A major U.S. retailer recently spent six figures per year on a social media campaign to increase the number of likes on its Facebook page. While its investment increased likes and improved engagement, the retailer lacked a quantifiable way to gauge return on investment. The retailer was focused on Step 1 (creating social communities), but was missing the know-how to accomplish Steps 2 through 5.
The retailer worked with Tresata, a big data predictive analytics software company, to understand and enhance the return of its investments. After integrating multiple data sources, including social media, loyalty programs, and transactional data, the retailer uncovered insights that allowed the management team to start measuring the impact of its investments.
The retailer found that 90 percent of consumers that like a product on Facebook actually purchase it, but not necessarily at the retailer’s stores. This revealed significant areas of growth that had not been visible to the management team. The retailer also found that 60 percent of its most loyal consumers bought the liked product at its stores, compared to only 15 percent of its less loyal consumers. This showed that the return of social media investment was greater with loyal consumers (heavy users) than with other groups. This represented an opportunity to generate incremental revenue from users whom the company might have considered as “tapped out.”
Next, the retailer ran two targeted promotions for a “center store” product. One was a Facebook-only promotion targeted at consumers who liked the product page. The other was targeted at consumers who had already liked a product page, but had not purchased the product at the retailer’s stores (which could only be done by integrating individual social media activity and transactional data, Step 3). The former promotion increased the number of customers buying the product by 15 percent and number of units sold by 23 percent (week over week). The latter promotion delivered redemption rates as high as 80 percent. The conversion rates are significant even before incorporating incremental sales when consumers came into the stores to redeem their offer.
The results from the promotions enabled the management team to understand the important role of engagement in the context of driving purchase (like-to-buy). The management team validated a core premise of marketing: Promoting what consumers like yields better outcomes than promoting what companies want to sell. The retailer is now expanding the number of fans that receive Facebook-driven promotions by a factor of 10 to capture greater share of wallet in an extremely competitive category.