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With the explosion of social media, beauty brands and retailers have become increasingly aware of the important role their consumers play in fueling the purchasing funnel. Research shows recommendations from peers or opinions posted by consumers online are the most trusted forms of marketing. According to the Nielsen Global Online Consumer Survey, 90% of consumers trust recommendations from people they know, while 70% trust consumer opinions posted online.
This research, when leveraged with the power of social media, provides beauty brands and their retail partners the opportunity to tap into their consumers and turn them into a highly effective marketing channel. Folica—an e-commerce website for hair products, tools and expert advice on care and styling (www.folica.com)—did just that.
By taking a closer look at its customer data, Folica noticed its consumers were doing the marketing for them by referring their friends to the Folica website. Folica’s consumers had organically become the brand’s own social advocates, voluntarily recommending the Folica website and inviting their friends to check it out. Wanting to leverage this trend and accelerate the process, Folica launched a social referral program in June 2011. Powered by Extole, the referral program was introduced and launched via Folica’s 850,000-strong e-mail subscribers.
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The e-mail was sent to all subscribers explaining the referral campaign. The concept was simple: Consumers who referred others received a $10 credit toward future purchases at Folica.com when a referral resulted in a purchase. The referred customers also received a $10 credit as an incentive to make their first purchases from the e-retailer.
To further propel the reach of the referral program, Folica also used its owned media channels to promote the offer. Its website, Facebook page, Twitter feed, customer newsletter and dedicated e-mail blasts were all used to announce and drive to the program. Existing Folica customers received an invitation to refer their friends from each of these channels. These customers then became online social influencers and started to refer their friends to the brand. They posted directly into their Facebook news feeds, e-mailed their friends, tweeted and reached out via other online methods.
Interestingly, the owned channels drove the highest amount of social referrals via the brand’s own website and e-mail database. Extole provided ongoing tracking and optimization on each of these social touch points and adjusted for maximum conversion. This sustained, cross-channel effort helped Folica understand and communicate with its current customers and incentivize them to help identify new ones.
“Our expectations for the referral program were exceeded in just the first 30 days,” said Jessica Bohm, marketing director at Folica.com. “Ninety-three percent of the referral e-mails customers sent to friends were opened, and 22% of those who opened a referral e-mail clicked through to visit Folica.com, which resulted in 16% of customers making a purchase. By both our standards and industry standards, these numbers were astounding.”
According to Forrester Research and Shop.org statistics, the industry average online conversion rate for e-commerce is 2.9%. Folica’s 16% online conversion rate, in just the early stages of the campaign, was a true testament to the power of social referrals.
In addition to tracking the number of conversions, Folica also tracked the number of shares for each channel: Facebook, Twitter, e-mail and the number of clicks that resulted from each share. Each promotional placement was also tracked and analyzed to fully optimize the referral program. This allowed for detailed analytics to be provided throughout the campaign. It also allowed Extole and Folica to modify promotional placements and make recommendations as needed.
Folica took several steps that encouraged social sharing and paved the way for a successful referral program. As other retailers contemplate similar programs, there are a number of practices they should keep in mind.
Creating a unique and compelling offer is integral to a social referral program’s success—it is the fundamental driving force. Like many retailers, Folica promotes a number of offers at any given time, from special deals to discounts on the latest hair products. Thus, Folica needed to develop an offer structure that was rich enough to encourage current customers to share Folica with peers and would not be overshadowed by other offers being advertised on the site. The offer also had to be a win-win for both the referrer and the friend.
The promotion of the program also plays an important role. It is at the top of the referral funnel and represents the biggest lever in campaign optimization.
The owned media channel is often overlooked, with retailers focusing most of their attention on paid and earned media. What retailers are neglecting to realize is that their brand’s websites and e-mail databases are one of the most important places, if not the most important places, to engage their consumers and encourage them to become social advocates. Folica knew this and properly executed the promotion of the program by leveraging all of its owned media channels. Placements on its website, Facebook page, Twitter feed, and e-mail blasts all contributed to the success of the program.
Lastly, the timing of the referral program itself contributes to its success. Folica’s six-month referral program falls into the sweet spot of a program’s life cycle and primes it for future or extended referral programs.
With its first foray into a social referral program, Folica experienced the unprecedented value its consumers had in affecting and fueling the purchasing funnel. Folica’s consumers became its most effective marketing channel.
A well-designed social referral program led Folica to achieve results that exceeded its expectations and ultimately squashed industry-standard online conversion rates and produced quality ROI.
Trevor Legwinski is the director of marketing at Extole. In addition to retailers such as Safeway, Famous Footwear and Sky Mall, Extole’s clients include Audi, The Discovery Channel, MGM Resorts and The Boston Globe. www.extole.com