Influencer marketing has taken the digital world by storm, and it’s showing no signs of slowing down. In 2019, the influencer marketing industry was worth nearly $8 billion globally and is predicted to reach up to $15 billion by 2022.

While COVID-19 has certainly thrown a curveball to Australia’s retail industry, it has also provided opportunities for retailers to meet customer expectations and demands in new ways.

As Australian retailers continue to navigate the ‘new normal’ as we’re slowly coming out of the pandemic, influencer marketing is a great avenue to engage and connect with customers, generate new leads and build a more personal, approachable digital presence, all while cutting down on mass scale expensive promotional efforts.

When retailers and influencers collaborate, they create a more authentic connection with their target audience, which generates more engagement and a higher return on investment for marketing campaigns. In fact, according to a study by Influencer Marketing Hub, content from influencers earns more than 8 times the engagement rate of content shared directly from companies.

Australia’s 20.5 million social media users coupled with the growing ecommerce market created the perfect opportunity for social media companies to roll out new products and tools, such as Instagram Shops to capitalise on this trend. As a result, retailers are increasingly using social media as a sales engine and influencers will continue to play a key role in pushing products more aggressively.

In 2021, consumers will make even more purchases that are directly influenced by influencers and social media. It is a trend that is likely to become a prominent part of the retail landscape. So if retailers want to cash in on this trend, they need to be in it to win.

Below are the top three most effective ways retailers can achieve the most impact when leveraging influencers.

  1. Choose your influencers wisely

There are over 56,260 influencers in Australia with between 1,000 and 10 million followers. It can be challenging to navigate such a wide and diverse landscape in order to find the right influencers for your brand. Typically, influencers are broken down into four tiers:

  • Mega-influencers and celebrities with over 1M followers. They tend to have the biggest reach but the lowest trust and the lowest engagement.
  • Macro-influencers have between 100K and 1M followers. They are famous within a specific community. Their content is usually high-quality and is driven by genuine passion and interest for a particular topic.
  • Micro influencers have between 5K to 100K followers. They have a more niche audience that is highly engaged with the deeper connection. According to a recent report by HypeAuditor, the majority of Australian Instagram influencers are micro-influencers (46.1%).
  • Nano-influencers are followed by 1,000 to 5,000 people. They are regular consumers who are passionate and willing to share, but have little influence. Nano-influencers have stronger connections with their audience thus, their Engagement Rate (ER) is higher. In Australia nano-influencers have the highest average ER (4.51%) compared to average ER of 2.33% for other tiers of influencers.

Depending on the campaign objectives, going by the tiers is generally a good starting point to narrow down the number of influencers that are relevant for your brand and/or your campaign. For example, if you’re looking for reach, brand awareness and impressions, mega influencers are probably most appropriate for you.

However, according to a 2019 LINQIA survey, 77 percent of businesses prefer to work with micro-influencers because of their incredible pull and their effectiveness to deliver better ROI. According to another study, over 82 percent of consumers are likely to buy something recommended by a micro-influencer and they are the most effective in driving lead generation.

  1. Pay attention to the data

There are a number of influencer performance-driven metrics that retailers need to look at when selecting the influencers they want to partner with. These metrics are indicators of how successful or not the influencers are on social media and whether they are worth the investment.

  • Engagement rate

The  engagement rate refers to the total number of engagements on a social media marketing post – such as likes, comments. The more engaged the audience, the more likely they are to interact with any paid or partnership placements.

  • Follower growth rate

Instagram follower growth rate is a metric indicating whether the influencer’s content is reaching new people and grabbing their attention, and at which pace.

Sharp, sudden spikes in the number of followers might be indicative that shadow methods such as loop giveaways or fake followers are at play. However, a steady increase in followers means the influencer is growing his or her follower base organically, because their audience is genuinely interested in the content they share.

  • Cost per Engagement (CPE)

If a retailer has a limited budget but wants to get the most bang for buck, this is definitely a metric worth paying attention to. Cost efficiency shows how cost-effective investments in previous sponsored posts were. The lower the cost per engagement (CPE), the more cost-effective the ad.

  1. Promo codes

With job cuts and declining household income caused by COVID-19, consumers are hungry for cost-effective products and deals. One very effective way for retailers to boost conversions fast using influencer marketing is to use discount codes – they act as the call to action which encourages followers to make a purchase. Additionally discount coupons are a win-win for retailers as well as influencers as they give influencers a chance to give back to their loyal followers, all while earning commissions. And for retailers they get a revenue boost out of it.

It is clear that influencer marketing has the power to open up a world of new opportunities for retail businesses as it can achieve greater visibility among target audiences. Additionally, genuine reviews and recommendations from the right influencers coupled with incentives like discount codes help drive traffic and boost sales.

Alexander Frolov is CEO at HypeAuditor