eMarketer has just put together a useful 2009 state-of-the-nation report on Social Commerce, authored by senior analyst Jeffrey Grau.
The full report is available here ($695) – but here is a summary of some key points – and SocComToday’s key takeouts:
(NB the report reads more as a social media marketing guide for online retailers (rather than a report on latest social commerce tools), with background data to support the case for social media marketing).
- Retailers and brands should begin implementing social commerce with modest steps; start by social media monitoring, social commerce monitoring (monitoring competitor activity) and then moving on to hosting customer conversations (to help customers make better purchase decisions, share experiences, and save time by getting recommendations).
- The next step in your social commerce strategy should be to host customer ratings and reviews (these have established and measurable benefits for retailers). Although opening up a site to include customer ratings, reviews and forums raises the potential for criticism, this is an opportunity for brands and retailers to learn – and be seen to be responsive.
- Start experimenting with how you can drive traffic and conversion using Facebook, Facebook Connect, Twitter and Social Shopping Networks (once ratings and reviews have been implemented). These tools are current hotbeds of social commerce experimentation, but it’s too early to know what works and what doesn’t
- The future of social commerce will incorporate virtual storefronts and influencer marketing a) establishing virtual storefronts where customers congregate and spend time sharing opinions about brands and products (i.e. on social media platforms), and b) identifying influential customers (not necessarily biggest spenders) and including them in influencer marketing programs
- Social commerce plays a role across the buying decision process. Product Discovery can be stimulated through social shopping networks such as Kaboodle, Stylehive, StyleFeeder and ThisNext. Product interest can be stimulated by deals on Twitter, Facebook or shopping networks. Product selection can be aided through customer ratings and reviews on e-commerce sites, as well as live-chat with their friends. Post-purchase, costs can be reduced through user forums and real-time by tweeting with a retailer’s customer service agent
- Different social commerce tools suit different target markets; younger people use social networks to make purchase decisions, older more time-strapped shoppers use consumer reviews on retail sites to inform purchase decisions, and technophiles use forums to inform their purchase decisions
- “[Facebook Connect] is going to be used [only/successfully] where the power of the recommendation is much stronger. Wal-Mart is a great example. I don’t really need to decide whether I need that giant roll of dishtowel paper or whatever, just to bring it to my home. It is either the right price or it’s the wrong price.” Paul Dunay Avaya
- There is more to social media marketing than social commerce; building brand awareness, a solid reputation and a fan base, as well as generating leads are social media marketing goals that do not involve e-commerce. For example, brands are using Twitter for public relations, loyalty building, thought leadership, product development and customer service, as well as customer acquisition and promotional announcements
- Always remember that people join social networks to connect with each other, not brands or organisations; nevertheless social network users do talk about brands and organizations. Effective social media marketing involves stimulating word of mouth recommendations.
Top Facts (social media diet) (figures refer to US, unless specified otherwise)
- 43.5% of adult US Internet users use social networks, this is set to rise to 50% by 2012
- People use social networks primarily to connect with friends and family
- Internet users who use social networks are more likely to be active users social media tools (uploading videos, pictures, blogging, commenting, participating in forums)
- Half (52%) of social network users have become a fan/friend of a brand/company, 46% have said something good about a brand/company, 23% have said something bad
- Internet users who use social networks are more likely to shop online, especially under 25s (Gen Y) who are more than 2x as likely to be online shoppers (Gen X 50% more likely)
- 11% of adult US Internet users use Twitter (heavy bias to 25-54 age group), and 11% of Twitter users use Twitter connect with brands/organizations
- People use Twitter primarily to connect with friends, family and celebrities
Top Facts (social media marketing)
- Marketers increasingly believe in the power of social media to build brands – with more rating the medium effective than radio, outdoor, and newspaper press
- The most popular social media platforms marketers use to connect with audiences are 1) Facebook (80%), Twitter (69%), online videos (63%) and blogs (57%). Wikis, widgets and forums are the least used
- Three out of four top 500 US retailers have a presence on social networks or social shopping sites (most popular – Facebook (56.8%), YouTube (41.4%), MySpace (28.6%), Twitter (20.4%), Kaboodle (10.4%), Stylehive (5.4%), ThisNext (3.8%))
- Fortune 100 companies who use Twitter use it to do 1) PR (make news announcement (94%)), 2) customer service (?), 3) advertising (communicate promotions, deals, contests (57%)), and 4) HR (job postings (11%))
- The top three barriers to social media marketing (for brands and agencies) are lack of knowledge, lack of effectiveness measures, and lack of funding
- Adding social commerce functionality (customer reviews/social features (forum, blog)) is the #2 priority for online retailers (after increasing marketing spend)
- Online retailers cite the benefits of adding customer reviews to e-commerce site as 1) increased sales conversion rates, 2) higher average order value, 3) lower product return rates, 4) reduced customer call center rates, and 5) higher customer satisfaction rates
- 89% of online retailers allow shoppers to bookmark products to Facebook for friends to see (SWYN – share with your network) (but only 13% email marketing includes SWYN).
- “Recommendations from people I know” remains the most trusted media source (92% trust) (followed by consumer opinions posted online (72%) and editorial content such as a newspaper article (70%))
- Customer reviews are the #1 influence on online purchases (home appliances) – above brand, specifications, design or price
- Social media content posted by close friends and family has the most heavy influence on creating awareness and prompting purchase. Anonymous peer reviews and contributors to YouTube are strong on informing consideration
- In terms of online purchase recommendations, 2% of social network users share recommendations daily, 8% every few days, 19% every few weeks, 42% every few months, and 29% never make recommendations
- Top categories that people use social media to inform purchases are travel (28%), clothes/shoes (26%), restaurants (24%) mobile phones and services (23%)
- The top 3 reasons people participate in communities on retail sites are 1) help make better purchase decisions, 2) share experiences, 3) save time by getting recommendations
- 69% of social shopping site users say have made purchases based on recommendations from other users
- JanSport, luggage manufacturer, uses Facebook Connect to allow visitors to communicate (ask advice) with their Facebook contacts whilst on the site, create and share wishlists (implemented by Fluid)
- Charlotte Russe, apparel retailers uses Facebook Connect with DecisionStep’s social shopping toolbar to allow visitors to chat with friends whilst browsing the site and share items to their social network contacts (SWYN share with your network). DecisionStep say their social shopping toolbar can increase items placed in cart by 25%, average order value 50% and time on site by 400%
- Comcast uses Twitter (@comscastcares) to offer customer service – a team of q0 service agents tweet responses to customer questions. Comcast also use Twitter as early warning signal of service issues
- Dell uses Twitter (@dellOutlet (1.2m followers) as a forum to exchange information about refurbished Dell computers and electronics
- Zappos uses Twitter (@Zappos) as a PR vehicle for Tony Hsieh (CEO of Zappos – acquired by Amazon in July 2009) to put a human face on the organisation: 1/3 of Zappos staff tweet as public spokespersons/tweetpersons for Zappos
- JCPenney uses private customer discussion boards to do market research. For example, based on discussions with customers, the retailers modified its Ambrielle lingerie product line
- Lenovo uses customer forums (50,000 users+) to allow customers to offer customer support to each other. Lenovo has seen a 20% reduction in call center activity
- Sears uses its ManageMyHome customer forum to allow customers to share tips on home improvement projects, and get advice from experts. The forum is promoted through Twitter
- Whole Foods supermarkets uses Facebook to build its brand – offering advice on living a healthy, environmentally responsible lifestyle. Whole foods also hosts customer forums where visitors can exchange recipes, share special diet concerns, and discuss healthy living and environmental issues.