In my opinion: retailers can use social media to drive sales, says Wrapp

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Winbladh: word of mouth is key to unlocking retail sales

Winbladh: word of mouth is key to unlocking retail sales

Retailers dan drive sales through social media, according to Hjalmar Winbladh, CEO of social gifting service, Wrapp, which allows users to send free and paid gift cards to friends using its mobile app or the web

Wrapp: new social gifting service

Wrapp: new social gifting service

In recent years retailers have invested considerable resources to establish a presence on social networks. The devotion of often significant amounts of finances and working hours into social media is a result of persuasive arguments from marketing teams about the importance and value to brand awareness and advocacy.

If you don’t believe me, test it yourself. Go to your preferred social network and type in the name of just about any good-sized retailer. Nine times out of 10 you will find a fan page – often with tens of thousands of followers and Likes.

One of the most crucial elements of using social media for a retailer is to be able to monitor what is being said about its products and services. Social media can also be used to amplify off-line marketing initiatives or help to generate new product buzz. These are all fantastic elements of social media but are also incredibly tough for retailers to evaluate. How can a retailer be sure how much those activities have actually helped to generate profitable sales in brick and mortar stores?

Some try to transform social network fans into sales with coupons or discounts as a way of thanking them for their online engagement and loyalty. 

But what many fail to consider is that coupons, vouchers, mass discounting, daily deals, and the deal-hunters they rouse, actually dilute brand value, damage a retailer’s reputation and – especially in this economic climate – are overall bad for business. 

By incentivising online customers with deals and discounts, retailers are simply perpetuating old-school bad behaviour among consumers who have been trained over the years to wait for sales, bargain offers and low prices. 

So what’s a retail executive to do? 

It turns out the answer is as old as the hills, but the practical implementation is 100% current and cutting edge.

A Nielsen survey in April this year found 92% of respondents (from 28,000 internet users in 56 countries) trust word of mouth recommendations from friends and family above all forms of advertising.  

This should come as no surprise in an era where consumers are increasingly skeptical about marketing and advertising. Ironically, at a time when customers have more options than ever to find out about and research products, it is to their nearest and dearest they are increasingly turning to when making purchasing decisions. 

Marketing and brand guru David Aaker summed it up nicely in an article for Harvard Business Review about the secrets of social media. He wrote people love recommendations, but want to know what the motivations are of those recommending. Are they genuinely looking to help customers or have they another motive such as helping sales? As discerning the motives of a reviewer or commentator can be so difficult, especially with the amount of opinions that can fly around social media networks, people are far more likely to rely on recommendations from those they have an authentic, personal relationship with. 

In other words, friends and family. And it is these same friends and family who are fuelling the social gifting phenomena that is now sweeping retail marketing.

Social gifting: retail gift cards are stored on mobile phones until redemption as a part of a purchase

Social gifting: retail gift cards are stored on mobile phones until redemption as a part of a purchase

Social gifting in concept is quite simple. For consumers it’s a platform that let’s people give gift cards or vouchers for actual gifts to their friends and family on social networks.  

And rather than requiring the recipient to print the gift card, or wait for a piece of plastic to arrive in the mail, the more sophisticated of these platforms deliver the gift cards digitally. The beauty of this is digital cards are stored in the recipients’ mobile phones, where they’re always there, ready to be redeemed in-store as part of a purchase.

The best of these platforms are now being used by consumers for everything from casual, day-to-day small gifts, to large, substantial group gifts in celebration of big events.

For example, imagine it’s a co-worker’s birthday. You’re not particularly close, but you’re Facebook friends. Instead of just being one of the hundreds of others who send written birthday wishes, social gifting allows you to attach a small – usually £5 to £10 – free gift card provided by popular brands such as Warehouse, Oasis, Karen Millen and Schuh. At the click of a button you’ve given your colleague something of real value and made yourself stand out from the dozens of other well-wishers.

Many of these services also facilitate group gifting. Let’s say it’s your sister’s birthday. You live in London, your brother lives in Manchester, your folks live in Glasgow, and your sister lives in Bristol. With social gifting built on a friend-to-friend (F2F) marketing platform you can co-ordinate contributions from everyone on the social network, and pool your money to send her one big gift card, so she can buy not just a new pair of shoes from Warehouse, but also a matching top, jacket and bag.

For consumers the benefits of social gifting are obvious. It takes the hassle out of giving people gifts, and actually makes fun and easy. It eliminates the need to go into a store, purchase a gift card, wrap it and either present it in person or send it by mail. You no longer have to make dozens of calls or send piles of emails to coordinate a bigger, more expensive gift. 

But for retailers, the benefits of social gifting are far more profound.  

Social gifting can be a discount-free marketing platform for conducting measureable, performance-based customer acquisition and retention campaigns. Because in essence, social gifting flips mass discounting and the deal voucher model on its head.  

Used correctly social gifting can be used by retailers to target and drive specific demographics into their brick and mortar stores (where 90% of sales are still made). 

No one wants to give a coupon as a gift. But they will gladly give gift cards of real value to friends and family on a social network – positively inserting the retailer into the social network conversation, and thereby endorsing – recommending – the brand in a totally non-obtrusive, non-aggressive way.

Because there is no cost to the retailer until the recipient walks into the store and purchases something, social gifting can be zero risk.  And, early returns indicate people are spending four to six times the value of the free gift cards provided by retailers. So it’s not just a sale, it’s a profitable sale. 

Despite offering numerous opportunities to influence consumers, social media still accounts for less than 1% of an average marketing budget, according to recent article in the McKinsey Quarterly. Many chief marketing officers say they now want to increase that share to 5%, but the main obstacle is the perception the return on investment from such initiatives is uncertain.

Show them social gifting built on F2F marketing. I’m sure they’ll agree it’s a no-brainer.

Hjalmar Winbladh’s Biography: Winbladh is a serial entrepreneur based in Sweden. His latest venture, Wrapp, offers a new take on social and mobile gifting. Prior to Wrapp Winbladh co-founded and was the CEO of Rebtel, the world’s largest independent mobile Voice over IP company where he still serves as chairman. In 1994 Winbladh co-founded and was the CEO of Sendit AB, the first mobile internet company, which Microsoft acquired in 1999.

Wrapp contact details:

Tel: +1 415 717 4666

Email: greg@wrapp.com

Web: www.wrapp.com

(A Retail Times’ sponsored article)