Social media is a bigger retail sales channel of late, especially with the emergence of direct response marketing tools and influencer blogs. While many retailers are finding great benefit from these emerging channels, managing the different channels and determining the most productive marketing mix has become more difficult.
A panel of e-commerce retailers shared insights on how they are tracking the performance of different sales channels and the challenges encountered during the recent Shoptalk conference in Las Vegas. The panelists agreed on the importance of accurately attributing sales to their different marketing channels. They also agreed marketing channels are becoming increasingly complex.
Jane Lu, founder and CEO of Showpo, an Australia-based online fashion apparel retailer that sells in more than 100 countries with more than $60 million in annual revenue, attributes much of the company's growth to social media marketing. The retailer has 3.5 million social media followers, including 1.5 million Instagram followers.
Showpo gained 20,000 Facebook followers in its first month, Lu said, which cost the company nothing. "The most important thing that it taught us was how effective social media was," she said.
In April of 2015, Showpo surpassed $1 million in sales, driven by its Facebook fans. A year later, however, Facebook made some changes in how it displayed organic content, causing Showpo to diversify its marketing mix.
"We are all still at the mercy and at the whim of these channels," Lu said.
Instagram then became the company's dominant social media channel. The number of Instagram followers grew at a consistent pace, surpassing 1 million by the end of 2016, Lu said, while Facebook followers stagnated. Showpo regained some of its exposure through Facebook by posting videos, she said, and has become the leading brand on Facebook in Australia.
Lu cited the importance of using influencers on social media. "People trust people more than they trust brands," she said. She said it makes sense to send a product to an influencer for free since influencers oftentimes post products.
A key metric Showpo looks at is cost per social media engagement, Lu said.
Tracy DiNunzio, founder and CEO of Tradesy, a peer-to-peer marketplace for women's designer fashion that has more than 6 million members, emphasized the importance of attributing customers to marketing channels to determine the best return on investment.
The three components of attribution, according to DiNunzio, are instrumentation, reporting and analysis.
"The most important thing you can do is get your instrumentation right," she said.
DiNunzio showed a slide demonstrating the benefit of "multi-touch" attribution, which maps out every step in the social media customer journey.
This journey can begin with Facebook organic, move to Google paid, to website sign up, to an email-driven app visit, to the website, to social retargeting to the purchase. The journey can take more than 100 days.
The customer journey
"Knowing about this customer journey is really important," DiNunzio said. She cited four key points about the customer journey.
1. The marketer needs to know who visited. Knowing the customer demographics allows you to find more customers.
2. Where did they come from? Understanding which marketing campaigns (paid and non-paid), messages and referral sources customers used allows for a successful investment strategy.
3. Know how customers behave. This includes knowing how long it takes for them to convert, how many pages they view and how often they visit. Such insight allows a marketer to optimize the user experience.
4. Know how much revenue the customer delivered. The cost of acquiring the customer only matters in relation to their contribution, DiNunzio noted. Attribution allows the marketer to optimize visitor sources to achieve maximum customer lifetime value.
"Attribution is an art and a science," she said, because there is always room for interpretation of data. "There is no single source of truth. Your data is never going to add up to 100%."
The company learned, from its mistakes, that it is important to understand the customer conversion window for each marketing channel, DiNunzio said. At one point, they thought TV ads were not effective, but later realized that TV ads were working — the customer conversion took nine months. "We probably lost a huge opportunity not to scale with TV at the time," she said.
DiNunzio presented a Google Analytics report comparing results for referrals, direct, paid search, email, organic search, social network, other advertising and "other." The chart listed number of conversions and conversion value (both in dollars and percentage of total) for last interaction.
DiNunzio said Facebook customers cost more than Google customers, but Facebook followers generate four times as much business. She said her company assigns lifetime value profiles to its customers.
Social media has also proven to be a key marketing medium for Hubble, a contact lense brand that sells to customers on a subscription basis, said Jesse Horwitz, company co-founder and CEO.
Horwitz said all digital direct response platforms have reporting tools that allow marketers to review the results of their marketing. These tools allow marketers to assess what channel is providing the highest quality customers.
Horwitz, like DiNunzio, said customer lifetime values is an important metric to track.
Hubble also does a post purchase survey, Horwitz said, to which 90 percent of its customers respond.
The panelists agreed that as social media channels have become an important marketing tool, using the tools effectively requires trial and error, and an investment in marketing.