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Driving Revenue with Social Media: The Importance of Social Endorsement
Posted on October 22nd 2012
The proliferation of social media
It’s no secret that if you’re reading this post, your life, as well as the lives of those around you, has likely been heavily influenced by social media; according to Pew Research, 65% of online adults now use social media for personal and professional use. People use social networks for everything from catching up with friends, to checking news, to learning about companies that interest them. In turn, brands follow their customers; The Harvard Business Review found that 79% of companies currently use or are planning to use social media.
Despite the proliferation of social media usage, companies have not even begun to tap into its full potential. Gartner predicts that global social media revenues will reach $16.9 billion in 2012, with the majority of this revenue coming from advertising. Additionally, The McKinsey Global Institute’s recent study on social media valuated the potential of social media at $900 billion-$1.3 trillion globally. In contrast, a recent eMarketer white paper found that only 20% of marketers believed that social media produced a quantifiable ROI in 2011.
For those marketers seeking social ROI, social endorsement is a powerful tool to jumpstart their revenue stream. All marketers can help drive customers to share purchases, ultimately leading to a cost-effective increase in organic sales, as outlined in the latest Moontoast white paper: 6 Best Practices to Get the Most from Your Facebook Presence.
Social endorsements: Creating social ROI in the present
While many variables go into creating value through social media, social endorsements - fans openly promoting products to their social networks -- represent a powerful tool for generating direct, measurable ROI.
Ecommerce store Zappos is among the leaders, taking advantage of social endorsement. The company allows buyers to easily share their purchases across Facebook, Twitter, and Pinterest, with impressive results across social networks. For each ‘Share’, Zappos earns $33.66 on Twitter, $2.08 on Facebook, and $0.75 on Pinterest in incremental revenue.
To top that, Zappos leverages social media with sites like Pinpointing, which utilizes Pinterest users’ posts to make shopping recommendations for them. This initiative, combined with encouraging and facilitating social sharing, allows savvy companies to use social media to generate both directly quantifiable ROI and more comprehensive ROF (Return on Fan).
Image 1: Zappos combines social referrals with social recommendations to drive revenue
Driving social endorsements
Adding a large, easily seen ‘Share’ button after completing a transaction is a great way to remind fans to share with their friends. Simply posting a call to action (CTA) asking fans to share their transaction also increases their likelihood of sharing.
Image 2: Posting a call to action is the first and most important step for increasing social endorsements
In addition to clear CTAs, further incentives can help convince consumers of the worth of sharing their purchases. Promotions may include basic referral bonuses such as:
- X% off next order
- Free shipping on the current order for clicking ‘Share’ at checkout
- $X off coupon
- Free gift for ‘Sharing’
These referrals may prove very effective, but be sure not to get caught up in the excitement of heavily discounted referral sales; after all, your net revenue still needs to result in a profit!
Image 3: Living Social offers performance-based incentives, offering great value for successful ‘Shares’
For more sophisticated performance-based incentives, download the Moontoast white paper, 6 Best Practices to Get the Most from Your Facebook Presence.
The benefits of Social Endorsement: Present and future
Social endorsement exists as a way for companies to drive tangible revenue using social media, and companies like Zappos and Living Social provide examples of ways to successfully drive social endorsement in the present.
Just as current social endorsement practices represent a step up for companies struggling to achieve social media ROI, future social endorsement practices demonstrate even more ambitious possibilities. New mobile provider Solavei will offer customers a recurring $20 monthly revenue for every three users they successfully refer to Solavei, potentially creating an entire consumer sales force and paying them a fraction of the lifetime value of individuals they convert to the mobile provider. While we won’t see the results of this initiative until after Solavei’s official launch on September 21st, the company represents a bold new way to take social endorsements to the next level.
Achieving social media ROI can be easy and cost effective
If your company doesn’t currently use social endorsements to drive revenue, there is no better time to start than now! Setting up a call to action and implementing basic referral incentives is affordable, easy, and effective. For those looking for a clear, actionable roadmap to building social endorsement, download our complimentary industry white paper, 6 Best Practices to Get the Most from Your Facebook Presence.
Please do not be shy – share your successes, trials and errors with social endorsement – comment on this post, Twitter, or Facebook.