Social Media

What a Toy Maker Can Teach Us About Using Social Media for Business

Brad Smith
May 22, 2012
Using social media for business
height=”240″ Image courtesy of Fabulous Five

Everyone recognizes names like Hasbro and Mattel.

It seems like they’ve been around forever, and their children’s products are ingrained in pop culture.

But maybe you haven’t heard of the toy maker, Step2.

They’ve only been around for 20 years, so their toys haven’t been passed down through generations like the others.

How do you break into a competitive field with long-term market leaders like Little Tykes, Hasbro, Mattel?

I haven’t seen their commercials on the Super Bowl. So it hasn’t been through spending millions of dollars on brand advertising.

Instead Step2 is exploiting the social media opportunity gap, and using social media to drive sales.

The Wall Street Journal recently interviewed Step2 CMO Jerry McDermott.

Here’s how Step2 uses social media, and the marketing lessons you can apply to your own business.

Dominate the Zero Moment of Truth

Before anyone will buy from you, they will actively research your company online. This is the beginning stage where people want to know about your product, service and business.

Google calls this the Zero Moment of Truth. And it’s vital to success in today’s marketing environment.

Step2 is a leading U.S. maker of preschool and toddler toys. The privately held company’s assortment of wagons, kitchens and outdoor playhouses are priced at $50 to $200, so consumers tend to mull over Step2 toys before purchasing them, said Step2 CMO Jerry McDermott. ”These products that are usually a significant investment for mom”.

Marketing Lesson:

Many consumers do significant research online before buying products in Step2′s price range.

This is actually a great opportunity.

These are the consumers who care, who don’t buy on price, and who will stay loyal to you for years.

To win this step, you need to make it easy for people to discover you.

You need to show up in search engines by targeting specific keywords and building high quality links.

And you also need active social media accounts that show authentic, positive engagement. Here, size doesn’t matter, because only engaged audiences will actually buy something.

Stuck? Look at how American Express is using social media to build their business.

Focused on their Target Demographic

Celebrities are on Twitter, and Pinterest is in the news everyday.

But what social network does Step2 focus on above all?

Facebook.

They aren’t wasting their time prioritizing other platforms because of the latest trends.

Step2′s tale comes as more companies, including e-commerce giants such as Amazon.com, are tapping Facebook and other social services for help selling their products online. “Moms are running Facebook,” Crock said. “They’re basically doing our word-of-mouth marketing.”

Marketing Lesson:

To succeed in social media, you need to know exactly who your audience is, what they respond to, what they like, dislike, and where they hang out online.

Oprah succeeds in social media because she has an innate understanding of her audience.

Traditional marketers would refer to their customer’s demographics, pyschographics and more. But you can also create “personas” based on real examples of your typical customer.

This step is crucial because you have limited resources. You probably don’t have the resources to dominate Facebook and Google+ at the same time.

So at the end of the day, you need to choose one. And you won’t know which one to pick if you don’t understand your audience.

They Go Direct to Consumers

One of the biggest opportunities the internet provides companies is the ability to go direct to consumers.

Companies no longer need to rely on a complicated sales channel strategy. They can build their own media platform, integrate the ability to purchase, and create an online sales machine.

And 23%, or $57.5 million of Step2′s roughly $250 million in annual sales, come from the web, where Step2 sells toys through Step2.com, Amazon.com and other e-commerce sites.

Marketing Lesson:

Of course a toy company is going to be listed on Amazon and other big players. You should always look for major sales channels where appropriate.

But those come at a hefty price, usually in the form of a large recurring fee or share of revenue.

If you want to grow, then your best bet is by focusing on people buying directly on your own site.

Your website isn’t a static brochure. It only has two goals.

  1. To generate inbound leads
  2. To generate sales

So that means that everything on your site needs to lead to a sale.

Can’t decide between what font to use or which color everyone likes best?

Run a split test, and the winner is the one that converts better.

No need for internal politics or another boring meeting.

Make smart marketing decisions based on real data, and sales will take care of themselves.

Embrace Online Reviews

Most companies are terrified of online reviews. They’re constantly trying to bury or discredit them.

Online reviews from actual customers are like Pandora’s box… you never know what you’re going to hear.

But Step2 has a different philosophy:

In 2007, the toy company turned to a review software service for help. Consumers write reviews of products on Step2, and when a consumer peruses Step2.com for toys, the service retrieves the most relevant reviews from previous customers. Step 2 now has more than 20,000 reviews on its website, said Tena Crock, online marketing director for Step2.

Marketing Lesson:

Step2 goes out of their way to gather and highlight their product reviews for customers.

Not only is this good, honest business, but it’s also a powerful differentiator between them and their customers. And in a world where everyone’s connected on social media anyway, there’s no room to hide.

If you’re a commodity business and your product or service is average, then people are going to find out.

In today’s world, marketing is your product or service.

And it’s important to realize that what you’re selling, isn’t always what people buy.

Social Media Integration

Digital savvy companies integrate social media into everything they do.

It’s a core component of their business, not an isolated part of their marketing department.

And the biggest reason is because when you make things easy and frictionless for consumers, you’ll experience better results.

But the value of the review service, provided by PowerReviews, ratcheted up in the last several months with the inclusion of connections to Facebook. PowerReviews allows Step2 consumers to link their Facebook profiles to their reviews, or follow a reviewer, category or specific product and have future reviews published to their Facebook profile. Such social connections raise the profile of Step2 products online, Crock said.

Marketing Lesson:

Customer experience is king in today’s online world.

So if you want better results, then you need to integrate your internet marketing tactics.

For example, a good blog writer can generate inbound traffic and demand for your products and services.

But it will only be effective if you combine their work with a good SEO strategy and an authentic social media presence.

Marketing is the sum of its parts. Advertising, PR, or social media alone won’t build your business.

Use Tactics to Increase Retention

Most companies only focus on getting new customers. And they leave their existing ones out to dry.

But they’re missing something critical.

Also, brands and retailers can reward their reviewers with badges next to their names identifying them as verified reviewers or verified buyers. A loyalty leaderboard recognizes the top 100 reviewers for a brand or retailer and allows shoppers considering a purchase to ask questions of those reviewers.

Marketing Lesson:

Today’s increased competition and advancements in technology are driving down the price of everything. Chances are, you won’t be able to sell your product or service for the same price a few years from now.

So how do you build a thriving company and grow revenues?

You can grow the lifetime value of a customer by increasing the interaction and engagement customers have with your brand.

Designing gamification features like “loyalty leaderboards” is a great example. But it’s expensive and difficult to implement.

So use an easy, “low-hanging-fruit” tactic like lifecycle email marketing.

It’s a simple, effective way to increase touches with your brand, while also encouraging people to purchase more frequently.

Using Social Media to Drive Sales

All of these previous steps drive sales. But the’re indirect, and often hard to measure. That’s why there’s so much debate around the ROI of social media.

But that still doesn’t deter Step2:

Step2′s use of PowerReviews and Facebook together provided some measurable gains. Crock claimed sales from Step2.com increased 130 percent year-over-year after PowerReviews added loyalty and badges for reviewers and buyers in February 2012. Since October 2010, Step2 has recorded a 300% boost in revenues from visitors who arrive at Step2.com via the Facebook Connect button.

Marketing Lesson:

Social media can be used effectively to generate sales. Even if you can’t track it’s direct impact.

Because it does two important things for your brand:

  • Allows you to reach more people, with less cost (decreasing the cost of customer acquisition)
  • Keeps people engaged longer (increasing the lifetime value of a customer)

Social media improves your marketing ROI because it decreases the cost of acquiring new customers, while increasing the lifetime value of that customer at the same time.

Conclusion

Just because it’s difficult to measure social media’s impact on sales, doesn’t mean it’s not working.

The goal of social media is to reach new people, increase interactions, and keep people genuinely interested so they stick around longer.

It’s difficult to get up-and-running when you first launch.

But if you do it correctly, it will scale better in the long run and help your business grow quicker (and cheaper) than any other method.