Beyond all the hype and technobabble, the value proposition of social commerce is very simple – social commerce makes word of mouth measurable and manageable.

At Apple, the word of mouth mouth value of each happy customer is estimated to be $1927; the recommendations they make drive additional sales. Compare this $1927 word of mouth value with sales value to Apple of the purchases actually made by each customer – $2446, and you’ll see that word of mouth adds a 78% to customer value (total $4373).

In other words, nearly half the value (44%) of a customer lies in their word of mouth value.  The promise of social commerce is that it’ll help you realise this word of mouth value by using social media content to drive sales.

All very simple in principle, but hard in practice.  Beyond selling products worth recommending and helping customers recommend them, what’s a business to do?

The strategy of eBay, and other big retailers seems increasingly to be to buy in technology designed to eek out word of mouth value rather than develop it themselves. In 2011, eBay bought Hunch – a word of mouth recommendation engine that makes recommendations based on similarities between people and their tastes (after buying and selling StumbleUpon, another online word of mouth recommendation tool). And yesterday, eBay announced that it has purchased Svpply, yet another word of mouth recommendation tool that helps people share stuff they like with their friends. No indication was given as to the price paid, or how eBay will use Svpply to help unlock the word of mouth value of its users.

But you don’t need expensive technology to start doing social commerce – just use this simple question to inform what you sell and how you sell it; “Is this worth recommending?

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Today’s article is sponsored by Milyoni: The Leader in Social Entertainment
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