October 2009 – Channel Crossing: Social Media

DR Marketing and Social Engagement

By Chris Peterson

If you have any doubts about the growing importance of social media today, consider this: If Facebook was a country, it would be the eighth-largest in population, just ahead of Japan. Two-thirds of the world’s Internet population visit social networks. More than 100 million YouTube videos are viewed every day. Flickr now has one photo for every two people on the planet. More than 3 million tweets are broadcast on Twitter every single day. Social media now accounts for 10 percent of all Internet time.

The good news is that customers using social media want us marketers to participate. In a Cone research study on business in social media, 93 percent of social media users believe a company should have a presence in social media. But “presence” doesn’t necessarily mean advertising with a strong CTA. That’s akin to walking into a party of people you don’t know and announcing from across the room that you want to sell them something.

Integrating social media into your overall direct response strategy is not difficult–but it does require a different mindset. It means engaging in these platforms in a manner that delivers value, with sales as a happy by-product. That’s not exactly direct response marketing, but it’s still measurable and potentially very effective. Let’s consider two areas that direct marketers feel very comfortable with: acquisition and conversion.

Conversational Acquisitions
There are some very straightforward ways to acquire customers using social media. You can simply place banners or links on various social media sites. Or you can create a sponsorship or host a particular area within a social media site. Unfortunately, these tactics rarely pay out. Either the underlying cost structure is too high or response rates are too low–or both.

For a more effective strategy, consider what is happening on these sites. These are groups of people with shared interests who are communicating with each other frequently. There is a social connection or common interest that is at the root of the communications–and the conversations represent the most valuable asset, not the impressions.

So how do we get into the stream of all these conversations? First, we can establish our own presence on various sites, which is often a very simple exercise. The challenge is scale. You may end up putting a lot of energy into engaging with the seven people who happen to find you on Facebook.

A second option is to harness the social power of your existing customer database–to get to the group of highly social people online who tend to be the “connectors.” They know a lot of people and pride themselves on the vast networks they have built. They are customers who like to be heard and who are also willing to advocate on your behalf, assuming they have been treated well.

You can identify these customers a number of different ways. As a start, external databases that aggregate social data can be overlaid on your customer database. You can identify who in your customer database has a Twitter account. Establishing presences on social media will attract them. You can also invite your customers into referral programs where you can help them look like an expert or a helpful resource in the eyes of their friends.

Simply bribing your customers with incentives to refer other customers may not be the most effective way to garner referrals. Response rates are often higher when you focus more on a customer’s achievements and status. For example, Adobe Software uses a series of valuable guides that are passed along to friends to garner referrals for photography software. The key is to think about how you can fuel interactions between your customers and their social networks that puts your products in the spotlight while making the customer look good. For companies with larger databases or with products of high value, these types of programs can be very successful. In some cases, these programs can yield the lowest CPA when compared to other media channels.

As an example, consider a company that sells a product for $150 and executes a four-month referral trial. If there is a customer database of 250,000 and three percent refer an average of two customers over four months, that’s $2.25M in sales. If the pilot costs $100,000 to $150,000, the ROI is 15 to one.

Converting Social Interactions
Not long ago, direct response marketing was very direct. You ran ads and counted calls. Now media, especially DRTV, drives both direct orders and research. There are a significant number of responders who prefer to first confirm your claims by consulting their peers.

Peer reviews often rank very high in search because so many people rely on them for purchase decisions. If someone is considering a product, it’s pretty easy to locate reviews written by other customers to get the unvarnished truth about products and services. Unfortunately, when a customer has a bad experience, one of the easiest ways for them to vent is in peer reviews. You may then have a disproportionate number of negative reviews from a small group of customers. All of this has an effect on conversion. If your media sparks research and your customers are bumping into negative content, then they may not buy.

The first step to improve conversion is to perform a social media audit of the conversation and content about your product. By parsing peer-review data, you can gain an understanding about what issues you may have with your product or customer service. You can also use this data to help improve your overall rankings.

If you want to improve review ratings, then turn to those same customers we talked about above–the social advocates who are in your database. If you proactively invite customers to write reviews on your behalf (without telling them what to write), you will generally get positive reviews. The overall effect will depend on the volume of existing reviews, but sometimes products with only a few reviews have one or two really negative reviews that drag the scoring down.

Austin’s Park, a family entertainment park in Austin, Texas, had a handful of reviews on various local review sites like Yelp. Some were old and negative. The park then printed a message on the back of all park receipts that asked customers to write reviews about their experience on various review sites. When they brought a printed review back, they got a free pass to the park. The effort garnered 15 to 20 new reviews that were very positive. It was a simple effort that dramatically changed the online chatter about the park.

Measuring the exact impact on conversion from these types of tactics can be difficult. But if you believe that online reviews and online conversation are affecting purchase behavior, then these efforts are well worth it. Investment in managing the effect of online conversation tends to be small when compared to your overall media spend.

Chris Peterson is president and managing partner of R2C Group, one of the nation’s largest direct response agencies, headquartered in Portland, Ore. He can be reached at cpeterson@r2cgroup.com.