roi impact of social retail victoria bracewell lewis senior analyst forrester research 1 may 2008
TRANSCRIPT
ROI Impact of Social Retail
Victoria Bracewell LewisSenior Analyst
Forrester Research
1 May 2008
3Entire contents © 2007 Forrester Research, Inc. All rights reserved.
4Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Theme
Social retail is creating new opportunities for
shopping . . . and selling
5Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Agenda
• What is social computing?
• The realities of social retail
• Mapping the social retail trendsetters
• Influencing the influencers: How to harness the value of social retail
6Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Social Computing RSS
Open Source S/W
Blogs
Wikis / collaboration
Tagging
Social networks
Search engines
C2C Commerce
craigslist
P2P file sharing
PodcastingComparison shopping
User review portals
7Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Technology is moving away from firms
8Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Technology is moving away from firms
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Creators
Publish a blogPublish your own Web pagesUpload video you created Upload audio/music you createdWrite articles or stories and post them
Critics
Post ratings/reviews of products or services Comment on someone else’s blogContribute to online forumsContribute to/edit articles in a wiki
CollectorsUse RSS feedsAdd “tags” to Web pages or photos“Vote” for Web sites online
JoinersMaintain profile on a social networking siteVisit social networking sites
Spectators
Read blogsWatch video from other usersListen to podcastsRead online forumsRead customer ratings/reviews
Inactives Not using any social technologies
The ladderof participation
10Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Online shopping has grown rapidly in the past few years, particularly in Sweden and the Netherlands
U
PLVS RLT
23m
31m
16m
4.5m
7.2m
4.4m
6.7m
56%
58%
39%
42%
18%
16%
71%
64%
59%
54%
45%
25%
20%
74%
70%
69%
54%
64%
31%
28%
66% UK
Sweden
Germany
France
Netherlands
Italy
Spain
Q2 2004
Q2 2005Q2 2007
Germany and the UK still account for 60%
of Europe’s online shoppers
Base: At least 22,102 European net users (16+) Source: Forrester's Consumer Technology Adoption Study, 2004 to 2007
“Have you bought any products or services online in the past three months?”
11Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Shoppers use of social computing is on the rise
7%
6%
2%
7%
8%
7%
12%
13%
14%23%
Listen to podcasts
Publish your own Web pages
Use peer-to-peer file-sharing programs
Read customer reviews
2007
2006
2005
Base: EU-7 online shoppers
Source: Forrester’s Consumer Techno graphics, 2005-2007
Percentage of online consumers who use these technologies monthly or more often
12Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Agenda
• What is social computing?
• The realities of social retail
• Mapping the social retail trendsetters
• Influencing the influencers: How to harness the value of social retail
13Entire contents © 2007 Forrester Research, Inc. All rights reserved.
What is impact on eCommerce?Social networks drive more site traffic than search: Topshop.com
Source: Spannerworks / Topshop. Data compiled from Hitwise site traffic.
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Consumer reviews drive hard conversions
Highly reviewed products receive more attention from both consumers and retailers, ultimately leading to higher sales
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
Number of reviews
Co
nv
ers
ion
in
cre
as
e
10 to 241 to 9 25+
No reviews
Source: Bazaarvoice. Data compiled from Bazaarvoice customers.
Impact of review volume on conversion
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Reviews also achieve lower product returns
Returns can reduce a manufacturer’s profitability by an average of 3.8%
Source: Bazaarvoice. Data compiled from Bazaarvoice customers.
0%
10%
20%
30%
40%
50%
60%
70%
1 to 5 6 to 15 16 to 24 25 to 59 50 to 100
Number of reviews
Re
du
cti
on
in
re
turn
s
Impact of review volume on returns
16Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Many retailers haven’t got there yet
Yes, all the time27%
Yes, sometimes
5%
Yes, rarely5%
No, never64%
Base: 22 European leading multichannel retailers
“Do you use a recommendation engine?”
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Many outright ignore this trend
36%
31%
21%
20%
25%
20%
24%
14%
16%
18%
32%
33%
29%
25%
30%
25%
23%
30%
26%
35%
Comparison-shopping sites
Wikis/collaboration software
Engage with/monitor blogs elsewhere
RSS
Blog section on our Web site
Monitor user review sites elsewhere
Social networks
Audio and video podcasts
Offer consumer section on our Web site
Forums Don't know / N/A
Will not use
Base: 122 European luxury brand retailers
“In what ways do you currently use Social Computing Web 2.0 technologies?”
18Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Agenda
• What is social computing?
• The realities of social retail
• Mapping the social retail trendsetters
• Influencing the influencers: How to harness the value of social retail
19Entire contents © 2007 Forrester Research, Inc. All rights reserved.
How you should think about these social retail engagement tools
Channel indirect sales
Low
Direct to consumer sales
High
Te
chn
ical
C
om
ple
xity
Customer ratings and reviews
Podcasts
Recommendation engines
Virtual worlds
Blogs
Wikis
Social networks
Niche Communities – User Generated
ContentPersonal
Assistants
RIA
Crowd Sourcing
Mobile Location Services
Searchandising – Faceted Search
20Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Ratings and reviews: The top-rated shopping paths drive direct sales
Bass Pro Shops customers that browse top- rated products have a 59% higher conversion rate and spend 16% more than the average shopper.
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Searchandising, Faceted Search, Recommendations
Implemented July ’07 –
40% of searches result in correct product placed at top of site.
Overall hard conversions increased over 10%.
Source: ComputerWorld UK report on Smart searching, Nov 19, 2007
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User-generated content and products drive ROI directly and indirectly
User-generated = constant NavPix product replenishment
Links with social networks increases product awareness
• Navman’s NavPix library and tool kit; launched May 2006
• Partnered with Lonely Planet and flickr
• Build cost: £550K
• 23 million NavPix images generated
• 3,612 press pieces resulting in Navman as No. 2 for brand awareness
23Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Agenda
• What is social computing?
• The realities of social retail
• Mapping the social retail trendsetters
• Influencing the influencers: How to harness the value of social retail
24Entire contents © 2007 Forrester Research, Inc. All rights reserved.
What should you do about this?
Define clear business goals
There is little point marketing or merchandising with social technologies unless you know what you want to achieve
• Traffic to your Web site (What for?)
• Registrations (What will you do with them?)
• Advertising/eCommerce/subscription revenues (How much?)
• Customer relationship management (How will you manage the data?)
• Market and social retail mapping research (Where and who for?)
• Media publicity and PR (How will you measure?)
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Development
Support
Sales
Marketing
Research
ObjectivesRoles
Listening
Talking
Energizing
Supporting
Embracing
Key roles and objectives
26Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Why? Data indicates you will increase conversions, plus enhance. . .
• Cross-sell and up-sell
• Basket size
• Loyalty
• Service levels
• Satisfaction
• Positive experience and word of mouth
• Brand presence
27Entire contents © 2007 Forrester Research, Inc. All rights reserved.
28Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Victoria Bracewell Lewis
+44 (0)20 7631 0202
To download this presentation, go to: www.forrester.com/internetworld
Thank you