Return on Twitter

The ROI on social media is at retail.

One of the great debates in social media is, “Where’s the ROI?” Some say ROI is irrelevant because social media is about being part of the conversation — and if you’re not part of the conversation, you are not part of the marketplace. Therefore, the argument goes, social media is a cost of entry, and not necessarily a profit center.

But others insist — and rightly so — that every dollar spent in marketing should be accountable for a tangible result. And, to many, the cool factor of Twitter and Facebook, while appealing, is anything but measurable.

A recent Reveries.com survey confirms this (see page 12). The survey’s respondents, regardless of whether they love or hate Facebook or Twitter, tend to see them truly as social — and not marketing — media.

While some are resigned to the idea that there must be ads to subsidize free services like Twitter and Facebook, others are openly hostile to the idea that any kind of marketing should interfere with their online party-time.

Such attitudes may be in the minority, but an aversion to commercial messaging has been part of the DNA of the internet from the beginning, and that is not likely to change soon. However, careful observers have long noted that the internet is not so much a marketing medium as it is a transactional medium.

The infamous inadequacies of banner ads versus the wild successes of Amazon, eBay and Google’s search ads, tell the story: The potential to mix digital media with the shopping experience is huge. However, it is also underdeveloped.

In other words, it may well be that social media’s ROI riddle can be solved at retail. The extent to which brands integrate services like Twitter and Facebook with their retail strategies is probably the best indicator of social media’s true ROI potential.

Zappos is a good model of how this can work because its online community so seamlessly integrates social media with retail transactions. Shoppers commune by exchanging advice and the level of customer service rivals that of the finest department store.

Of course, Zappos exists online only — for now. Just imagine the force multiplier if Zappos built a brick-and-mortar strategy based on its online success. That is completely within the realm of possibility and would no doubt serve as a model for how social media — the power of a community — can drive growth at retail.

At the moment, few brands — or retailers — are thinking this way. They lead great conversations on Twitter, Facebook and other sites. Sometimes they create fantastically creative promotions that make good use of the technology.

Too much of that activity begins and ends online, unfortunately, with no big payoff where it can really make a difference — where the cash register rings.

Dell is a notable exception, with its use of Twitter to inform its followers of special deals on used computer gear. They’ve generated millions of dollars in incremental sales as a result.

Target and Toys R Us have used Facebook to promote their Black Friday and Cyber Monday specials. Whole Foods responds to Twitter-follower questions and comments and offers giveaways.

On a local level, restaurants have done a particularly good job using Twitter, Facebook as well as smartphone apps to stay in touch with patrons and keep them engaged with news and special offers. In fact, a number of Reveries.com survey respondents mentioned that restaurants, so far, are doing the best job with social media.

It would be easy to dismiss such successes as isolated, but smarter to view them as leading indicators. Clearly, at least some shoppers already view these media as part of their shopping excursions. So it’s not a question of orchestrating a massive shift in shopping behavior; it’s a relatively simple matter of connecting the dots.

The Smartphone Linchpin

The connecting point is plain to see: It’s the mobile phone. Growing numbers of people — and not just young people — are using them both for social media and shopping. In fact, the Reveries.com survey found that 78.5 percent have used a mobile phone while shopping. Anyone who has made a recent trip to a grocery store cannot deny that mobile phones have changed the lives of shoppers.

The only thing more ubiquitous than shoppers unconsciously humming and moving their lips along with the Muzak soundtrack are the countless numbers of them chatting away on their mobile phones. “Do we need eggs?” “Did you mean Light, Low-Fat or Non-Fat?” “Apple Jacks or Froot Loops?”

However, beyond the old-school use of mobile phones as devices for talking when shopping, the potential for their usefulness as a tool to improve the shopping experience remains, as yet, unrealized.

Where are the downloaded coupons and loyalty cards that can be scanned right from my mobile phone? Where is the social media engagement that helps me choose the right HD widescreen to purchase? Where are the GPS-synched offers that motivate me to enter a store when I am in the neighborhood?

The answer is: They’re coming. In fact, many of these applications are available and already in use to some extent, but consumer adoption is far from widespread. It’s a good bet that once more shoppers have smartphones designed for use as shopping tools, mobile phones will become a linchpin of shopping behavior.

In the meantime, forward-thinking marketers are already developing technologies — both online and in-store — designed to capitalize on the powerful draw of social media in particular and digital media in general.

Flit.com aggregates retailer websites into a search engine, turning the online navigation experience into a virtual shopping mall. So, shoppers can shop by retailer, like they do in real life, instead of by product, which they do only on the web.

Chronodrive.com, in France, enables shoppers to place their grocery orders either online or via in-store kiosks, and then pick them up via drive-through. Alice.com helps shoppers make sure they never run out of household staples. This means keeping track of what people buy and sending them reminders when it’s time to re-order.

On the social media side of things, Keds lets its customers design their own shoes online, and then makes some of the best designs available for sale both online and in-store. Designers are encouraged to promote their creations via Facebook and Twitter.

Avon is reinventing its famous “doorbell” distribution network with a digitized version for younger shoppers, in which Twitter and Facebook replace the traditional door-to-door approach.

Without a doubt, the opportunities are much larger than simply figuring out how to use these new channels to deliver coupons.

In fact, the digital-media challenge is compounded by the fact that consumers have been trained to purchase based on price. This will only accelerate with the advent of tools that enable real-time price comparisons between retailers. The struggle to maintain the value of a brand while enticing a price sensitive shopper will need to be skillfully managed to mitigate the impact of this real-time tool.

As the adoption of mobile applications and social media tools grows among consumers, the opportunity to reach and interact with a brand’s desired target audience will be greater than ever before.

The ability to maneuver will be determined by the commitment to resources dedicated to managing the mobile and social spectrum.

Those brands that make an investment now will be poised to positively impact the shopper experience by providing greater incremental value through real- time responses and customized offers as well as shopping tools developed to provide easier transactions.

The ROI measurement of this investment will not only be sales at the moment of engagement, but also an increase in customer loyalty in the future. •

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CATHERINE BOERA is vp and director of integrated media communication at Active International, where she leads integrated communication planning with expertise in touchpoint communications. She can be reached at cboera-at-activeinternational.com.