January 3, 2013, 2:53 PM

The new math

(Page 2 of 3)

Goldberg attributes much of Fab's outsized social commerce sales to its on-site social feed, which it launched in late 2011. The feed, which resembles the image-focused look of Pinterest, shows Fab.com shoppers who is buying what right now, and which products shoppers like (or, as Fab calls it, "fave"). If site visitor Jane Smith using the Fab.com user name jsmith purchases a Soggy Doggy Doormat, an image of that product will appear in the Feed section of the site with the tag, "jsmith purchased a Soggy Doggy Doormat."

The true social power of the feed, Goldberg says, is unleashed when consumers sign into Fab using their Facebook login. Once logged in, all actions—whether they be commenting on a product, purchasing an item or adding it to a list of favorites—are shared on a shopper's Facebook timeline and in her friends' news feeds. And she stays logged in with her Facebook credentials unless she logs out.

Adding to the Feed multiplies Fab.com's brand exposure significantly. A recent weekday check of the tool showed around 80 products shared within one minute.

Fab also incentivizes shoppers to share. It grants credits to shoppers whose social shares drive new customers to the site. Each shared product on Facebook includes a personalized URL, so if several of Jane Smith's Facebook friends click on the picture of the Soggy Doggy Doormat and join Fab.com, Jane gets rewarded. Jane gets a $30 credit after 10 friends join, 25 friends get her another $30 credit and 50 new members gets Jane free shipping for two months. Fab.com says it's granted nearly 5,000 $30 credits. Of those, Fab.com's issued 1,300 secondary $30 credits and nearly 900 then qualified for free shipping since its founding in June 2011.

These types of viral sharing bring in more than half of Fab.com's new customers, Goldberg says, and at a minimal cost. It also drives higher-quality traffic. He says consumers who come to the site as a result of social media buy 5.5% of the time, a rate about 30% higher than traffic that comes from search or other sources.

Brand awareness

For many merchants in the Social Media 300, before they can generate traffic and sales, they first have to build a fan base.

Take PetFlow.com, which ranks No. 1 in the Social Media 300. With an investment of around $200,000 in targeted display ads on Facebook, the retailer built its fan base from around 20,000 last February to more than 570,000 by mid-November. The ads usually included a photo of a pet with a simple message like, "Do you have a pet? Click Like if so!" The ads, which targeted Facebook users based on their interests, such as members of a group dedicated to bulldogs, were well worth it because they established connections with consumers, says Alex Zhardanovsky, the site's co-founder. Unlike paid search ads that stop driving traffic to an e-commerce site once they are turned off, the fans PetFlow.com acquired via its display ads will always be fans, which mean they see the brand's posts in their news feeds.

And those fans see a lot of posts. The retailer posts up to 20 times a day and under most of those posts it includes a link to its site with a deep discount on a specific product, like 99 cent bully sticks, a chew treat for dogs, which usually run about $3. The goal, Zhardanovsky says, is to get shoppers to click and buy something on its site. The approach has helped the retailer generate $10 million of its projected 2012 sales of $30 million via social media marketing.

Beyond sales

Some retailers are less focused on driving sales directly from Facebook and other social networks. They view social media marketing as an important ingredient in their marketing mix, but more as an outlet for sharing the personality of their brand and maintaining a connection with customers. These connections can eventually lead to sales, and these merchants have their own metrics for tracking the impact of social efforts.

That's the case for baking goods manufacturer and e-retailer King Arthur Flour Co. Thanks in large part to the vivid images of scones, brownies and other goodies that accompany the recipes on its site, 10.5% of consumers in August 2012 arrived at the baking goods manufacturer and e-retailer's site after clicking from Pinterest, according to Kantar Media Compete. That's more than 20 times the 0.52% average for the top 50 retailers in terms of Pinterest followers in the Social Media 300. And it makes Pinterest second only to Google in drawing traffic to the site.

"Pinterest is ideally suited to our site," says Aime Schwartz, the retailer's new media coordinator. Pinterest's user base skews female, with women making up 70% of its unique web visitors and 84% of the unique users of its mobile app, according to Nielsen.

Getting people to a retailer's site is extremely valuable, whether or not it results in a purchase, Schwartz says. That's why the brand pins its most vivid, seasonally relevant photos of baked goods—like cinnamon-eggnog scones during the holidays—on Pinterest. But most of the traffic from Pinterest comes as a result of consumers clicking the site's Pin It button to share photos they've found on KingArthurFlour.com, not as a result of the retailer's own actions on the network. When another Pinterest user clicks on the pinned image she visits the KingArthurFlour.com web page where the image originally appeared.

The traffic that clicks from Pinterest is largely made up of first-time visitors to the site. While a large number of people leave the site after viewing the recipe, that's OK, Schwartz says. Most shoppers buy their flour in a supermarket, and driving those sales is important. The retailer says it has been tracking the social network's effect on its overall sales since it hired Schwartz in fall 2011 to work on its social efforts full time, although it won't disclose specific store sales results.

The retailer says the social traffic gives it a chance to expose new consumers to its brand, which is why it also tracks the percentage of consumers who arrive at its site from Pinterest who subsequently sign up for its e-mail list or print catalog.

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