The impact that social will have on the way people shop- and on your bottom line - is expected to grow by leaps and bounds in the coming years. Learn the truth about what public social networks mean for your acquisition strategy.

1. hey, retail!
get serious about social acquisition
the real truth about public social networks (like Facebook and Twitter)

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lithium.com | © 2013 Lithium Technologies, Inc. All Rights Reserved
Lithium social software helps the world’s most iconic brands
increase loyalty, reduce support costs, drive word-of-mouth
marketing, and accelerate innovation.
Lithium helps brands to build vibrant customer communities that:
contents
1 intro
2 the state of social media for retail
3 the social media imperative
4 the social media good news/bad news
6 social networks are not communities
7 social network volume and velocity
8 it’s a small world—and getting smaller
9 public social network limitations
12 resources
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intro
Social shopping may be in its infancy, but like most infants, it’s only getting bigger—and it’s growing fast.
The potential benefits for retail are hard to beat: social
offers lower acquisition costs, viral buzz, more eyeballs—and
more focused eyeballs—for targeted advertising that lead to
increased click-throughs. The impact that social will have on
the way people shop—and on your bottom line—is projected
to do nothing but grow. In fact, new estimates predict that in
the next two years the value that social media offers to retail
will more than double. This paper aims to unpack the specific
potentials (and limitations) of public social media networks
like Facebook and Twitter as engines of acquisition, and part
of your broader social strategy.
53%
of people on Twitter recommend companies and/or
products in their Tweets
deliver on their purchase intent
48%
$231
2012 2013 2014 2015 2016 2017
$262
$291
$319
$345
$370
14%year-on-year growth
forecast: US online retail sales, 2012 to 2017
(US$ billions)
CAGR from 2012
to 2017: 9%
share of total retail sales
13% 11% 10% 8% 7%
8% 8% 9% 10% 10% 10%

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the state of social
media for retail
What you’re literally acquiring over social media is awareness
and interest—winning customers’ attention and influencing
them to check out what you have to say. It‘s ultimately about
bringing in new potential customers, of course, but social
media strategies function principally as a top-of-the-funnel
mechanism for expanding your company’s social footprint
and dramatically extending the range and impact of its
messages. Public social media channels (and not merely
because they’re huge) represent a giant set of tools and
services for retail, beginning with the infrastructure to
generate that huge new audience.
Going online has transformed retail from the top shelf to
the bottom line, from how brands market, stock and grow, to
how they support, innovate and monetize. When it comes to
acquisition specifically, social customers have totally changed
the game. They are a new breed—connected, empowered,
influential, and they value customer reviews above the
company line. One key driver of their revolution is mobile
innovation, which—ready or not—has already
brought social into your bricks-and-mortar stores. Today,
over 40% of US smartphone owners compare prices on their
mobile device while in-store shopping. By 2015 smartphone
users are projected to rise to 159 million, up from just 82
million in 2010.
Social offers your brand access to many millions more
consumers than ever before. In turn, they have greater
access to you, too—as well as a growing power to move
your bottom line. Social customers expect real-time service
and an excellent customer experience to be included in the
sticker price and they complain loudly and effectively when
disappointed. That said, today’s top brands are doing more
than just satisfying their social customers, they are sparking
their passion and enthusiasm to help drive new business.
community
member spend
non-members
community
members
community
superfans
2x
10x
relevance
interest
awareness
desire
action
reach

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The market itself has already responded to social media
disruption with a shift in priorities. For retailers today, the
point of sale is now only the beginning of a long-term,
profitable customer relationship. Social media doesn’t just
empower brands to tap a much larger consumer pool or get
to know their customers really well. It doesn’t merely
enhance the speed, reach and relevance of word-of-mouth
messaging. Social media makes each of these things an
economic imperative. At this point, a complete social strategy
is more than a matter of gaining a competitive edge; it’s a
matter of survival.
Increasingly, social consumers expect retailers to deliver an
integrated shopping experience across all channels. Brands
failing to deliver risk irrelevance. Already, more than 74% of
consumers rely on social networks to guide their purchase
decisions. Over 64% of consumers have made a first purchase
from a brand because of a digital experience such as a visit to
a social network or community, a mobile coupon, or an email.
How well you adapt to the changing landscape and meet the
growing expectations of today’s social customer will help
define your rate of acquisition and your profits, now and into
the future.
the social
media imperative
long-term,
profitable
relationships

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the social media
good news/bad news
Overall, the outlook for online retailers remains sunny. Online
retail has seen double digit growth since 2010 and is expected
to top $367 billion by 2016. Fifty-eight percent of retailers say
their online conversion rates were up and cart abandonment
rates down in 2012. But we all know the tide can turn at any
moment. In 2009, Netflix had been outperforming the average
Internet retailer in customer satisfaction for years and
was considered the top retailer by the American Customer
Satisfaction Index (ASCI). But in 2011 and 2012, the once
mythically popular video streaming company fell to the lowest
rated Internet retailer.
What happened? Netflix, arguably, made some pricing and
policy missteps. Importantly, though, social media added fuel
to the fire. Social media only did exactly what it was supposed
to do—propagate messages. But what it propagated—at
breakneck speed—were negative impressions of Netflix
throughout the marketplace, and this took a sizeable bite out
of the brand’s image.
But channels like Facebook, Twitter, Google+, YouTube,
Pinterest and Instagram can propel acquisition just as
efficiently as they can accelerate disaster.
For retail, the trick is in making sure the messages kept afloat
with social customers are about the positive experiences they
have with your brand. To do that, you need to have a social
strategy that understands how those messages propagate.
When social media-based customer communities flourish
around brand messages, they create interest, awareness and
loyalty, and the potential to become one of your most efficient
drivers of acquisition.
80% of consumers are more likely to
try new things because of social media.
source: CMO Council

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Social networks are the top online destination. For most
social customers today, the components of your acquisition
strategy will define their first direct experience with your
brand. It’s the face you put on that all-important first
impression. Sixty percent of people who use three or more
digital means of researching products first learned about a
retailer through a Facebook or Twitter post.
Any effective social strategy needs to recognize and invest in
what channels like Facebook are designed to do best—attract
lots of eyeballs and spread your message fast. It’s vital that
you not waste time, money and goodwill trying to force public
social channels to do what they fundamentally can’t, like
deepen relationships or enlist customers. Those aims are
better left to communities.

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social networks are
not communities
Social networks and communities are just how we describe
two different kinds of social structures that have been around
for many thousands of years. We’ve been organizing ourselves
in groups since the beginning, and we still do. But here are
the important distinctions between the two when it comes to
social strategy:
Social networks (like Facebook and LinkedIn) are held
together by pre-established interpersonal relationships
between individuals, like family, friends, classmates, and
colleagues. You know everyone in your network personally
because they’re all directly connected to you. Those
interpersonal relationships mean there’s more initial trust in
social networks than in communities. Ironically, though, all
those friends tend to get in the way of your brand goals. The
reason is that networks like Facebook do such a great job
at maintaining connections between trusted relationships,
there’s not much room left for other engagements—your
brand included.
Communities (like Yelp, Wikipedia, and brand communities)
are held together by a common interest. They form around
members’ hobbies, goals, art, politics, as well as the
products they use everyday. Although there may be pre-
existing interpersonal relationships between members of
a community (ie: you rarely already know people in your
community the way you already know everyone in your
network), knowing people personally is not required and it’s
not even common. Community members represent a wide
range of origins and types. The common element—the glue
that keeps their community together—is that they all care
about the same thing: the shared interest of their community.
That shared interest means that there’s more initial relevance
inside a community than in a social network.
Communities and social networks are different structures,
but that doesn’t mean that they are mutually exclusive: they
overlap, intersect and weave in and out of each other. In fact,
social networks can (and often do) exist inside communities.
common
interests
pre-existing
interpersonal
relationships
held together by
may have
comm
o
n
interest relationship
s
social networks online communities

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social network
volume and velocity
volume
In a public social network, the comparative lack of relevance
puts a limit on what your brand can do, but it doesn’t slow
down acquisition. On the contrary, if you’re trying to acquire
more customers, and keep their numbers reliably growing,
social media gathering places are your richest pools. Simply
by increasing the number of aware consumers, brands
benefit from a proportionally greater number of conversions
at the other end of the funnel. In other words, just by setting
up shop where the crowds are already thickest you get a
bigger audience. With over a billion active users, Facebook
alone offers businesses an irresistibly wide pool. Toss in
a couple of other public social networks like Twitter and
Google+ and your opportunities get even bigger.
velocity
Messages travel across social media so fast, it’s almost
real-time. We learn about uprisings over Twitter before
dictators a world away fully know what’s hit them. These
days, people can attend a conference virtually by following the
hashtag for the event on their Twitter stream. And when the
Supreme Court makes a decision, Facebook and Twitter are
hosting reactions within seconds of the first announcement.
Because information shared across social networks is so
fast, using social networks to propagate your messages helps
to spark customer engagement with an increased sense of
urgency and timeliness. Engagement can and often does
happen on your acquisition channels, though the interactions
are not usually very deep. This shallow engagement, however,
is often enough to grab the attention of your potential
customers, and therefore helps you acquire more effectively.

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it’s a small world—
and getting smaller
To understand why social networks offer such high velocity
(so that you can build tactics that take advantage of it), let’s
take a look at how the interconnected structure of networks
like Facebook and Twitter are shrinking the world—to the
benefit of brands.
We know that information travels across social networks
from one person to another via sharing. So your message will
propagate through the network faster when the connections
in it have, on average, fewer degrees of separation.
This is the familiar theory of “six degrees of separation”. The
American psychologist Stanley Milgram tested and made
famous the idea that even though there are infinitely many
paths connecting any two people in the world, you could still
select any person on Earth—anyone, anywhere at all—and
contact that person using nothing but a chain of about six
individuals, at least one of whom is a personal acquaintance.
Off-line, some chains are much longer and some end up
being shorter, but in general, the shortest and most efficient
path between any two people on the planet is on average
about six people. That means it takes only six re-shares for
information to spread throughout the entire social network in
the physical world.
The interesting thing is that online, the path is even shorter—
and it’s shrinking. As we build our networks, establishing
relationships and following people, we become more and
more tightly connected. Facebook, for example, started
out mimicking our physical social network pretty well with
an average of 5.73 degrees of separation. Now there’s an
average of 4.74 degrees of separation between any random
pair of Facebook users. Twitter is smaller still. It began with
an average of 4.12 degrees of separation between users. Now
the average is 3.43. That’s the reason that breaking news is so
often heard first over Twitter.
The relatively small size of our online personal networks—
about 229 friends, on average— not only enables us to know
our friends better, it also keeps information that is only
relevant to a few people well-contained. On the other hand,
when the information is relevant to a broader audience,
then the small world property of our social network enables
each person to spread it rapidly to a large audience. This
balance between relevance and reach is what gives public
social networks like Facebook the power to drive interest and
awareness so effectively.
average degrees
of separation

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public social
network limitations
broad but shallow
We know that Facebook fan pages are effective at bringing
new consumers through the shallow, upper layers of the
traditional purchase funnel, but by themselves they don’t do
everything that your brand needs social to do. To say that
they’re shallow, doesn’t mean that fan pages don’t also lead
to purchase actions—they do. We call public social networks
shallow because after making the initial draw into the early
stages of the funnel, fan pages simply don’t add a whole lot
more to the funnel’s natural conversion dynamics. Those
conversion dynamics develop only through the combination of
engagement and enlistment strategies.
The reason public social networks can’t drive deep-funnel
behaviors well enough on their own has to do with the
relevance issue: the fact that friends and family in our social
networks aren’t gathered around a common interest. The
content they pass along to one another over Facebook or
Twitter, even when it’s timely, is really just hit or miss. The
upshot is that acquisition is necessary, but not sufficient on its
own to create a holistic social strategy.
irrelevance and noise
Even though you’re casting the widest net in the biggest
pool, when you delve into social networks you’re still not
going to acquire everyone. That’s because the bigger a chan-
nel is, the less focus it has, and the less focus it has, the less
relevant it is to any one individual. The reason YouTube got so
big in the first place is that it’s utterly non-specific—
it’s got to have something for everyone. As individuals, after
all, we’re all interested in something different, personal,
unique to us. When the audience is that broad and diverse,
as it is on large social networks like Facebook and Twitter,
when you focus on strong relationships instead of common
interests, your brand’s message will inherently suffer from a
lack of relevance.
The other downside of big social networks is that big comes
with a lot of noise. It’s not just the billions of people
hanging out in these networks—it’s the gazillions of
conversations across every imaginable subject flying around
them. Lots of consumers means lots and lots and lots of
conversation. The onslaught of social media conversation
creates a huge challenge both for your technology and your
staff, because with those noisy conversations comes a lot of
irrelevance to you.
just 2% of fans return
to brand pages they
like on Facebook
source: AllFacebook.com

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That said, however daunting, that endless spool of social
media conversation threads also represents a golden
opportunity. First and foremost, it allows you to learn a lot
more about the consumer in general and more about your
customers in particular. Gathered well, those insights can
lead to a real understanding of their interests, likes and
dislikes. That data lets you understand your customers better
so that you can become more relevant to them, which in turn
makes your acquisition efforts more effective. That’s why just
being there is never enough.
the most common mistake
One of the most common mistakes companies make with
social media is to launch many, many fan pages for every last
feature in their products instead of creating a cohesive social
strategy for their online presence.
By spreading their presence too thin, brands are essentially
shooting themselves in the foot. One of the results we found
in developing the Community Health Index is that you need a
concentration of activity to produce a sense of livelihood that
attracts new members and grows the community. If brands
spread their activity too thin, they can only blame themselves.
Further, the content that most companies share is rarely
optimized for their fans’ newsfeeds. Instead, the content gets
optimized for what the company wants to communicate. If
that’s the case for your company, then your fan pages have
just become another one-way communication tool, which is
not what social is all about. In fact, this one-way approach is
the very opposite of social.
off-domain ain’t your domain
While public social networks are terrific top-of-the-funnel
tools for acquisition, powering reach and driving the aware-
ness, they fall short on the deep engagement you need, and
miss enlistment entirely. The simple reason for this is that
they are off-domain. You don’t own these channels. You don’t
own your Google+ fans, Twitter followers, or your Facebook
pages. You can’t control the experience your customers have
when they view your content and interact with your brand on
YouTube or Pinterest, and you certainly can’t interact with
customers on these properties in any scalable capacity.
If people simply put a ‘follow me’ on Facebook or Twitter
or on their corporate home page without an integrated
strategy, they are actually driving traffic away, and doing
themselves a dis-service. The effect would be N times
worse if they have N fan pages.
—Jeremiah Owyang, The Altimeter Group

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Further, on platforms you don’t own, the data available to you
is fleeting and any benefits they yield are inherently short
term. Why? Because at anytime, Facebook can change their
interface, their pages, layout, the way groups and people
connect, how much information is available to you (or not)—
pretty much anything. That alone hinders your ability to
learn, adapt and innovate on the social customer experience
you deliver.
Moreover, fans go to Facebook to interact with their
friends, not with your brand. You might pitch a clever, well-
timed, totally personal message to them there, but they’re
still missing the kind of engaging social customer
experiences they can—and do—get from brand-owned
customer communities.
Facebook, Twitter, YouTube, Pinterest all attract consumers
in huge numbers and yes, you need to set up shop there,
too. But the difference is that in the new order, it’s not nearly
enough to catch-and-monetize—today, that’s the same
as catch-and-kill: you only get to monetize them once. In
today’s marketplace, the point of sale is only the beginning
of the profitable relationship. Gaining long-term competitive
advantage is about winning the social customer experience
such that you can monetize customers over and over again.
The business goal of a sustainable social strategy is to
engage social customers to co-create something of mutual
value with your brand, and then enlist them to become, in
turn, your most efficient engines of acquisition.
the Canon Forum community
accumulated over 5,100
registered users and 2.8M page
views in its first 6 months

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lithium.com | © 2013 Lithium Technologies, Inc. All Rights Reserved
Lithium social solutions helps the world’s most iconic brands to build brand nations—vibrant online communities of passionate social customers.
Lithium helps top brands such as AT&T, Sephora, Univision, and PayPal build active online communities that turn customer passion into social
media marketing ROI. For more information on how to create lasting competitive advantage with the social customer experience,
visit lithium.com, or connect with us on Twitter, Facebook and our own brand nation – the Lithosphere.
resources
i. U.S. Online Retail Sales to Hit $370 Billion by 2017, Forrester Research
ii. Social Media Is A Highly Valuable Tool for Retailers, The Guardian
iii. Majority of Consumers Relay on Social Networks to Guide Purchase
Decisions, Gartner Research
iv. Digital Brand Experience Report, Razorfish
v. US Digital Future in Focus—2013, Comscore
vi. Social Media Report, Nielsen
vii. Smartphone Adoption Soars, Internet Retailer
viii. The State of Retailing Online, Forrester Research
ix. STUDY: Facebook Timeline Doesn’t Affect Engagement, AllFacebook.com
x. Online Retailers’ 2013 Top Priorities, Forrester Reesarch
xi. 9 Retailers with the Worst Customer Service, USA Today
xii. How to Measure Your Facbook Engagement, Social Media Examiner
xiii. The Digital Divide, Lithium & the CMO Council
resources