No Sales For Social?

Although a company’s social site can do well for branding, loyalty and customer word of mouth, new research from Forrester shows that social sites are not currently creating direct sales.

Would your confidence in the value of social business diminish if you learned that only a miniscule amount of business’s direct sales originated from social links?

We suspect it would.

A just-released study by Forrester Research, which tracked the origins of digital purchases, found that fewer than 1% of over 77,000 transactions could be attributed directly to social sites.

Before rushing to judgment, let’s take a close look at what this study does and does not show, and its implications for social tools to drive sales.

First, let’s look at the details of the research itself.

The study, “The Purchase Path of Online Buyers in 2012,” was written by Sucharita Mulpuru with Patti Freeman Evans and Douglas Roberge and was performed by Forrester, GSI Commerce and True Action Network, GSI Commerce’s digital agency. The researchers examined 77,000 consumer orders between April 1 and April 14 2012 to figure out how shoppers touched various digital marketing channels such as search, email and social before making a purchase.

New study: Fewer Than 1% of Sales are Linked to Social Media

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As the Forrester chart illustrates, for new customers, the most common ways they arrived at a purchase were direct visits (20%), organic search (16%) and then paid search (11%), with some variation based on whether or not there were one or two preceding touch points. In both cases, though, social represented less than 1%. For repeat customers, email gets a higher response, with 30% coming from that route (13% after reading the email and 17% after seeing the email and interacting with other marketing forms), with other channels like organic and paid search following depending on whether there was one or two touch points involved. Again, though, social represented less than 1% of the path leading to a direct sale.

The key question is: What to make of this?

The research did not track small businesses, which, in fact, Mulpuru herself has said do perform better with social commerce, particularly in Facebook stores.

Another important factor is that the research does not comment on whether those social sites were trying to deliver sales. It measures how social is being used now — and more often than not, social sites are not set up to produce direct sales. It also does not show if any sites that were set up to produce direct sales were done in any kind of effective or ineffective manner.

We don’t want to minimize the results, though. We think the research does show precisely what it says: that at this point in time, sales are not coming directly from social sites. This fact should be an important consideration in how businesses think about their social business activity: in short, don’t count on it for direct sales. Even so, social business activity may benefit a company in other ways by building brand awareness, managing brand reputation, informing product development, providing customer service and cultivating customer loyalty.