ellipsis flag icon-blogicon-check icon-comments icon-email icon-error icon-facebook icon-follow-comment icon-googleicon-hamburger icon-imedia-blog icon-imediaicon-instagramicon-left-arrow icon-linked-in icon-linked icon-linkedin icon-multi-page-view icon-person icon-print icon-right-arrow icon-save icon-searchicon-share-arrow icon-single-page-view icon-tag icon-twitter icon-unfollow icon-upload icon-valid icon-video-play icon-views icon-website icon-youtubelogo-imedia-white logo-imedia logo-mediaWhite review-star thumbs_down thumbs_up

A quick and dirty guide to social commerce

A quick and dirty guide to social commerce Jim Nichols

Social commerce is one of the hottest digital sectors. From the explosive growth of Groupon and Pinterest to the widespread implementation of social sign-on across brand and e-commerce sites, it's plain to see that many companies are scrambling to leverage social networks and influence in service of their business goals.

Booz and Company estimated that $30 billion in goods and services will be sold within social networks by 2015.

On-network sales are just a segment of the total range of services and vendors that comprise the "social commerce" segment.

The basic concept of social commerce -- that social influence and communication networks can be leveraged for business -- is nothing new. What is different today is that the explosive growth of social networks, coupled with the availability of connected tools within and outside of such networks, has given people even greater reach and influence over one another.

With so many social options available, it is critical that marketers take an objectives-based approach to evaluating and selecting social commerce tactics and partners for their businesses. Here are a few ideas to get you started.

Understanding social influence

For millennia, people have been influenced by the ideas and actions of others. With the advent of social media, the number of people that we influence and that influence us has grown markedly. For example, without social media, a highly satisfied customer might evangelize your product to perhaps 10 people. With social media, that number can now easily exceed 100, or 1000, or 10,000. Further, the ability to measure and track social influence is dramatically increased by digital social platforms.

Photo: Hans PƵldoja

The influence of a particular individual or institution varies -- this is based upon a number of factors. These factors include the:

  • Size of their overall network

  • Level of perceived expertise on a topic

  • Credibility of the person

  • Likelihood of amplification

It may sound complicated, but in reality it's all rather intuitive.

What do we mean by "social commerce?"

At its core, social commerce refers to the use of user contributions and interactions to help sell products and services.

Photo: PhotoSteve101

Ultimately, this means using social networks and media to help people become aware of options, consider their choices, make purchase decisions, and eliminate friction in the buying process. We all want to make better choices, and the process of gathering information to make those decisions can be made easier through our relationships with others.

The six types of social commerce solutions

There are a variety of categorization models available to "bucket" social commerce solutions and companies. The European agency SyZyGy developed an excellent categorization model for social commerce solutions and providers. Those who are looking for more than a top-line view of the category would do well to visit the site Social Commerce Today. I'm going to do my best to do it justice by providing a capsule summary of the market segmentation model, which classifies categories and companies into six groups:

Social Shopping
The common denominator in this set of services is empowering people to simultaneously shop online with others. The category encompasses group buying (e.g., Groupon and Living Social), socially empowered shopping experiences (i.e., an online store using Facebook Connect to enable a richer and more interactive shopping experience onsite), stores within social networks (e.g., Facebook stores), group gifting (e.g., eBay's GroupGifts service), and social shopping portals such as Kaboodle.

Ratings and Reviews
One of the most ubiquitous forms of social commerce, these services allow consumers to rate and leave comments about goods and services. The largest such platform is probably Amazon.com, which includes ratings and comments on virtually every item offered. While we often think about these as simple text based recommendations, services such as ExpoTV and Zuberance have expanded this category to include video and encourage recommendations.

Recommendations and Ratings
This category focuses more on recommendations for specific audiences, rather than universal availability -- social referral programs (e.g., Extole) fall squarely into this category. The key difference between these offerings and those in the previous category is that the recommendations group generally uses the personal networks of participants to spread the message, whereas the services in the previous category are available to any viewer.

Forums and Communities
Forums and communities have been around almost as long as the internet itself. In the context of social commerce, these terms refer to brand-sponsored venues for the sharing of information. Examples might include a Mercedes Owners Club, or the American Express Open Small Business community. Here people organically share information and advice related to categories and products.

Social Media Optimization
This category refers to the use of social media to drive more qualified traffic to an online sales environment. It encompasses using social for SEO, link building, offer and deal feeds, company news feeds, and other means by which links can be disseminated.

Social Ads and Applications
Here the focus is on socially empowered ad messages. The range includes socialized ads, social shopping apps, and remote catalogue or shopping units.

Evaluating social commerce options for your brand

In order to identify the best strategies and tactics, it can be helpful to start with a simple assessment focused on six key questions:

What are the business goals of this effort, and how will performance be measured?
Selecting a platform should begin with a review of your goals and measures. Different platforms will be able to "move the needle" in different ways and to different degrees.

What channels are you trying to address, and what is their relative importance?
Many products and services sell through a variety of channels. "Own" stores, online retailers, supermarkets, and department stores are just a few of the options. The set of channels you use should play an important role in determining the social commerce approaches you deploy.

Companies that sell goods primarily or exclusively online were among the first movers in social commerce, both because many of the tools were designed for online stores and because tracking the impact of social commerce on sales is easier when digital actions can be tied directly to specific purchases. Offline retailers and brands sold primarily in brick and mortar stores have generally been slower movers in social commerce, but that is changing. A great example is Procter and Gamble, which was among the first CPGs to incorporate social influence into its websites and other marketing experiences. Additionally, the company has experimented with intriguing new retail formats like Facebook stores in order to determine their potential impact.

What are the bottlenecks in your customer flow?
The concept of a buying funnel -- the progression of consumers from awareness to purchase has driven marketing decisions for decades. Chances are the other elements of your marketing mix are already aligned to the greatest communications needs. If so, then the challenge of selecting the best social commerce tools is a relatively simple one. The needs of businesses change over time and the range of appropriate social commerce tools may change or expand over that time. For example, if your biggest problem was awareness and your first social tactics focus on that area, increases in awareness may shift your greatest marketing need to increasing conversion rates. A second social commerce tool -- like a review and ratings platform -- might then make a great deal of sense.

What aspects of the product or service are most important to prospects?
Understanding the attributes that matter most to consumers is a critical step in making the right social commerce decisions. Ensure that the social commerce platform you choose has the "legs" to communicate the most important product information and attributes. Some tools like ratings offer the advantages of ease and universality, while others -- like video reviews and social shopping -- provide much richer platforms, but with perhaps less reach.

Final thoughts

Photo: Paul Bica

This is truly a fascinating new arena -- one that is thriving because of the "perfect storm" of new buying options, ubiquitous connectivity, and the explosion of social tools available.

As next steps, I suggest you talk to a few of the companies making news in the space. These companies can provide a great deal of color and granularity for the sectors in which they operate. I truly believe that there is a tool (or set of tools) out there for most brands, and that the first movers will reap tremendous benefits in the months and years ahead. Why not be one of them?

Jim Nichols is vice president of branding at ROI DNA.

On Twitter? Follow iMedia Connection at @iMediaTweet.

"Card for text in hand vector" and "Wood background" images via Shutterstock.

Jim Nichols is VP of Marketing for Apsalar. Jim has 20+ years experience in over 80 different categories, including developing successful positioning and go-to-market plans for more than 40 adtech and martech companies. He joins Apsalar after...

View full biography


to leave comments.

Commenter: Brant Emery

2012, May 31

First of all, nice comprehensive yet readable article!
One point sticks out for me: "For example, without social media, a highly satisfied customer might evangelize your product to perhaps 10 people. With social media, that number can now easily exceed 100, or 1000, or 10,000."
This factor is often quoted as a reason to be socially engaged - Forrestor's social impact factor model, etc. Yet, I think in reality this is much compromised by the credibility factor (which you mention later). Trust is still key to decision making. Though wisdom of the crowd accounts for 20% of our purchase influence (ratings, reviews, etc - the help of strangers) - the rest still comes from stronger connections, family, peers, friends. I'm not sure how exponential the actual amplification really is. Also, another key issue is are you in fact just advertising to customers? Who came first? The Facebook fan or brand advocate?