Learning from the big boys’ social marketing mistakes

Gideon Lask discusses how the low proficiency of big retailers in social media can provide a lesson for smaller businesses.

When we were planning the survey for our new Social Maturity report, we weren’t expecting terribly dramatic results. After all, social marketing is hardly a new field, not by online standards at least.

The bad old days of a ‘virtual shop window’ operated by a bored intern, advertising the same old products, are (just about) consigned to the last decade, and the biggest corporations now have whole divisions dedicated to their online presence. This is great news for the small business too, because it represents a significant democratisation of digital marketing; it’s a free channel that you are as able to use as any giant corporation!

As a result we were expecting that the 100 largest retailers would be broadly split between our three categories; stage ones who were still collecting followers, stage twos who were engaging with their followers, and stage threes who were going beyond this to use social media as a new sales stream. We were quite shocked when the results came through, and showed Tesco as the lonely single stage three of all the brands.

That’s a pretty pathetic showing by some of the world’s giants of social media. Some of these guys are spending upwards of £10 million a year on raising their online presence! So what’s going so badly wrong for them, and how can small businesses learn from their mistakes? We took a step back, analysed our results, and came to the conclusion that how a product it sold is just as important as who it is being sold to. This is more good news for small businesses because it shows that giant marketing budgets are no guarantee of success, and a small budget need not mean certain failure.

Allow me to explain our criteria: One would hope that these days we have moved past awful ‘content marketing’, the epitome of quantity over quality, after the follower bubble burst on Twitter. People have ceased to be impressed by vast armies of ‘fans’ (especially when it turns out that half of them aren’t even real), who make for an impressive number on a report but don’t actually add anything to your brand. Companies aiming for this market are in Stage One. They are churning out bland content laden with hashtags, which may attract ‘compers’ looking to win free gifts, but is unlikely to generate any real fans.

It gets a bit better in Stage Two, which is inhabited by companies who have moved beyond collecting followers and are actually working towards a goal, that same goal that should be behind all business decisions; driving sales. Stage Two companies have a solid game plan with their social media; they’re creating a conversation around their products rather than a static display. This will still involve the usual hallmarks of social media such as competitions, polls, giveaways and hashtags, but with a much greater view to driving these fans to become customers.

The difference between stages Two and Three, then, would appear to be quite subtle. However, the distinction is crucial in terms of profits: Our research shows that top 100 companies who successfully implement Stage Three practices will turn over £2.9 million a month more than those who don’t. To find out why, let’s look back to last Christmas. 

It’s a period during which sales are at their peak, and social media has long been utilised by the top retailers as a channel for promoting their best deals. Marks & Spencer are no social media slouches themselves; they came 17th in our study overall, but what separated them from the coveted Stage One slot? They engaged with their customers via social media alright, but they restricted the majority of their activity to ‘generic’ percentage discounts.

This kind of discounting just doesn’t cut it any more in social media, it gets lost in the background noise when everyone else is doing the same. Our research shows that you need to offer discounts of 80 per cent or more before people begin to take notice, which is devastating to the profit margins of a small business, and you’ll only attract bargain-hunting mercenaries rather than converted fans.

There is another way, and it’s where a small business can really cash in. A modern alternative to discounting is dynamic pricing (which Tesco calls ‘smart rewards’). You might not have the budget to offer massive discounts or pay agencies for flashy branding, but you’ve got the flexibility to build up your fan-base intelligently, and you can do that by turning shopping into an experience.

Word of mouth is 7x more effective than advertising, and you are already getting 8x more back for your outlay from social media than big companies just by being a small business (according to the Advertising Association). So give those people something to talk about!

As a Stage Three pioneer, you need to bake social into your small business’s retail experience, not just bolt it on – and that’s done by using techniques like gamification, dynamic pricing and co-operative buying. Suddenly, shopping becomes something you can win, something where the price you pay depends on what you give back to the brand, something where you’re incentivised to become a marketer in addition to simply being a customer.

So before you make another move on social media look at the big boys of retail and learn. This report is proof that for all their resources, they still don’t have the right ideas, but as a small business you are uniquely placed to take the initiative and the more effective direction.

Further reading on social media


Gideon Lask

Gideon is founder and CEO of social commerce technology business Buyapowa.

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