Electronic Retailer - November 2011 - 38

BY TREVOR LEGWINSKI

Case Study

a
The Solution

Building a Voluntary Sales Force
How e-retailer Folica increased online conversions by 433 percent using social referrals.
existing customers with a $10 coupon for Folica hair care products for each friend who purchased products as a result of the social referral. The friend/new customer also received a $10 coupon to use at the point of purchase. To encourage easy sharing, Folica enabled its customers to share across multiple social channels such as Facebook, Twitter, email and personal URLs (“PURLs”). Folica also promoted the campaign via calls to action on its website, Facebook page, Twitter profile, customer newsletter and dedicated email blasts. Extole provided ongoing tracking and optimization as well as ongoing tests of these promotional spots and adjusted for maximum conversion as needed. Extole tracked all of the results for each channel. This allowed for detailed analytics to be provided to Folica throughout the campaign. Extole also integrated social referral tracking into Folica’s order confirmation page to enable the company to track actual sales as a result of the program.

Across all industries, social media represents an incredible opportunity but also a challenge as companies know they need to “be social” but many are confused as to which programs to execute and how. Retailers, even savvy online retailers, are not exempt from this confusion and, when all else fails, have focused on building a social presence on Facebook or Twitter. Where they haven’t spent as much time investigating – and benefiting from – is using social media to engage their customer base and turn their most vocal brand advocates into a voluntary sales force. More than two-thirds of consumer-related economic activity in the U.S. is driven by personal recommendations. Combine that with the fact that more than half of Americans are now engaged in social media, and the potential of social referrals comes into focus. In fact, research shows higher revenue per referred customers vs. non-referred customers. But, implementing a social referral program isn’t as simple as popping up a Facebook sweepstakes where you must be a “fan” to enter. It is about a sustained, cross-channel effort to communicate with your current customers and have them help in identifying new ones. Folica Inc., an online retailer of hair care and hair styling tools is one company that recognized this opportunity and has integrated social referrals into its marketing mix.

The Results
A well-designed reward, coupled with Extole’s robust platform led to results that exceeded Folica’s expectations. Within the first 30 days, Folica’s social referral program drove a 16 percent conversion rate, which means 16 percent of people clicking on a friend’s link or post went on to make a purchase. This represents a more than 433 percent increase over the industry average of 2.9 percent. The program also achieved a 5.5 percent open rate of its email promoting the program. Lastly, the program saw a 93 percent open rate from customers sending emails on the program to their friends, and a 22 percent click-through rate of these emails.

The Challenge
Folica knew from reading the product reviews on its e-commerce site that new customers often purchased from the site because friends told them about it. (Note to reader: Read your reviews. They give you insight into your customers and are a goldmine for new marketing ideas.) With this information in mind, Folica knew it wanted to create a social referral program to tap into the power of customer referrals to increase new customers and sales. The largest challenge Folica faced was creating a compelling and unique offer. Like many retailers, Folica promotes a wide variety of offers on its site on an ongoing basis. Thus, Folica needed to develop an offer structure that was rich enough to encourage current customers to share Folica with their friends and would not be dwarfed by other daily deals advertised on the site.

Conclusion
With its first foray into social referrals, Folica experienced great success. As other retailers contemplate similar programs, there are a few things to keep in mind: 1. Leverage customer referrals on your largest brand channels first (your website and email). 2. Provide an incentive for the referrer and friend to encourage social sharing. 3. Offer multiple sharing options (email, Facebook, Twitter, LinkedIn, Google Plus and personal URL) for the widest reach. 4. Identify your goals before you execute whether it be sales, brand impressions, reach, leads and/or repeat purchases. 5. Measure and optimize your offers, sharing options, creative and copy to get the best results. Trevor Legwinski is the director of marketing at Extole, a company that helps brands and agencies turn customers into social marketers.

Folica partnered with Extole to run its social referral program, based on its deep experience with social referrals and recommendations, and its fully hosted solution that allowed Folica to focus on its core business rather than developing an in-house referral program. As mentioned above, Folica’s social referral program had to look and feel different than the other offers it had on its site. Thus, Folica and Extole created an offer that rewarded 38

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Electronic Retailer - November 2011

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