The e-retailer reports a $126 million net loss, stemming from a $640 million year-over-year increase in spending in the quarter on technology and content ...
Social media offers enticing prospects for marketing. But measuring success remains a challenge.
Levi.com is all in on Facebook. In April Levi Strauss & Co.'s Levi.com became one of the first retailers to integrate Facebook's social media plug-ins, a program designed to make it easy to integrate Facebook into sites across the web. That means Facebook is everywhere at Levi.com, starting with its home page which declares, "Like-minded shopping starts here," a play on the Facebook feature that lets users of the social network click on a Like button when they find content appealing.
Levi.com shoppers can click that they like any category or item on the site. They can also visit the Friends Store, a section of Levi.com that allows shoppers who sign into their Facebook accounts on the site to see their friends' birthdays, as well as view just the merchandise their Facebook friends and other Facebook users noted that they like.
The social marketing efforts allow Levi's to highlight its most fashionable styles, and to do so with an authoritative voice—the voice of the consumer. "We can imagine a world in which we'll make product decisions based on what styles are being liked on the site," says Megan O'Connor, director of digital and social marketing for Levi's.
Where's the beef?
Levi's social marketing efforts may also provide other direct benefits, such as allowing the retailer to alter its future lines based on consumers' likes, says O'Connor. But measuring the payoff in terms of sales isn't simple, she says, particularly since a large portion of Levi's customers browse the site, but buy their Levi's elsewhere.
Levi's challenge finding the true monetary effect of its social marketing efforts typifies the struggles many retailers are having with social media—proving their investments in the space are worth it. A recent Forrester Research Inc. study found that 66% of online retailers are unable to identify the return on investment for social marketing initiatives. Even so, another Forrester study found that a quarter of online retailers have budgets to enhance or implement social programs in the near future.
The reason for social marketing's growth is that it's cheap—startup costs, aside from staff time, are minimal, says Sucharita Mulpuru, Forrester analyst. Social marketing only accounts for an average of 1% of interactive marketers' advertising budgets for large retailers and 5% for small retailers, according to Forrester. And those new investments in the space represent a small portion of the overall growth in e-commerce marketing dollars. Moreover, having a presence in social media gives retailers the ability to help guide, or respond to, what consumers are saying about the brand.
While measuring the monetary effect of social marketing is difficult, there are clear means to determine success in the channel, depending on the retailer's particular niche, says Zach Hofer-Shall, Forrester analyst. For instance, some retailers are gauging the success of their social marketing efforts by looking at reduced customer service calls, evaluating direct clicks from Facebook or Twitter or measuring consumers' awareness of the brand.
An ear to the virtual ground
Vistaprint Ltd., an online retailer and provider of print-related services, wanted its Facebook and Twitter presences to bolster its profile. "We're on the Internet, we don't have bricks-and-mortar stores, so what people are saying about us is very important to us," says Jeff Esposito, head of the company's social marketing initiatives and public relations manager.
To understand whether its efforts are working, Vistaprint measures its share of online conversations, as well as the percentage of those conversations that are positive.
To determine what consumers are saying about Vistaprint, the retailer works with Scout Labs, a listening platform technology vendor owned by Lithium Technologies. Listening platforms comb social media, as well as the broader web, for mentions of a particular brand or product category, then analyze that data to produce metrics such as a brand's share of online conversations.
Scout Labs provides Vistaprint with a weekly analysis of Internet conversations on blogs, message boards and other social media that mention Vistaprint and its competitors. "It allows us to see the impact of our engagement on conversations across the web," says Esposito. It also allows the company to pinpoint whether a particular offer, such as 80% off business card orders, creates a viral effect, he says.
Using a listening platform like Scout Labs, Social Mention, or any of the dozens of free or paid listening platforms is important because it allows retailers to know and understand what consumers respond to both on a particular social network, as well as on the broader web, says Hofer-Shall. "It gives a retailer both qualitative and quantitative data that it can use to understand what its customers react to and why," he says.
For all the work Vistaprint has done, it has determined the benefits of its efforts by monitoring its customer service calls and e-mails. While declining to give specifics, Esposito says those calls and e-mails have significantly declined.
The retailer dedicates a member of its outsourced customer service team to monitor Facebook and Twitter to respond to any customer service-related issues. While that requires a customer service agent's time, Vistaprint has found that issues can often be resolved faster than on phone calls, or even e-mail.
And, since the dialogue is public, the answer one customer receives can help avert another customer posing the same question. For instance, when one customer who was using the Spybot antispyware program complained on Facebook that he couldn't load the site, Vistaprint replied by posting a link to a page where he could add Vistaprint to the anti-spyware program's safe site list.
Since Vistaprint began working with Scout Labs to break down the positive and negative aspects of online conversations, it has recorded a noticeable decrease in the percentage of Vistaprint-related conversations that are negative in tone. It attributes the decline to its customer service efforts. "People are seeing that if they ask us a question, we're there to respond," he says.
And that improved customer service often translates into sales—at some point, says Esposito. "Good customer service can help push a sale along the way—whether it's the same day you answered a question or a week or two later," he says.