Report Summary

One in five retailers is not using any digital channels to communicate with customers. Everyone talks about the benefits of social media as a way for businesses to engage consumers.  Nine out of every ten US Internet users visit a social networking site at least once a month, spending more than four hours on average on these sites monthly. So it’s surprising that 21% of retailers responding to an Economist Intelligence Unit survey said they aren’t using any digital channels to communicate with customers. Thirty-five percent of respondents have no presence on Facebook, and 59% are absent from Twitter.

Product promotions are the low-hanging fruit of social media marketing. More than half (56%) of respondents to the Economist Intelligence Unit survey are using social media to promote new or existing merchandise, while 32% are offering coupons or other purchase incentives. Engaging users on social media sites using contests or sweepstakes or by offering discounts or coupons can drive sales. Yet while promotions are consistent with the way marketers have always executed campaigns – from e-mail offers to newspaper coupons – these activities don’t take full advantage of social media’s potential to help retailers develop a deeper understanding of their customers.

Retailers are struggling to measure their social media investments. A whopping 84% of respondents rate their effectiveness at measuring social media initiatives as average or poor. Only 4% say they have advanced metrics in place that can tie social media campaigns directly to retail sales.

Social media are slowly influencing other parts of the organisation. More than one-third (37%) of respondents say they are currently exploring ways to incorporate social media insights into product and merchandising operations. And 15% say they have launched at least one new product based on social media insights.

The 4 Cs of social media success. Four themes emerged from the EIU survey of retailers about what they need to build a successful social media strategy. Success requires following four general principles:

1. Consistency. Retailers need policies in place to ensure that their brand promise remains consistent across all media channels, including social media – even if the interactions on Twitter, Facebook and the like are less formal than traditional media.

2. Community.  Key to success is an understanding that social media is not purely a communications channel – in which the retailer controls the message – but more as a community of individuals who share an interest in a brand, or a product, or a category of products. Some brands who understand this have created their own social media communities instead of relying solely on third-party platforms such as Facebook and Twitter.

3. Collaboration. Social media channels deliver the most value when they move beyond the customer service objective and when insights are effectively shared between different departments.

4. Commitment. For many retailers, the biggest challenge with social media is getting people throughout the organisation – from senior management to front-line personnel – to buy into the benefits. Only 27% of survey respondents have budgets dedicated to social media marketing and only 12% have added one or more full-time positions to support social media.