The big changes that are irritating everyone on Facebook are at least partially intended to make Facebook a more effective sales platform. Booz Allen reports that $5 billion in sales will take place within Facebook in 2011, which sounds like a lot but averages out to only$6 per Facebook user. The market research firm predicts that number to rise to $30 billion in 2015.
Without getting too deep into Marketing Funnel Theory, the conventional wisdom about Facebook is that it is a fairly effective “top of funnel” marketing tool, meaning that it gathers an audience that can then be sold to, but that is doesn’t do a lot of actual selling. That’s where the changes in Facebook come in: they’re designed to create a friction-free world where the eyes of users and marketers can meet across the crowded social media barroom.
Booz Allen, disputing conventional wisdom, believes that Facebook will do more than just introduce buyers and sellers. The company thinks the changes in Facebook and the increased comfort of everyone with doing business in social media will make Facebook most effective when it’s time to close the sale.
Social commerce will almost certainly have the biggest impact at the lower end of the funnel, in the consideration, conversion, and loyalty and service stages. These are areas where it is possible to establish clear metrics—including conversion rates, incremental revenue, and repeat business—and thus more accurately measure return on investment. The key for companies will be understanding how to use social media in each of these stages.
The most likely candidates for big social media sales are what Forrester Research calls “small retailers, niche products, or steeply discounted items” — which sounds a lot of people like a nutshell description of the segment of the wine business populated by small wineries increasingly oriented to direct sales.
To that end, companies providing sales technology to winery websites are branching out into Facebook apps, on the assumption that people who are interested enough in a winery’s operations to pay attention on Facebook will buy wine when it’s available there. One of those is Vin65, “leaders in winery ecommerce,” which recently announced a big push into Facebook. (Video overview here.) On his blog, Vin65 CEO Andrew Kamphuis lists five reasons why Facebook is the Next Big Thing in wine sales. Four of the five reasons focus on Facebook’s potential, but one highlights a marketing strategy that is likely to become very familiar to wine lovers.
The popular cider brand Magners (owned by C&C Group) has set up a pop-up fan-store on Facebook to support the launch of a new range of special edition ciders. The goal, according to Magners marketing manager Kirsty Hunter, is to drive trial among UK Facebook fans.
That is: they’re offering special, Facebook-only special edition sampler that, the company hopes, will drive drinkers to retail outlets to buy more. It’s a toe-in-the-water strategy for a company with wide, conventional distribution. This is the kind of thing a big brand might try with their wine, a replacement for in-store tastings.
It’s the next step after that that is really interesting. If the legal hairball around direct shipping ever untangles, smaller wineries looking to increase their margins by cutting out middlemen may find Facebook to be just the platform they’re looking for. Non-alcohol retailers who’ve added shopping apps to their Facebook sites have seen huge increases in revenue, and are finding that Facebook customers spend more than walk-in or conventional catalog customers. If that pattern holds true for the wine business, look forward to a spate of Facebook-only wine offerings and even wineries that exist entirely in social media.