February 20th, 2015
Have retailers been looking at social media all wrong?
Often lost among the chatter about how brands can use these platforms to boost their sales is the inverse argument: How they can use social conversations to predict—and improve—revenue trends.
A new study by Networked Insights, which monitors social conversations across networks including Twitter, YouTube and Reddit, found there’s a correlation between the way consumers talk about certain brand metrics, and a retailer’s same-store sales.
The firm determines a brand’s health by gauging customer satisfaction, loyalty and advocacy across social media.
“When we see in our large data sets big drop-offs in customer satisfaction and customer loyalty… we know that at some point in the near future that brand is going to have struggles,” said Rick Miller, a vice president at Networked Insights.
“When we drill down into this data we can see very specifically what consumers are very unhappy about, what they’re complaining about.”
Networked Insights just concluded a 15-month case study on low-price department store Kohl’s, through which it monitored more than 500,000 entries about the brand. It found that as the online conversation about the retailer started to deteriorate—particularly surrounding customer loyalty—its same-store sales, as reported by Goldman Sachs, moved in sympathy.
By recognizing this correlation and monitoring social conversations, Miller said brands can better resolve customer service issues and tweak their marketing campaigns. That, in turn, could prevent a sales slump.
Networked Insights works with retailers and other companies to identify social problems, so they can find potential solutions; Kohl’s is not one of its clients. Despite his firm’s focus, Miller said he would never discount the importance of brands finding ways to monetize social media.
“I would never sit here and say ‘Oh, you shouldn’t advertise on Twitter, Oh, you shouldn’t advertise on Facebook,'” he said. “That stuff works.”
The platforms themselves are also looking for ways to capitalize on social commerce. Twitter has said that it is testing a “buy” button that would allow consumers to purchase items from tweets. Reports surfaced last week that Pinterest plans to debut a similar feature, possibly this year, though the company declined to comment on the rumors.
According to IBM, retailers only get about 1 percent of their websites’ visitors from social media pages.