Leveraging Social Networks for Retail
By David Dorf-Oracle on Apr 27, 2010
For retailers, social media is all about B2C2C. That is, Business to Consumer to Consumer, or more specifically, retailer to influencer to consumer. Traditional marketing targeted mass media, trying to expose the message to as many people as possible. While effective, this approach has never been very efficient, with high costs for relatively low penetration.
Then it was thought that marketers should focus their efforts on a relative few super-influencers that would then sway the masses. History shows a few successes with this approach but lacked any consistency or predictability. After all, if super-influencers were easy to find, most campaigns would easily go viral. Alas, research shows that most wide-spread trends were the result of several fortunate events, including some luck.
So do people exert influence over each other when it comes to purchase decisions? Of course they do, all the time. But that influence is usually limited to a small set of friends and specific specialization. For instance, although I have 165 friends on Facebook, I am only able to influence my close friends and family on PC purchases, and I have no sway at all for fashion purchases. People trust my knowledge on technology, but nobody asks my advice on shoes.
How then should retailers leverage social networks in order to reinforce brand image and push promotions? Two obvious ways are Like and Share.
Online advertisements or wall-postings receive more clicks when the viewer sees that friends have "liked" the posting. That's our modern-day version of word-of-mouth advertising. Statistics show that endorsements from friends make it more likely a person will engage.
If my friends and I liked it, then I might also "share" (or "retweet" in the case of Twitter) it with other friends. In that case the retailer has paid for X showings of the advertisement, but sharing has pushed it to an additional Y people at no cost. And further, the implicit endorsement by the sharer makes it more likely the recipient will engage.
So a good first step is to find people active in social networks that will Like and Share in order to exert influence. Its still tough to go viral, but doubling engagement is still a big step in the right direction. More complex social graph analysis would be a second step, but I'll leave that topic for another day.
If you're interested in the academic side of social dynamics, I suggest reading Duncan Watts' work.