02 EXECUTIVE SUMMARY
03 INTRODUCTION: SOCIAL MEDIA SNAKE OIL
04 SOCIAL COMMERCE: AN ANTIDOTE TO SOCIAL MEDIA SNAKE OIL
04 SOCIAL COMMERCE DEFINED
07 WHY SOCIAL COMMERCE?
09 SIX DIMENSIONS OF SOCIAL COMMERCE
13 WHERE TO START: LEAD STRATEGY
14 MEASURING SOCIAL COMMERCE SUCCESS
15 FROM TOOLS TO STRATEGY: BRAND BUILDING WITH SOCIAL COMMERCE
15 THE SOCIAL PSYCHOLOGY OF SOCIAL COMMERCE
21 CONCLUSION: FUTURE TRENDS
22 SOCIAL COMMERCE RESOURCES
- 2009 was the year of social media marketing experimentation. In 2010 marketers are looking to make social media pay. One increasingly popular strategy has been to monetize social media with e-commerce
- Social commerce is the fusion of social media with e-commerce. More fully, social commerce is a subset of electronic commerce that uses social media, online media that supports social interaction and user contributions, to enhance the online purchase experience
- Social commerce is not itself new, what is new is the social media and e-commerce technology, such as social media stores and portable social graphs, that have opened up a new range of opportunities forthe monetization of social media with e-commerce
- Social commerce can deliver three key business benefits - social media monetization, e-commerce sales optimization and business model innovation
- For customers, social commerce can enhance the purchase cycle experience offering trust, utility and fun in three key areas; product discovery, product selection and product referral
- When deployed to enhance product discovery, social commerce solutions act as Awareness Boosters. For product selection, social commerce acts primarily as a Decision Accelerator, and for product referral social commerce acts as an Advocacy Activator
- There are essentially two social commerce strategies - ‘putting water-coolers next to tills’ (helping people connect where they buy) and ‘putting tills next to water-coolers’ (helping people buy where they connect)
- There are six distinct dimensions or toolsets for social commerce; Social Shopping, Ratings & Reviews, Recommendations & Referrals, Forums & Communities, Social Media Optimization, and Social Ads and Apps
- To start out with social commerce, businesses can adopt a LEAD strategy, Listen, Experiment, Apply, Develop
- The ‘3Rs‘ of social media measurement can be used to measure social commerce success - ROI, Reputation and Reach, but ROI is the preferred method as it establishes the business case for social commerce, and provides a benchmark for optimization
- There is the potential to do effective brand building with social commerce using the social psychology of social commerce to create differentiated choice-shaping associations in the mind of the customer based on one or more six universal social intelligence heuristics; popularity, authority, affinity, scarcity, consistency and reciprocity
- Future trends and opportunities in social commerce include sCRM (social CRM), Mobile Social Commerce, and Curated Social Marketplaces
INTRODUCTION: SOCIAL MEDIA SNAKE OIL
2009 began with social media marketing sat atop of a precipitous peak of inflated expectations in the technology hype cycle.
In 2010, we are languishing in the depths of the inevitable trough of disillusionment, with precious little evidence that social media delivers on the effective and reliable promotion of goods and services.
In summing up the state of social media marketing today, BusinessWeek likens social media marketing to snake oil, adding to the dodgy image of social media marketing consultants as hype-merchants and charlatans, a motley crew of reconverted estate agents/realtors and ad men, Feng Shui consultants and life coaches. To some, the fall from grace of social media marketing is not surprising since the term itself is something of an oxymoron - social media is conversational media not messaging media.
In an assessment of the business value of social media, consultants McKinsey & Co conclude that the primary value lies not in echo-chamber marketing but in knowledge management, internal communication, recruitment and market research.
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SOCIAL COMMERCE: AN ANTIDOTE TO SOCIAL MEDIA SNAKE OIL
In 2010 many marketers are now on a slope of social media enlightenment, eschewing talk of social media marketing Revolutions for talk of social media marketing ROI. They are looking beyond faddish hype to establish the hard business case for social media marketing. And the means by which they are doing this is social commerce-the fusion of social media with e-commerce.With social commerce, the value of social media marketing is a matter of fact, not opinion.
This white paper reviews the marketing opportunities, new and established, in social commerce - the monetization of social media through e-commerce - for brands, businesses and retailers.
SOCIAL COMMERCE DEFINED
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Simply defined, social commerce is the fusion of social media with e-commerce, or in the words of IBM, social commerce is basically the concept of word-of-mouth applied to e-commerce. More fully, social commerce is a subset of electronic commerce that uses social media, online media that supports social interaction and user contributions, to enhance the online purchase experience. It is also an increasingly popular solution for monetizing social media marketing, the online promotion of goods and services using social media.
Social commerce is not new, although the portmanteau term social commerce' is relatively recent; coined by Yahoo! in 2005 to denote online places where people can share experiences, get advice from one another, find goods and services and then purchase them. From this perspective, social commerce is nearly as old as e-commerce itself. Just one year after the first recorded ecommerce transaction (Sting's CD Album 'Ten Summoner's Tales' containing the hit track 'Fields of Gold' on NetMarket.com on August 11, in 1994), Amazon was already doing social· commerce, inviting customers to publish ratings and reviews of products they had purchased.
What is new, however, is the expansion and mainstreaming of social media over the last couple of years, spawning an expanded range of social commerce tools and opportunities.
- 1-800-Flowers, setting up the first online retail store embedded into Facebook
- US fashion chain The Limited creating a newsfeed store on Facebook allowing users to buy directly from within newsfeeds
- Toy manufacturer, Mattel, adding a social shopping’ toolbar to its e-commerce site, allowing friends to shop and chat together whilst browsing
- Burberry curating a user-generated ‘Art of the Trench' discussion gallery of customers modelling Burberry trench coats
- Dell offering a ‘deal feed’ on popular micro- blog-ging service Twitter, netting it over$7m in sales
- Amazon & Best Buy extending their reach beyond their sites with social media services such as social bookmarking 'universal wishlists’
- The mainstreaming of Facebook Connect, a service that adds Facebook functionality to e-commerce, allowing people to shop with their social networks
- Carrefour, the world’s second largest retail group, selling on Facebook with 'Faceshopping’ flash deals, a deal feed for Facebook members only
- Dell (again) offering Dell Swarm, a group- buy tool linked to social networks, the more people who buy, the cheaper the price
- Vente-Privée, private shopping event site, growing to be Europe’s leading online retail success story powered uniquely by an online member-get-member referral program
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A Slice of Life: A flower bouquet that made e-commerce history on July 8, 2009 - the first retail transaction to take place inside the world's favourite social networking platform Facebook, on the page of U.S. Florist 1-800-Flowers.
Many of these recent examples of social commerce have been made possible by new social media technologies that link social media platforms to e-commerce platforms, either by embedding e-commerce stores directly into social media platforms (where people increasingly spend their time) or by enabling 'portable social graphs' that effectively allow visitors to e-commerce sites to bring their social networks with them. Services such as Facebook Connect and Google’s FriendConnect allow visitors to login to e-commerce sites with their social networking accounts and communicate directly with their social networks whilst on those sites.
In essence, portable social graph services allow visitors to e-commerce destinations to bring their friends with them when shopping. Portable social graphs that integrate social networks with e-commerce destinations are part of a suite of social shopping tools covered in more detail below.
Whilst it may be technology that enables social commerce, the rationale is social; helping people connect where they buy and buy where they connect. In practice, this means that social commerce can be summarised in terms of two central activities; putting water-coolers next to tills and/or putting tills next to water-coolers:
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- Putting cash water-coolers next to tills:
Helping people connect where they buy by adding and linking social media tools and content to e-commerce sites. For example, Amazon invites customers to rate and review products on its e-commerce site, and to discuss them in customer forums
- Putting cash tills next to water-coolers:
Helping people buy where they connect by embedding social media stores and storefronts to popular social media platforms. Leading electronics retailer Best Buy's storefront in Facebook is an example of the putting tilts next to water-coolers approach
WHY SOCIAL COMMERCE?
// Social Media Marketing Monetization: Social commerce helps marketers monetize and measure campaigns. By making social media marketing the independent variable and e-commerce sales the dependant variable, marketers can measure the business value of social media marketing directly, bypassing thorny and unresolved reach and reputation debates about the value of social media marketing. Although criticised by some as a simplistic 'Posh V Becks' approach to doing social media marketing, social commerce has the advantage of speaking the language of business, using return on investment (ROI] to measure success.
// E-commerce Sales Optimization: Social commerce can drive traffic volume, improve conversion rates and increase average order value for online retailers. By extending their reach beyond e-commerce sites and onto social media platforms, retailers can set up shop where customers are increasingly spending their time. Social commerce software providers such as Bazaarvoice and Power Reviews have amassed a wealth of compelling data to prove the sales value of adding or linking social media tools and content to their own e-commerce sites. For example, UK retailer Argos increased conversion rates by 10% by adding user reviews to its site, US blender manufacturer Blendtec increased sales 500% by seeding video ads to social media platforms and linking them to its e-commerce site, whilst Juicy Couture's online Club Couture community increased conversion rates by 162%.
// Business Model Innovation: Social Commerce provides businesses with the opportunity to do business model innovation - creating new revenue streams by curating and extracting value from social media content. For example, in the B2B sector, a legal firm called Westlaw sells 'PeerMonitor', a paid-for benchmarking service that involves curating user content, in this case self-declared financial and operating information from legal firms, anonymising and bundling it into geo-tagged competitive performance reports. In B2C, Nike and Apple do likewise with Nike+ service, curating runners’ data online to provide collaborative tools and competitive performance reports.
From a user perspective, social commerce has nothing to do with social media marketing monetization, e-commerce sales optimization or business model innovation, and everything to do with enhancing online customer experience. Specifically, social commerce offers trust, utility and fun.
// Trust: By facilitating social interaction and user contributions on e-commerce related site, for example by allowing customer ratings and reviews, that site becomes more compelling for users. This is because social media content increases what communication scientists call 'source credibility' of sales and marketing messages, making them more believable, persuasive and trustworthy to the user.
// Utility: Social commerce tools, such as the social shopping toolsets that allow people to share the act of online shopping together (synchronous shopping - see below), are useful tools for online shoppers, allowing them to shop smarter through tools such as co-browsing, social bookmarking, and group-buying.
By putting these tools at the disposition of customers, brand, businesses and retailers can enhance the online customer experience.
// Fun: In addition to the functional utility of social commerce for users as an aid to product discovery, selection and referral, social commerce may also have emotional value - enhancing the online customer journey into a more naturally engaging and rewarding social experience. Flistorically, commerce has always been social in nature - people dealing with people, people shopping together. In contrast early e-commerce was a solitary experience, people interacting with software. Social commerce helps make commerce social again.
More specifically, from a customer perspective, social commerce can enhance the customer journey, from initial 'need recognition' and 'product discovery’, through 'product selection’ and 'product referral' .
- Quote paper
- Paul Marsden (Author), 2010, Social Commerce (english), Munich, GRIN Verlag, https://www.grin.com/document/146286