Don't Buy Social Stocks; Buy Socially Intelligent Companies
One day, every business on the planet will connect more intimately with its customers via social networking. In this increasingly interlinked world, companies that capitalize on social media to enhance their already strong revenue streams could be winning investments. Here are three companies that have unlocked the secret to social-marketing success.
Soda giant Coca-Cola (NYS: KO) aims to increase consumption of its beverages by building brand awareness online. The world's largest beverage company has the third-highest Facebook following, with more than 34 million fans. Coke uses its social fan base as a tool for determining consumer sentiment about specific products.
Coke then uses the knowledge gained from its fans to pitch new products and sell merchandise on its Facebook storefront. It also has a Facebook page dedicated to consumer-generated content. Consisting of more than 30 different interactive tabs ranging from virtual gifts to viral videos, Coke is able to gather valuable feedback on consumers' interests.
The beverage giant was one of the first companies to utilize social commerce. A recent study showed that a whopping 38 million people say social media influences their purchasing decisions. Additionally, social commerce sales are expected to exceed $30 billion worldwide by 2015.
The company's most recent networking promotion encourages fans to submit photos with its soda cans -- creating free advertisements for the beverage king on social sites viewed by consumers around the world.
Coca-Cola is also using social media to increase shareholder engagement. This year, the company began live tweeting its earnings announcements -- a move that received mixed reviews from investors. Coke's social efforts create brand buzz around the world, with an estimated 5,000 conversations a day about the soda company in social-media outlets -- talk about cost-effective marketing.
Brewing big business
Social media also helped move business for Starbucks (NAS: SBUX) . The coffee maker uses social media to promote campaigns such as "My Starbucks Idea," which generates consumer feedback by directly asking customers what they want.
Today, almost 120,000 ideas have been submitted via My Starbucks Idea, with Starbucks having implemented at least 150 of them as of July. The company is also using social media to draw customers into its stores.
Starbucks' social store on Facebook lets users send virtual Starbucks gift cards to their friends that can be used for in-store purchases -- a recipe for success by today's increasingly social standards.
Another company pushing sales through the Facebook platform is department store powerhouse Macy's (NYS: M) . The retailer kicked off fashion week last year with Macy's Magic Fitting Room. Shoppers browse and try on Macy's apparel virtually, in a full-length digital mirror, and once complete, they can send the winning looks to their Facebook page, SMS, or email.
Macy's is one of the companies paving the way in "social retailing." Other retailers, including Target (NYS: TGT) and Wal-Mart (NYS: WMT) , are also taking advantage of social commerce. Target's Facebook page features a weekly ad, while the retailer's dedicated Target Style page gives visitors an inside look at Target's team of style experts, including fashion director Nina Garcia. Wal-Mart steps up its social game with a Facebook app that syncs to your personal account to offer ads based on your location.
A socially conscious future
These companies use social media to encourage consumers to engage with their brands by creating user-generated content on sites like Facebook, Twitter, and YouTube -- creating conversations and buzz around a company's product or brands. Buzz sells products and sales pay dividends.
For another company that's using technology to generate future revenue, I strongly encourage you to read this free report and discover the only stock you need to profit from the new technology revolution.
At the time this article was published Fool contributor Tamara Rutter owns shares of Target. Connect with her on Twitter @TamaraRutter for real-time stock picks and investing news. The Motley Fool owns shares of Starbucks, Wal-Mart, and Coca-Cola. Motley Fool newsletter services have recommended buying shares of Wal-Mart, Coca-Cola, and Starbucks, as well as creating a diagonal call position in Wal-Mart. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.