According to retail strategist and consultant, Steve Dennis, “The most disruptive force in retail is not e-commerce but the fact that most customer journeys start in a digital channel.”
This past weekend I started my own journey to finding a perfect, new cardigan for the season online. It started at 9am on Saturday morning when I turned my phone on, checked my emails and opened the daily mail from Madewell – a women’s apparel retailer I’ve grown to trust and love. The email featured a beautiful cardigan for the Fall (just what I was looking for) and after a click, I was led directly to the product page on Madewell’s main site. After 5-10 minutes scrolling through images, checking sizes and comparing products available on the site, I wasn’t quite sold yet on the cardigan so I switched channels and browsed my Instagram feed instead. Lo and behold, one of my targeted ads turned out to be that very cardigan I had been browsing from Madewell. This time, it was being worn by a ‘regular person’ in a beautiful setting – it looked just like any other content on my Instagram feed, I barely even noticed it was an ad until I accidentally single-tapped the photo to reveal tags of the product name and price. The next day, I ventured into Manhattan to purchase said cardigan at the nearest store in SoHo. This omnichannel retail journey of mine wasn’t the first, and probably won’t be the last. In fact, according to a November 2013 survey of US digital shoppers by consulting firm Accenture, I’m not alone. 78% of respondents to the survey reported “webrooming,” or researching online before heading to a store to make a purchase.
Source: Accenture, 2013

Researching online, as demonstrated in my experience, often includes perusing social media posts by various brands and retailers. Today, roughly 2% of all e-commerce traffic in the United States now comes from social networks and continues to grow. Many of us younger consumers who are tapped into various social media channels are hence driving the rapidly growing social media influencer marketing strategy amongst retailers who want to capture as much attention as possible online. In a single year, brands are spending over $1 billion on marketing via Instagram influencers alone (Mediakix, 2017).

 

The history of influencer marketing can be traced back to a 1940 study entitled “The People’s Choice” by Lazarsfeld & Katz. Although the study analyzed political communication, it found that the majority of people are influenced by secondhand information and by opinion leaders. Fast-forward to 2017, people are increasingly being influenced by ‘regular people’ who have gained celebrity status or built a brand and following on social media channels such as Facebook, Twitter, Instagram and Snapchat. These people are more popularly known as social media influencers.

An influencer is: “A third party who significantly shapes the customer’s purchasing decision” (Brown & Hayes, 2008) and “has a greater than average reach or impact in a relevant marketplace” (Word of Mouth Marketing Association Handbook).” From cardigan to vacation destinations, consumers are turning to influencers and their product reviews and endorsements before committing to making a purchase online or in-store.

These influencers often have credibility in a specific subject area – hiking gear, street fashion, interior design, photography – and have built a brand and following around their personalities, interests and skill sets. Their unique and trusted voices enable them to engage large, targeted audiences – the sweet marketing spot for retailers grappling to adapt to the digital age. Engaging social media influencers, however, doesn’t necessarily result in sales activity. Twitter, for example, only drove 12% of social and email generated e-commerce revenue in the fourth quarter of 2014 and only 30% of Pinterest users made online purchases after browsing Pinterest content. However, this may change as social media channels continue to introduce new call-to-action features and direct-response imperatives like “Shop Now” buttons for products and “Sign Up” buttons for services.

 

Social media influencers,however, have proven to be most successful at building brand awareness and trust. In fact, 92% of consumers trust an influencer more than an advertisement or traditional celebrity endorsement, according to Musefind, a social media marketing company, and 49% of consumers looked for purchase guidance from social media influencers last year. Many consumers place their trust in these influencers specifically because they are not tied directly to retailers or brands.

Source: Musefind, 2016

 

Of course, social media influence works differently on consumers by retail category. Some purchasing journeys are more highly influenced by the digital than others and can be more critical at different points within a single journey.

Source: Deloitte, 2015

 

In a 2015 study by Deloitte, consumers shopping for baby and toddler, electronics, and furniture and home furnishings products turned out to be most heavily influenced by social media during their shopping journey, while grocery customers were least influenced by digital overall. Critical interaction points started from the beginning of a consumer’s journey, during the ‘finding inspiration’ and ‘researching products’ phases, till midpoint when consumers are ready to select products for purchase.

Source: Deloitte, 2015

 

For the apparel retail category, the critical point for digital interaction appeared to be in the beginning of the consumer’s journey. With such a wide selection of products, over 15 percent of apparel shoppers are unaware of the product until they see a brand or retailer’s digital advertisement or communication that makes them want to buy the item, compared to an average of only nine percent across other categories. (Remember that Madewell email notifying me of the new Fall season cardigan and also the targeted Madewell Instagram ad?)

In a famous example, Lord & Taylor, designer clothing department store, proved the power of social media influencer marketing by getting 50 influencers to put on the same dress, photograph themselves in the dress, and then post the photos on social media. Within three days, Lord & Taylor sold out of the dress but more importantly, the retailer built awareness around the brand’s new collection, which resulted in a halo effect on other products in the same line.

 

Regardless of the varying magnitudes of impact that social media influencers have on consumers, they continue to be a strong marketing force for brands and retailers. Retailers should seek new ways to influence the influencers through their marketing campaigns or build partnerships and creative collaborations with these influencers, in order to achieve greater brand authenticity and trust amongst consumers.