Social commerce revenue is significantly underreported — here’s how to fix that

Recent SimplicityDX research shows that currently only about 25% of social commerce revenue is being measured by analytics tools. In other words, 75% of all social commerce revenue is either not being tracked or being incorrectly attributed to direct website visits, meaning that we are likely not seeing the true impact of running campaigns on social. Social is a critical channel for new customer acquisition for most brands, and with rapidly rising costs understanding what is driving new customer acquisition is important. 

In fact, we have estimated that social commerce revenue could be 300% larger than is currently reported. In order to find out what is behind this vast underreporting, we conducted a study looking at how customers purchase products they have discovered on social and how long it typically takes between discovery and purchase. We wanted to find out if customers typically click through directly from social or if they head to the brand site independently.

Read on to learn more about our findings.

Customers prefer to shop on the brand site

In line with previous research we have undertaken, we found that over 70% of customers prefer to complete their purchase on the brand site without clicking through from social.

There are a number of reasons for this. A lack of transparency about returns and refunds on social, poor trust in social platforms not to abuse personal data, and inconsistency in posts being made shoppable by brands are all reasons we’ve looked at in detail in previous posts.

We found that only 23% of respondents reported navigating to the brand site immediately after discovering a product on social. 48% reported that they went back to the brand site at a later date in order to complete their purchase. Of those who reported clicking through directly from social to the brand site, 81% said they had a poor experience doing so.

This, coupled with the fact that it is difficult to find the same posts on social media across multiple sessions, means that most shoppers typically navigate directly to the brand site when looking to make a purchase, skipping the social step entirely. These findings alone go some way to explaining the underreporting seen in social commerce revenue figures. However, there is another factor to consider — last-click attribution.

Last-click attribution amplifies the problem

Most web analytics tools default to last-click attribution when determining attribution for any revenue generated. Last-click attribution looks at which touchpoint customers interacted with last before making a purchase, then gives 100% of the credit to that touchpoint.

This means that if a customer discovers a product on social media, clicks through to the brand site but doesn't buy, then in a separate session navigates to the brand site independently and purchases that same product, all of the credit will be attributed to direct traffic to the brand site and none to the social platform where the product was first seen.

In practice, we found that 4% of revenue was credited to direct traffic. Combine this with the traffic going straight to the brand site and we see that 75% of revenue is not being tracked by web analytics. In other words, brand site reported revenue from social is underreported by approximately 3x.  

3 tips for fixing social commerce revenue underreporting

So, what can you do to fix your social commerce underreporting problem? While it is impossible to gain a fully-accurate picture of your exact social commerce revenue, there are a few things that can be done to help bring your data closer to the actual figures.

1. Recognize there is a reporting problem

Like with many things, the first step to fixing a problem is realizing that there is a problem to begin with. While many may already have the feeling that social commerce revenue is being underreported, it is important to acknowledge the problem, then take steps to understand why it is the case. Hopefully, this article has given some insight into the causes behind the issue.

One thing to consider is that reducing your spend on social advertising is likely to impact direct sales traffic also, since, as we have discussed above, last-click attribution means that customers coming from social independently are often attributed as direct site traffic.

But the opposite is also true. Increasing your spend on social advertising is likely to increase sales seen across all channels. It is therefore important to trust in the process, knowing that although you may not be seeing the numbers you think you should be seeing from socials, your advertising efforts there are working.

2. Speak to your customers

Knowledge is power — and there is no better source of knowledge when it comes to customer shopping habits than your customers themselves. Run surveys or focus groups with your customers to find out exactly how they like to make their purchases.

By speaking directly to your customers you can find out where they like to complete their purchases, the routes they took to get there, and how long it took for them to reach that final purchasing step.

Although surveys of anecdotal shopping experiences won’t give you exact data on how much of your social commerce revenue is not being reported, it can help to give you an approximate idea of the size of your underreporting problem. From there, you bring your data more in line with exactly how much revenue you are generating from social commerce.

3. Solve the pain points

Clicking through from social is a notoriously poor experience, as we mentioned above. It should be a priority for brands to ensure that the customer journey is as frictionless as possible. This means finding out where your customers’ pain points are in their journey and resolving these as effectively as possible.

Our research found that there are myriad reasons that customers reported a poor experience clicking through from social to the brand site. Chief among these were stock issues, sending traffic to the Product Detail Page, poorly optimized landing pages, and broken links.

With regards to stock issues, far and away the most common issue reported in our research, brands need to make sure that they are regularly updating stock levels on their social channels in line with real-time stock. Uploading product catalogs and monitoring purchases closely will help to alleviate this problem. Even more care should be taken during periods of high demand, such as during the holidays or when running promotions.

Fixing your landing page and broken links can be more difficult and require a high level of expertise. Luckily, SimplicityDX has the solution. We specialize in building optimized landing pages to help you avoid high bounce rates when customers click through to your site.

Get in touch with the team today to find out more or visit our blog for more eCommerce insights!

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