FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. ANY AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. Copyright © 2015 by SAGE Publications, Ltd. H I G G S , 8 Social Commerce S H A LEARNING OBJECTIVES N I C Q U A When you finish reading this chapter you will be able to answer these questions: 1 2 3 4 1 2 How do ratings and reviews provide value for consumers and 3 e-retailers? 2 and tools affect consumers as How do social shopping applications they move through the consumer decision-making process? 6 What is the relationship between social commerce and e-commerce? What are the psychological factors that influence social shopping? 234 FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. The Four ANY Zones of Social Media Copyright © 2015 by SAGE Publications, Ltd. The Zone of Social Commerce When was the last time you went shopping? Yesterday? Last weekend? Were you online or in your local mall? Did you go alone or with someone else, or maybe even with a group? Shopping is at its heart a social activity. Doing it with others makes the activity more enjoyable—even when your shopping buddies don’t agree with your choices. Our shopping companions, known among marketers as purchase pals, help us to think through our alternatives and make a decision. They validate the choices we make. When we don’t have a purchase pal with us, we might H turn to surrogate pals like sales associates and other shoppers. Shopping together can be a shared activity that strengthens our I relationships with others, but it also reduces the risks we associate with making purchase decisions. Perhaps this has been one reason G for the prevalence of in-store shopping over online shopping. E-commerce may finally have a solution for those who hate to shop G alone but who would still rather browse online while they hang out at home in their S pajamas: social commerce. Social commerce is a subset of e-commerce , (i.e., the practice of buying and selling products and services via the Internet). It uses social media applications to enable online shoppers to interact and collaborate during the shopping experience and to assist retailers and customers during the process.1 Encompassing S online ratings and reviews, numerous shopping related apps, deal sites and deal aggregators, and social shopping malls and H of social media (Figure 8.1). storefronts, social commerce is the fourth zone Historically, wired shoppers have relied heavily A on the Internet as an information source during the decision process—but many then turn to offline stores to complete the purchase. N I C Q U A 1 2 3 2 6 Figure 8.1 Social Commerce Zone FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. ANY AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. Social Commerce Copyright © 2015 by SAGE Publications, Ltd. 235 H A Social Commerce: The Digital Shopping Experience N It’s a cold day in mid-December, and David is spending some time on Facebook readI ing about his friends’ recent activities. A social ad for 1-800-Flowers appears on the side of his news feed that promotes C flowers as a Christmas gift and Q provides an endorsement that thouU sands of people like 1-800-Flowers. Remembering that he hasn’t yet sent A a Christmas gift to his grandmother in Texas, David gets a brainstorm— he really doesn’t have the time to 1 spend hours at the mall looking for 2 something for Grammy. He clicks the ad to reach 1-800-Flowers’ 3 Facebook page. There he sees a 2 promotion for 20% off his order if he “likes” the page and a “Shop 6 Now” call to action. With a click of the Shop Now button on the Shop Photo 8.1 tab of 1-800-Flowers’ page, David can browse flower selections and price points. Not sure whether 1-800-Flowers is the best choice, David first visits 1-800-Flowers’ Wall. Comments from past customers fill the Phone Facebook: Tsyhun/Shutterstock.com Increasingly though, these online researchers are converting to online shoppers—today over 82% of those who conduct research online also shop online.2 Online shopping offers many benefits to shoppers, such as the ability to comparison shop easily and efficiently, convenience, enhanced selection, and cost savings. With advances in social commerce, online shopping can finally offer a shared experience too—the experience of social shopping. Though, importantly, social commerce is influencing offline as well as online purchase decisions. At its core, social shopping refers to situations where consumers interact with others during a shopping event. Of course, just as in the physical world this changes the dynamic of shopping because it opens the door for others H to influence our decisions. Social media applications allow us to share product information electronically; easily I post opinions and access the opinions of others; and communicate with friends, family, and G to place or time. Whenever consumers associates about shopping decisions without regard navigate product information online using social commerce tools, such as bookmarking their G favorite products, emailing product summaries, and subscribing to RSS feeds of other users’ favorite product lists, they are social shopping.SSocial shopping provides utility to our shop3 ping experience because it lowers our perceived , risk. We can feel more certain, by using social shopping tools, that we got the best price, made the best choice, and know whether our friends will approve of our decision. It’s the digital answer to our desire as consumers to shop with others—but with the added convenience and power of online technologies. S 236 FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. The Four ANY Zones of Social Media Copyright © 2015 by SAGE Publications, Ltd. page, and David can read the posts from satisfied and dissatisfied customers along with the responses from company service representatives. He chooses three arrangements he likes, but then he posts a message to his two sisters to help him decide which is best. They both respond within 10 minutes (and as usual, they both pick the same one!). Now David is confident he’s got a winner, so he uses the Buy button where he chooses the arrangement and completes his transaction. Share technologies post to David’s Wall—“David bought a holiday arrangement at 1-800-Flowers” and “David likes 1-800-Flowers.” Once the flowers arrive and David knows how well Grammy liked them, he plans to return to the page to share a review on 1-800-Flowers’HWall. From there, the cycle begins again as another individual sees shared posts about the brand and/or social ads. Figure 8.2 illusI trates how David’s actions map to the consumer decision-making process—and he went G through the whole process without leaving Facebook! We all know some people who shop simply for the sport of it, and others (like David) G whom we have to drag to a mall. Shopping is how we acquire needed products and Sare important. Shopping is an activity that services, but social motives for shopping also we can perform for either utilitarian (functional , or tangible) or hedonic (pleasurable or intangible) reasons.4 S H A N I C Q U A 1 2 3 2 6 Figure 8.2 Social Commerce and the Customer Decision-Making Process FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. ANY AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. Social Commerce Copyright © 2015 by SAGE Publications, Ltd. 237 A shopper’s motivation influences the type of shopping environment that will be attractive or annoying; for example, a person who wants to locate and buy something quickly may find loud music, bright colors, or complex layouts distracting, whereas someone who is there to browse may enjoy the sensory stimulation.5 How such environments translate to social commerce shopping experiences is still unknown. But we can still see where these motives may play a role in social shopping. Hedonic shopping motives include social experiences (the social venue as a community gathering place), opportunities to share common interests with like-minded others, the sense of importance we experience when others wait on us, and the thrill of theHhunt.6 After all, the role of hunter/gatherer has long been ingrained in the human psyche. I Surely, too, there are utilitarian motives at play for social shoppers. E-commerce enabled shoppers to find alternatives andG a wealth of pricing information with the click of a mouse. Consumers benefit from the convenience and ease of shopping with G more choices and better information. Social commerce further enables shoppers to S access opinions, recommendations, and referrals from others within and outside of their own social graphs, again potentially improving the ability for consumers to , make the most rational and efficient decisions. But there’s one more benefit offered by social commerce that was missing from e-commerce—the social aspect of shopping that people got when they shopped in S person with their purchase pals. Social commerce provides that missing ingredient to the e-commerce equation. For example, H than his own when choosing a gift for David trusted his sisters’ judgment a lot more Grammy (though he would probably consult A other purchase pals before he buys a new gaming console). N It was only a few years ago that retailers scrambled to figure out how to present their store offerings online and worried as to the effect I of e-commerce on their traditional business models. Now, things are changing again as they assess the influence of consumer C desires to shop online socially. Q U Social Commerce and the Shopping Process A At the end of the day, shopping online is still shopping. Sure, the way we locate and purchase products may not look the same—but the successful marketer understands that our basic shopping orientations (e.g., to obtain a1needed product or service, to connect with others, to stimulate our senses, etc.) are the same as our ancient ancestors possessed. 2 process of shopping in terms of the stages Furthermore, it’s helpful to break down the of consumer decision making. Though we 3 may make some simple decisions in fewer steps, important decisions require five steps: •• •• •• •• •• Problem recognition Information search Alternative evaluation Purchase Post-purchase evaluation. 2 6 238 FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. AND UNAUTHORIZED USE IS STRICTLY PROHIBITED. Zones ofALL Social Media The Four ANY Copyright © 2015 by SAGE Publications, Ltd. When we look at these stages we realize that what seems at first to be an “obvious” and quick decision (“throw something in the cart”) is in fact a lot more complicated. On the bright side, many current social media applications are out there to help consumers make it through each of these stages. Table 8.1 summarizes the decision-making stages and illustrates some of these social media and social commerce tools that already are changing how we shop (but not why we shop!). So social commerce is a part of e-commerce, and it leverages social media to aid in the exchange process between buyers and sellers. That seems straightforward enough, but social media are sufficiently complex and broad H to influence e-commerce in all five of the consumer decision-making stages. I We noted earlier that even for offline purchases, wired consumers tend to search online for information prior to making anG actual purchase. In a book sponsored by Google, Jim Lecinski explains the process, coining the term, ZMOT – Zero Moment of G Truth.7 The concept is based on a related concept long understood by retailers, and Sgoods industry. It draws from the notions particularly those in the consumer-packaged , Table 8.1 Social Commerce Tools for Purchase Decision Stages Decision Stage Problem Recognition Information Search S H Social ads on social networking sites A posted in activity streams Shared endorsements from friends Curated images and lists on N sites like Pinterest Location-based promotions (e.g., Foursquare) I Comments (influence impressions) throughout social channels (opinions posted C an experience, etc.) on a brand’s Wall, tweets about Queries and responses within Qsocial networks (e.g., LinkedIn and Facebook) Ratings and reviews posted on sites (e.g., Yelp, Zagat, Citysearch) U available Product and pricing information Deal directories A Wish lists, gift registries Social Commerce Tools Evaluation of Alternatives Bar code scanning/price comparisons 1 recommendation agents, and popularity Recommendations, testimonials, filters (“ask your network” apps, video testimonials such as VideoGenie, and 2 top lists from retailers such as Amazon) Referrals 3 Purchase Shop within network options 2 (e.g., Facebook Buy) Social stores and social shopping malls (e.g., Wanelo) 6 Group buys (e.g., LivingSocial, Groupon) Post-Purchase Share opinion posts in activity streams Ratings and reviews on review sites and retailer website Reviews and product experiences posted on blogs FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. ANY AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. Social Commerce Copyright © 2015 by SAGE Publications, Ltd. 239 of First Moment of Truth (FMOT), the moment a consumer chooses a product from the store shelf, and the Second Moment of Truth (SMOT), the moment the consumer uses the product and feels satisfaction or dissatisfaction. ZMOT emphasizes that consumers today may be influenced in several moments online prior to making a purchase decision. Though the number of sources and types of sources vary by region and product category, on average consumers will use more than 10 sources of information before a purchase. These sources may be owned media content vetted by the brands in question, paid media in the form of an ad, or content posted by users in social media channels. Savvy brands will strive to be involved in this part of the purchase process, earning positive word-ofH mouth and other forms of influence impressions, leveraging the content by encouraging I its spread online, and facilitating the development of the content. G of favorites at Macys.com or a review of ZMOT information, whether a Pinterest board pizza places on Yelp, may or may not be social, G but much of it is. This information, particularly that provided by reviews and ratings, influences consumers at multiple stages in the buying process. Reviews are assessmentsSwith detailed comments about the object in question. Ratings are simply scores generated ,by users that reflect assessments of attributes like perceived quality, satisfaction, or popularity on a scale. Estimates vary from study to study, but research consistently shows that the vast majority of Internet-connected shoppers globally search for product information online Sfirst.8 Where people search varies but most start with a search engine and consequently can find all kinds of online content, including Hsocial channels. This search for information user-generated and brand-generated content on online may take place in social channels including A social networks like Facebook, review sites like TripAdvisor, social marketplaces like Amazon, and more. Although shoppers may N do turn to the Internet to gather informanot always complete their purchases online, many tion prior to making a purchase. Sixty-four percent of shoppers said they spent 10 minutes I or more reading reviews prior to making a purchase.9 Nearly 40% reported reading eight or C more reviews. In other words, this isn’t a casual behavior. Shoppers are intensely studying Q reviews to improve their purchase decisions. Researching products online makes sense—it can save time, increase confidence, and reduce risk that might be associated with the purU chase. It also ensures better, more credible information. Besides using opinions early in the A and reviews as a form of validation just decision process, consumers may also use ratings prior to purchase. This is called verification.10 That’s right—today buyers seek out information online early in the purchase process, and then many return to validate the decision. Many later also write reviews and rate products in 1 the post-purchase stage (the Second Moment of Truth – SMOT). Because reviews are so influential, retailers are inviting customers to 2 rate their experience and write a review soon after products are delivered. 3 alternative evaluation stage, with shopThis information influences the consumer’s pers reporting that they read reviews to evaluate 2 options both for products and retailers, compared prices and checked for deals, and considered the opinions of others. Even with 6 always consider online reviews to be fair 25% of online shoppers noting that they don’t or trustworthy, shoppers read the content and judge for themselves whether they feel a review is useful.11 Consumers trust information provided online by other consumers more than television, magazine, radio, or Internet advertising, more than sponsorships, and more than recommendations from salespeople or paid endorsers. 240 FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. The Four ANY Zones of Social Media Copyright © 2015 by SAGE Publications, Ltd. By the time the shopper reaches the purchase point, he or she has used an average of 10 sources of information with about half being a source delivered via social media. The Second Moment of Truth (SMOT) is just as relevant as it always was. At the point of product use, the consumer evaluates the purchase and has the opportunity to feed others’ ZMOTs with their shared experience and opinions. The Marketing Value of Social Commerce Marketers will be influenced by social commerce activities whether they chose to engage H or not. That’s because the reputation economy in which we live ensures that there is a I publishing platform for individuals. We see content creation increase with access to social channels and communities, social software, G and digital devices. Regardless of whether a brand is active, this content will be generated and will be accessible by a search online. Gat over 4,000 small businesses with reviews For instance, one study of Yelp reviews looked on its site. None of the businesses were also S engaging in advertising on Yelp. Fortunately for them, they still benefited. The study revealed that the unsolicited, organic Yelp reviews , $8,000 annually on average. What’s more were associated with increases in revenue of is that brands that facilitated a presence on Yelp saw an average uptick of $23,000.12 Another study found that for independent restaurants, a one-star rating increase on Yelp S was associated with an annual increase in revenues of 5% to 9%.13 Influence impressions can take on many H forms when it comes to user-generated content that relates to social shopping. The cornerstone is reviews. But ratings, recA Recommendations can also include ommendations, and referrals are also relevant. user-generated curated content such as shopping lists, Pinterest boards, Instagram N photos, and more. I Whereas ratings and reviews are visible to everyone who wishes to see them, recommendations and referrals originate from theCrecipient’s social graph. This makes them more influential than reviews and ratings because they leverage the social capital of the Q referrer. In fact, a Harris Interactive poll found that 71% of respondents said recommendations from family and friends have substantialU influence on their purchase decisions.14 And while we tend to trust reviews from strangers, Awe are more trusting of recommendations from people we know; 90% in the survey said they trust an online recommendation from someone in their network.15 Recommendations from friends and family 1 are all around us, and the prevalence of social media in the lives of wired consumers heightens our ability to share these opinions. WOMMA claims that the average consumer2mentions specific brands in conversations with others more than 90 times a week.16 Just 3 imagine how those influence impressions can travel when shared via social networks. This number could increase as people use social media to seek out recommendations. A2study from researchers at Penn State found that 20% of Twitter posts were from people asking 6 for or providing product information.17 Recommendations and referrals can be simple or integrated in their execution. Facebook’s “like” button, now available on millions of external webpages, is a form of recommendation. When you click it, you publicly announce that you recommend the content on the page. While others can see the total number of “likes,” anyone in your network can also see that you personally made a recommendation. FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. ANY AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. Social Commerce Copyright © 2015 by SAGE Publications, Ltd. 241 The Value of a Review Ratings and reviews are not always useful. Companies like Amazon ask users to rate the reviews according to helpfulness to improve the quality of reviews. Helpfulness ratings (yes—a rating of a rating!) give a quality indicator to other users before they invest time reading and also provide feedback to those who complete reviews. What goes into a valuable rating and review? Ratings are a heuristic; a mental shortcut consumers use to help them with decision making. For instance, if you want to choose a restaurant near the amphitheatre where you are attending a concert this weekend, you might pull up H all the restaurants in the area and then choose the one with the highest average rating. Reviews provide more detailed informationI for those who want to evaluate the choice at a deeper level. Consequently, a good review G should include product information such as features and specifications, an overall impression of the product with a positive or G negative judgment, a list of pros and cons, experience with the product, and a final rec18 ommendation. With these components, theSreview will have sufficient information for the readers to judge relevance and credibility and apply the content to their purchase , situation. Increasingly, reviews are questioned. Why? Deception. Estimates suggest that as much as 30% of online reviews is fraudulent. Reviews likely to be deceptive tend to include Sand to lack verified purchase information. information that is not related to product use These reviews may be provided by marketers H (on their own products or for competing brands) or by customers who have not actually bought the product in question. Researchers A estimate that legitimate reviews may come from as few as 1.5% of reviewers.19 N Benefits to E-Retailers I Product opinions affect shoppers, but that C isn’t the only way they impact the marketing process. Online reviews generate increased sales by bringing in new customers. Q Further, people who write reviews tend to shop more frequently and to spend more U Those who review products make up online than those who do not write reviews. just a quarter of online shoppers, but theyAaccount for a third of online sales.20 And 21 consumers are willing to pay a price premium for products with higher ratings. For e-retailers, this means that it makes good business sense to host rating and review features. Ratings and reviews also enhance organic 1 search traffic to the website. Organic search results improve because reviewers tend to use the same keywords (tags) in their 2 Petco, a pet supplies retailer, found that product descriptions that searchers will use. having customer reviews on its website generated five times as many site visits as any 3 previous advertising campaign. Those who browsed Petco’s Top Rated Products had a 49% higher conversion rate than the site 2 average, and an average order amount that was 63% higher than the site average.22 6 Reviews result in better site stickiness—customers reading reviews will stay at a retail site longer than they would otherwise. They can also enhance the effectiveness of offline promotional strategies. For example, Rubbermaid added review comments from its website to the content included in its freestanding inserts. When reviews were included, coupon utilization increased 10%.23 Lastly, the reviews and opinion posts 242 FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. The Four ANY Zones of Social Media Copyright © 2015 by SAGE Publications, Ltd. become a source of research data for the business, highlighting consumer opinions in a frank yet unobtrusive fashion. Some businesses believe the data resulting from online reviews to be more valuable than data from focus group research. Businesses can learn whether consumers like a competitor’s brand better and why, how consumers react to positive or negative press, what stories are being spread about the brand, and which customers are being evangelical and which ones are acting as “brand terrorists.” In Chapter 9, our focus will be on how marketers can use social media content as a source of consumer insight. While many forms of user-generated content Hknown to influence the consumer decisionmaking purchase process will occur organically, savvy marketers can encourage this I phenomenon, facilitate it by providing social software tools designed for social shopping, G and partner with social marketspaces. We organize the descriptions of social commerce strategies in this way. G S Social Commerce Strategies , Encouraging and Facilitating Influence Impressions The first level of social commerce strategy is S to utilize user-generated content, encourage it, and facilitate it with social sharing and shopping H functionalities customers want—providing tools that make content creation and sharing easy and by incentivizing the behavior. At A share tools on its website. These tools the simplest level, an online retailer can include may enable visitors to tweet an item, pin a picture to Pinterest, or save an item to their N Wanola. More engaging tools include those that enable site visitors to create social video I social software apps like VideoGenie) or testimonials using their mobile phones (with “share stories” in an onsite gallery. eMarketerCestimates that 94% of major online retailers now include such social sharing tools on their websites.24 Q that, while not user-generated, are based Online retailers can also enable other features on user behavior and still represent a kind ofUsocial recommendation. These include features like wish lists, gift lists, and similarity recommendations (e.g., “others who bought A this also bought”). Here’s a summary of the opportunities online marketers can provide to encourage social commerce sharing that may facilitate sales: •• •• 1 2 enable easy sharing of products sold on Share tools: social software plug-ins that a retailer’s website to social networks. 3 The most popular plug-in today for retailers is Pinterest. This sharing is a form of recommendation in that others in the user’s 2 social graph can treat the pin as an endorsement. Recommendation indicators: simple buttons 6 that provide an onsite endorsement of a product. The most common options are Facebook’s “like” and Google’s +! buttons. •• Reviews and ratings: onsite reviews and ratings with tools for writing and rating. •• Testimonials: a form of recommendation that enables users to share a more personal story about their experience, possibly as a video endorsement. FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. ANY AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. Social Commerce Copyright © 2015 by SAGE Publications, Ltd. 243 •• User galleries: virtual galleries where users can share their creations, shopping lists, and wish lists. This approach is sometimes called user-curated shopping and may occur onsite or offsite with a community like Wanelo. •• Pick lists: lists that help shoppers share what they want onsite, typically in the form of a wish list. •• Popularity filters: filters that enable the shopper to show products by most popular, most viewed, most favorite, or most commented. •• User forums: groups of people who meet H online to communicate about products and help each other solve related problems. I G Ratings Best Practices to Leverage Social Reviews and Ultimately, it’s important to remember thatG users are reading online reviews because they want to know what people like themselves S think of a product. They must be able to trust those reviews; if they can’t, the reviews won’t be effective. To make the most , a social commerce approach with these of the opportunity, marketers should develop characteristics: S whether positive or negative. •• Authenticity: accept organic word-of-mouth, H were invited, incentivized, or facilitated •• Transparency: acknowledge opinions that by the brand. A •• Advocacy: enable consumers to rate the value of opinions offered on the site. N •• Participatory: encourage consumers to contribute posts. I •• Reciprocity: acknowledge the value of the opinions customers offer. Cshare reviews on blogs and social network•• Infectiousness: make it easy for users to ing platforms. Q •• Sustainability: online opinions are so U influential because they live on in perpetuity. If a consumer tells a friend about a satisfying brand experience on the phone, A or trackable. If the opinion is posted the story once told is no longer retrievable in a company-controlled review site (e.g., if you post a review of the leggings you bought from LegLuxe on its review area), the opinions can be moderated and the brand has an option not to publish. 1 2 What does this mean for marketers? First, marketers must ensure high standards when it 3 to survive in the world of social reviews. comes to product quality and service if they wish It is so easy for anyone to tell everyone about2his or her brand experiences, whether good or bad. That means those experiences had better be good—very good! Those that fail 6 will have their sordid story broadcast to the social world as customers submit reviews and those reviews are shared via social networks. Second, brands should embrace, not hide—because really, online there is no place to hide—from consumer opinions. Instead, organizations can engage in word-of-mouth marketing by actively giving people reasons to talk about the brand while facilitating the conversations. The Word of Mouth Marketing 244 FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. The Four ANY Zones of Social Media Copyright © 2015 by SAGE Publications, Ltd. Association (WOMMA) identifies five key components to word-of-mouth marketing on its website, www.womma.org, all of which can be applied to managing online product opinions for brand value:25 •• •• •• •• •• Educating people about your products and services Identifying people most likely to share their opinions Providing tools that make it easier to share information Studying how, where, and when opinions H are being shared Listening and responding to supporters, detractors, and neutrals. I G the conversation by informing consumIn other words, marketers should encourage ers about the brand, offering consumers a forum for expressing opinions about the G brand, and responding (making the communication two-way) to comments consumS ers make on the forum and elsewhere. Customers can be invited to offer reviews, resulting in more engagement and the propagation of positive word-of-mouth com, munication about the brand. Perhaps most important is the final component of word-of-mouth marketing—listening. There is valuable information about the need for product improvements like product features and service quality embedded in S ratings and reviews. H Why Don’t All E-Retailers Offer Reviews andA Ratings on Their Sites? Aside from the problem that marketers and N advertisers have overlooked their value and influence, the most commonly cited reason given for not allowing online reviews on sites I is the fear that dissatisfied customers will use the review feature as a venue to flame a C brand. Given the old adage that negative word-of-mouth communication is more damaging than positive word-of-mouth communication is beneficial, some retailers have erred Q on the side of caution when it comes to offering a review feature. The ratio of negative to U that this fear is unfounded. Bazaarvoice, positive reviews found on various sites suggests a firm that provides a customer review and A rating service for e-tailers, reports that 80% 26 of its user-generated reviews are positive. In reality, retailers can benefit from negative reviews and should welcome them. Consumers want to see negative reviews to1be able to accurately assess the degree of product risk they face when purchasing. They seek to minimize perceived performance and financial risk associated with purchases.2Negative reviews give them the information they need to assess risk. The negative reviews 3 also enhance credibility. Consumers often assume that if the reviews seem too good to be true, they probably are. Lastly, negative 2 reviews give valuable information to the retailer on products that should be improved, augmented, or discontinued. The other primary 6 deterrent for e-retailers is more operational in nature. There are challenges related to acquiring and managing reviews and the review process as well as site maintenance. Companies such as Bazaarvoice and PowerReviews provide solutions; they service retailers by providing the technology to capture and display customer feedback. FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. ANY AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. Social Commerce Copyright © 2015 by SAGE Publications, Ltd. 245 Social Promotions and Partnerships In addition to leveraging user-generated content both through on-site tools and crossplatform partnerships, marketers can also facilitate sales using sales promotions offered through social deal partners and shopping carts in social vehicles like Facebook and Twitter. This is the second level of social commerce strategies. The most extensive format would be to truly socialize the shopping function on the retailer’s website. A few adventurous retailers gave this a shot (most notably, Levi’s) but thus far, full implementation has not gained H momentum. Amazon is perhaps the world’s most friendly retailer for social shopping but synchronous, shared online shopping expeI riences are still not featured. Another form is to provide for shopping from G within the user’s feed on his or her preferred social community. Facebook first offered a similar service known several years ago G on the brand’s Facebook page. While 62% with shopping carts and transactions completed of retailers tried the functionality in 2012, just S15% are estimated to still use that functionality.27 More recently, Facebook and Twitter began offering shopping from within one’s , feed.28 This allows the retailer to suggest products that are likely to be impulse purchases with social influence. It overcomes the issue of searchability within a large catalog of products, which caused frustration in the earlier versions of in-network social shopping. Sfor social shopping experiences. Sites like Marketers can also partner with other sites Motilo, Fashism, and GoTryItOn claim to provide H a digital shopping experience akin to the one you’d have face to face with friends, known as Shop Together functionality. In addiA tion, marketers may wish to offer sales promotions, short-term deals designed to generate Nshopping communities like LivingSocial or demand in a specific time period, using social Groupon. These sites have come under fire in recent years. They were originally seen as I a panacea but as many businesses suffered from an inability to meet demand (remember C return on investment, businesses became our discussion on scalability?) and a negative more reluctant. These communities still offer Q a way to provide a sales promotion to a large number of socially connected consumers, but should be closely evaluated. LivingSocial Uincludes features that speak to the referral has redefined itself as a deal marketplace and power noted above. With its Me+3 option, when A three friends buy a featured deal, the referring friend gets the deal for free! Geo-location communities and apps like Foursquare also offer partnership opportunities for social promotions. Social shopping portals and partnerships 1 can also be relevant. Wanelo enables users to share products they “want, need, love,” which are linked to the product’s page on 2 from browsing to truly buying. Wanelo the retailer’s website. This enables conversion thinks of itself as a digital mall where users3can post favorite items, and comment and share with friends. Users link their favorites to specific retailer websites so that sales 2 can be driven from Wanelo to the retailer’s own site. It can be described as a multiretailer catalog built as a social network. Products are listed with a Buy button that 6 connects to the retailer. This kind of conversion is possible with other social sites too, but Wanelo has a critical mass that makes it especially relevant to marketers. For example, Urban Outfitters has fewer than 200,000 followers on Pinterest, but over 2 million on Wanelo. Facebook is the most used partner, with 86% of retailers identifying it as 246 FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. The Four ANY Zones of Social Media Copyright © 2015 by SAGE Publications, Ltd. their most important social network for promoting specific products. Shopify reported that Facebook drove two thirds of the visits to Shopify-operated stores in 2013 with an average order value worldwide of $55.00. Pinterest had an average order value of $58.95 but drove fewer visits. The best vehicle with which to partner also depends upon the type of retailer. Pinterest generated 74% of social orders in the antiques and collectibles industry at Shopify-operated stores.29 A developing area in this realm is one known as “participatory commerce,” which is sometimes also called social funding. It is part of social commerce because it enables entrepreneurs to include individuals in theHdevelopment of a commercial venture by I G THE DARK SIDE OF SOCIAL MEDIA G S People write reviews of their experiences ability to do business. This is of course and they can do this on their own blogs, , at the heart of why social publishing for on branded sites, or on review sites like TripAdvisor and Yelp. If a person wants to be heard, there are hundreds of social sites that can publish the content. Most marketers want this coverage. We know from research assessing the reviews online that 80% of online reviews are positive. Among ratings, most brands earn on average a 4.3 of 5 stars. The fans are the ones critiquing, and happily, most of the time! But the negative review is also of value. It’s valuable to those who might patronize the brand if it weren’t for the information, and to the brand itself, in the form of research that can enable customer service recovery and product improvements. Still, not everyone believes in the process. And the process may become increasingly regulated. That’s what blogger Caroline Doudet learned after posting a review of the restaurant Il Giardino in Cap-Ferret, France. The restaurant owner sued Doudet claiming that Doudet’s review ranked so high in the organic search engine results for the restaurant that it was thwarting its a brand is relevant, and also why brands should truly seek to deliver on their promSises. Alas, though Il Giardino’s owner Hadmitted to failing when it came to providing a good experience for Doudet, he Abelieves it is unfair for one experience to Ninfluence the choices of others. The court agreed, fining Doudet and requiring her I to pay court costs as well.30 CThe case is related to an ongoing EU Qcontroversy on the so-called right to Ube forgotten. The ruling makes search engines like Google responsible for elimAinating or removing search results that provide links to past stories people and businesses don’t want exposed. It’s quite 1a controversy since the ruling makes the 2search engines, which did not create and do not control the content, responsible. 3Online advocates argue that this goes 2against the very culture of the Internet, which stands for openness and transpar6ency. If onerous regulations force social networks to censor what is posted, will the democratic promise of the Internet evaporate? FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. ANY AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. Social Commerce Copyright © 2015 by SAGE Publications, Ltd. 247 funding at different levels. It is related to the microlending phenomenon. Interested in social funding? Check out the current projects featured on Threadless or Kickstarter. To summarize, these more integrated approaches e-retailers can take for social commerce include offering sales promotions and social shopping opportunities, often with a partnering company. Marketers can use social commerce in several ways. The most simple approach is to encourage social sharing of the brand’s offerings by providing share tools on the site. Some of these tools will result in recommendations and referrals. Other content can be encouraged by enabling a space for reviews and ratings or by developing a campaign that encourages fans to develop H user-curated shopping lists. Conversion can be enhanced with social deals and campaigns planned with partners and with in-network I shopping functionalities. G Social media marketers who want to win customers find it helpful to understand what we know more generally about the psychology of influence—the factors that make it more G or less likely that people will change their attitudes or behavior based on a persuasive message. In particular, some social shoppingS tools play to our cognitive biases. This term refers to the “shortcuts” our brains take when , we process information. Unlike computers that impassively process data and produce the same result each time (when they work!), humans aren’t so rational. Two people can perceive the same event and interpret it quite differently based on their individual histories, S gender, and cultural biases. For example, our reactions to colors are partially “colored” by our society, so a North American might H bride” while an Asian might assume the interpret a woman in a white dress as an “innocent same woman is going to a funeral since white A is the color of death in some eastern cultures. Cognitive biases are important when we look at purchase decisions, especially because N how we interpret it. Even though consumthey influence what we may pay attention to and ers have access to more information than everI before when it comes to purchase decisions, they are also faced with the limitations of bounded rationality. Bounded rationality captures C the quandary we face as humans when we have choices to make but are limited by our 31 own cognitive capacity. As consumers, we typically approach an identified need with an Q information search followed by alternative evaluation. In a world of search engines and U social media, though, our information search could potentially be limitless. With thouA sands of online retailers carrying products, millions of product reviews to sort through, and hundreds of “friends” to ask for recommendations, online commerce is fraught with information overload; there’s simply too much data for us to handle. 1complexity than they can manage comfortWhen consumers are confronted with more ably, bounded rationality kicks in. We adjust 2 to the overload by finding ways to make decisions without considering all the information for an optimal choice. Instead, we often 3 effort to make a decision that’s acceptable satisfice—this means we expend just enough but not necessarily the one that’s “best.” We 2 call the shortcuts we use to simplify the process heuristics. This term describes “rules of thumb” such as “buy the familiar brand name” and “if it’s more expensive it must be6better.” This process of using heuristics to simplify the decision-making process is sometimes referred to as thinslicing, where we peel off just enough information to make a choice.32 When we thinslice we ignore most of the available information; instead we “slice off” a few salient cues and use a mental rule of thumb to make intuitive decisions. Research on 248 FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. The Four ANY Zones of Social Media Copyright © 2015 by SAGE Publications, Ltd. the psychology of influence identifies six major factors that help to determine how we will decide.33 Let’s review them and illustrate how social shopping applications and tools harness these heuristics. Social Proof We arrive at many decisions by observing what those around us do in similar situations. When a lot of people select one option (e.g., H a clothing style or a restaurant), we interpret this popularity as social proof that the choice is the right one. There are several ways that marketers use social proof. For instance,I identifying brands as the #1 choice, market leader, and so on, all point to evidence of social G proof. In social commerce applications, tools can enable shoppers to see the social proof related to the product. As more people jump on the bandwagon a herding effect canG occur.34 Herd behavior occurs when people 35 follow the behavior of others. S Although in every age there certainly are those who “march to their own drummers,” , regarding how they should act and look most people tend to follow society’s expectations (with a little improvisation here and there, of course). Conformity is a change in beliefs or actions as a reaction to real or imagined group pressure. In order for a society to funcS rules that govern behavior. Without these tion, its members develop norms, or informal rules, we would have chaos. Imagine the confusion if a simple norm such as stopping for H a red traffic light did not exist. A We conform in many small ways every day—even though we don’t always realize it. N Unspoken rules govern many aspects of consumption. In addition to norms regarding appropriate use of clothing and other personal items, we conform to rules that include I gift-giving (we expect birthday presents from loved ones and get upset if they don’t mateC on a first date), and personal hygiene (our rialize), sex roles (men often pick up the check friends expect us to shower regularly). Q We don’t mimic others’ behaviors all the time, so what makes it more likely we’ll conform? These are some common culprits:36 U A •• Cultural pressures: different cultures encourage conformity to a greater or lesser degree. The American slogan “Do your own thing” in the 1960s reflected a movement away from conformity and toward1individualism. In contrast, Japanese society emphasizes collective well-being and group loyalty over individuals’ needs. 2 •• Fear of deviance: the individual may have reason to believe that the group will 3 behaviors. It’s not unusual to observe apply sanctions to punish nonconforming adolescents who shun a peer who is “different,” or a corporation or university that 2 passes over a person for promotion because she or he is not a “team player.” 6 •• Commitment: the more people are dedicated to a group and value their membership in it, the greater their motivation to conform to the group’s wishes. Rock groupies and followers of TV evangelists may do anything their idols ask of them, and terrorists can be willing to die for their cause. According to the principle of least interest, the person who is least committed to staying in a relationship has the most power FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. ANY AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. Social Commerce Copyright © 2015 by SAGE Publications, Ltd. 249 because that party doesn’t care as much if the other person rejects him or her.37 Remember that on your next date. •• Group unanimity, size, and expertise: as groups gain in power, compliance increases. It is often harder to resist the demands of a large number of people than only a few—especially when a “mob mentality” rules. •• Susceptibility to interpersonal influence: this trait refers to an individual’s need to have others think highly of him or her. Consumers who don’t possess this trait are role-relaxed; they tend to be older, affluent, and have high self-confidence. Subaru H created a communications strategy to reach role-relaxed consumers. In one of its commercials, a man proclaims, “I want I a car . . . Don’t tell me about wood paneling, about winning the respect of my neighbors. They’re my neighbors. They’re G not my heroes.”38 G In Table 8.2 you can see that several of the social S shopping tools we covered earlier influence shoppers with social proof. Any content that we can share with others includes a , social proof component. When you choose items for an online wish list and then share that list with your network of friends, you’ve given your friends social proof that the items listed are desirable. And, testimonials have long been a source of social proof that S a product is the right one to choose. New social tools such as VideoGenie make it posH video clips they record with their mobile sible for customers to share their stories with phones or web cams. At one time, testimonials were limited to those of typical person A endorsers, celebrity endorsers, or word-of-mouth communication. Now, users can share testimonials with a written story, comments,Nor a video. I C Authority Q The second source of influence is authority. Authority persuades with the opinion or recommendation of an expert in the field. Whenever U someone has expertise, whether that expertise comes from specialist knowledge and/or personal experience with the product or problem, we will tend to follow that person’s advice. WeAcan save time and energy on the decision by simply following the expert’s recommendation. In advertising, we see the use of authority in ads for pain relievers that state “9 out of 10 doctors recommend.” A doctor should know which medicine is best for pain, and the copy1in the advertisement delivers this advice. However, the use of authority is also in play 2 when we see ads from someone who has experience with choosing a product for a specific functional need. For example, when 3 Mia Hamm or Peyton Manning endorses Gatorade products, it’s based not on credentials in the area of nutrition, but rather on their personal experience with needing a beverage 2 that can rehydrate them efficiently. We listen to them because, as elite athletes, they ought 6 to know which product is best. In the realm of social media, authority can be activated in several ways, including referral programs, reviews (from experts as well as from existing customers who can speak with the voice of experience), branded services, and user forums. Although citizen endorsers are not paid agents representing a brand, they do hold a position of authority in the minds of other consumers. Professional experts and reviewers, 250 FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. AND UNAUTHORIZED USE IS STRICTLY PROHIBITED. The Four ANY Zones ofALL Social Media Copyright © 2015 by SAGE Publications, Ltd. whether book critics, movie critics, doctors, or lawyers, have authority in specific, relevant product categories but so do citizen endorsers who have actually used the product. In other words, one’s experience with the product serves as the source of authority. •• “Ask your network” •• Brand butler services •• Deal directories •• Deal feeds •• Filters * •• Group buy •• Lists * •• Recommendations * •• Referral programs * •• Reviews * •• Share tools * •• Shop Together S H A N *I *C *Q U A * * * * * * * * * * * * * * * * * * * * •• Storefronts * •• Testimonials * *1 •• User forums * * •• User galleries * •• Geo-location promotions Reciprocity Scarcity H I G G S , Affinity Social Proof Social Shopping Tool Consistency Social Shopping Tools and Sources of Influence Authority Table 8.2 2 3 2 6 * * * * * Affinity Affinity, sometimes called “liking,” means that people tend to follow and emulate those people whom they find attractive or otherwise desirable. If we like someone, we are more FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. ANY AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. Social Commerce Copyright © 2015 by SAGE Publications, Ltd. 251 likely to say yes to their requests or to internalize their beliefs and actions as our own. We talked about how advertising often uses endorsers as a source of authority. They can also be used as a source of affinity. While Peyton Manning is an expert when it comes to whether Gatorade is the best choice for hydration during times of physical exertion, he is simply a likable celebrity when he endorses Timex watches. With social media, affinity is almost always present because the social shopping is tied to your social graph—to your friendships. Some tools that leverage affinity as a source of influence are “ask your network” tools that enable shoppers to request real-time recommendations from their friends, deal feeds (where friends share deals), H shopping opportunities posted in friends’ news feeds, pick lists, referral programs, sharing tools, and shop together tools. I G Scarcity G We tend to instinctively want things more if weSthink we can’t have them. That’s the principle of scarcity at work. Whenever we perceive something as scarce, we increase our efforts to acquire it—even if that means we have to pay, a premium for the item and buy it before we would otherwise have wanted. Marketing promotions that use scarcity as an influence tool might focus on deals that are time-sensitive, limited-edition products, or products that are Sapplications include deal feeds, news feeds limited in supply. In social commerce, scarcity with special offers, group buy tools, referral H programs, and deal directories. A N Reciprocity The rule of reciprocity basically says that we Ihave an embedded urge to repay debts and favors, whether or not we requested the help.CReciprocity is a common norm of behavior across cultures. We reciprocate kindnesses in part because we feel it is the fair and right thing to do (a social contract we have with Q others) and in part because reciprocation is important to well-functioning relationships. U Reciprocity influences daily interactions all around us. It may be as simple as choosing a birthday present for someone for whom A do because they gave you a gift on your you wouldn’t normally buy a present, but you birthday. Marketers activate the rule of reciprocity to encourage consumers to choose a specific brand and to show loyalty to the brand over time. The key is to initiate an offer 1 of some kindness, gift, or favor to the target audience. The targeted consumers will then 2 feel compelled to respond in kind. This is the basic principle behind the sales promotion technique of sampling; where a 3 marketer offers a free trial of a product to consumers. The free trial illustrates the relative advantage of the product, but it also creates2the perception of having received a gift in the minds of consumers. Consequently, sales6of sampled products are higher than those of products that are not sampled. Some retailers send birthday and holiday cards to their top clients. Even something as simple as a greeting card can be perceived as a kindness that should be reciprocated. In social commerce, several tools can be perceived as a favor or kindness offered by the brand. These include deal feeds, group buy, referral programs, and user forums. 252 FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. The Four ANY Zones of Social Media Copyright © 2015 by SAGE Publications, Ltd. Consistency People strive to be consistent with their beliefs and attitudes and with past behaviors. When we fail to behave in ways that are consistent with our attitudes and past behaviors, we feel cognitive dissonance, a state of psychological discomfort caused when things we know and do contradict one another. For example, a person may believe it’s wrong or wasteful to gamble, yet be drawn to an online gambling site. To avoid this discomfort, we strive for consistency by changing one or more elements in the situation. Thus, our gambler may decide that he or she is betting the house only H due to “intellectual curiosity” rather than due to the thrill of betting. The need for consistency is a fairly broad source of influence I or behavior. Marketers may instigate the because it can be activated around any attitude need for consistency with image ads, free trial G periods, automated renewals, and membership offers. Some of the social shopping tools that include a consistency component Gpick lists, share tools, shop together tools, include ask your network tools, social games, reviews, forums, and galleries. S , FROM BYTES TO BUCKS Goran Bogicevic / Shutterstock.com Social Commerce Leverages Fan User-Generated Content to Drive Sales Photo 8.2 Smart brands are actively thinking about how the products fans share to social networks like Pinterest and Instagram are generating awareness, celebrating the brand, and ultimately driving clicks S Hto purchase. They also understand how users might incorporate brand images Aon both these sites differently. Curalate, Na company that provides tools for brands to integrate user-generated content I for branding and demand-generation Cmarketing activities, thinks of this relationship among different visually Qoriented social networks as optimizing Ubrand celebration (Instagram) with aspirational content (Pinterest). A Urban Outfitters used Curalate’s Fanreel product to integrate user-generated 1photos into its e-commerce site and then used those photos to drive customer 2loyalty and sales. In their first two months 3of using Fanreel, Urban Outfitters was able to collect more than 13,000 user2generated images of people celebrating 6their Urban Outfitters style. These inspirational images were linked to relevant product pages, giving browsers FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. ANY AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. Social Commerce Copyright © 2015 by SAGE Publications, Ltd. an immediate path to purchase. In fact, user-generated content on Urban drove a 15% clickthrough to product pages. The picture is clear: social proof sells. Urban Outfitters’ customers now upload between 100 and 200 Instagram photos a day via the hashtag #UOOnYou, which populate directly into Curalate’s Fanreel. From there, Urban Outfitters can choose images and link them to its digital catalog. Because the system enables links from user photos to a product number, visitors can easily click on a user-generated photo and purchase 253 an item. The system allowed Urban Outfitters to leverage the user-generated content for engagement by rewarding fans with onsite exposure while driving online sales. Most importantly, Urban is celebrating the customers who are celebrating the brand. Additionally, Hsince Fanreel analytics include insights page views, impressions, and I like interaction duration, Urban can now Geasily recognize which user images are Gresonating with consumers and use those photos to inform other marketing Sdecisions. , S Benefits of Social Commerce H A So far we’ve talked about the ways that marketers can approach social commerce. But what benefits does social commerce offer toN marketers? 1 It enables the marketer to monetize theI social media investment by boosting site and store traffic, converting browsersC to buyers, and increasing average order value. Q 2 It solves the dilemma of social media return on Investment (ROI). ROI is a U was created by an investment. We’ll metric for understanding how much value explore this concept in depth in Chapter A 10. Some criticize social media for 3 4 5 6 their lack of accountability, but linking sales to social media eliminates this criticism. Social commerce applications result in1more data about customer behavior as it relates to the brand. 2 Social shopping applications enhance the customer experience. They make online 3 mean higher levels of customer loyalty shopping fun and functional, which should and better long-term customer lifetime2value. Social shopping makes sharing brand impressions easy. The brands earn referral 6 value with these easy-to-use word-of-mouth tools. Brands can keep up with the competition, and maybe differentiate themselves from others in the e-commerce space. 254 FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. The Four ANY Zones of Social Media Copyright © 2015 by SAGE Publications, Ltd. CHAPTER SUMMARY What is the relationship between social commerce and e-commerce? Social commerce is a subset of e-commerce (i.e., the practice of buying and selling products and services via the Internet). It uses social media and social media applications to enable online shoppers to interact and collaborate during the shopping experience and to assist retailers and customers during the process. Encompassing H online ratings and reviews, applications, numerous shopping related apps, deal sites I malls and storefronts, social commerce and deal aggregators, and social shopping is the last zone of social media. G G for consumers and e-retailers? How do ratings and reviews provide value Ratings are simply scores people, acting inSthe role of critic, assign to something as an indicator. The rating may reflect perceived , quality, satisfaction with the purchase, popularity, or some other variable. Reviews are assessments with detailed comments about the object in question. They explain and justify the critic’s assigned rating and provide added content to those viewing S the content. Both serve as a source of research during the information search and evaluation of alternatives stages of the buying process and as a tool for verifyingH a decision before purchase. For retailers, positive reviews generate increased salesAby bringing in new customers. Further, people who write reviews tend to shop more frequently and to spend more online N than those who do not write reviews. Consumers are willing to pay a price premium I for products with higher ratings, too. Ratings and reviews also enhance organic search traffic to the website. C Q and tools affect the consumer deciExplain how social shopping applications sion-making process. U Table 8.1 indicates which social shopping A applications primarily affect each stage of the consumer decision-making process. Many of these applications are influential in the information search and evaluation of alternatives stages, but to some extent social shopping is relevant throughout the1process. Describe the psychological factors that2influence social shopping. Research on the psychology of influence3identifies six major factors that help to determine how we will decide; these can 2 be applied to social commerce. These sources of influence include social proof, authority, affinity, scarcity, consistency, and reciprocity. Social proof occurs when6we can see what others would choose or have chosen. Authority persuades with the opinion or recommendation of an expert FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. ANY AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. Social Commerce Copyright © 2015 by SAGE Publications, Ltd. 255 in the field. Professional experts and reviewers, whether book critics, movie critics, doctors, or lawyers, have authority in specific, relevant product categories but so do citizen endorsers who have actually used the product. Affinity, sometimes called “liking,” means that people tend to follow and emulate those people for whom they have an affinity. With social media, affinity is almost always present because social shopping is tied to your social graph—to your friendships. We tend to instinctively want things more if we think we can’t have them—that’s the principle of scarcity at work. In social commerce, scarcity applications include deal feeds, news feeds H with special offers, group buy tools, referral programs, and deal directories. The I an embedded urge to repay debts and rule of reciprocity basically says that we have favors, whether or not we requested the help. G In social commerce, several tools can be perceived as a favor or kindness offered by the brand. These include deal feeds, G group buys, referral programs, and user forums. The final source of influence is S to be consistent with their beliefs and our tendency to be consistent. People strive attitudes and with past behaviors. Some of the social shopping tools that include , a consistency component include ask your network tools, social games, pick lists, share tools, shop together tools, reviews, forums, and galleries. KEY TERMS affinity authority bounded rationality cognitive biases cognitive dissonance conformity First Moment of Truth (FMOT) herding effect heuristics information overload principle of least interest principle of scarcity S H A N psychology of I influence purchase pals C ratings Q reviews rule of reciprocity U sales promotions satisfice A Second Moment of Truth (SMOT) share tools Shop Together 1 2 3 2 6 social shopping social shopping portals social video testimonials susceptibility to interpersonal influence testimonials thinslicing user-curated shopping user forums user galleries verification 256 FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. The Four ANY Zones of Social Media Copyright © 2015 by SAGE Publications, Ltd. REVIEW QUESTIONS 1 2 Explain the concept of purchase pals. Do you pull your offline and online purchase pals from the same pool of friends and family, or are they different somehow? How is social commerce related to e-commerce? In the future, will e-commerce be able to exist without social applications? Why or why not? 3 What are the benefits that accrue to businesses implementing social shopping applications? 4 Explain the two approaches retailers can take toward social commerce. EXERCISES 1 Search Wanelo for brands you like. Can you buy the products you find? Is a recommendation tool included in the page? Can you add products to your shopping cart and check out from within the page? In your opinion, what could make the site more effective? 2 Which are more influential—reviews from experts or reviews from customers? Explain. 3 Review the list of social shopping applications presented in the chapter 5 How are reviews different from recommendations? 6 Why are ratings an important cue to include with a review site? H7 I G G8 S , 9 10 S H A N I C Q U A 1 2 3 2 6 Explain the concept of bounded rationality as it relates to social shopping. Which stage of the decision-making process is most affected by the dimensions of social commerce? Explain. What is thinslicing? Explain the six sources of influence prevalent in social commerce applications. and visit some of the sites that use these applications. Social shopping applications provide functionality for customers, such as enhanced organization, price comparisons, risk reduction, and access to product information, but they also make the shopping experience more fun. Tag the list of applications based on the benefit the application provides— utility or fun. Which aspect of social shopping is most impor tant to shoppers? FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. ANY AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. Social Commerce Copyright © 2015 by SAGE Publications, Ltd. 257 Chapter Notes 1 Adapted from “Simple Definition of Social Commerce (With Word Cloud & Definitive Definition List),” Social Commerce Today, November 17, 2009, Updated June 2010, http://socialcommercetoday.com/social-commerce-definition-wordcloud-­definitive-definition-list/, accessed July 28, 2010. 2 Jeffrey Grau, “US Retail E-Commerce H Forecast: Room to Grow,” E-Marketer, March 2010, http://www.emarketer.com/Reports/All/Emarketer_2000672.aspx, I accessed July 28, 2010. 3 G J. Shen, “Social Comparison, Social Presence, and Enjoyment in the Acceptance of Social Shopping Websites,” Journal G of Electronic Commerce Research 13, no. 3 (2012): 198–212; cf. J. Shen and L. Eder, “An Examination of Factors Associated With User Acceptance of S Social Shopping Websites,” International Journal of Technology and Human, Interaction 7, no. 1 (2011); J. Shen, L. Eder, and J. D. Procaccino, “Social Comparison and Trust in the Acceptance of Social Shopping Websites,” International Journal of Electronic Business S 8, no. 4 (2010). 4 For a scale to assess these dimensions H of the shopping experience, see Barry J. Babin, William R. Darden, and Mitch Griffin, “Work and/or Fun: Measuring A Hedonic and Utilitarian Shopping Value,” Journal of Consumer Research 20 (March 1994): 644–656. N 5 Velitchka Kaltcheva and Barton Weitz,I“When Should a Retailer Create an Exciting Store Environment?” Journal of Marketing 70 (2005): 107–118. 6 Mark J. Arnold and Kristy Reynolds, “Hedonic Shopping Motives,” Journal of Q Retailing 79, no. 2 (2003): 77–95. 7 U with Google, 2012, http://www. Jim Lecinski, ZMOT Handbook, Think thinkwithgoogle.com/collections/zero-moment-truth.html, accessed May 23, 2013. A 8 Yubo Chen, Scott Fay, and Qi Wang, “The Role of Marketing in Social Media: How Online Consumer Reviews Evolve,” Journal of Interactive Marketing 25, no. 2 (2011): 1 85–94. 9 “5 Social Shopping Trends Shaping the 2 Future of Ecommerce,” Power Reviews and the eTailing Group, 2010, http://www.powerreviews.com/case-studies.php, 3 accessed January 1, 2011. C 2 6 (Continued) 258 FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. The Four ANY Zones of Social Media Copyright © 2015 by SAGE Publications, Ltd. (Continued) 10 “New Research Reveals Best Approach to Harness the Power of Online Influence on Purchase Behavior,” Cone, http://www.coneinc.com/consumers-confirmrecommendations-online, accessed July 29, 2010. 11 Ayaz Nanji, “Do Consumers Trust Online Reviews,” MarketingProfs.com, September 5, 2013, http://www.marketingprofs.com/charts/2013/11563/ H do-consumers-trust-online-reviews, accessed July 13, 2014. 12 I Manfred, and John Rose, “Unlocking Sebastian DiGrande, David Knox, Kate the Digital-Marketing Potential of Small G Businesses,” BCG Perspectives, March 19, 2013, https://www.bcgperspectives.com/content/articles/digital_economy_ G marketing_sales_unlocking_digital_marketing_small_businesses/, accessed July 20, 2014. S 13 Michael Luca, “Reviews, Reputation, , and Revenue: The Case of Yelp.com,” Harvard Business School Working Paper Series, 2011, http://www.hbs.edu/ faculty/Pages/item.aspx?num=41233, accessed June 12, 2012. 14 Quoted in “Social Commerce Statistics,” Bazaarvoice, http://www.bazaarvoice. H2010. com/resources/stats, accessed July 30, 15 S A People, Not Companies,” eConsultancy, Jake Hird, “Online Consumers Trust Real July 8, 2009, http://econsultancy.com/blog/4175-online-consumers-trust-realN people-not-companies, accessed July 30, 2010. 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FOR THE USE OF SAVANT LEARNING SYSTEMS STUDENTS AND FACULTY ONLY. NOT FOR DISTRIBUTION, SALE, OR REPRINTING. ANY AND ALL UNAUTHORIZED USE IS STRICTLY PROHIBITED. Social Commerce Copyright © 2015 by SAGE Publications, Ltd. 259 21 “Online Consumer-Generated Reviews Have Significant Impact on Offline Purchase Behavior,” comScore, November 29, 2007, http://www.comscore.com/ Press_Events/Press_Releases/2007/11/Online_Consumer_Reviews_Impact_ Offline_Purchasing_Behavior, accessed July 30, 2010. 22 Don Davis, “Customer Reviews Help Cut Product Return Rate at Petco,” Internet Retailer, June 26, 2007, http://www.internetretailer.com/2007/06/26/customerreviews-help-cut-product-return-rate-at-petco, accessed July 30, 2010. 23 “Rubbermaid Products with Reviews Show Increased Revenues,” Bazaarvoice I Case Study, January 2010, http://www.bazaarvoice.com/resources/case-studies/ rubbermaid-products-reviews-­show-increased-revenues, accessed July 29, 2010. 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(Continued) 35 Wenjing Duan, Bin Gu, and Andrew Whinston, “Analysis of Herding on the Internet—An Empirical Investigation of Online Software Download,” Proceedings of the Eleventh Americas Conference on Information Systems, Omaha, NE, USA, August 11–14, 2005, http://www.hsw-basel.ch/iwi/publications. nsf/ bc26b92ec161bc8fc 12572180036eb62/592d 9e78196c07fec 125722e00292418/ $FILE/VIRTCOM01-1424. pdf, accessed July 20, 2010. 36 For a study that measures individual differences in proclivity to conformity, see I William O. Bearden, Richard G. Netemeyer, and Jesse E. Teel, “Measurement of Consumer Susceptibility to Interpersonal Influence,” Journal of Consumer G Research 15 (March 1989): 473–481. 37 John W. Thibaut and Harold H. Kelley, The Social Psychology of Groups S and R. Hill, The Family, a Dynamic (New York: Wiley, 1959); W. W. Waller Interpretation (New York: Dryden, 1951). , 38 Bearden, Netemeyer, and Teel, “Measurement of Consumer Susceptibility to Interpersonal Inf luence”; Lynn R. Kahle, “Obser vations: RoleS Relaxed Consumers: A Trend of the Nineties,” Journal of Advertising H Lynn R. Kahle and Aviv Shoham, Research (March–April 1995): 66–71; “Observations: Role-Relaxed Consumers: Empirical Evidence,” Journal A of Advertising Research (May–June 1995): 59–62. H G N I C Q U A 1 2 3 2 6 Visit the companion website for free additional materials related to this chapter: study.sagepub.com/smm Instructions: This assignment is a THREE part assignment. This assignment must be done in APA format. Each section has its own word count and instructions; so please pay attention to details below. Although this assignment is done in APA format, it must keep the question and answer format. For Example: Question: XYZ Answer: XYZ Reference: XYZ Book: Tuten, T.L., & Solomon, M.R. (2015). Social Media Marketing. Thousand Oaks, CA: Sage. Part One (Discussion) This part of the assignment has a minimum word count of 250 words. A minimum of two (2) references, along with in-text citations, MUST be used. Please Note: The BOOK must be one. Helpful hints are highlighted below. 1. What are benefits businesses may obtain by implementing social shopping applications? Is there any risk to an organization related to shopping application? How can a business measure the return-on-investment of an application? Part Two (Complete) This part of the assignment has THREE questions. Each question must be answered in a minimum word count 275 words. THREE references along with in-text citations ( done APA format) must be included in each question. Please keep answer and question format. For example: Question: XYZ Answer: XYZ Reference: XYZ 1. Social commerce can be used by small businesses. Choose a small business that you are familiar. Propose at least three (3) social commerce tactics the business could use to market itself more effectively. Be certain to choose social commerce types of social media covered in the unit. For instance, maintaining a Facebook page is part of the social community zone. It only belongs in social commerce if coupons are shared or social commerce can be conducted on the Facebook page. Be specific in sharing your ideas. 2. One of the most prevalent social commerce strategies is the use of a group deal like Groupon or Living Social. Investigate whether group deal sites like these are effective approaches for marketers. What marketing objectives can be accomplished using group deals? Is the approach financially sound? What are the risks? Explain your answer drawing upon a brand's experience using a group deal to enhance your response. If you don’t personally have experience with a group deal you can reference someone else’s experience you may know. 3. There are several online tools marketers can use to encourage social commerce sharing. What are a few that are most commonly used? Provide an example that uses at least two (2) of the opportunities that start on page 242 of this week’s reading. Part Three (Reponse) Instructions: This part of the assignment is very simple. Write a response to each post. A minimum of 75 words are required. No references are needed. 1. Social media applications are used to enable online shoppers to interact and collaborate during the shopping experience and to assist retailers and customers during the process. Social media applications fall under the social commerce zone. Social commerce is the practice of buying and selling products and services via the Internet. Social commerce is considered the fourth zone of social media. The benefits of social media applications are that it allows the user to share product information electronically, post opinions, and communicate with friends, family, and associates about their shopping decisions. Social media applications are helpful to the consumer on making it through the stages of consumer decision making. The five steps are problem recognition, information search, alternative evaluation, purchase, and post- purchase evaluation. (Tuten & Solomon, 2015) There are risks on organizations related to a shopping application. Many consumers are unaware of the risks to their privacy and data that use of mobile shopping apps may entail. A lot of consumers find it easy to just order everything online, but there are risks to that. Apps are not always properly encrypting sensitive data which may include personal and financial information which could result in fraud or identity theft, or an enterprise spear phishing attack or other exploit if in the wrong hands. (Guerra, 2016) The ways a business can measure the return-on-investment of an application is by defining the company’s goals and develop measurable KPIs (key performance indicators) that are relevant to an overall strategy, and then begin to calculate the return-on-investment enterprise mobile app. The way to do this is to weigh the KPIs against the app development costs. This includes everything from development costs, ongoing app maintenance costs, upgrade costs, and other costs that come with producing an enterprise mobile app. Then the business will be able to see a return-on-investment number that can weigh against the value of mobile strategy. (SevenTablets, 2017) 2. Brands generate the opportunity to influence buyer decisions through providing social shopping applications that simplify access to product offerings and community opinions of the brand. Social shopping applications provide occasions for customers to publicize brand product info and images of social media share buttons. Through the sharing, “word-of-mouth” gets around on the internet, causing earned media which leads brands to reap greater benefits from the psychology of influence. People are busy and have limited time to dedicate to researching purchase options. With the ability to read customer reviews and discuss potential purchases on social media, people apply bounded rationality to much of their shopping decisions (Pettinger, 2012). Businesses benefit when they cash-in on the positive reviews as potential customers rationalize they will like the brand if others with perceived authority leave positive reviews. Additionally, brands can partner up with other brands to increase customer conversion rates. Through the psychology of consistency, customers are more open to trying new products if they see special offers in apps, reviews, and galleries of purchases others have made (Tuten & Solomon, 2015). Social shopping applications are not without risks for businesses, however. Competitors and disgruntled shoppers may “flame” a brand by leaving false or exaggerated negative reviews to hurt the company’s image. Businesses can find potential benefit in listening to genuine negative reviews from customers as they reveal areas where the brand can improve. By tracking online sales and correlating the results with social media campaigns or reviews, businesses can measure their return-on -investment of an application. Companies can also calculate returns-on-investment by looking at numbers such as; site traffic rates, spending trends, average customer supplied ratings, and brand content share rates.
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