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IRX 2013 COMMENT Is social referral the new affiliate marketing and are retailers ready for it?

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Ahead of IRX 2013 we’re previewing the events, speakers and technologies that will be centre stage at our annual expo. Today we bring you a comment piece from Manoj Krishnapillai, co-founder of IRX 2013 exhibitor Owned it, the social referral platform.

by Manoj Krishnapillai

Rewarding customers for sharing product information via social media channels is the newest form of affiliate marketing.

Affiliate marketing has dominated the online retail industry for over two decades. Since its origin in the late eighties, online affiliate marketing has blossomed with webmasters and bloggers (the affiliates) writing product news, reviews and other product-related content. When a visitor buys via the affiliate’s website, he or she receives some reward; typically a commission from the retailer or manufacturer.

Until recently, retailers lacked the ability to incentivise large numbers of consumers to start conversations about the products they had purchased. Many consumers did not (and still do not) have a blog or a website where they could talk about the products they had bought, so retailers relied on affiliate marketers to increase visibility of product and drive more sales.

However, as social media adoption grows, the process of affiliate marketing is becoming democratised. Retailers are targeting the opportunities that Facebook’s one billion active users bring. Retailers wanted to be mentioned in the175 million tweets sent on Twitter in 2012 alone or be referred via Pinterest: Pinterest referrals spend 70% more money than visitors referred from non-social channels.)

Social media channels are used primarily to drive consumers to a retailer. They are not, however, being used to encourage happy consumers to promote a product by sharing information immediately after a purchase has been made – a time when a consumer is looking forward to receiving the product and is feeling positive about the retailer.

Today, social media enables consumers to talk about the products they like and provides retailers with an opportunity to reward this behaviour. This phenomenon is leading to a new kind of marketing channel where retailers can monetise and reward the recommendations that take place in popular peer-to-peer social networks.

Monetising social media referrals

Some companies have already started to capitalise on this opportunity and according to TicketMaster, it receives $5.30 per link shared on Facebook in revenue. Also in a recent study Levi’s revealed that when it added a ‘Like’ button to its product pages, it saw a 40x increase in referral traffic. Similarly, Tea Collection saw an increase of 10x in their daily sales after adding a ‘Like’ button to its product pages.

However, the challenge here is not about whether consumers ‘talk’ on social networks – sharing with friends and family online is not a new concept. The real challenge for retailers is how to ensure that customers talk on social networks about the retailers’ products and brands.

A well designed campaign is necessary, but creating engaging campaigns requires an understanding of customers social media habits and the type of incentives that encourage sharing.

Social marketing platforms help retailers to automate customer referrals. Using our experience, here are the key factors that retailers should keep in mind for developing successful customer referral campaigns.

Identify the social channels

When running campaigns across multiple networks, it is important to identify the platforms that bring the best returns.

The ROI varies significantly for different sectors and for different social networks. The performance of a social network for referrals is heavily influenced by the products as well as the audience the retailer targets. From our experience Facebook is the top performer for fashion, clothing and accessories whereas Twitter generates more sales for gadgets and digital products.

We’ve noticed a general trend amongst our clients that most start with Facebook but eventually use a combination of all the networks including Facebook, Twitter and email to drive referrals.

Define your goals

Retailers have have different expectations of a campaign’s outcome. This can vary from general promotions for special occasions such as Valentine’s Day, Mother’s Day, Easter, Christmas etc: creating brand awareness; increasing revenue or creating communities around the brand. It is critical to decide the outcome of the campaign both in the short tem and long term. Defining the KPIs, planning and selecting the metric that show progress is key to running a successful customer engagement campaign.

Interact and don’t pitch

Unlike any other marketing campaigns social media campaigns should be designed to create conversations and interaction with your audiences. It is not about pitching/broadcasting your businesses. Be creative in grabbing your customers’ attention, create campaigns that your customers engage and interact with. Sales driven by customers will generate more value compared to sales by any other means.

Be clear and consistent with your messaging

One of the most important aspects of running a successful social referral campaign is being clear and consistent about the different elements of the campaign. It is critical that the message is clearly articulated and the audience can understand/interpret it correctly.

For example, one retailer who sells accessories, designed a social campaign in the following manner:

• Customers who referred the products on social networks received a discount voucher

• Friends of customers who referred products received a cash coupon

• Customers whose referrals led to X sales received a free product

By conveying the message clearly the retailer achieved a referral rate of approximately 35%. Confusing or inconsistent marketing messages on the offer may lower credibility and the audience may start to doubt the genuineness of the offer.

Test, optimise and test

Marketing campaigns are all about testing, and so are social referral campaigns. Just as we invest significant time and effort into creating landing pages that convert, we should invest resources into creating social campaigns that will work. Generally, when creating marketing campaigns, we create a few variations of and test to discover which works best, a similar process applies for creating social referral campaigns. One should test and try different variations of the campaign or marketing text to identify how customers react to these it and identify the combination that works the most.

For example, one consumer electronics retailer created a referral campaign that initially achieved only a 5% referral rate. After making some variations to the theme and layout the referral rate rocketed to around 40%. Sometimes minor modifications in campaign text, colour and image can make a substantial difference in the referral rate and the resulting traffic.

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