Owning Your Brand's Social Community Drives More Shoppers

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Owning Your Brand’s Social Community Drives More Shoppers and Sales share this whitepaper

Contents

1 Executive Summary

3 Introduction

5 Research Scope & Methodology

6 Why They Come

7 Comprehensive Findings

9 Retail

11 Communication Service Providers

13 Conclusion

We make software that helps you better connect with your customers. Our social software helps companies respond on social networks and build trusted content on a community they own:

Executive Summary

In today’s social marketing world, proving the ROI and impact of social marketing can be challenging. Consumer usage of social communities has grown to the point where they are now major brand touchpoints and, in some form, building a social community has become standard for most brands. With this growth in scale, the question marketers are asking is: is my investment in community driving sales and improving critical branding objectives like NPS (Net Promoter Score) as well as purchase intent (PI)? They are also asking The study, commissioned by Lithium, included a large which type of brand community should be prioritized: social sample of leading consumer brands in Communication media communities, such as Facebook and Twitter or on- Service Provider, Technology, Financial Services, and Retail domain branded communities like Lithium? that use Lithium and social media extensively. The sample represented more than 30% of Lithium’s monthly usage and A major research study conducted by Millward Brown Digital a combined market capitalization of more than $740 billion. has found that the value of a Lithium customer community During a 13-month period, it observed 60,000 US consumers’ is unequalled in terms of sales conversion, frequency in social community usage and their e-commerce activity and purchases, and attracting customers that have higher NPS resulting e-commerce sales on Lithium communities and and PI scores, trust, and loyalty among brand’s owned/earned their social media communities. In addition, a survey of social media audiences (the study did not cover brands’ paid 4,000 US consumers evaluated the brand impact on social reach). According to the study, branded on-domain users that engaged in Lithium communites, social media communities drive the majority of e-commerce sales, attract communities, or who had not engaged at all in any of the more shoppers and have higher conversion rates than the brand’s social communities. brand’s other social media communities. The research results highlight that brands need to make branded, on-domain communities a priority, and if they are not already doing so, they would do well to improve their approach to social marketing. Branded, on-domain communities are a powerful, untapped consumer touch point that influence consumer behavior and generate improved revenue.

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Specifically, the study found that in comparison to the brand’s 52% other social communities, their Lithium community drove the: Most traffic: 52% of all social traffic, more total reach than their other social media communites combined.

Most shopping: 7.8 times more shoppers than the brand’s other social media communities combined.

Most sales: 65% of all social e-commerce sales or 12 times more sales than all other social media communities combined.

Most incremental sales: Same session e-commerce sales conversion rates doubled within 30-days after a customer’s first visit to a brand’s Lithium community. Visiting the community continued to influence up to four times as many shoppers as other social media communities combined within 30 days of a first visit. Lithium community users were 65% also more likely to purchase again, with 79% saying they would spend more per sale.

Best customers: The study included surveys of 4,000 consumers and underscored the importance of building trusted relationships with customers. It revealed that Lithium communities have a strong positive impact on perceptions of trust and loyalty. The brand’s Lithium community attracted the brands’ best customers as evidenced by the highest NPS and PI scores for the most customers.

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Introduction

If you’re like most brand marketers, you understand that, don’t go to Facebook to find your brand. They go there to today, “social” is interchangeable with “relevant.” Your brand connect with friends and family. They “liked” your page at has an online and mobile presence composed of a website, some point and now your posts stream through hundreds of e-commerce and customer support features, and social others that flow through their timelines. It’s easy for brands pages on third-party sites like Facebook, Twitter, Pinterest, to get lost in that crowd and hard (dare we say, impossible?) YouTube and Google+. to keep consumers’ attention.

Social networking sites like Facebook generate a sense of That’s why smart brands are looking at the value of community, foster brand awareness, and allow brands and prioritizing their own social communities. The advantages are consumers to interact in real time. However, many brands many, one of the chief being that you control, well, everything are discovering that third-party sites have disadvantages. You about it. You create a “social hub” for your customers to can’t control the end-user or privacy agreements (Facebook gather, interact, hang out, get help, discuss product/service owns your page, after all), you can’t make changes to the recommendations, be notified of sales/discounts, and belong interface, and perhaps, most serious of all, people simply to a community of like-minded brand enthusiasts. Brands quickly find that branded, on-domain customer communities reduce service costs, accelerate innovation, and grow brand advocacy. All of which are great and wonderful, right? But the key question digital marketers and e-commerce executives ponder is: do customer communities actually drive sales? What is the business value in prioritizing your own customer community?

Lithium software helps companies reinvent how they connect with their customers via brand communities. We work with more than 300 of the world’s best brands— including AT&T, Best Buy, Indosat, Sephora, Skype and Telstra —to respond on social networks and build trusted content on a community they own. We have been asking the same questions. And we’re happy to report that we have some answers for you.

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A research study conducted by Millward Brown Digital has found that Lithium communities (owned and branded by our clients) drive 12 times more sales than all other social channels combined. Additionally, the brand’s Lithium community attracted the brands’ best customers as evidenced by the highest NPS and PI scores for the most customers. Our analysis indicates that these communities impacted more than $500 million in e-commerce sales in a single year—a particularly significant finding since the study represented a sample of only about a third of Lithium’s total community users, and the communites were designed to increase the brands’ social presence not e-commerce sales. Lithium communities drive The study tracked desktop e-commerce sales, but did not 12x more traffic than all other track mobile, in-store or sales outside the US, indicating that the overall sales and brand impact of the brands’ Lithium social channels combined communities could be far more substantial. Millward Brown Digital study

Additionally, the study findings revealed that Lithium communities powerfully convert shoppers into buyers and continue to influence consumers long after a visit to the community. Sales conversion rates doubled and continued to influence up to four times as many shoppers as other social channels within 30 days of a first visit. Community users are also more likely to purchase again, spend more per purchase, be brand loyalists, and associate “trust and honesty” with the brands studied. All are strong indicators that brands that leverage owned customer communities experience significant benefits, including increased sales revenue.

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Research Scope & Methodology

The study focused on a cross-section of U.S. Lithium In the study, a “same session” was defined as 20 minutes customers over a 13-month period from October 2012 to after a branded site visit. Activity was tracked within “30 days” October 2013. It included surveys and tracked user behavior after a branded site visit and a “first Lithium community visit” on desktop computers only (no mobile devices, in-store sales was tracked at pre/post 30 and 60 days, respectively. The or non-US sales) across all social properties operated by terms “shopping activity” (add to cart), “sales activity” (check Lithium customers, and it represented one-third of Lithium’s out) and “conversion” are used consistently throughout. user base among major U.S. retail, communication service The study also included interviews with 4,000 additional provider, financial services, and technology brands. Traffic, customers who had purchased from the brand with the intent conversion rates, sales revenue, purchase influence, and to gauge the importance of trust, brand reputation, and the brand affinity were studied after consumers visited a Lithium value of community to consumers. These were segmented as (branded) community, and after consumers visited other “Lithium” (had visited the brand’s Lithium community); “Other social media properties operated by the same brand. These social” (had visited the brand’s other social communities, other social channels were Facebook, Twitter, YouTube i.e., Facebook, Twitter) and “General purchaser” (had and Pinterest. Google+ was not included, as it did not have purchased from the brand, but not visited the brand’s Lithium sufficient shopping activity to be measured by this study. At community or other social communities). times, a specific social media brand of the brand’s studied was not included if it did not have sufficient traffic.

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Why They Come

These results provide solid evidence of the value that

consumers attribute to communities, as well as the When asked why users had visited a community financial value experienced by or social page, their response was... brands when they leverage an owned customer community.

38% researching brand’s product or service before purchasing

33% to hear more about promotions, sales and new products

36% seeking customer support/help

26% came across it while exploring the brand online

24% to find out about other products and services I can buy from the brand

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Comprehensive Findings

Sales impact

• Traffic: Nearly twice as many people who visited a Lithium • Lithium users in every industry studied ranked community performed a shopping activity within 20 “Trustworthy/Honest” as the No. 1 descriptor of the minutes of their visit, compared to Facebook brand visitors brand, followed closely by “Friendly”, “Innovative”, “Smart”, (0.7% and 0.4%, respectively). “Responsive”, “Cool/Trendy” and “Real”.

• Sales: Lithium communities brought in 7.8 times more • 88% said they “purchased from brands they trust”.

shoppers and 11.8 times more sales than other social sites. • 79% reported that “brand reputation is part of the • Incremental sales: Lithium communities brought in more decision process”.

than twice as many users who performed a checkout • 72% said they “enjoy knowing that the brand 30 days after their visit to a branded site compared to provides a community for engaging with those that Facebook users. have similar interests”.

• Best customers: Lift in sales went up 133% in the 30 days Percentage of consumers who strongly agreed they were after a first visit to a Lithium community: 3% of visitors to likely to purchase from the brand again. a Lithium community added to cart within 30 days of their first visit, compared to 1.6% who shopped on a branded site in the 30 days before their first community visit. General Other Lithium Purchasers Social 72% 76% 79% Net Promoter Scores Trust & loyalty Percentage of consumers who considered themselves “extremely General Other Lithium satisfied” with Other Lithium Purchasers Social the brands. Social 26% 34% 21% 35% 39%

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Percentage in lift of how likely consumers who had Percentage who said they would or already had signed up for recommended the brand in the past were to recommend it in a rewards program. the future.

General Other Lithium General Other Lithium Purchasers Social Social Purchasers 48% 54% 60% 15% 10% 23%

Percentage who responded they would “defend the brand” Percentage of consumers who considered themselves and be brand advocates. loyal to the brand.

General Other Lithium General Other Lithium Purchasers Social Purchasers Social 56% 62% 65% 56% 62% 66%

These results demonstrate that branded communities drive shopping activity, direct sales and critical brand what do the results say? metrics. They are also valuable to purchasers and can lead to greater sales revenue than other social media alternatives or general purchasers, creating a significantly more loyal and evangelical consumer base that fuels future revenue. 8 share this whitepaper

Retail

Retailers are experiencing an evolution as they move toward of Facebook, 1.5% of Twitter, 1.7% of Pinterest, and 0.5% of omnichannel marketing — where customers experience a YouTube visitors.

seamless shopping experience across every touchpoint with • 9.6% of Lithium community users performed a shopping the brand, in-store, online, and on mobile. Communities provide activity within 30 days of their visit compared to 8.5% a unique opportunity for retail brands to harness the power of of Facebook, 4.6% of Twitter, 6.9% of Pinterest, 3.0% of consumer advocacy and allow customers to define how the YouTube visitors. brand can be shaped to respond to their expectations and needs. • 56% of online sales volume was driven by Lithium Within the broader study, we examined top retail companies community users; compared to 32% of Facebook, 7% of with both an ecommerce and brick and mortar presence, YouTube, 4% of Twitter, and 1% of Pinterest.

which combined reach over $120 billion in revenue (based on • 50% of online sales volume within 30 days of a visit to a 2013 annual reports from each company studied). branded site was driven by Lithium, compared to 27% by Facebook, 16% by YouTube, 5% by Twitter, and 2% by Pinterest. Sales impact • Percentage of consumers who strongly agreed they would • Lithium communities attributed to $45.8 million over a buy from the brand again: 12-month period for same-session online sales, and they may have influenced $143.7M based on users who visited the community within 30 days of sale. General Other Lithium • Lithium community users spend 8% more compared to Purchasers Social other social visitors and the general purchaser, with 23% of 85% Lithium users spending between $100-$200 compared to 80% 87% 20% of other social, and 18% of general purchasers; 14% of Lithium users will spend $200+, compared to 12% other social, and 11% general purchasers. Net Promoter Score

• After a first Lithium community visit, the incremental lift in sales went up 100% in the 30-day period after. General Other Lithium Purchasers Social • 3.5% of Lithium community users performed a shopping activity within 20 minutes of their visit compared to 2.4% 32% 44% 50%

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Trust & Loyalty • Consumers who reported that the brand “allows me to see what others think about their products or services in order • 67% of Lithium community users considered themselves to make the right purchase decision”: loyal to the brand, compared to 63% of other social, and 57% of general purchasers.

• 70% of Lithium users had or would sign up for a loyalty General Other Lithium program, compared to 63% of other social, and 58% of Purchasers Social general purchasers. 68% 76% 78% • 61% of Lithium community users consider themselves brand advocates, compared to 52% of other social, and 46% • Percentage of those who reported they were “extremely of general purchasers. satisfied” with the brand: • Consumers who reported that they “trust the brand online”:

General Other Lithium Purchasers Social General Other Lithium 40% 42% 48% Purchasers Social

74% 80% 84% • 72% of Lithium and other social visitors have recommended the brands in the past, compared to 62% of • Consumers who reported that the brand “makes it easy to find general purchasers information or get customer support if I have a problem”: • Lithium communities will gain a 22% lift in future recommendations

General Other Lithium Purchasers Social 76% 78% 81%

what is the impact? The impact of communities on retailers is significant in both sales

conversion and trust/loyalty. 10 share this whitepaper

Communication Service Providers

Communication service provider brands fight a fierce, • 53% of online sales volume within 30 days of a branded continuous battle for customer acquisition, retention, and site visit was driven by Lithium users, compared to 18% of loyalty. Owned customer communities clearly win over other Facebook, 27% of Twitter, and 2% of YouTube visitors.

social channels for driving online sales and generating loyalty • Percentage of consumers who strongly agreed they would among customers. buy again from the brand:

With over 160 million customers combined, the brands in the study include the top communication service providers (CSPs) in the US (based on 2013 annual reports from each General Other Lithium company studied). Purchasers Social 70% 67% 71% Sales Impact

• Lithium communities attributed to $40.7 million over a 12-month period for same-session online sales, and may Net Promoter Score have influenced $150.7M based on users who visited the community within 30 days of sale. General Other Lithium • 0.3% of Lithium community users and Twitter users Purchasers Social performed a shopping activity within 20 minutes of 13% 10% 16% their visit compared to 0.1% of Facebook, and 0.2% of YouTube visitors.

• 0.9% of Lithium users performed a shopping activity within Trust & Loyalty 30 days of their visit, compared to 0.5% of Facebook visitors, • 50% of Lithium users had or would sign up for a loyalty 0.7% of Twitter, and 0.7% of YouTube visitors. program, compared to 45% other social, and 42% general • Lithium communities brought in 6.7 times more shoppers purchasers. and 26 times more sales than social media alternatives. • 50% of Lithium community users consider themselves brand advocates, compared to 48% of other social and 45% of general purchasers.

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• Consumers who reported that they “trust the brand online”: • Percentage of those who reported they were “extremely satisfied” with the brand:

General Other Lithium Purchasers Social General Other Lithium 71% 74% 72% Purchasers Social

• Consumers who reported that the brand “makes it easy to find 30% 27% 28% information or get customer support if I have a problem”: • 62% of Lithium and general purchasers have recommended the brands in the past, compared to 58% of other social. General Other Lithium • Lithium communities will gain a 31% lift in future Purchasers Social recommendations. 73% 73% 74%

• Consumers who reported that the brand “allows me to see what others think about their products or services in order to make the right purchase decision”:

General Other Lithium Purchasers Social 60% 66% 67%

Communication service provider brands have the opportunity to significantly increase online sales what is the opportunity? and tap into opportunities for crowd sourcing brand innovation by fostering customer communities that allow customers to have a voice, and advocate for the brand. 12 share this whitepaper

Conclusion

These research findings indicate the power of a Lithium customer community and demonstrate that branded communities drive shopping activity, direct sales and critical brand metrics. Not only do owned customer communities allow brands to maintain full control over their social media platform, they also provide more effective metrics and customization. Consumers want to belong to a community and value interacting with brands they love. They reward brands that provide a community with trusted content; that listen, respond, offer peer-to-peer interaction and problem solve; and a fantastic community experience. Lithium community users purchase significantly more and advocate for the brand among their trusted networks.

The opportunity to create your own customer community is now. The benefits are long-lasting and exponential.

Lithium social helps the world’s best brands build trusted relationships with customers. Lithium helps more than 300 iconic brands — including AT&T, Best Buy, Indosat, Sephora, Skype and Telstra — respond on social networks and build trusted content on a community they own. The 100% SaaS-based Lithium Social Customer Experience™ platform enables brands to build and engage vibrant customer communities to drive sales, reduce service costs, accelerate innovation and grow brand advocacy. For more information, visit lithium.com, or connect with us on Twitter, Facebook and our own community. Lithium is privately held with corporate headquarters in San Francisco and offices across Europe, Asia and Australia.

The Lithium® logo is a registered Service Mark of Lithium Technologies. All trademarks and product names are the property of their respective owners. 13