Social Referral Traffic - What to measure? Whom to target? What are the qualitative aspects?

The pieces of big puzzle of profitability of any consumer internet company have always been

1. Traffic Generation
2. Conversion
3. Monetization. (in some cases, 2&3 are same)
4. Retention.

But with the advent of social media, social networks, and social sharing tools, a whole new piece of puzzle is emerging : 5. Social Referral.


I had earlier written a post about the benefits of social media optimization here. Your customers and visitors share information about your products and services using the social sharing tools in your website. The ever expanding social networks such as Facebook and Twitter are fundamentally changing the way people discover information. Except for a brief period of last about 30-40 years, people, for times immemorial, were discovering information through word of mouth, and through the trusted sources in their offline social networks. Today, social media sharing is enabling people to hear what their trusted sources from across the world say about the news, products, and services people care about, before making their decisions. Simply put, social networks are slowly restoring the primacy of information discovery through word of mouth (mouse).


A simple diagram below depicts the big picture of traffic generation, referral, retention, and monetization.

Social Referral Traffic.
When your visitor or customer shares information about your website, products or services to his social networks, and generates traffic through such referral links, the traffic is called social referral traffic.


What to measure?

1. How many times information from your site has been shared.
2. Who is sharing the information?
3. Who is generating new social referral traffic?
4. No. of new visitors referred per social sharing link.
5. No. of conversions per No. of new visitors referred through a social sharing link.
6. Retention rate per unit number of converted referral traffic customers per social sharing link.

(there are certainly more parameters to measure than these six)

Whom to target? 
From the above analysis, it would be possible to identify the group of users generating the most valuable social referral traffic to your website. It will be useful to understand what percentage of your visitors are generating what percentage of your referral traffic from their social networks. Often, less than 3% of your visitors/customers would generate more than 50% of your referral traffic, and even a less percentage would generate new customers.  Most likely, these 3% visitors/customers are social media influencers of some significance, among their networks. Simply put, their followers trust their referrals, and that is why their followers follow their referrals to your website.

Redefine your Net Life Time Value parameters. It is very important to  identify who these top 3% customers are, and how valuable is their referral traffic. Assuming that all your current customers have same/similar Average Revenue per User (ARPU), these top 3% customers unquestionably have a higher net life time value than other 97% percent of your customers because they generate referral traffic, who then generate further profit. Therefore, it is important to identify this top 3%, proactively woo them with offers, and promotions to retain them, and give them incentives to share information more often to their social networks.

Qualitative Aspects of Social Referrals.
Web analytics is quantitative and often does not identify the qualitative aspects completely. For example, let us assume that two of your referring customers A and B, generate same amount of referral traffic AX and BY, and both AX and BY same amount of revenues and net profits. Your web analytics results would treat A and B as equally valuable referring customers, and your marketing department might approach both A and B with equal promotion offers. However, AX, the referral customers generated by A, is qualitatively poor: AX consume your customer care services much more than BY, the referral  customers generated by B, or may be, AX has  signification number of returns and repurchases than BY. In that case, you might want to think about which referring customer to keep, and which one to stop targeting. In the long run, quality of customers referred matter beyond profit numbers.

Today, as social networks expand exponentially, and as we rapidly perfect the social media monitoring tools, measuring, and understanding social referral traffic, and targeting social media influencers will be key to running a successful consumer internet business. 

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Mouse is mightier than Sword!! Engage your customers through Social Media Optimization (SMO)

Several years before, management guru CK Prahlad wrote a definitive article on Co-opting Customer Competence, in which he had outlined how you can coproduce with your customer, and use his competence to sharpen your competitive advantage. One of the main tools of coproduction is not just listening to your customer, but engaging and actively using his inputs in your design and delivery of your products and services. A few years before, a website was a mere shouting tool - communication was often one way, with website providing information to the reader/user/customer. But today, online platforms are powerful interactive tool that allows you to engage your customers, not just communicate with them. Your customers are constantly communicating with their networks about everything including the products and services they use. They blog, tweet, share and buzz, and it is important to optimize your business and your online presence for social media in order to effectively engage and co-opt your customer in your success.


Why should you engage your customers? Why bother what they write about you in their social networks?


(a) Customers trust user generated content, reviews, and recommendations much more than they trust any of your traditional marketing tools including advertisements. Media advertisements are good to generate the first interest. But  beyond that, your previous customers evangelizing your product will get you much more sales and new customers. The Razorfish consumer experience report for 2008 reports that 61% of people rely on user reviews to buy products. According to a global Nielsen survey of 26,486 Internet users in 47 markets, consumer recommendations are the most credible form of advertising among 78% of the study's respondents.


(b) Consumers give you valuable inputs and real time feedback. The mouse is mightier than the sword. Internet users increasingly tweet, share, blog, and buzz about everything they do, feel, and think. Google has started crawling social media sites including facebook, twitter and its own buzz in order to give real time information of the latest information in its search results. You can listen in to what your customers and users are saying in real time. 


(c) The word of mouse.  In other words, do you have the latest tools to instantly share your information? Can your readers share the news about your latest product launch to their network using twitter, digg, or FB Share? The word of mouse is viral, and powerful. If only you can provide the right tools, every reader can become your brand marketer, every customer can become your ambassador.


How can you optimize your business for social media?


1. Have a blog page. Blog is a powerful tool to engage and educate your customers and visitors. Blog gives an opportunity for the visitor to learn more about your product/service, and understand why your product/service is better. You can blog about all the latest research and market trends that gives more information about your hypothesis to the users. You can test your new product ideas, and capture the user inputs early on. You can get more information on advantages of having a company blog here.


2. Have social media sharing tools to share instantly information from your site to other media sites like FB, Twitter, Digg, and the like. This is very vital for viral word of mouse marketing.


3. Have a FB Fan Page, and integrate FB Connect. Most of your customers and prospective customers are likely to be in Facebook or Myspace. Their positive (and negative) comments about your products and services will be instantly available to their networks and your networks. Unlike myspace, FB has a vast majority of real users with real friends. Comments from real people are more likely to be trusted and hence you must encourage.


4. Tweet and Follow. Encourage your customers and users to follow you. And you follow them. It is a great way to reach your customers and your follower's followers.


5. Influence the influencer. New concepts of social media influence are emerging, and tools such as Klout, and Mylikes are able to measure the influence of any user in the twitter and social networks. Social media gives quanitifiable and analyzable metrics to orchestrate influencer marketing strategies. But before that, you need to be present in the social media.


What has been listed above are some of the important channels. There are many more channels including youtube, bookmarking sites, and the like. This diagram gives the complete universe of social media. (image courtesy: www.theconversionprism.com, by Brian Solis)

But the most important thing is to listen to your customers and users feedback and inputs. Listen to what they are saying about the products and services they use. Capture the trend. Decipher their wish list. Discover their desired outcomes. There is a wonderful article written by Anthony W Ulwick on Turning your customer input to innovation. A good product manager will know what and how much to listen from his customers. As more and more users generate contents, and more and more users consume user generated contents, harnessing the power of the social media will become mandatory to maintain your competitive advantage. It certainly appears that mouse is mightier than sword.

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