By Andrew Arnold

Why do brands spend so much time and effort courting millennials on social media? Digital marketing is a big undertaking, it can be expensive, and there’s lots of competition. Still, companies seem to be committed to engaging on social media. The simple reason behind this is that it works.

Social media is a major influencer when it comes to the purchasing decisions of millennials. In fact, 72% of them report buying fashion and beauty products based on Instagram posts. And the further role of social media influencers goes way beyond this one network.

Peer recommendations carry a lot of weight with millennials

As mentioned above, recommendations from peers can reap a lot of customer conversions. According to Hubspot data,  71% of people are more likely to make a purchase online if the product or service comes recommended by others. This may be driven by millennials inherent distrust of brands and traditional advertising. They simply tend to believe what their peers say, seek their opinions and often validation.

However, according to McKinsey, a small number of influencers are accountable for the lion’s share of referrals brands receive via social media. For example when studying products such as shoes and clothing, it was discovered that 5% of the influencers offering product recommendations were driving 45% of social influence. They have earned the trust of their followers as a result of establishing expertise or other influence in a very specific niche.

According to entrepreneur Andrew Molz, in order to reach millennials, brands should focus on earning those referrals and recommendations. Molz is an ecommerce guru who built a Shopify based website and generated $2.2 million in sales using only social media to generate traffic. He’s consulted numerous startups and recently, one of his ecommerce ventures, Onyx Hearts, was acquired only 18 months after he started it. Apart from hiring influential brand ambassadors and sponsoring influencers, Molz says this may also include asking satisfied customers to leave reviews, soliciting customer testimonials, then displaying those on social media and landing pages.

Fashion is now driven by influencers on social media

“Industry influencers in niches such as fashion and beauty hold a lot of sway over this consumer group,” Molz said. They start trends, determine what’s cool and desirable, and curate the must-have items as fashion magazines used to do.”

For instance, last August 80% of Nordstrom’s mobile trafficcame from a single influencer, RewardStyle Network. This same influencer network also drove 21.94% of Sephora’s traffic, 34% of traffic to Revolve.com, and 30.83% to Net-A-Porter.

This means, as Molz argues, that “companies must recognize who has the ear of the millennials in their target audience. This includes bloggers and vloggers, publishers, YouTubers, etc. Getting their seal of approval could be key in pushing millennials further into the sales funnel.”

The influence goes way beyond fashion too. For example, the release of the video game overwatch was  highly anticipated. A week after its release, Elon Musk tweeted that he liked the game and congratulated the publisher on a job well done. That casual, likely offhand remark generated over 3800 retweets and resulted in 12000 instances of engagements. This happened in only minutes.

User generated content has a big influence on purchasing decisions

According to Gartner research, 84% of millennials are likely to be influenced to make a purchase based upon user generated content that is created by strangers. While many brands are already using user generated content to increase their followers and further branding, Molz says this can act as additional motivation to encourage followers to share content such as reviews, images, and stories. “Seeing a product in  use or simply reading personal stories from other consumers clearly has a big influence on this consumer group,” he added.