Using Social Rewards To Monetize The Social Web
Retailers deserve more from social media. Although this new tool has had a profound impact on communications and collaboration between merchants and customers, it has done little to actually drive real incremental sales for serious e-commerce companies. But this can change.
There is a way retailers can use the social Web to drive meaningful sales and discover relevant metrics. However, doing so requires them to adopt a new vision –– one that is low-cost, high-impact and puts retailers squarely in the driver’s seat. This vision -- my vision -- is social rewards.
What Are Social Rewards?
The social rewards approach is simple –– and yet it’s profound, because it takes into account on a microscopic level what makes the Age of Social different. In the most basic sense, social rewards are loyalty rewards to customers -- and their friends.
Those last three words are extremely important: With social rewards, customers receive a reward for making an online purchase, and so does their social group. It may sound simple, but it merges the promise of the social Web with the proven value of customer rewards. And as a result, it drives real, untapped revenue.
How Can Social Rewards Unlock Incremental Revenue?
Right now, retailers spend millions on Facebook ads and provide customers with platforms to share purchases on social media sites. But this approach has not worked, at least financially. In fact, the “social media” portion of the marketing budget bleeds red because it is a money-loser for most merchants. As a result, many retailers have concluded that social media is merely another advertising channel or daily deal platform. But this isn’t true.
The social Web –– the universe of interconnected groups online –– can unlock incredible value, if only retailers get bolder and more creative with it. At its core, the social rewards strategy involves rewarding the basic unit of this social Web –– networks of connected people –– rather than just individual customers.
With this fresh approach, retailers reward customers who make a purchase and reward their network of friends –– even if the friends aren’t yet loyal customers. Doing so creates a domino effect because of this simple fact: The most accurate predictor of a person’s likelihood to buy a product or service is whether or not that person’s friends have purchased it.
This fact allows merchants to increase their customer base and expand their sales pipeline with social rewards because the merchants tap a pre-defined psychographic group that already has the statistically highest chance of making a purchase: their customers’ friends. And here’s how it works: Jane Customer decides to make a purchase. The merchant, in turn, provides her with points or some other incentive to make additional purchases. But here’s the twist: the merchant also rewards Jane’s friends with points and incentives to make purchases for themselves.
And what happens next is like magic: Retailers discover that Jane’s friends are now making purchases from them because her friends are taking advantage of rewards incentives they didn’t originally earn. And as a result, the merchant grows a new revenue stream and customer base -- loyal social rewards customers who make purchases using group rewards.
How Can Social Rewards Provide Real Metrics?
But not only do retailers drive incremental sales with this approach, they can utilize social rewards to deliver genuine metrics and valuable consumer insights. And this is huge. Today, most retailers can’t articulate what relevant insights they gain from their current use of sites like Facebook and Twitter aside from the number of “likes” and “tweets” they garner. This is not enough and simply doesn’t make sense, especially considering all of the money these merchants are spending on these sites.
But what’s worse is that this leaves retailers with the impression that the social web can’t drive meaningful revenue or deliver relevant sales data. It can. If merchants decide to employ a social rewards strategy, they will be empowered to define their own metrics, develop their own custom analytics and be in the driver’s seat in the social web for the first time. For example, with social rewards metrics, retailers can determine what percentage of a loyal customer’s friends make purchases after they have been offered the incentive. The merchants can also tweak discount levels and incentives to find out what it takes to drive additional sales.
Any way you slice it, though, retailers who use a social rewards strategy will have real data and sales insights to work with, which is far better and more relevant than tallying “likes” and “tweets” that don’t mean anything when it comes to driving meaningful sales.
What’s the Bottom Line on Social Rewards?
So with social rewards, merchants now have a golden opportunity to gain insights and use new strategies to monetize the as-yet-unrealized financial potential of the social Web. They can reach potential customers who are statistically most likely to buy because their friends have already made purchases as loyal customers, and they can generate real data that can be acted upon to refine marketing approaches.
This alone will do more to monetize the social Web than current strategies that merchants are employing -- but to realize all of these benefits, retailers must have the courage and creativity to move beyond “like” and take the next step into the Age of Social. Let’s hope that they do.