Work
- by Sarah Mahoney @mahoney_sarah, February 3, 2011
For all the
buzz created by social media, a new study shows retailers may be barking up the wrong tree: ForeSee Results reports that social media drove just 5% of visitors to retail Web sites. On the other hand,
"promotional emails, search engine results, and even advertising are more influential," it says. In fact, the study found that more traditional marketing techniques not only generated more traffic, they also deliver better-quality customers. "Some of the most satisfied site visitors arrived at the site because of previous familiarity with a brand, promotional emails, word-of-mouth, and product review websites," it says in its report.
Survey respondents were asked what factors were the primary influence to a store's Web site, and 38% say it was familiarity with the brand, while 19% say it was due to promotional emails. Search engine results, word of mouth, and ads (newspaper, TV, radio or magazine) were each named by 8%. Just 5% said social media was the primary influence. Some 3% cited blogs, while 2% named both shopping comparison Web sites, and product review Web sites.
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The study uses the same methodology of the American Customer Satisfaction Index and is based on a sample of 10,000 adults.
ForeSee, based in Ann Arbor, Mich., also asked participants to name their preferred method of communication with a retailer, and overall, only 8% named social media. Mobile is even less popular, with only 5% saying they prefer to communicate that way. Emails, with 64%, were by far the most popular, followed by snail mail, 25%; Web sites, 21%; and TV, 11%.
"Every retailer should know how many customers are influenced by promotional emails, advertising on Facebook or word-of-mouth recommendations, and furthermore, they should know which group is most likely to buy," Larry Freed, President/CEO of ForeSee Results, says in the report.
"Serious thought needs to be given to finding out whether social media is worth the investment for their business, and then if the answer is yes, they need to make the most of it by making sure that interactions on social media meet the needs and expectations of customers. Otherwise, the effort is wasted and could even be detrimental to the business."
15 comments about "Study: For Retail, Social Media Doesn't Work ".
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I think this study offer interesting results, however i don't think retailers should count Social Media out of their marketing campaign, as i feel it will continue to grow in 2011. I think that as long as companies create EFFECTIVE and well planned out social media campaigns they will see the results they are hoping for. Like any under developed plan, a poor social media strategy will yield poor results.
Social media reaches a very narrow audience. Somehow social media advocates seem to often want to ignore this idea with the herd theory: "everybody's on social" and you should be too. But, it isn't true.
However, within that disclaimer, social reach out can be very effective for that narrow audience. So I believe retail oriented companies need to keep social media active.
But it is striking that traditional media is measured to drive both more consumers and higher value consumers. This is consistent with Zappo's finding that if they sent a physical printed catalog, consumers spent more money.
That's quite an erroneous headline to say that "Social Media Doesn't Work" for Retail. That's like saying TV doesn't work for certain industries or newspaper doesn't work. It might not work to drive traffic, but that's not the same as failing to work period. Social media can work for retail in many ways, just as other media work to drive traffic. It's a tool. It has to be used for the right purpose and used effectively. You can try to use a hammer to drill a hole, but it's best used to pound nail.
If Social was TV... I love Lucy would not have aired yet. We are still so early... no one has figured out... especially retail... how to connect and build relationships. The tone of this article makes it feel like we should just chuck it. What baseline do they have to make these statements? Did they do this study last year, the year before... how much has opinion shifted over that time... or is it the first study? To start this as a yearly study to measure shift in attitudes over the next 10 years, now that might be helpful.
Bottom line is, you need to find out what your customers prefer and use the media tools that work for them. If you speak to them in the right way, deliver the messages that they want to hear in a form that they're receptive to, you'll drive sales.
Does Sarah want to go on the record with a statement like that or was it just a way of getting me to read the article? Favorite part there is "whether it is worth the investment?" What n investment? Most companies social media budget is probably less than 1/5th of their marketing budget. I can guarantee you that if they if they spend the time, it will work.
No methodology, no understanding of the type and duration of social efforts in the study, nothing that would even warrant this type of headline. This is shoddy journalism. One study without any understanding of its marketing validity, its strategy, its execution and boom ... social does not work for retail. The truth is that most companies come from a PR approach which is is incorrect, do not staff it properly with people who understand marketing and think any 22 year old can do this ... wrong, wrong. wrong.
Social works fine if you know what you are doing, do not think it is PR and do it for a long enough duration. It is very tedious work that involves understanding how the social networks actually work, understanding how to build permanent relationships with the correct bloggers for your brand and most of all having genuine, objective information currency that intenders in the purchase mode are seeking. Also you need smart and brave clients who are willing to put their brands out there because they have the confidence to know they work well vs. the competition.
Saying social does not work is saying word-of-mouth does not work. We have plenty of evidence that it works, there is plenty of data that shows how it effects consumer behavior and there is even more data that show its reach. We can even calculate an ROI.
Here's the catch ... you need to know marketing and advertising, not just technology. It is all about consumer behavior, competitive analysis, understanding the category landscape and segmentation.
It does not work because most do not understand the discipline nor put in the time. Reporting on one study is fine ... reaching a definite conclusion is absurd.
Okay so you wrote this to get us to think.
Retailers who are not using social media to grow their businesses are really in the dark ages. They're also guaranteeing their exit strategy from their business since the generation Y doesn't know life before Facebook. Why fight it--it's here to stay.
The big problem is their lack of knowledge on how to use it and what to post. I heard today that Super Bowl advertisers are relying on social media types to send the funniest and best of the commercial viral. I noticed our Magazine Editor @ Fabulous Floors Magazine has just posted her favorite upcoming Super Bowl commercial--already. Combining traditional with social media will get retailers 'more bang for the buck.'
It's just new, retailers need a strategy and to keep at it. Like anything else, it needs focus and consistency. Someone said, "consistency is better than good salesmanship.'
Thanks for inspiring me to post!
nice headline. Social media as a stand alone discipline won't work but it's very effective as part of an integrated marketing plan that also includes digital, advertising, blogger relations, pr, etc.
Excellent Sarah! (and ForeSee). You've got the social media "gurus" apoplectic. "oh yeah, wait til next year!"
They sound like Jets fans...
To add to what Margaret, Mark, Auriette & S Gano say - Social Media Absolutely Works for retail, but the key is to be strategic and utilize the strengths of the platform (FB, Twitter, Amazon, etc.) to connect directly with customers. One tactic involves focusing on your Brand Advocates (the people who proactively recommend your brand or products without being paid to do so) - because after all, people trust people the most (as opposed to your company's marketing department) and that doesn't stop with purchase decisions (retail included).
This article doesn't mention the strength of direct mail. It still is powerful. Look at the amount of mailings Macys and Pennys still do. On the computer all day - I need a break. Looking through a traditional catalog is relaxing and quicker to scan through than a website. With the catalog I am exposed to products I wasn't shopping for but could become interested if the offer is right.
I think we need to become better content providers with social media, not just take the coupon of the week and post it as a status update.
Nowhere in the ForeSee study does its author, Larry Freed, suggest retailers are “barking up the wrong tree” or that “social media doesn’t work.” He merely suggests that marketing strategists might want to look past the “breathlessly-documented rise in social media activity and usage” to the hard sales numbers.
Seemingly damning is the stat that only 5% of the visitors to retail Web sites during the holiday season said they were influenced shop through “interaction on a social network.”
But this conclusion is based on a very pinched definition of social, one that does not include blogs or discussions forums, product review websites, word-of-mouth recommendations, search engine results or simple familiarity with the brand, all of which I’d say are either truly social (like blogs) or influenced by social.
This conclusion also ignores whatever might be made of the fact that while some retailers, like J.Jill with less than a 1,000 Likers, are having a hard time gaining traction in the medium, at least 25 retailers attracted more than one-million Likers to their Facebook streams in 2010.
I strongly encourage you if you are interested to download the ForeSee study and read it for yourself. I also encourage you to regularly visit www.mlinc.com for updates on the growth and impact of marketing by retailers through their owned media channels – stores, email lists, events and Facebook.
Finally, please remember that the social Web isn’t Facebook, Twitter, FourSquare, Digg and the also-rans. The social Web is the Web.
Two things:
1) Is traffic to a brand's web site really the best measurement of success? that would be one limitation IMO of this study.
2) Similar to that, I would argue that social may be more about the emotional side of brand engagement, not the rational.