Heed the Hype: Survey Reports Only 5% of On-line Shoppers Cite Social Media as Sales Driver

Social media is in its relative infancy as a channel/service but from the beginning, extravagant claims have been made about its impact. The stock prices (or shadow prices) of the securities issued by the most prominent providers have skyrocketed and investors have fallen all over themselves to grab a piece of the anticipated action. The reasons for this gushing enthusiasm have to do with a societal bias towards innovation, particularly as it harnesses the vast power of the internet; the financial crisis and economic downturn, which heightened interest in a good news story that also held out promise of a 'savior' technological fix at a time of depressed consumer confidence; and a belief that, given the lost faith in 'experts' or other authority figures, a network based on personal connections might provide a powerful new tool for encouraging sales.

Several years into this experience, more data are emerging based on actual sales. What it suggests is that a) we still have a lot to learn about how best to harness the power of this set of channels b)that some of the early hype was, not surprisingly, exaggerated or misplaced c)that traditional media remain a significant force influencing customer purchase decisions.

The prominent lesson learned is that rather than serving as a stand-alone, social media may prove optimally useful when employed in conjunction with traditional media as part of an aligned strategy that identifies and focuses on the strenghts of the myriad platforms available to business.

Jeff Haden examines the latest data in BNet:

"According to a recent survey by ForeSee Results of 10,000 online shoppers, social media interactions are the primary influence for only 5% of the people who visit retail websites.

Here’s a breakdown of what influences those visits:

Familiarity with brand: 38%
Promotional emails: 19%
Search engine results: 8%
TV, newspaper, radio, magazine ads: 8%
Word of mouth: 8%
Internet advertising: 7%
Interaction on social network: 5%
Blogs or discussion forums: 3%
Shopping comparison website: 2%
Product review website: 2%

While social media marketing gets lots of media attention, traditional marketing still generates better bottom line results.

Surprisingly (at least to me) promotional emails are a very powerful marketing tool that result in an extremely high likelihood to purchase, both offline and online. And customers seem glad to get those emails: 64% of respondents say they prefer to hear about sales and promotions by email, while only 8% want to be notified through Facebook, Twitter, or YouTube. (The actual percentage varies somewhat, depending on the company.)

Keep in mind ForeSee’s research includes findings from the top 40 online retailers’ websites by sales volume (as measured by Internet Retailer); your results may vary. But probably not by a lot — don’t assume your retail business is different, because in all likelihood it isn’t.

Other interesting findings:

40% of respondents chose Facebook as their preferred social media means of receiving company communications; only 4% chose Twitter.
More shoppers prefer to hear about sales and promotions from company websites than from TV, social media, radio, or text alerts.

People aren’t particularly satisfied with Facebook itself, but they rate their satisfaction with the Top 40 retailers’ presence on Facebook higher than with the retailers’ own websites. (Possibly meaning that if customers already like your business they’ll like Facebook as a touch point.)

Based on this and other research, here’s what Larry Freed, CEO of Foresee Results, has to say about social media marketing:

Social media has yet to blow me away as a driver of website traffic, store traffic or sales. That doesn’t mean we should ignore it; that means we should keep it in perspective as one of many tools at our disposal. Yes, the data shows that some of the people who are most likely to buy come to our sites because of social media. But that doesn’t necessarily mean that it was participation in social media that made this group more likely to buy. It is likely that social media-influenced visitors are already some of the best, most loyal customers to begin with.

ForeSee’s reports, unlike a lot of research reports, are insightful and make for interesting reading. Check out the Results Report on Social Media Marketing for more detail. (There’s also a U.K. version available.)

Then rethink whether a full-on social media marketing effort makes sense, especially if resources are limited and you must choose how to allocate marketing resources. Don’t ignore social media marketing, but for now you possibly should dabble rather than dive in.

Hype aside, traditional marketing channels are still likely to drive better bottom line results