Receive the latest articles for free. Click here to get the Luxury Daily newsletters.

Social media marketing is crucial to driving luxury sales

October 12, 2010

Clay McDaniel runs Spring Creek Group

Word-of-mouth is a powerful driver of luxury purchases because shoppers trust their friends, family and even strangers online to give them product recommendations far more than they trust advertising messages.

Seventy-one percent of consumers said reviews from family members or friends influence their decisions about whether to use a specific company, brand or product, according to a Harris Interactive study.

Eighty-three percent of all holiday shoppers are influenced by customer reviews, according to ChannelAdvisor.

Seventy-four percent of consumers rely on social networks to guide purchase decisions, according to Gartner Group.

At the same time, a recent report from the Institute for Advanced Studies at Lancaster University found that 95 percent of people do not trust advertising and 58 percent agreed with the statement “companies are only interested in selling products and services to me, not necessarily the product or service that is right for me.”

Luxury Daily’s Kaitlyn Bonneville interviewed Clay McDaniel who runs Seattle-based Spring Creek Group, a social media marketing firm. Here is what he said.

When it comes to brand name designers and luxury goods, consumers turn to Amazon.com or sites like Epinions to find out about other people’s experiences and ratings. Can you explain how this is a benefit to the brand and how this could be a bad thing as well?
Any brand that is selling luxury goods needs to keep this new reality in mind: Word-of-mouth is crucial to driving sales.

Customers are in the driver’s seat and this benefits brands with high-quality products and great customer service, because the majority of customer reviews about their products will be positive, driving more sales.

But if your brand has shoddy products or doesn’t address customer concerns, problems, or comments quickly, word-of-mouth can be a sales killer.

Most luxury brands have much to gain from online word-of-mouth, because they have always striven to create high-quality products and deliver exceptional customer service.

Can you please discuss how shopping online has turned to a new direction by combining the elements of social bookmarking into the mix.
With deep connections to their social networks, consumers now expect a full range of social shopping services when making online purchases.

They do not just turn to Twitter and Facebook for deals, they turn to their social networks for product recommendations, gift ideas and more.

That means retailers need to approach social channels not just as a way to disseminate deals, but more as a platform for their customers to discuss products and gift ideas, create wish lists, add reviews and suggestions, and get involved in the product design process.

Retailers should make it easy for customers to share their stories about buying a certain products, which works especially well in the luxury world where the purchase of jewelry, a trip to a luxury resort, or the purchase of a car or other big-ticket item is more than a purchase, but a personal experience.

Also, because almost all customers search the Web for products before they buy, make sure to blog about your products in the places your customers hang out.

For example, a luxury hotel chain should add comments and posts in travel blogs frequented by their key customers, but make sure to identify yourself as a brand or vendor, so as not to annoy readers.

In today’s socially-driven world, brands should think about starting conversations around their products and deals, not just making one-time sales.

What are best practices for luxury brands deploying social shopping tactics to boost sales this holiday?
There are a lot of things brands can do to sell via social channels this holiday.

One thing that’s really caught on this year are shareable “wish lists.”

Luxury brands should make sure their products are featured on Web sites such as Kaboodle.

Registered Kaboodle users can add items from various Web sites to their lists, then share them on social sites and via email.

Kaboodle also offers many social features, including the ability to create polls to receive feedback from the community on potential purchases, view updates on friends’ Kaboodle activities, and write blog posts.

Other wish list sites are Wishpot, TheThingsIWant.com and ThisNext.com.

Can you give some examples that illustrate how social shopping is the next opportunity for brands and consumers to connect and enjoy products in a new way?
One thing that’s really bringing brands and consumers closer together than ever before are mobile social shopping tactics.

Mobile is the link that will tie social networks, online shopping, and in-store shopping together at last.

Check-in applications such as Foursquare, Gowalla, and Whrrl offer users discounts and rewards for being frequent customers at their favorite stores, shops, businesses and restaurants.

Luxury brands can use these check-in applications during the holiday season to boost in-store foot traffic and to offer special deals and offers.

How does social shopping let luxury brands interact with their most loyal brand representatives?
Social shopping is a great way to reward loyal customers.

For example, a retailer can use Twitter and Facebook to launch promotions only for followers and fans.

This makes your most loyal customers feel special and encourages them to share the promotions with friends and family, increasing the reach of your limited-time offers.

That way, on top of driving immediate sales through the promotion, you also capture increased search traffic from people looking for gift ideas and increase your long-term followers and fan base.

In addition, retailers can, as mentioned above, work with mobile check-in companies like Foursquare, which reward frequent shoppers who come often into your store with points and rewards over time.

Another tactic is to reward your most vocal customers – those who write the most reviews and tweet about your products the most by giving them “top customer” badges and providing them with special discounts.

How does social shopping help luxury brands sway consumers to buy?
Social shopping turns customers into brand advocates. Your best customers sell for you, by recommending your products and services to their friends and social networks.

Should social media be complemented by other, more traditional media?
Absolutely.

Luxury retailers aren’t about to stop advertising the old-fashioned way, on TV, in magazines and online. However, it’s important to unify creative, promotions and messages across all advertising channels.

A big splashy brand advertising campaign should be echoed in your social media campaigns with the same messaging, images and offers. One way to really unify traditional media buys with social media is through a contest.

You can create a branded contest page and promote it via Twitter, Facebook and other social channels.

By encouraging people to share your contest on social networks and via email, you will get wide reach for the promotion and get a great platform to communicate your wider campaign message, creative, and images.

Can you talk about adding the Facebook “Like” button to a luxury retail site and the benefits to that brand?
Facebook is a great tool for any brand, luxury or not.

The trick is to make sure you use the same messaging and imagery on your Facebook page as elsewhere.

Do not water down your brand image on Facebook by posting messages and promotions that are not consistent with your luxury brand image.

What types of social shopping behaviors do expect will be really popular this holiday season?
Aside from the behaviors mentioned, mobile check-in apps, wish lists, Facebook and Twitter promotions, there are a few other consumer trends set to be huge this holiday in the luxury space.

Group shopping sites like Groupon, flash sales like Gilt and celebrity-backed recommendation sites like OpenSky.

Final Take
Kaitlyn Bonneville, editorial assistant at Luxury Daily, New York