Insights
Nov 20, 20186 min read

Instagram followers – a new currency in e-commerce.

by Klarna.com

To attract and convert new customers, online bed store Ester Beds lets Instagram users pay using followers as currency. “This idea for payments began as a marketing campaign, but now we are making it permanent,” says Gustaf Varre, Commercial Manager of Bed Factory Sweden, the company behind the Ester Beds brand. Having completed a two-month trial of the offer, the company has set the value of a follower at 2.5 cents.

The million-dollar question for many online entrepreneurs is: “What’s the fastest and most cost-effective way to reach out to and bring in new customers?”. Online bed store Ester Beds is exploring a new way to answer that question: by mining the Instagram market in an innovative way.

“Because Ester beds is a new concept for the Swedish market, we discussed ways to increase our reach besides using traditional online marketing or working with Influencers with 200,000+ followers. That’s how we ended up with this idea,” says Karl Stenberg, CEO of Bed Factory Sweden.

 

The power of “ordinary” Instagram users

When you have a new product or concept you want to market – in this case, beds delivered in flat packages to the doorsteps of customers who can then try their new bed for a hundred days to make sure they are totally satisfied – you need to spread the word.

For most businesses, that comes with a challenge: How do you get people to listen? It’s crowded out there.

Ester Beds has found its own way to tap into influencer marketing:

“We believe that if we can have micro influencers talk to their followers regarding Ester Beds, that will have a big impact. Their followers are loyal and closer to the influencer,” explains Gustaf. “The value per follower is higher when you have a personal connection to the person. So our question has been: ‘How do we get people to name our beds to their followers without paying for the mention? First of all, it is important for us that the influencer actually needs the bed and likes our product. This makes the communication with their followers much more genuine.”

 

Making each follower valuable

Millions of Instagram users share moments from their lives daily in text, videos and pictures without seeing themselves as influencers.

But they are.

At least that’s how Ester Beds views them. In the campaign “Pay with your Instagram followers”, running in April and May 2018, the store launched its offer to give a specific value for each follower: 0.1 euro.

How it works in a nutshell: The customer orders a bed priced at 600-1,400 euro. Once it arrives, the customer mentions @Esterbeds and tags #realinfluencer #esterbeds in a post, then sends an e-mail with their personal information and a screenshot.

“Depending on how many Instagram followers the customer has, we apply a reduction to their invoice. The discount is 50 euro for up to 500 followers, 50.1 for 501 followers, 50.2 for 502 followers, and so on. If someone has 3,000 followers, they get a 300-euro discount,” says Gustaf.

Company CEO Karl Stenberg says many people can’t believe the offer and contact them asking if it’s for real. People are simply not used to this way of marketing.

What it looks like in practice

Lynn Petersson is one Instagram user who took advantage of the chance to convert her followers into currency. She had heard about Ester Beds via TV host – and, also blogger and influencer — Elsa Billgren, and didn’t wait long to order a bed herself.

“I had considered buying a new bed, and a bit of a discount doesn’t hurt, I thought.”

Lynn Petterson explains: “After I had emailed a screenshot of my Instagram post to them, it didn’t take long until my number of Instagram followers was taken off the price so that I could pay the discounted amount. I easily paid it with Klarna’s app.”

Later she mentioned the bed brand in a new post, this time talking about the bed sheets.

 

The risk of this payment model

There are a couple of risks to businesses with this payment model.

Fraud is one of them.

The deal means a 1,400-euro bed is given away for free to Instagram users who have 14,000 followers or more. What if someone claims to have 14,000 followers, but every one of them is fake?

“We are very aware of the risk of faked accounts where people buy followers,” says Gustaf.

There have been attempts at fraud ever since Ester Beds launched the idea, but fortunately very few, he reveals.

“We check each account to make sure the followers are real. There are easy ways to do that. Some accounts are obviously fraudulent, like those which have grown from nothing up to several thousand in just a day.”

The other risk is in the product itself. If it doesn’t live up to the hype, but rather leaves your customers disappointed, that will be spread on Instagram too. Not exactly the kind of marketing you want.

“We feel very confident in our beds. The first ones came out last year, and the return rate is insignificant. We have tested the beds in all kinds of ways to make sure they stand the test of time,” says Karl.

 

Making the idea permanent

Ester Beds is excited about the success of their initiative. One new post per day on Instagram from customers is more than they anticipated.

“Because the offer has been so popular, we decided to let people pay by sharing with their Instagram followers as standard. You will get 2,5 cents per follower as of 1 of June 2018,” says Gustaf.