Why You Can’t Sell with Social Media (And What to Do Instead)

FixCourse
Brad Smith Partner, Codeless Interactive, LLC

Posted on September 24th 2012

Why You Can’t Sell with Social Media (And What to Do Instead)

Social media can give your company many different benefits.

It can increase awareness and introduce you to new people. It can be used to help customer service, and follow-up with disgruntled customers. It can also be used to get the elusive, but effective word-of-mouth marketing.

But it can’t sell. At least, that’s what people say.

Market research giants Forrester Research and GSI Commerce looked at online retailer data in 2010. They were trying to determine how many actual retail sales came from social media visits.

The results aren’t pretty.

Less than 2% of all orders were from social networking shoppers. (Conversely, search and email marketing converted the most).

The most common objection to using social media is, “What’s the return-on-investment?”. And when you try to come up with an ROI, you get results like these (dismal, to say the least).

So what’s the solution? Give up entirely? Or should you just look a little more closely...

 

 

How a Toy Maker Used Social Media to Increase Revenue by 300%

The direct ROI of social media is usually dismal.

But then again, so is almost every offline advertising method like TV, radio, print and billboards. However they obviously increase sales.

They just aid indirectly, so it’s difficult to measure a direct conversion rate.

Just like social media.

Try telling toy maker Step2 that social media doesn’t drive sales. Here’s a quote from the Wall Street Journal:

Step2′s use of PowerReviews and Facebook together provided some measurable gains. [Online Marketing Director] Tena Crock claimed sales from Step2.com increased 130 percent year-over-year after PowerReviews added loyalty and badges for reviewers and buyers in February 2012. Since October 2010, Step2 has recorded a 300% boost in revenues from visitors who arrive at Step2.com via the Facebook Connect button.

Step2 is seeing impressive online revenue growth, due in large part to their integration of social media.

So who’s right? Does it drive sales, or doesn’t it?

Or is it all in your approach?

 

How to Drives Sales with Social Media (Even if You Can’t Track It)

Social media doesn't drive sales directly. But it significantly impacts sales indirectly.

So here's what you should do instead.

1. Increase Awareness: The first step in marketing is to get your prospect's attention.

Selling is difficult for most companies online because... no one’s ever heard of you. And no one’s going to buy without recognizing your brand.

Don't use social media to sell, but to get attention initially. Promote content, run contests, and create an identity in your industry. And then think of fans and followers as leads, and nurture their trust over time to accelerate first-time purchases.

2. Establish Trust to Accelerate First-Time Purchases: Email marketing is consistently one of the best performing marketing channels.

But it’s not because companies are exceptionally good at it. It’s because following up with leads consistently over weeks, months and years builds trust and recognition.

Just like seeing television ads over years or finding your brand logo on a sports team’s jersey.

You can accelerate purchases with social media by providing information to drive need awareness, interact to overcome objections, and use authenticity so prospects pick you over the competition.

3. Increase Purchasing Frequency: Netflix has built a thriving business on $8 a month.

They’re successful because they can predict the average lifetime value of each customer.

Most people don’t just sign up for one month. The average person may be a Netflix subscriber for 36 months… or longer. That predictable, recurring revenue is a powerful income stream.

Marketing 101 says it's cheaper and easier to keep an existing customer, than to acquire a new one. And using social media is an easy, effective way to increase your profitability by increasing the lifetime value of a customer. People will buy more products and services, or simply buy more often.

Social media can drive sales... but it does so indirectly.

People find you in social media through serendipity... they don't typically go actively looking for products and services to buy.

So your social media strategies need to gain attention, inspire trust, and then increase profitability. It takes a little longer to get started, but it can pay off significantly in the long run.

FixCourse

Brad Smith

Partner, Codeless Interactive, LLC

Brad Smith is a Partner at Codeless Interactive, LLC, which specializes in custom web development and customer acquisition services.

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Comments

Jonathan Bennett
Posted on September 24th 2012 at 8:58AM

Trying to directly tie sales to tweets (or posts etc) is very difficult unless your an eCommerce business and have a specific promotion only promoted via social media but that doesn't mean its not valuable.

We see social media as a way of nurturing our client relationships, emails are dead in my opinion while social media is thriving. Simply retweeting a client, promoting their business or giving them a #FF goes a long way. As time goes on maybe this will deteriorate as more businesses start using this approach and people's attention is once again stretched but for now we're making the most of it at Yolk and looking at the long term benefits.

MKTdojo
Posted on September 24th 2012 at 10:19AM

I thought the whole point of social media was to build awareness and relationship.  Not sure when it moved to selling.  Did I miss something?

FixCourse
Posted on September 24th 2012 at 10:43AM

Why do you want to build awareness and relationships in the first place?

Just to have more friends? 

Or do you eventually want to leverage that awareness and relationships for something else? 

MKTdojo
Posted on September 24th 2012 at 10:54AM

Of course, in the end I would like fans to purchase a product or service; however, isn't Social Media used to build the awareness and relationship which leads to sale at some point. 

FixCourse
Posted on September 24th 2012 at 11:40AM

Yes - and that's what this post is about :)

tom crawshaw
Posted on September 24th 2012 at 11:55AM

Hi Brad, 

Thanks for sharing this research, it quite surprising that only 2% of orders came from social media traffic. I agree that if you had a product to sell online you can directly associate a discount coupon number or set-up a goal in Google Analytics you can directly measure the ROI from social media.  

Moving fans and followers over to your e-mail list is the strategy that would suit most businesses to help build trust.  As we all know, this is the foundation to all purchases and sales.

If social media is cleverly integrated into the company website and any offline promotions and events they a running, a larger reach can be achieved in your target market via the viral affect of social.  This is key, becuase the more people you reach the more likey you are to get a bigger response and more sales.

 

FixCourse
Posted on September 24th 2012 at 12:36PM

Great points Tom, thanks for your comment. 

I like using a coupon or product code and GA goals too. But beyond that, it's pretty tough to measure direct conversions.

I think the integration - which you mentioned in your last point - is the key. It doesn't matter what type of campaign (online or off), but companies will get better results if they integrate everything.

Thanks again!

 

ianjcam
Posted on September 24th 2012 at 12:15PM

Hi Brad, 

I take all of that on board - and pretty much agree with it. I would like to see some September 2012 research though - Social Media is evolving at the speed of light and my guess is that 2% will have grown significantly since 2010.

Ian

Mary Kay Lofurno
Posted on September 24th 2012 at 8:34PM

It depends on the market, the product and your strategy.  I have products that can drive sales directly tracked back from a post on their facebook page.  I have other products where it contributes exclusively to assisted conversions.  And some products/services, not at all.

 

 

Martin Calle
Posted on September 25th 2012 at 2:32PM

The difference here is that television's impact for example is immediate versus print and social whose impact takes longer to build. When planning media strategies for Leo Burnett, Omnicom, Publicis or WPP Group clients I always do me print and social spends three months in advance of television so that when television hits the impact of both buys peak together.

FixCourse
Posted on September 25th 2012 at 3:11PM

Great points Martin. I (admittedly) don't have experience in TV adv., but like you said it's key to focus more on campaigns - building up efforts with integrated tactics.  Thanks for your input.

JeffMolander
Posted on September 25th 2012 at 7:12PM

Respectfully, the premise is wrong. I can see how you conclude that you can't track sales based on advertising. But yes you CAN track sales otherwise. I wrote an entire book on the subject profiling small businesses like www.petrelocation.com and www.riverpoolsandspas.com along with big brands like Intuit and The Tractor Supply Company. They're all generating leads and making sales with social media and they can prove that social media caused the sale.

www.logan-services.com is selling HVAC units on FB--- all trackable to their FB page. They simply buy local ads, drive it to FB where leads are captured via a give-away contest. Trackable 100% to sales revenue.

www.jandofabrics.com is selling novelty fabric on Facebook. The CMO here runs a "Most Creative Halloween Costume" contest that leverages FB's photo sharing. Current customers spread the word about the contest prize ($50 gift card) to non-customers. Everyone who enters gets a $ off coupon and a chance to win the prize. A % of those non-customer enteries convert and are tracked by a coupon code. The CMO here is making real money on social media.

So how can you not sell and how can you not track sales again?

 

 

 

 

FixCourse
Posted on September 26th 2012 at 9:16AM

Hi Jeff, thanks for your comments. My premise is that social media can drive sales -- it's just not very effective as a direct sales channel.

I've used both advertising and coupon codes like you've mentioned, and have generated thousands from a FB page, so I know it can sell. But the biggest benefit from social media is by helping aid sales indirectly.

Because as a direct sales channel, the results pale in comparison to the effectiveness of AdWords, SEO, and email marketing. So if you're looking/investing in a channel for sales, then pick one of those first.

Hope that clarifies my point. Thanks again for your comment.

JeffMolander
Posted on September 26th 2012 at 9:38AM

Thanks for the clarity, Brad, but in my experience (myself) I'm selling directly using social media. And would not suggest picking something over something else without looking at the particular business case/environment, myself. But back to direct selling (figuring out what you mean by direct)...

I use LinkedIn Groups to target, court and successfully net leads and sales. I do it in 3 steps:

  1. I create valuable, provocative content (answers to burning questions)
  2. Monitor for people demonstrating need for it (in LinkedIn Groups)
  3. Reveal answers in ways that created cravings for more of what I have to share (provoke interaction using the juciest, most meaningful, actionable sound bytes from my content)

In many cases the interaction results in sales (people coming to my site and buying my book right away). In other cases I net leads that I court effectively enough to sell a $500 "How to Make Social Media Sell" training program. I court using an email list but mix it with, for instance, YouTube videos and Facebook comments on landing pages.

So if your point is to "get people OFF of social media" so you can sell to them as an effective strategy I suppose I agree. But I'm not sure if that's what you're saying here. I'm confident you can appreciate a guy who markets himself as the "Make Social Media Sell for You" guy showing up to debate you a bit on this :) (if not appreciate, at least understand my motivation maybe!)

FixCourse
Posted on September 26th 2012 at 10:18AM

I definitely appreciate it! :)

And I definately agree with your point - it depends a lot on the context of the situation. But I think in most cases, it's not always the most cost efficient channel (when you factor in time invested for community management, etc.) if you're ONLY looking for sales.

And in your case, I think using LinkedIn Groups is an excellent option for consulting/coaching/services, establishes you as a thought-leader or authority figure, etc. etc.

But for the majority of companies, I think if you compare direct sales (or leads) from social media vs. AdWords (where people are explicitly showing intent), the results won't be good. (I'm emphasizing "direct" here because that's what most analytics packages will show - and not everyone is savvy enough to use coupon codes, trackable advertising, etc. etc.)

In my experience, companies complain about how social media doesn't drive sales (when you compare it to these other things, or maybe they don't/can't track it because they don't understand how to do it properly, and - let's be honest - most just aren't good enough).

And so my point is don't just do it for sales only (because you'll initially be disappointed and then give up or underinvest), but also for these other benefits and that it will help drive long-term profitability. 

JeffMolander
Posted on September 26th 2012 at 9:45AM

And one more point/question, Brad?

In my example w/ J and O Fabrics using FB and a simple coupon to create sales. If the sales are not coming (year after year for them) from FB in that example I gave where exactly are they coming from, "directly?"


Thanks for considering.

Robert Austin
Posted on September 26th 2012 at 1:57PM

I think there is a lot of confusion going on in the comments about this article, and I agree that the premise of the article is flawed - here's why.

First, to say that only "2% of sales is coming from social media", does not really tell the whole point, and yet that seems to be the only supportive evidence behind the "at least that's what people say". Well, "people" say a lot of things, I would like to hear facts and figures, and not just numbers either, but what do those numbers mean?

In other words, saying that only 2% of sales comes from social media is really insignificant without other factors being considered, such as
 - How much of a a budget does social media receive compared to other marketing avenues?
 - Tracking! In other words, is the social media channel being properly monitired? You can use Google Analytics or many other marketing tracking tools to determine how many visitors are unique, or how often repeat visitors come back, how long they stay on your site, and any number of other things, in fact, the amount of things you can track is only limited by how much you can dream up to track (within reasonable parameters of course, tracking cookies can only go so far, and not cross outside of domains not owned by the site that created the tracking cookie)

One big confusion that I see in this commenting thread, in regards to the whole social media and sales issue is whether or not the social media channel is actually handling the transaction - taking the Credit Card info, asking the customer how many and which products they are buying. These all take place at the Ecommerce level, so what does it actually mean that 2% of sales are coming from social media?

One last comment I would like to make is that social media is not just a tool to raise brand awareness and customer service, just look at Amazon, more specifically Amazon Associates, where they actually pay a finders fee for people to post a review on their blog of products sold on their site(s). You might say that is raising brand/product awareness, but the act of placing a link on a blog, or even an email message, with the proper Associate tracking ID is leading *directly* to the sale of the product.

FixCourse
Posted on September 26th 2012 at 3:30PM

Hi Robert, thanks for your comments.

Here's the source - 2% of sales by people who are coming from social networks. Which implies that there is tracking, and means that it has nothing to do with what's happening on the social network itself, but rather people coming from those sources (so social media as a traffic source).

And my point was never that social media can't sell directly (it's just that not very good at it in most cases). My use of  - "at least that's what people say" - was a sarcastic remark about people who say that it can't sell. 

Hope that clears some issues up.

 

 

Robert Austin
Posted on September 27th 2012 at 12:00PM

I guess I didn't make one of my points clear enough and that's my fault. When I brought up the issue of tracking, I wasn't trying to say it was non-existant, but rather inadequately implemented, not being able to properly handle knowing when a sale came from facebook or twitter, versus a PPC or other on-line ad campaign, which would be easier to track.

However, when you say that "at least that's what they say" was sarcastic, there is no way of telling that from the printed (or in this case typed) words on the page, we can't "hear" the sarcasm in your voice as we would be able to in person.

Also, the article didn't appear (at least to me) to clear up this misconception, as this article does
"The definitive guide to social marketing" http://pages2.marketo.com/dg2-social-marketing.html?mkt_tok=3RkMMJWWfF9wsRolvK7Pe%2B%2FhmjTEU5z16OQrUaK1lMI%2F0ER3fOvrPUfGjI4DRcRkM6%2BNFAAgAZVnyRQFF%2BGHd4VU9fcP
Which clears up 3 false myths of social marketing, one of which is;
"Social channels are only relevant to marketers, not sales"

FixCourse
Posted on September 27th 2012 at 12:12PM

Hi Robert, thanks again for your comment. I realize my point wasn't clear so I apolgize.  I'm a total believer that social drives sales (indirectly). But coincidentally, new research from Forrester just came out (from Marketing Pilgrim):

"The report from Forrester called “The Purchase Path of Online Buyers in 2012” (link is to page to purchase full report which Marketing Pilgrim receives no payment whatsoever) basically says the the most effective tools in the online space to drive sales are the equivalent of online hammer and nails: email marketing and search marketing. Here are the main points but without the report’s detail.

  1. Paid search matters most for new customers
  2. Email matters most for repeat customers
  3. Social tactics are not meaningful sales drivers"

So the premise of my article was, if social media doesn't/can't drive sales directly very effective, then here's how you should think about it and what you should do instead.

 

FixCourse
Posted on September 27th 2012 at 12:08PM

{retracted}

Kimberley Scott
Posted on January 3rd 2013 at 1:37PM

Im finding it very difficult to promote our online business at the moment, on twitter im being responsive (i try my up most to be on time!) i thank and follow, retweet and join. And also with linkedin although it is still very difficult to have as much feedback as i do from twitter.

 

Could anyone recommend a 'new step'? 

Im starting to feel impatient and feel the need to find other resources.

 

Many thanks and good luck to everyone for 2013!

Bradly McGregor
Posted on January 23rd 2013 at 9:12AM

Hi Kimberly -- Don't think of social media as a way to promote your online business. Social media is about establishing relationships first and foremost. You should be making friends online not only with potential clients, but people within your own industry as well. Remember, social media takes time.

Best,

BM
@bradlymcgregor - Twitter

Athar Afzal
Posted on November 3rd 2013 at 3:34PM

Hi Kimberly -

The comment above this one from Brad is absolutely correct - an easier way for you to look at social media is just have a conversation with someone or even initiate a conversation. 

It's like going to a party on a Friday or Saturday evening and in a gathering of friends you might not know everybody - but you might try to talk it up with them and to know them.  Social media works the same way - it's just getting to know the other person.  Even if they don't tweet or message you on something related to your business - but you have an answer go ahead in answer it - you never know where it might take you! 

Key is just enjoy the freedom of social media!