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How Social Media Advertising Might Be Hurting Your Business

As a speaker I am constantly submitting my talks to conferences in an attempt to get hired. I am also looking at their websites to see what kinds of talks they hosted at their last conference. Time and time again they have speakers talking about how to advertise on social media. Rarely does anyone have talks anymore on how to use radio or build a website or craft an email (even though statistics show email is more effective than social media).

Then today I ran across this little three-minute audio from NPR. Go ahead and listen to it. I’ll wait …

Image result for social media advertisingIt is something I have been saying from the very beginning of the social media craze.

(For those of you unable to click and listen, the gist of the report is about a study done in China. Although promotional ads on social media have a short-term immediate effect of a small boost in sales, they have a long-term effect of driving away followers.)

Roy H. Williams, aka The Wizard of Ads, taught me this back in 2005 and I’ve tested it time and time again and found it to be true. There are two types of customers for every industry—those who believe they are the expert and are shopping on price and those who know they are not the expert and are looking for an expert they can trust.

The former are called Transactional Customers. They look at every purchase as a single transaction with no relation to previous purchases. They believe they are the expert. They know exactly what they want. They will check many different places to find the best price. They are driven by the fear of paying too much. Once they make the purchase, they brag to everyone about what a great shopper they are, but have no loyalty to the store.

The latter are called Relational Customers. They look at each purchase as one in a series of purchases. They do not believe they know all the answers. They are looking for an expert they trust who will steer them to the right item. Their fear is buying the wrong item. While they do not brag much about their purchase, they do love to brag about their store and once they find the person/store they trust, they are highly loyal to that person/store.

The split is pretty much 50/50 in any category (slightly more Transactional in commodity categories like grocery or during economic downturns, slightly more Relational in bespoke categories such as fashion). But since Transactional Customers are more prone to shop around, it feels like more people are “price” shoppers than really are.

When it comes to advertising, promotional ads and discounts are Pavlov’s Bell to Transactional Customers. They love to hear about sales and discounts and promos. At the same time they are fingernails on the chalkboard to Relational Customers. Since RC’s are looking for trust, those same promotional ads not only don’t foster trust, they turn the RC’s off and destroy trust.

Social Media is about building relationships. Social Media is for your fans. Social Media is all about the RC’s. Yeah, you might see a small bump in sales. We are all both TC and RC as consumers, depending on the product. When you run your ad, you find the TC’s in your crowd for that particular product. But at what risk? Run those promos all the time and you drive away the RC’s social media is best at helping you reach.

Here’s my two-minute presentation on Social Media …

Use it to build Trust. Ask questions. Listen to feedback. Post useful information. Answer all questions asked of you. Respond quickly, politely, thoroughly (even the trolls). Build trust. Share information from other sources. Stay true to your Core Values. Write interesting content. Post pictures and videos of your products in use. Build trust. Be honest about the downside. Talk about benefits of the product. Relate to the way people use your stuff. Help your customers picture already owning your product. Post daily with something of value. Post shareworthy stuff. Build trust.

If you want to run an ad on social media, run an ad for your event. Events have deadlines which creates excitement. Events are attractive to both RC’s and TC’s because events imply relationship-building (interacting in a fun way with the brand) and promotions (some kind of discount). You can get the bump without driving people away.

I get it. Social Media is sexy. It is new. It is hip. Everyone is on their phones and online. That’s cool. Just be sure no matter what media you use that you play to that media’s strength.

Now if you ever want to talk about some less sexy things proven to move the needle like radio or websites or crafting an email …

-Phil Wrzesinski
www.PhilsForum.com

PS In case it wasn’t clear above, TC’s are price-sensitive, only buy what is discounted, and have no loyalty to your store. RC’s are not as price-sensitive and have tremendous loyalty to your store (if you build that trust). The stronger you market yourself to one of these types, the less attractive you become to the other. Pick one and go after them strongly, because half-ass marketing to both is an even quicker way to fail.

PPS RC’s care about price, too. Just not in the same way as TC’s. You can’t gouge the heck out of an RC just because of the relationship. When they find out you’ve been gouging them, you will have destroyed all trust and lost them forever.

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