Nothing So Practical as Good Theory 3 | James Poulter on Social Commerce

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Next up in our series of “There’s Nothing so Practical as Good Theory”; a speed summary of February’s social media week (London) session on social commerce by James Poulter (@jamespoulter), thought leader and digital consultant for Lexis PR.  Entitled Social Commerce: Welcome to the Reputation Economy, it’s refreshing to have a PR (brand-reputation) led – perspective on social commerce and what it can do.  James’ excellent presentation is embedded below, but here’s the speed summary.

What is Social Commerce (The Definition): “Converting conversations into commerce…leveraging the recommendation economy to drive sales”

How Social Commerce Works (The Theory): We live in a “recommendation economy” where personal recommendations are the new currency defining brands and driving sales.  Social commerce is recommendation-optimization in the context of e-commerce.  There are three “styles” of social commerce…

  • Social Intelligence – helping people shop with social intelligence – informing purchase choices through social learning (via friends) (and listening to the choices and accompanying recommendation behaviour for product improvement/innovation
  • Social Capital – helping people build social capital – their social status and power through association with brands (‘impression management’)
  • Social Buying – helping people club together to get great group deals/be a member of an exclusive group-buying club

Social commerce is data rich, leverages the recommendation economy to drive sales, encourages smarter shopping, and helps solve the ROI issue of brand advocacy/word of mouth

The Evidence:

  • Social Intelligence – Deploying ratings and reviews (Asos)
  • Social Capital – Tying purchase to an added value – status-enhancing experience (Celebrity access/events (Westfield Mall, London – with Rihanna))
  • Social Buying – Uses social networks to make shopping go viral (Groupon)

The Recommendations:

  • Understand the three core components (DNA) of a recommendation  – Direction, Narration and Association and build your social commerce strategy around it (see image)

SCT Likes: The idea of social capital (the power, privilege and possibilities we have by virtue of the social networks to which we belong) as a key component of social commerce – a quid pro quo for purchase.  ‘Social capital (AKA bragging rights) for sales’ as a value proposition.

SCT Adds: The idea that social commerce is recommendation-optimization in a recommendation economy means that social commerce is as much about branding (ability to extract margin by creating choice shaping associations in the mind of the audience) as it is about sales.

About the author

Paul Marsden

Chartered psychologist specialising in consumer behaviour and technology. Certified CX professional experienced in Design Thinking. A researcher, writer and speaker, Paul is head of Digital Insight at SYZYGY.

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  • Great concepts and framework. I would add the Social Context is another dimension that should be considered in this framework. Social Context is the source of conversation and what may have brought people together in the first place. A sporting event…leads to conversation…that leads to a purchase of sports gear. A concert event…leads to a conversation…that leads to a ticket purchase. While GroupOn brings together people in search of a deal, there are many other Social Contexts that create commerce opportunities and brand enhancement beyond “the deal of the day”.

  • A wrong definition of social commerce produce porrnes and Climate Change…please think about it…Social is a big world and commerce too…why that definition…its means like a advertising definition… Am I wrong???

    Converting conversations into commerce…leveraging the recommendation economy to drive sales”…this concept means like the same e commerce concept…but now we have a chat…..no no no….

    From Costa Rica….

    Gracias…

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Consumer psychology insights and news for digital professionals brought to you by WPP agency SYZYGY and Dr Paul Marsden (@marsattacks)

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Paul Marsden

Chartered psychologist specialising in consumer behaviour and technology. Certified CX professional experienced in Design Thinking. A researcher, writer and speaker, Paul is head of Digital Insight at SYZYGY.