Blog 2: Exposing the influence on purchase decisions?
“Half the money I spend on advertising is wasted; the trouble is I don’t know which half”.
The waste of resources implied by this famous law of advertising attributed to John Wanamaker has been the bane of business since at least the 19th century*. Little has changed to resolve this issue…until the emergence of social biz.
No, social biz hasn’t found the holy grail of identifying the wasted half. What it has done, however, is introduce a disruptive innovation for influencing purchase decisions. In other words, more and more purchasing decisions are being made based upon word of mouth as opposed to advertising. Word of mouth of course isn’t new. What Social Biz has done, however, is provide a platform for customers to easily share information. While this information can’t be fabricated like advertising, it can at least be measured and thus managed.
Let’s begin by measuring the impact of user reviews on purchase decisions. 46% of polled Internet users agree that “user reviews on the Internet are more informative than other sources of information”. Only 12% of respondents disagreed. 41% of respondents also found that user opinions “are more credible than other sources of information”, while only 17% disagreed.** Figures 2 shows that about 70% of review readers are influenced (both positively and negatively) in their purchasing decisions by user reviews. These figures are incredibly high, indicating that the trust people place in reviews goes so far as to impact their purchasing decision. It stands to reason that reviews from friends or celebrities via Facebook or Twitter have an even greater influence.
Figure 2: User feedback from customers have been … (**See: Fittkau & Maass Consulting: “29 WWW user analysis W3B”)
So how do we best manage this and even foster word of mouth on social networks? To begin with, it takes good products and the right organizational culture of course. Social Media and Internet reviews have been very successful platforms for transparent and customer-centric organizations. At the core, companies need monitoring capabilities that give them data specific to their brands, products or services. They can deploy Monitoring & Analysis tools such as SAP Social Media Analytics by Netbase to comb the Internet for references to their products. The results can than be automatically aggregated and categorized by share of voice, sentiment or other helpful categories.
Please check out our overview video here.
Another crucial component is to think beyond Marketing. Yes, Dialogue Marketing plays a key role of course, but Social CRM now represents the evolution of making Social Media scale across your business by harnessing social data in various departments influencing your relationship with your customers including Sales, Service, but also HR and R&D for example. SAP’s CRM solutions offer Social CRM support. For example, SAP Social Customer Engagement OnDemand (click link to see video) helps companies to better manage incoming feedback and service requests from their “social channels” by routing Facebook comments or tweets to the right experts within your organization. With the help of CRM ticketing capabilities as well as embedded Analytics your company can now deploy a modern Social Media cockpit that supports customer-centric organizations engage directly with consumers where it makes sense.
One potential starting point is to contact the Co-Innovation team at SAP. We haven’t managed to identify the wasted half of the advertising budget yet, however, we are succeeding in managing an ever more important aspect of the purchasing decision. If interested, please engage with our Co-Innovation program today and benefit from our exchange of ideas and requirements.
We hope you will enjoy this blog series on our “March to Madrid” – you will hear and see more atSAPPhire NOW in Madrid.
Let us know your thoughts.
Part 1: Blog series “March to Madrid”: Let’s get down to business – exposing the value of Social Media activities and data