In its second-largest acquisition, Amazon buys the company for $970 million.
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A branding play
Online apparel retailer Karmaloop.com takes a similar view, as social media has played a major role in shaping its brand. "Karmaloop is built around social networking," says Greg Selkoe, CEO and founder.
Karmaloop can measure the results of its social media campaigns in two ways, one direct and the other indirect.
The direct measurement comes from its network of 96,500 representatives that promote Karmaloop via posts on social networks like Facebook and Twitter. They send out their "rep codes" that other shoppers can use to get a 20% discount at Karmaloop.com. Whenever a shopper uses a code, Karmaloop gives the rep points that can be redeemed for Karmaloop merchandise. As of early December, 27% of Karmaloop.com's sales in 2011 were tied to the rep program.
The indirect measurement stems from Karmaloop's social initiatives designed to engage consumers and generate buzz. One example is ReclaimYourTV.com, a campaign launched in September to promote the retailer's push to transform KarmaloopTV.com, the online entertainment network it launched in 2008, into a full-fledged 24-hour cable TV channel. The channel, which the retailer projects will attract 40 million views this year, features 25 channels of programming that focus on music, fashion, art and other themes that appeal to Karmaloop's consumer base of fashion-focused 18- to 34-year-olds.
Consumers visiting Karmaloop.com can connect to KarmaloopTV.com to watch programming or to ReclaimYourTV.com to submit their own videos. Visitors to ReclaimYourTV.com can click a thumbs-up icon next to each video or Twitter post to express approval. Each week, Karmaloop awards the creators of the videos and tweets that get the most votes such prizes as a $2,500 shopping spree for the most-approved video and $1,000 for the most popular tweet. Prizes also include Karmaloop tote bags and T-shirts featuring designs from street artist Shepard Fairey. "ReclaimYourTV and KarmaloopTV don't directly affect sales," Selkoe says. "But they do mirror our whole ethos as a lifestyle brand."
Karmaloop measures the impact of these campaigns by tracking impressions on KarmaloopTV.com, and by its Klout Score, a series of metrics developed by social marketing vendor Klout Inc. That score aims to gauge how many people the retailer influences, the degree to which it influences them, as well as the overall influence of the retailer's network in the broader social landscape.
While impressions provide Karmaloop with the quantity of consumers seeing its content, its Klout Score offers a sense of the quality. "We're interested in having active followers and seeing how they respond to us," he says. "We're not just looking to accumulate numbers. Klout enables us to understand who we're reaching." Since the retailer began using Klout's free offering in October 2010, it has seen a consistent upward trend in its Klout Score, he says.
Moreover, there's a correlation between sales and the score. "It goes hand in hand," Selkoe says. "The more influential customers and greater critical mass of customers we reach on social media, the more that translates into more potential customers and sales."
Monitoring a retailer's share of the conversations that flow on Facebook and Twitter is important, but such data can't be viewed in isolation, says Econsultancy's Charlton. "People can't get too hung up on one measurement," he says. "Retailers have to look at the broader picture."
That's why Vistaprint Ltd., an online retailer and provider of print-related services, looks at a range of metrics that include its share of the conversations compared with its competitors, the sentiment of those posts, what sales result from social media links and how many times its followers post on the social networks. "Having a number of ways to look at what we're doing on social media gives our team a way to look at the ebbs and flows from week to week," says Jeff Esposito, Vistaprint public relations manager, who oversees the retailer's social marketing initiatives.
Vistaprint works with Scout Labs, a listening platform technology vendor owned by Lithium Technologies, to determine what consumers are saying about the e-retailer. Listening platforms scour 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. It also works with Klout to understand the impact of its conversations with customers. But what consumers are saying has limited utility without the bigger picture, namely, how sales, and even more important, repeat sales, result from those interactions.
That type of understanding stems from digging into the data that its social metrics vendors provide. Examining the rate at which customers who make a purchase on Vistaprint.com opt into receiving e-mail from the retailer in combination with click-through rates on Facebook and Twitter posts, for instance, enables Vistaprint to know that 40% of its customers who have purchased via a social media link, but who don't opt in to receive e-mail on Vistaprint.com, later click through a link posted on Facebook or Twitter to place another order. That provides information that helps Esposito and his colleagues understand which posts resonate with repeat shoppers. "It's important to let the numbers tell us what we should be doing," Esposito says.
Just like Blendtec, Karmaloop and Vistaprint, practically every major retailer is promoting itself on Facebook and Twitter. But that isn't enough—retailers must have a quantifiable goal for what they're trying to achieve, says Forrester's Hofer-Shall. "Otherwise," he says, "how do you know what you're doing is working?"