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How To Successfully Leverage Facebook To Drive Commerce

  • Written by Mike Santos
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Brad_KlausSocially-driven features like Share-Within-Your-Network (SWYN) and Refer-a-Friend enable retailers to extend brand outreach by empowering enthusiasts to spread the word. Social Marketing-as-a-Service program provider Extole, founded in 2007, offers a fully integrated platform designed to enable high-value customer referrals, social fan base expansion and visible brand recommendations. Retail TouchPoints had the chance to catch up with Extole CEO Brad Klaus to explore Facebook retail best practices, how to quantify Facebook marketing and the effectiveness of building a “social graph” to identify influencers.

RTP: In 2011, one of the key trends on the social/retail front is the ability to enable purchases from within Facebook. What are your thoughts on the potential for Facebook Commerce, or “F-Commerce?”

Brad Klaus: There is no doubt that Facebook is becoming a major channel for retailers. For starters, its reach is astounding: the site has over 650 million users, most of whom visit the site every day.  And according to data from Compete, social media sites send more referral traffic to online retail sites than Google.  It's no wonder that retailers are leveraging Facebook as a new sales channel.

Facebook's huge user base is a key reason why brands are adopting F-Commerce, but that's only part of the story. Social networking sites have become important to retailers because they provide a platform for easy sharing of product recommendations between friends.  According to eMarketer, 68% of Facebook's half-billion users are more likely to buy a product that has been referred by a friend. In other words, it's not just that Facebook is getting traffic — Facebook is allowing brands to tap into their customer base to acquire new customers.

Our client Roku is also tapping into Facebook to increase sales based on social recommendations. Lomit Patel, Senior Director of Direct Marketing at Roku, the market leader in streaming entertainment devices for the TV, said: "We went from nowhere to over 10,000 customer referrals a month. Our program is really working."

RTP: What are some of the best practices retailers can employ to turn their customers into a voluntary sales force using social media tools?

Klaus: The good news is that consumers love to tell their friends about their favorite brands and products.  Unfortunately, most retailers don’t make it easy for their customers to share with their friends.  Only 8% of the Internet Retailer 500 offer a customer referral program, even though referral programs consistently acquire high-value customers.  Facebook has made it easy for customers to recommend a brand by simply “liking” the brand, yet many retailers aren’t engaging their customers or encouraging them to become fans.

Two-thirds of purchase activity online has been influenced by word-of-mouth, illustrating that customers are active marketers yet retailers don’t effectively utilize this workforce. Retailers need to tap into the power of their customer social graphs across multiple channels in order to acquire new customers.

RTP: What are some of the key components of Facebook that retailers can harness to understand the value of the channel?

Klaus: Retailers don’t have to build a Facebook storefront in order to appreciate the potential of the channel. Facebook provides valuable insight into the fans that engage on the Facebook page. What really sets Facebook apart from a typical e-Commerce site is that it’s a trusted source of information because recommendations from friends have enormous credibility.

Similar to launching a web site, brands need to implement marketing programs to drive traffic to the Fan page, convert the visitors into Fans and engage the fan base with the goal of acquiring new customers and increasing sales. Our customer-driven programs drive visitors to the Facebook fan page, convert visitors to fans and encourage viral sharing of referrals into trusted networks of friends.

RTP: What are some of the qualitative and quantitative metrics retailers should be utilizing to determine the ROI of Facebook marketing?

Klaus: The Facebook marketing funnel is very similar to any retailer’s marketing funnel, in that the goal is to drive traffic to a site to generate new sales. In the Facebook marketing funnel, an important metric is the number of customers converted to fans and the number of prospects converted to fans. Becoming a fan is similar to an email opt-in — by becoming a fan, a user gives the retailer the right to “send” information to the user’s news feed with the goal of acquiring new customers and increasing sales.

RTP: What are the components of a “social graph” for retail brands?

Klaus: Retailers have always had social graphs comprised of customers and their spheres of influence. But what has changed is the ability of retailers to tap into their social graphs to identify key influencers, learn about their behavior and improve their marketing programs to grow sales and acquire new customers.

A retailer’s social graph is vast and can be identified by providing customers the opportunity to raise their hands and be recognized across multiple channels (i.e. retailer’s site, Facebook and Twitter) and multiple programs.  Brands that develop a deeper understanding of their social graphs will gain a deeper insight into their customer base, prospective customers and, most importantly, influencers who help attract new customers.


Brad Klaus is Founder and CEO of Extole. Klaus has experience in online and social marketing, and has founded several technology and online marketing companies. As the founder and CEO of Extole, Brad is building upon his online marketing experience to help brands tap into the marketing opportunity in the social channel.