New 'Digital IQ' Ranks How Well Retailers Use Social Media

Shoes About Town

The crowdsourced map from Shoes About Town, a Bergdorf Goodman initiative that invites fans to share pictures of interesting shoes via Instagram.

Retailers’ total embrace of social media is no longer a revelation; what’s news is how that enthusiasm is affecting sales strategies and inspiring new ways to judge a company’s financial health.   Now that so many brands are engaging with their fans through online channels, we have enough to study what works, and what doesn’t on the web. Here’s a rundown of one recent study:

  • NYU marketing professor Scott Galloway is creating a ranking system for retailers’ digital health. Called the Luxury Lab Digital IQ Index, it assigns e-tailers and physical retailers points based on their digital strategies and online innovation, to create online IQs for companies.
  • Beyond the ranking of mere digital health, Galloway’s index may serve as a broader indicator of how a company’s doing overall.  He found that the retailers with high Digital IQ scores also tended to be performing well financially.
  • When it comes to social media, department stores have a distinct advantage over brands — when you’re telling a story through all available channels (Facebook, Twitter, Instagram, etc.) you can jump from one category and label to another, offering more diverse content.
  • That said, it’s no longer all about quantity.  Having 14 million Facebook fans is merely the first step toward deeper consumer engagement.  To get the most out of that audience, strategy has moved on to target and attract smaller, more localized groups within a giant pool of “likes.”

And speaking of Facebook, it might just be the strongest channel that retailers can look to for an uptick in actual sales.  WWD cited Burberry as a brand that gets more traffic through the social media site than it does from Google.  Setting up “f-commerce,” so already-engaged consumers can buy right through Facebook, should (and in all likelihood will) become the norm in the near future.