The Rise of Social Commerce

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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 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 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.

This blog is written by a member of our expert blogging community and expresses that expert’s views alone.

Warren Knight thanks Brian Solis Reprinted from


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