Less than 1% of online purchases come from social channels

The people of media world are still living the hype of social media. But research shows that social media and tactics is a barely negligible source of sails for either new or repeat customers. Fewer than 1% of transactions could be traced to trackable social links.

Thirty-nine percent of online retail transactions by new customers start with clicks from paid or organic search results and less than 1% come from social channels according to a new Forrester report. "In spite of changes to the interactive marketing landscape and the growing number of shoppers using mobile and tablet devices to access content, core elements of web marketing continue to be effective," writes Forrester Analyst Sucharita Mulpuru.

In order to determine how and when shoppers touch various platforms when completing a transaction online, Forrester partnered with GSI Commerce to examine 77,000 consumer orders made over a period of 14 days in April 2012. Findings in the report include:

Multiple platforms influence many buyers. While 33% of transactions by new customers involve more than one trackable touchpoint, 48% of repeat customers visit multiple trackable touchpoints. The most popular platforms include organic search, paid search, and email.

Email and direct traffic matter for frequent customers. Thirty percent of transactions by repeat customers start with an email from the retailer, and an additional 30% type the retailer's URL directly into a browser.

Social tactics are not meaningful sales drivers. Forty-eight percent of consumers reported that social media posts are a great way to discover new products, brands, trends, or retailers, but less than 1% of transactions could be traced back to trackable social links.

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Less than 1% of online purchases come from social channels

When Do Consumers Make Different Conclusions about the Same Product?

Depending on which naive theory consumers use, a low price can indicate either good value or low quality, whereas a high price may imply either poor value or high quality, according to a new study in the Journal of Consumer Research.

“Consumers rarely have complete information and use various strategies to fill the gaps in their knowledge as they consider and choose products. One of these strategies involves using naive theories: informal, common sense, explanations that consumers use to make sense of their environment. For example, consumers may believe that popular products are high in quality while also believing that scarce products are high in quality,” write authors Hélène Deval (Dalhousie University), Susan P. Mantel (Ball State University), Frank R. Kardes (University of Cincinnati), and Steven S. Posavac (Vanderbilt University).

In one study, consumers were shown an ad for a bottle of wine with either a high or low price. When subtly reminded of quality, consumers evaluated the expensive wine more favorably than the cheap wine. However, when subtly reminded of value, they rated the cheap wine more favorably.

Sales promotions succeed when consumers perceive that they are getting a good deal, but they can also backfire if consumers perceive that lower prices indicate poor quality. Or, as J.C. Penney recently discovered, a company may implement an everyday low-pricing strategy that manages to reduce brand value and alienate consumers if many of them believe that low prices equal low quality. Over the years, J.C. Penney customers had become so used to sales that they no longer believed they were getting a good deal.

“Using subtle tactics, companies can bring a pre-existing naive theory to the consumer’s mind in order to guide favorable interpretation of their message. Yet, these tactics can backfire dramatically if they design a strategy by assuming that a certain naive theory is going to drive consumer evaluation and choice when, in fact, several naive theories are available to the consumer,” the authors conclude. 

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When Do Consumers Make Different Conclusions about the Same Product?

When Do Consumers Compare Experience over Value?

Consumers are often less satisfied when they buy or receive products that are easily counted because this makes them focus on value instead of experience, according to a new study in the Journal of Consumer Research.
“Numbers make us feel more certain of what is in front of us. When we count, we understand exactly how big, expensive, heavy, or old something is. But when we buy or receive products that are easily counted, we may be less satisfied,” write authors Jingjing Ma and Neal J. Roese (both Kellogg School of Management, Northwestern University).
What happens when consumers are compensated with gifts such as a toaster or a winter coat instead of cash? If two consumers receive the same dollar value, it shouldn’t matter if it comes in the form of gifts or cash. But it does matter.
In one study, the authors rewarded consumers with either cash or slices of cake. Predictably, consumers who received more cash were happy with the outcome while those getting less cash were upset. But whether people received more or less cake didn’t affect their satisfaction nearly as much. Because the cake slices were less easily counted, people were just as happy with less as with more. When consumers received a slice of cake, they were more likely to focus on how delicious their cake is and ignore how much cake others received.
Another study showed that when people miss out on a deal, they are more upset when that deal was countable (buy one, get one free) rather than uncountable (get a larger bottle at the regular price). This suggests that programs offering rewards that can be easily counted such as airline frequent flyer miles may be less satisfying to consumers than less easily counted reward programs such as those offering free products or vacation packages.
“Countability drives comparisons. When rewards are easily counted, people are more likely to compare themselves with others. But when rewards are less easily counted, people focus mostly on the unique aspects of their own experience,” the authors conclude. 

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When Do Consumers Compare Experience over Value?

Reminders of Money Impact Consumer Decision- Making

When reminded of money (not cost), consumers are more likely to evaluate a new product based on its primary features or brand name, according to a new study in the Journal of Consumer Research.
“Money and symbols of money are ubiquitous in our daily consumer environment, and money is linked to social resources such as security, status, power, confidence, and freedom. Mere reminders of money have the potential to signal confidence and strength and thereby impact consumers when making decisions,” write authors Jochim Hansen (University of Salzburg), Florian Kutzner (University of Heidelberg), and Michaela Wänke (University of Mannheim).
Consumers encounter money or symbols of money all the time. We earn, save, spend, or possibly lose money. We physically handle bills and coins. We are reminded of money by proverbs (e.g., A penny saved is a penny earned), songs (e.g., Money, Money, Money), and movie titles (e.g., The Color of Money). Given the importance of money in our lives, it is important to understand the psychological implications of such frequent reminders of money.
In a series of studies, the authors found that reminders of money caused consumers to think more abstractly and focus on the primary features of a product instead of its secondary features. For example, we might wonder if a television has great picture or sound quality and not pay any attention to the warranty. Or we might think about whether a yogurt is healthy or tasty but ignore the package design. Additionally, consumers reminded of money are more likely to evaluate a new product based on its brand name instead of its individual features. For example, we might think that a new bike by Mercedes must be good because Mercedes is a good brand and ignore its actual features.
“Our studies show that reminders of money influence consumer decision-making. Consumers should keep this in mind when choosing products, because they may overlook certain features when reminded of money,” the authors conclude. 

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Reminders of Money Impact Consumer Decision- Making

In the Blink of an Eye: Distracted Consumers Are Most Likely to Remember Ads with Subtle Variations

Consumers are more likely to remember an ad they’ve seen repeatedly if one element in the ad changes location from one exposure to the next, according to a new study in the Journal of Consumer Research.
“Consumers are bombarded with thousands of advertisements daily, are increasingly multitasking, and are preoccupied with everyday activities. The likelihood that they will devote their full attention to any one specific message is getting smaller every day. What impact can an ad have if consumers pay virtually no attention to it?” write authors Stewart Shapiro (University of Delaware) and Jesper H. Nielsen (University of Arizona).
Even when consumers pay very limited attention, advertising can succeed through repetition. When consumers are exposed to a print ad, an image of the ad is stored in their memory and this image becomes clearer with each exposure to the ad. As this memory becomes clearer, preference for the ad increases. Notably, this occurs even if prior exposures to the ad are extremely brief and a consumer devotes much of their attention to something other than the ad.
In a series of experiments, the authors found that this effect may actually be enhanced if one ad element such as the brand logo or product depiction changes location within an ad from one exposure to the next. Under conditions of limited attention, making subtle changes to an ad over repeated exposures may in fact be better than repeating the exact same ad or altering more ad elements from one exposure to the next. For instance, a company could create a more effective ad by placing their brand logo in the bottom left corner the first time it is shown, and then placing it in the bottom right corner of the otherwise unchanged ad the next time it is shown.
“Companies are still learning how to make the most of advertisements that are viewed quickly as a consumer searches for something else on a web page or in a magazine. Subtle changes to ads viewed repeatedly can boost advertising effectiveness in increasingly cluttered environments visited by increasingly unfocused consumers,” the authors conclude. 

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In the Blink of an Eye: Distracted Consumers Are Most Likely to Remember Ads with Subtle Variations

The Mobile Imperative

Key insight report - More than a marketing channel from TNS

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The Mobile Imperative

The end of stock market crashes?

A 72-year study of the Dow Jones could help avoid the kind of stock market crash that struck the world economy in 2008.

Professor Tobias Preis has led a study of the second oldest US market index and discovered that a portfolio of shares, far from being diverse and spreading risk during a time of stock market slump, start behaving the same.

This new study has been carried out in collaboration with Dr. Dror Y. Kenett (Boston University, USA), Prof. H. Eugene Stanley (Boston University, USA), Prof. Dirk Helbing (ETH Zurich, Switzerland), and Prof. Eshel Ben-Jacob (Tel-Aviv University, Israel).

In their paper entitled Quantifying the Behaviour of Stock Correlations Under Market Stress, Professor Preis reveals that the 'diversification effect' that protects a portfolio of shares through the vagaries of the stock market disappears when there is a general slump in the market.

Professor Preis believes this pattern can be used to anticipate 'diversification breakdown' in share portfolios and allow investors to steer away from a major crash by spreading their investments elsewhere or 'hedge' their money.

It could help traders avoid the major crashes that hit stock markets in 2008. Between September and December four of the five biggest daily falls in the Dow Jones hit the US stock exchange. It was part of one of the biggest stock market crashes and led to the economic recession most of the world is still suffering.

Professor Preis, who is associate professor of behavioural science and finance at Warwick Business School, which is part of The University of Warwick, said: "We analysed the daily closing prices of the 30 stocks forming the Dow Jones Industrial Average from March 15, 1939, to December 31, 2010. Our results also shed light on why correlation risks in mortgage bundles were underestimated at the beginning of the recent financial crisis."

The results of this study, published in Scientific Reports, provide crucial information on the behaviour of markets in times of stress.

"We found a striking result," said Dr Kenett. "The average correlation between these stocks increases at the same rate as market stress. Consequently the diversification effect, which should protect a portfolio, melts away in times of market losses, just when it would be needed most."

Their research has important applicative implications.

"We could use this to anticipate diversification breakdowns, which could guide the design of portfolios and contribute to the increased stability of the financial markets." says Professor Preis.

The German physicist, who founded Artemis Capital Asset Management, believes the data he has collected from 72 years of Dow Jones closing prices can be used to help portfolios steer clear of stock market crashes.

Professor Preis said: "When financial markets are suffering significant losses our findings could be used to anticipate the increasing lack of diversification in portfolios. This would enable a more accurate assessment of the risk of making losses."

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The end of stock market crashes?