Social Commerce: It’s all in the mind

The purpose of this paper is to (hopefully) provide you with some insight into how social commerce works from a psychological standpoint.

It is important to understand why it makes commercial sense to help people to connect where they buy and buy where they connect. This will give businesses a distinct strategic advantage and enable them to deploy effective social commerce strategies.

Why does Social Commerce make sense?

1. 1. By providing online shoppers with useful tools to make better and more informed choices, social commerce helps shoppers do smart and savvy shopping. This enables retailers to beat shopper expectations that drive loyalty and word of mouth advertising.
2. 2. Retailers now have an opportunity to sell where customers spend their time; ie. On social media platforms. This provides a cost-effective way to capture traffic and market reach; as well as raise the possibility of impulse e-purchase; a huge untapped opportunity in e-commerce.
3. 3. When properly used, social commerce/shopping tools, can harness the processes of social influence that take place when we are shopping. This is, in my opinion, the most effective and powerful reason for deploying effective social commerce strategies.

The Social Psychology of Shopping:

In short, it harnesses the human capacity for social learning; learning from the knowledge and experience of those we know and trust. Moreover, social commerce facilitates our ability to understand and learn from each other, and therefore profit from certain situations.

Psychologists have identified six universal heuristics (mental rules of thumb) that shoppers use to process information. Social shopping tools are powerful because they harness these heuristics to make purchase decisions more likely.

Heuristic 1: “Social Proof”/ Follow the crowd:

To resolve uncertainty of what to do or buy, we often look at what others are doing or have done, and take our cue from them. When something stands out as popular or dominant, we instinctively perceive this as social proof that it is correct or the most valid option – this is classic peer power in action.

Social Commerce Application: Social shopping tools that use social proof to stimulate heuristic-thinking shopping decisions include:

• Pick lists – wish-lists offer social proof about what people want and what is desirable.
• Popularity Lists – allow shoppers to view options by “most popular” , “most viewed”
• Customer Testimonials.
• Social Media reviews – from other customers to provide trustworthy proof about product or service quality.

Examples include Amazon, Apple (iTunes)

Heuristic 2: Authority/ Follow the Authority:

People have a natural tendency to defer to the conclusions of an expert or authority, regardless of what they say. With specialist knowledge, experience and expertise, they save us time and energy thinking things through. “Four out of Five Doctors recommend” being one example of this.

Social Commerce Application

Examples include:

• Referral programs – from people who shoppers trust.
• Social Media reviews by authoritative professional reviewers.
• Social Media services that establish the retailer or brand as an authority.
• User forums.

Referral programs such as Amazon Affiliates, ebay, Nike+ are examples of this in action.

Heuristic 3: Scarcity: “Scarce Stuff is good stuff”

Our minds are programmed to value scarce resources. We instinctively assign more value to opportunities as they become less available – part out of fear of potential loss. Limited offers, limited availability, and the like.

Social Commerce Application

• Group-Buy – tools that allow shoppers to be part of a great one-off deal.
• Referral programmes for private shopping events.
• Social Network storefronts – great deals for network members only.
• Deal feeds  – to get that exclusive deal the majority don’t know about. Or time-sensitive shopping deals (often with a count-down clock)

Heuristic 4: Liking/ Follow those you like

We have a natural inclination to emulate and agree with people we like, admire or find attractive, partly because it builds social bonds and trust, and partly because of impression management; managing our image and identity by association.

Social Commerce Application

• News feeds – to follow, share and spread social news about brands shoppers like, with people they like. (Twitter, Facebook, YouTube)
• Deal Feeds – for the same reason as news feeds.
• Share with your network – tools that allow shoppers to share shopping experiences.
• Social Network Storefronts – allow shoppers to share and discuss shopping experiences within their social network.

Heuristic 5: Consistency/ Be consistent

When faced with uncertainty, we’ll opt for the one that is consistent with our beliefs and past behaviour.  We do this to avoid “cognitive dissonance” – the discomfort we feel when our beliefs and behaviours don’t match up. The classic marketing applications here include lifestyle advertising ( demonstrating why a product is consistent with audience lifestyle), free trials (become a user for free, and stay consistent by buying later), signing up for free membership schemes.

Social Commerce Application

• Ask-your-network – tools that involve a small public commitment to an item (asking friends about it) that is consistent with purchasing it later.
• Social Gaming – stimulates behavioural consistency between playing a branded game, and later buying the branded product or service.
• Pick Lists – they are the social shopping equivalent of petitions, small free public commitments to products consistent with subsequent purchases.
• User Forums – allow shoppers to each others problems on behalf of the brand; a commitment that is consistent with a purchase.
• Social Media Entertainment, Reviews, Services – uses the small commitment of paying attention or rating to make future purchases more consistent with past behaviour.

Examples include Levi’s, Dell, Starbucks, Amazon, Apple, eBay

Heuristic 6: Reciprocity/ Repay favours

We have a natural desire to repay favours, whether those favours were invited or not. We feel good when we reciprocate favours, partly because of our innate sense of fairness and social contract. Now you know why you feel bad when you get a Christmas card from someone to whom you haven’t sent a card!

This has been used successfully in marketing through giving out samples, local Corporate Social Responsibility and sponsorship, to name a few examples.

Social Commerce Application

• Group-Buy – these tools allow friends to do their friends a favour and get them deals, which get reciprocated with participation.
• Referral programmes that allow friends to offer exclusive access or special deals to their friends to drive sales.
• Social Media services that are genuinely useful and can be passed on.
• User Forums that allow shoppers to offer each other buying support and advice – which through reciprocity translates to selling to each other.

Examples include: Dell, Amazon, Carrefour, Dell, Groupon, Starbucks.

Conclusion:

The practical use of looking at social commerce through the lens of social psychology is that it provides brands and retailers with a strategic approach to doing social commerce.

Rather than deploy social shopping tools based on a whim or sales pitches, these six heuristics provide a framework for six distinct shopper-centric social commerce strategies, with their associated tools and which can be adopted and developed based on their fit with broader marketing strategies.