Studying the impact of innovation on business and society

The Rise of Social Commerce

500 million Facebook denizens are plotting their social graphs.

145 million Twitter users Tweet and ReTweet.

3 million people are checking-in on FourSquare.

Brands are flocking to social networks, some with strategies and others simply experimenting with community building. What’s clear is that the 3F’s (friends, fans, and followers) are not created equal. Those brands who examine the composition of their existing community will find that many are simply seeking access to exclusive specials and content.

According to a recent comScore report, 23% of Twitter users follow businesses to find special deals, promotions, or sales. 14% of Twitter users reported taking to the stream to find and share product reviews and opinions.  Earlier this year, Chadwick Martin Bailey published a study that showed 25% of consumers connected to brands on Facebook did so to receive discounts. But here’s where things get interesting, in the same report, comScore found that Facebook and Twitter visitors spend 1.5x more online than average Internet users. Herein lies the opportunity for brands looking to add yet another “C” to the many C’s of Communitycommerce.

The Rise of Social Commerce

Part of a true 360 social media strategy is to convert the 3F’s from prospects into customers and existing customers into repeat customers, creating a rich community of commerce, conversation, and collaboration.

Starbucks set out to increase traffic in stores around the country through a “free pastry” program shared through social networks. The coffee company says that social media contributed to 1 million customers visiting local stores in one day. But, this is just the beginning.

Recently, Gap ran a special promotion through FourSquare where anyone who checked-in to any store, for one day, would receive 25% off the total purchase. The offer extended to Twitter and Facebook, but in those cases, users were asked to print a coupon.

Gap also ran the promotion through Groupon…

Many social consumers reported that the offer drove them into local stores and it indeed caused a social effect as they took to Twitter and Facebook to share the deal with friends and followers. According to a statement made to the Wall Street Journal by Sabrina Simmons, chief financial officer of Gap Inc., “While results were mixed across our brands in August, we remain focused on our overall goal of driving top line sales growth.”

Diversity and experimentation is key, especially as commerce is as distributed as attention and community.

Enlightened Engagement

Lora Cecere of the Altimeter Group is the author of a report on social commerce and in it she examines the steps necessary to bring social networks and commerce to life as brands seek answers to important questions, “What is the ROI? And, how do we encourage our fans to buy?”

Cecere sets the stage for the work that lies ahead, “As companies struggle to answer these questions, the effort no longer is social for the sake of being social, but gives rise to horizontal processes that extend beyond marketing to drive social commerce.”

If the first phase of the social commerce evolution is participation, Cecere believes that the next phase of social commerce is enlightened engagement.

In this phase, companies focus on learning to listen from multiple listening posts(internal and external), aggregating and syndicating shopper reviews, improving engagement through the use of experts and more effectively connecting like shoppers through video content. Commerce is enabled through fan pages, and the redefinition of engagement.  However in the evolution of social processes, companies find that listening and learning is not enough.  Fans want companies to respond in a more meaningful way.  They want to have input into which products that they buy and the way that they buy these products.

Enlightened engagement is the subject of a discussion that I’m joining at Altimeter’s first conference, “The Rise of Social Commerce” taking place in Palo Alto on October 6th and 7th (USE CODE RSC2 for $100 off if you’d like to attend).

Enlightened engagement, to me, represents much more than responding, it also represents the capacity to introduce value into the stream and also to connect the dots among all potential consumers and influencers. Remember, while it’s important to cultivate an existing community, the bigger part of the story is who you’re not connected to. In the Old Navy example, word of mouth emerged as catalyst for driving foot traffic as the brand did not integrate engagement or influence into the mix. Had it done so, Sabrina Simmons might have had a different story to tell to investors during Gap’s quarterly earnings report.

As Lora’s report takes us deeper into the phases of social commerce maturation, it mirrors the the path of advancement for social businesses. Through experience, we learn more about the very people we’re trying to reach and compel. The Altimeter report focuses on the 4 P’s of marketing to drive what it calls the store of the community:

– Which products and services do I deliver to which communities?

– How do I price and promote these products to best service community needs?

– How will I best position these products within existing and new channels to maximize brand presence?

Social commerce and social business also require a fifth P, where “people” earn an official representation in the marketing, service and commerce mix. Without connecting the Last Mile of personalization packaged in empathy, we are not able to activate the social effect in and around commerce. As a result of listening, learning, and adapting, we develop more relevant commerce strategies. Through enlightened engagement, we can spark sales and also social shopping, collaboration, and communication.

Lastly, as we dive one last level into the depths of inception and extraction,we’re introduced to the fourth phase of social commerce, redesigning the shopping experience to improve commerce. In my work, I’ve found that this is done through explicit listening and interpretation as well as through the implicit analysis and leverage of collective intelligence. Companies such as Baynote interpret persistent behavior and responses to enhance the social commerce experience. Over time, the combination of manual and semantic analysis partnered with the resolve to continually earn relevance within the community and foster social shopping that extends from the desktop to mobile to the real world.

As summarized by Cecere..

Companies realize that they can use new technologies—mobile applications, geo-location shopping, 2-D tagging, social gaming, social couponing, smart shelves—coupled with social technologies, loyalty programs and point of sale data to redesign the shopping experience. This allows companies to build customer intimacy in new and more meaningful ways.

The key to social commerce is understanding the roles of the social consumer and the parts they play in the grand production of your marketplace. It’s your responsibility to not only focus on the aspects of “paying it backward,” i.e. pay me for my goods and services, but also “paying it forward,” the investment in your community so that brands merit resonance through relevance.

Connect with Brian Solis on Twitter, LinkedIn, Tumblr, Facebook
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Please consider reading, Engage!: It will help you find answers to your questions…


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283 COMMENTS ON THIS POST To “The Rise of Social Commerce”

  1. Beverly Dracos says:

    Engage is mandatory reading for anyone who wants to or needs to understand how to move beyond listening to truly hearing and genuinely responding. I am also a strong proponent of brands investing in the community and you said it all when you said, ” brands merit resonance through relevance”. Beautiful, but also great business advice.

  2. Kyle Lacy says:

    I love this post. It gives great insight not only in relation to brands but to how to maintain an online reputation. It takes listening and engaging at all times.

  3. Paul Chaney says:

    Brian, is the report you referenced from Altimeter Group publicly available? I didn't find a link to it.

    • briansolis says:

      Hi Paul, hope you're well. I'm not sure if it's public yet. I'll find out…They might be presenting it at the conference.

      Excerpt:
      Enlightened engagement is the subject of a discussion that I’m joining at Altimeter’s first conference, “The Rise of Social Commerce” taking place in Palo Alto on October 6th and 7th (USE CODE RSC2 for $100 off if you’d like to attend).

  4. Thank you for a very insightful post that got my brain cranking on a Monday morning. In journalism, active listening is always the most important step in showing someone that you really care about them. It logically follows then that if a company actively engages with its customers by listening and responding, it will earn a loyal following that will not only buy products but also share opinions about products with the company and others. I couldn’t agree more that investing in your community through engaging with people in social commerce is the best way to spark sales, social shopping, collaboration and communication.

  5. Addoway.com says:

    Brian, Loved this post and love your book. Addoway was built around the strategies you describes in your book. I discussed in on my blog.

    My favorite part of this article: As a result of listening, learning, and adapting, we develop more relevant commerce strategies for our business. Through enlightened engagement, we can spark sales and also social shopping, collaboration, and communication.

  6. W. Alejandro Polanco says:

    Excellent post. Truly eye-opening and giving us a glimpse into the future of retailing/e-tailing. The influences from the three F's as Brian describes are already being seen/felt. I jumped on the Gap “groupon” in the example above and I personally know three other people who did the same. As for Engage, it'll be my next read! Great work.

  7. Nice article Brian.
    Home-based entrepreneurs are taught that the internet can be 'the cheapest place to fail'.
    However, can large brand-name companies afford to 'fail' if an “experiment with community building” on social networks backfires?
    Do social network managers working in large companies fave a 'get-out-quick' plan if a social media strategy is turning sour?
    I don't know and that's why I ask.

  8. startabuzz says:

    Thank you, Brian, for actually acknowledging that it's NOT just about engagement, that there has to be — and is — more. That more and more brands/companies are getting creative and using social networks to spur new business is fantastic! Really curious to see how brands take advantage of Places; if Facebook can bring a little bit more “zing” to it (one of the things that brings so many to FourSquare is its game-like qualities), it'll be a force with which to reckon.

  9. Christiane Delarbeyrette says:

    As always an indepth thought. Hope Commerce will engage on this societal movement.

  10. jgraziani says:

    Really like this post, Brian. It points out the relevance of engaging/responding and highlights the value of connecting those dots to not just customers but potential customers (expanding reach, market share). Great post. Thanks!

  11. Stephanie says:

    brilliant mix of online sociology and marketing for your upcoming event.

  12. Great post Brian. It is one thing for users to follow brands for discounts. But what if brands could enable users to share their purchases and offer discounts to their friends with the shared information. Would that make discounts more personal? Would that create another dimension in social commerce? Would love to hear your thoughts.

  13. Sam Meers says:

    Couldn't agree more. I would add that an often overlooked aspect of social commerce is acquiring email addresses in exchange for a added-value offer. Engaging advocates in a meaningful and trackable manner in order to monetize the social commerce efforts is key. Using social to engage is great, but if we fail to capture the advocates, then we miss a huge opportunity.

  14. Successmanual says:

    Brain,

    As always, a great post. While nobody can predict the future, your posts give us a glimpse of what can be and perhaps where we are heading. Technology is changing our lives so fast and in so many ways, it is easy to get caught up in it all simply because “everybody else is doing it, so I must too.” And that reason, standing alone, makes no sense.

    Keep up the good work.

  15. fbrody says:

    Brian – great insight as always – take a look at Cimbal [ http://www.cimbal.com ] – we add the critical 6th “P” to the equation: Payment, providing a software-based “NFC” mobile payment solution that provides Social Payment benefiting merchants and shoppers: http://blog.cimbal.com/2010/09/social-commerce-requires-social-payment/

  16. Garth Lyerly says:

    just ordered your book…..stoked is all I can say

  17. Paul says:

    This is a great topic. Influence is a powerful tool. And just how far can we go with it? Enough power to influence which bar to go to..which car to buy..or can social consumers control the thoughts we have of our ourselves rather than just what we buy. I am concerned that we are so materially focused that a plastic bag with a brand on it, can make us feel better in ourselves, than a non-branded bag..wow!

  18. Great insight, thanks for the post. 

    Do you envisage a full integration of social commerce into web users daily online activities in the future?

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  20. Dan Auito says:

    Always on the leading edge Brian, we need more nuts and bolts connect the dots overviews for our SMB’s, would love to have you on board our 5000 person live event in Tampa in Oct to give our business folks the insights they need to succeed. (Well done Sir)

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