Commentary

Monetizing Social Media Is About Targeting First, Everything Else Second

by Ryan Deutsch , November 27, 2009

About 60 days ago, my team was working on an email program with an online retailer focused on expanding participation in their loyalty program. Unlike previous programs, the call to action of this email was not to "click a link" and join the loyalty program; rather; it was to share the experience of the loyalty program with their friends and encourage them to join as well.

This was no simple share-to-social initiative. The retailer created several incentives to motivate sharing behavior. Next, they tracked the number of invitations each customer sent to their friends and attributed those that actually "subscribed" to the loyalty program back to the initial inviter.

The results far surpassed previous email campaigns; in fact, the social program described above generated three times the number of subscribers than the previously launched un-socialized programs. Major results included:

· 1 new member for every 1.8 peer-to-peer invitations

· 10% of new members went on to purchase

· 4.3 emails sent, on average, by each influencer

While the program clearly extended reach and subscriptions to the loyalty program, the team believed there was an opportunity for optimization -- and implemented two minor yet critical tweaks, both focused on enhanced targeting of the socialized campaign.

The company looked at their loyalty program members and created a segment based on engagement metrics: for example, how long a subscriber was part of the loyalty program. Targeting based on engagement is not a new concept to email marketers. Transactional email programs garner a higher response rate than broadcast campaigns do, because they target the customer at the point of maximum engagement: during a purchase cycle or some other lifecycle activity.

In addition to developing targets based on engagement, the company did more analysis to identify "Super Influencers" within their recipient lists. Super Influencers in this case are customers who already have a defined Web presence within a specific vertical.

In the retail space, there are a number of "Discount Bloggers." These bloggers aggregate special offers on blogs or personal Websites. These customers can have a huge impact on campaign performance, since they already have a following relevant to a specific space with people looking for new content or the next great deal. The identified "Super Influencers" were added to the segment and the optimized campaign was ready to go.

The email program was launched to the new, targeted segment with the same offer and creative. The result? The targeting impact was off the charts.

· 420% Increase in loyalty member subscriptions from the initial campaign

· 326% Increase in purchase conversions from the initial campaign

· Thousands of additional subscribers and hundreds of new purchases

The lesson is a simple one: Do not abandon the best practices you have grown to rely on when developing programs in the social space. The same email strategies you have been applying for years need to be relied upon as you activate new channels.

At the same time, it is critical to understand that not all customers are created equal on the social Web. There is a big difference in extended reach between me posting an offer on my Facebook page and a serious blogger embedding the offer for their followers to take action on.

4 comments about "Monetizing Social Media Is About Targeting First, Everything Else Second".

Check to receive email when comments are posted.

Paul Miller, November 27, 2009 at 1:14 p.m.
Ryan,
I occasionally scan these articles and read this one. Please accept my comments as collegial and respectful.
This article reported on an email campaign that targeted heavy loyalty program users instead of every member. It was very successful, and the article relays a good lesson.

Here are a few comments. (I admit to trying to be a bit funny about it - but it illustrates the point.)
First, there was something before email. It was called "mail". Sometimes it was called "catalog", or "coupon" mailed by a local retailer. Or, people used to cut coupons out of "newspapers". Sometimes even, it was on "broadcast" media. Like Oxy Clean.
The notions this article mentions are basic as I assume it is meant to be. There is a new generation that is learning the basics, and that's where we all started.
Let me add a bit of perspective. PCs have been around about 30 years, and mainframes before that. Analysis software for these uses has been around since - at least before 1968 when SPSS was released. Before that, people used FORTRAN and similar languages to do the same things. Even in the 40s, the first electronic computers were built, in part, to figure out the trajectory of an artillery shell - not an easy calculation. I happened to use SPSS at college and at work at times, (IBM just bought it) though you may know of SAS which is now more popular for certain reasons. Even in those times of green screens, people understood this stuff and far more.
I'll stretch my neck a bit - and say that Montgomery Ward, Sears, and Penny’s had this stuff figured out in the late 1800s. They had clerks that analyzed index cards, and used their common sense. Was it social marketing? Sure - people in small towns that used the catalogs used to talk with each other - in person! They know that some people talk them up more than they talk others.
What this article is saying would be in a 30-year-old direct marketing book on about the fifth page - after they defined targeting and samples. (Sorry, I am exaggerating a bit.)

But now we are in the age of the Internet - THE BASIC LAWS OF ARITHMETIC AND HUMAN BEHAVIOR ARE REVELATIONS THAT HAVE NOT CHANGED!
In an age where we now talk about pebibits (1,000,000,000,000,000 bits) i.e. - there is so much data that can be stored and easily analyzed that you don't even need a statistical sample - it might be good to have context around this article!
Thanks Ryan, and good job on relaying the important basics.
Reply

Sage Molotov from Sage Molotov Inc., November 27, 2009 at 11:51 p.m.

Holy Crap, that was brilliant....

Ryan Deutsch, November 28, 2009 at 8:52 a.m.

Paul thanks for the comments and yes, as the title would suggest, the purpose of the article is to make certain that marketers remember that with any new marketing channel, the basics still drive success. As far as the content “appearing in a 30 year old direct marketing book” I may have down-played what drove these results for the brand. First, the entire direct program was focused on driving current customers to recruit customers on the brands behalf. While I appreciate your "small town" catalogue example new channels based on Web 2.0 technologies (you may have heard of them, Social networks and Blogs for example) have enabled referral marketing to scale at a rate never before seen. The campaign outlined here used specific tools to facilitate, track and reward this sharing activity, all in real time. Again, marketing tool now available that have increased a brand opportunity to leverage Word of Mouth. My point here is that the approach to this campaign, using social networks and blogs to scale a direct marketing program in real time in a predictable and accountable way is NEW. I will give you that the concept of word of mouth is not but many marketing innovations take an old model and make it better. The issue many brands are having is that they are jumping into social channels and pretending the basics don't matter. The case study presented here is simply a reminder that they do, just like they applied to direct mail, email and smoke signals, if you care to go back that far.

david Baker from RedPill, December 1, 2009 at 3:55 p.m.

nice piece Ryan!!