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Social media’s predictive capacity for sales remains limited. More than four in 10 US omnichannel retailers in a Q1 2014 survey from the e-tailing group said that less than 1% of their ecommerce shoppers who made a purchase originated from social networks. Retailers recognize that having a social media presence may not drive sales directly, but its indirect benefits—from brand awareness to customer engagement and troubleshooting—may be well worth the effort.
August 2014 polling by McKinsey & Company in conjunction with Duke University’s Fuqua School of Business found that US marketers were looking less at metrics like profits per customer and revenues per customer than they had in the past several years. Instead, there had been a shift toward tracking hits, visits and page views—up from 47.6% in August 2010 to 60.7% in August 2014—and numbers of followers or friends (24.0% jumped to 45.0%). Other markers like buzz indicators (that is, web mentions), online product and service ratings, and other text analysis ratings to indicate consumer sentiment and affinity were also used more by marketers in 2014 than 2010.
While this may indicate a move away from the hunt for social media’s elusive return on investment—and the assumption that if it doesn’t drive revenues directly, it’s not worth anything at all—these metrics may just be used to contribute to different goals entirely.
In fact, retailers are using social media data, now more than ever before, for product development and promotional planning. Boston Retail Partners’ “2014 Merchandise Planning and Allocation Survey” found that among retailers in North America, use of social media data for product development increased 550% from last year’s study. The research also identified a 190% increase in use of promotional planning.
Still, these numbers only amount to between 35% and 40% of the total possible influence on merchandise planning, and social media has yet to be fully recognized as a potentially valuable business intelligence tool. Only 8% of North American retailers incorporated data on preferences, affinities and trends they gathered on social media into tools to utilize within the planning process.
Most retailers have formalized merchandise and financial planning processes, and business intelligence tools are critical to planning. Yet what data goes into these tools that help drive planning decisions at major retailers still need to catch up to the consumer market. Boston Retail Partners said that just 26% of retailers had real-time visibility of in-store/online inventory, and only 33% used CRM data to feed these business intelligence tools.
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