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Dell just relaunched their community for IT professionals, rebranding it from AppDeploy to ITNinja, and changing the interaction model from forum to Q&A.  This follows the Q&A models used in other IT communities like Spiceworks and StackOverflow.  It’s a subtle but important change.  A lot of forum discussion takes the form of Q&A anyway, but adding the formal structure of Q&A has advantages.

The core difference is this: a person asking a question is generally seeking answers, while a person making a comment is often seeking an audience.  The person seeking an audience tends to have a more “selfish” set of motivations, like establishing a reputation or promoting an agenda.  Those goals are often better served through vehicles like blogs where the commenter has more control over how their contributions are presented, and where their posts can be easily seen in aggregate.  Hybrid community/blogs where a newsfeed spans across posters but individuals’ profiles are still prominent (like Facebook, Twitter, and Tumblr) satisfy the goals of commenters particularly well (thus the success of these platforms – there are a lot of commenters out there!).  On the other hand, commenters who participate in forums tend to be motivated more by the desire to be helpful than by the goal of self promotion, and if your goal is to be helpful, answering questions is a great way to do it!  So, community forums tend to attract answer-seekers and answer-providers, making Q&A the natural framework.

Of course, the distinction isn’t black-and-white, but Dell’s decision to switch from a forum model to a Q&A model is further evidence that Q&A is gradually taking over from forums as the interaction model for communities.

This is such an important validation of the effectiveness of social merchandising that, if we’d thought of it, we would have commissioned a market research firm to write this study for us.  But, even better, it’s actually a peer-reviewed article produced by a team of university marketing professors and published in the journal of the American Marketing Association, the Journal of Marketing Research.  It’s titled: Online Social Interactions: A Natural Experiment on Word of Mouth Versus Observational Learning.  (There’s also a nice write-up and interview with the lead author on Red Orbit.)

The findings are straight-forward: Online, as in the physical world, people are more likely to buy things that they see other people bought.  There’s no word of mouth here.  This isn’t about customer ratings and reviews.  This is just about seeing the purchases of other people.  The merchandising lessons are simple:

1. You can improve conversion rates by showing shoppers that other people have really bought a product (on the product detail page)
2. You can encourage consideration by showing the purchases other shoppers made (in your product discovery/recommendation/cross-sell merchandising)

The study looked at a period when Amazon put up and took down the “what other people bought” section on their digital camera products to see what effect having/not having this information had on sales.  Using these data,

The authors observe a herd behavior among consumers when the OL or sales information is positive, but surprisingly, they observe no herd behavior when consumers face negative OL or sales information.  [OL stands for “Observational Learning”, which in this case means “seeing what other people bought”.]

In other words: when shoppers saw that other people were buying a particular item, they became more likely to buy it.  But if an item didn’t have peer-purchase information, that absence didn’t hurt sales.  So you don’t need sales coverage for your whole catalog – show purchase information where you’ve got it, and don’t worry about it where you don’t.

Here are a couple examples of stores using tools that deliver the OL effect.  For lesson #1 (on the product detail page, showing shoppers that other customers are also buying the item), have a look at the 98 check-out comments on these shoes at GoJane (scroll past the Q&A).  For lesson #2 (showing products that other customers are buying to encourage consideration and cross-sell), have a look at the “See what your friends bought” tab on the right edge of the window here at emitations.  What effect do these tools have on you?  Does this sort of merchandising make you feel like buying?

If you want to take advantage of the OL effect to improve your sales, give us call.

Most brands’ and stores’ greatest single asset is the goodwill of their customers. And most do little to leverage this goodwill for marketing gain.  There’s a fallacy in marketing land that just because you have a presence on social networks, you are doing “social” marketing.  But when you look a bit closer, you see that most social initiatives by brands look a lot like traditional marketing and merchandising, just in a new place.

The essential idea of “social commerce” is: connect your shoppers and customers directly to each other. Not only does this help turn your shoppers into customers, but it strengthens your relationship with your customer base. Sounds obvious, but for most brands it’s a deep paradigm shift. Most brands still think in terms of a hub-and-spoke model of communication; the brand is at the center managing a dialog (or monologue) with customers. Sure, customers talk to each other about the brand here and there, but the brand really wants to dominate the conversation.  The metaphor is brand-as-teacher; customers are the class. But there’s another approach in which brands actively facilitate dialog between their community members without dominating it.  These connections don’t just help bring new people into the brand fold, they also deepen the affinity existing customers have with the brand.  The metaphor is brand-as-party-host; shoppers and customers are the guests. Maybe the guests get a little interaction with the host during the party, maybe none, but either way, they are primarily interacting with each other.  The brand doesn’t get the same opportunity as in the classroom model to drive home its officially-approved message, but instead the brand earns a more powerful, social type of influence – by having the guest list stocked with loyal supporters.

Though more subtle, the influence of the party-host approach can be both deeper and farther-reaching.  Mikołaj Jan Piskorski has just published an article in the Harvard Business Review titled “Social Strategies that work” taking a rigorous look at the online social efforts of 60 businesses in a broad range of verticals.  He concludes:

What the poorly performing companies shared was that they merely imported their digital strategies into social environments by broadcasting commercial messages or seeking customer feedback. Customers reject such overtures because their main goal on the platforms is to connect with other people, not with companies. That behavior isn’t hard to understand. Imagine sitting at a dinner table with friends when a stranger pulls up a chair and says, “Hey! Can I sell you something?” You’d probably say no, preferring your friends’ conversation over corporate advances. Many companies have learned that lesson the hard way.

In contrast, the companies that found significant returns devised social strategies that help people create or enhance relationships. These work because they’re consistent with users’ expectations and behavior on social platforms. To return to our dinner analogy, a company with a social strategy sits at the table and asks, “May I introduce you to someone or help you develop better friendships?” That approach gets a lot more takers.

To make this concrete, take a look at the Facebook presence of a handful of your favorite brands.  See what page they have set for you to land on.  Is it a crafted brand message, or does it have customers and fans talking to each other?  Go to the brand’s wall. Are customers posting, or is it dominated by posts from the brands, with customers generally addressing their replies back to the brand?  I just went to the FB page for the Gap.  I landed on a high production values spread called the 1969 Denim Studio.  No customer voice there.  Then I went to their wall.  There are 18 posts showing.  All 18 of them are from the store.  Here’s the dialog responding to the first one:

It’s not that this sort of brand marketing is bad.  It’s just that it’s not SOCIAL.  It’s missing the opportunity of providing a forum for shoppers and customers to engage with each other.  In contrast, on Sephora’s Facebook wall, two minutes ago, 26 out of 26 posts  were from members of the Sephora community.  It’s not as tidy as the Gap’s – not all the posts are positive or interesting – but the approach does produce exchanges like this:

and this:

Another another place where you can see the difference in approaches in action is the social question-and-answer applications on ecommerce sites.  If the Q&A dialog is primarily between the shopper and the store staff, that’s not social, that’s customer support.  Hey, we love good customer support as much as the next person, and if that’s the goal of Q&A, fine.  But most stores find that channels like live chat and phone/email are optimal for support, while Q&A is uniquely positioned to enable dialog between shoppers and customers.  So if the store dominates the Q&A dialog (or if the Q&A system is not built to effectively produce shopper-customer exchanges), then the store is missing all the value that a social approach can generate: the credibility (and generally positive sentiment) of truly social answers, deeper shopper engagement, and stronger bonds with past customers.

Check out the difference between the Q&A dialog here on the product page for a camera at Staples.com, where most of the dialog is with staff, and on the page for a camera at Adorama.com, where most of the dialog is social.

So as you sit down with your team to map out the next phase in your social commerce strategy, ask yourselves this: are you teaching a class when you should be hosting a party?

We don’t usually link to our competitors’ blogs (they don’t usually link to ours…).  But PowerReviews put up a nice summary of the benefits of ecommerce Q&A that’s well worth a read.  We just want to add one important thing: imagine how much greater these benefits would be if your Q&A system actually generated a large number of fast social answers, instead of – how to put this – bupkis?

[For a downloadable version of this study, click here.]

To date, Q&A on ecommerce sites has been primarily a tag-along application to customer reviews (provided by vendors that specialize in customer reviews). This approach results in a Q&A model that’s more like customer reviews than a true social experience between shoppers and customers, missing the benefits that a truly social approach to ecommerce Q&A provides.

The key to Social Q&A is that shopper questions should reliably and quickly get answered by real customers, and participants should have the ability to go back-and-forth beyond the initial question, if they choose to. If shopper questions receive customer answers only rarely or after an extended period, the shopper is disappointed and the store has missed the chance to provide a fast reminder to the shopper about the purchase she was considering. Further, getting past customers to share their experience with real shoppers is a great way for stores to keep their relationships with the customer base fresh. The rise of social networks has conditioned people to expect a high level of interactivity from social applications – so if a Q&A tool isn’t providing that, it’s not really Social.

On many online stores’ Q&A systems, we’ve observed that most answers come from store staff.  That can be an OK supplement to social answers (especially if the staff are really experts), but the store may be better off directing those questions to a live chat or phone line so the staff can interact with the shopper in real time.  And if a shopper wants to know something subjective – like how the product held up after 3 months, or how it felt, or just if it’s really as fabulous as they hope it is(!) – they may only want an answer from someone like them who really bought the item.  A Q&A system that relies heavily on staff answers also isn’t really Social.

That’s why TurnTo created an approach to Q&A for ecommerce that reliably provides a true Social experience – multiple, fast answers from real purchasers with continuing back-and-forth dialog. To measure the difference between the TurnTo approach and that provided by the leading customer reviews vendors, Bazaarvoice and PowerReviews, we conducted a simple test. We asked 16 shopper questions on a range of sites with Q&A powered by TurnTo and these other vendors, and we tracked how long it took for the answers to arrive.  Here are the aggregated results:

Methodology:  In our test design, we tried to keep the playing field level. We asked general questions that could easily be answered by anyone with experience with the product. We tried to ask the identical question about identical products wherever possible. Where not possible we tried to pick featured items on the Bazaarvoice and PowerReviews sites likely to have high traffic and have been purchased many times (no new arrivals items were used). We tried to pick sites where the Bazaarvoice and PowerReviews Q&A tools were implemented in a highly visible way on the page. That meant that the PowerReviews and Bazaarvoice sites were not always the largest in each vertical (in particular, in the photo gear category), but more often than not, the Bazaarvoice and PowerReviews sites had far more traffic than the TurnTo sites, and they did so in aggregate. We checked the item page where each question was asked at exactly the specified intervals and counted posted answers. We also provided our email address with each question asked and counted answers received by email.  (The Bazaarvoice and PowerReviews stores often emailed answers well before those answers appeared on the sites, in some cases even before the questions appeared on the sites.)  None of the sites were alerted in any way about this test. All questions were submitted on Wednesday, August 10, 2011 between 9am and 11am eastern time.  Here were the test sites that we used:

On each site, we asked 4 questions.  So in total, we asked 16 questions per vendor.  Here are the details of the answers received, by individual site.  (All numbers are for social answers – answers from customers – except those in parentheses, which are answers from store staff.)

Staff answers:  We also tracked answers from store staff.  These are shown in parentheses in the table above.  At the end of the two week test period, the questions on PowerReviews sites received a total of 10 staff answers vs 7 social answers.  The questions on Bazaarvoice sites received a total of 5 staff answers vs 9 social answers.  No staff answers were received on the TurnTo sites – note that 15 out of 16 questions on TurnTo sites received at least 1 social answer within 24 hours.

We encourage you to try this test for yourself.

The raw data:  Here are the urls for all the item pages for all questions in the test.  The asker is “Andrew P”, “Andrew RP” or “Anonymous” – also look for a submit date of August 10th where that is shown.  Note that on the Bazaarvoice and PowerReviews sites, we counted answers received by email, even though some of those answers – in some cases, even the questions – were not posted on the site by the end of the test period.

SunnySports (TurnTo)
http://www.sunnysports.com/Prod/HSRAP.html
http://www.sunnysports.com/Prod/ERKTS.html
http://www.sunnysports.com/Prod/NFCVJWN.html
http://www.sunnysports.com/Prod/TMBCHTM.html

GoJane (TurnTo)
http://www.gojane.com/54695-stuff-pleated-twist-front-clutch.html
http://www.gojane.com/55317-stuff-floral-print-wayfarer-sunglasses.html
http://www.gojane.com/52138-shoes-patent-platform-pump.html
http://www.gojane.com/45392-shoes-mid-rise-combat-boot.html

KitchenwareDirect (TurnTo)
http://www.kitchenwaredirect.com.au/The-5-in-1-Multi-Cooker-5L
http://www.kitchenwaredirect.com.au/Global-Ikasu-7pc-Knife-Block-Set
http://www.kitchenwaredirect.com.au/Red-Pizza-Maker
http://www.kitchenwaredirect.com.au/Scanpan-Classic-Covered-Chef-Pan-32cm

Adorama (TurnTo)
http://www.adorama.com/INKD7000.html
http://www.adorama.com/CA702002ISU.html
http://www.adorama.com/GBSLBK.html
http://www.adorama.com/IDS8GBUC215.html

Sierra Trading Post (PowerReviews)
http://www.sierratradingpost.com/high-sierra-us-snowboarding-team-backpack~p~3901j/
http://www.sierratradingpost.com/marmot-titan-backpacking-tent-2-person-3-season~p~88182/
http://www.sierratradingpost.com/marmot-precip-jacket-waterproof-for-women~p~2283c/
http://www.sierratradingpost.com/asolo-fsn-95-gore-tex-hiking-boots-waterproof-for-men~p~72552/

Johnston & Murphy (PowerReviews)
http://www.johnstonmurphy.com/product.aspx?pid=80786
http://www.johnstonmurphy.com/product.aspx?pid=72913
http://www.johnstonmurphy.com/product.aspx?pid=80374
http://www.johnstonmurphy.com/product.aspx?pid=75845

Hayneedle (PowerReviews)
http://www.hayneedle.com/sale/fagorelectricallinonemulticooker.cfm
http://www.hayneedle.com/sale/calphalonkatanacutlery14pieceknifeset.cfm
http://www.hayneedle.com/sale/presto03430pizzazzpizzamakeroven.cfm
http://www.hayneedle.com/sale/rachaelrayhardanodized10piececookwareset.cfm

Abes of Maine (PowerReviews)
http://www.abesofmaine.com/item.do?item=NKD7000
http://www.abesofmaine.com/item.do?item=CN7020028ISII
http://www.abesofmaine.com/item.do?item=NKCFDC1
http://www.abesofmaine.com/item.do?item=SDCF8GBXA61

Bass Pro Shop (Bazaarvoice)
http://www.basspro.com/Badlands-Diablo-Day-Pack-Backpacks/product/102015/-1507491
http://www.basspro.com/Eureka!-Solitaire-Tent/product/58274/90919
http://www.basspro.com/The-North-Face-Venture-Jacket-for-Ladies/product/10224821/134865
http://www.basspro.com/RedHead%C2%AE-Everest-Hikers-for-Men/product/19193/115209

Bluefly (Bazaarvoice)
http://www.bluefly.com/Rebecca-Minkoff-fire-engine-leather-Beloved-Mini-crossbody-bag/cat20428/315738502/detail.fly
http://www.bluefly.com/Betsey-Johnson-black-contrast-stem-wayfarer-sunglasses/cat60024/314050001/detail.fly
http://www.bluefly.com/Pour-la-Victoire-aqua-patent-leather-Irina-platform-pumps/cat20458/314292102/detail.fly
http://www.bluefly.com/Ash-black-leather-Remix-studded-tall-boots/cat20448/312714301/detail.fly

Walmart (Bazaarvoice)
http://www.walmart.com/ip/Hamilton-Beach-6-Quart-Stay-or-Go-Slow-Cooker-33162/4012120
http://www.walmart.com/ip/Ginsu-14-Piece-Stainless-Cutlery-Set/7942211
http://www.walmart.com/ip/Presto-Pizza-Oven/3218
http://www.walmart.com/ip/Stansport-13-Cast-Iron-Fry-Pan/16349862

Cameras Direct (Bazaarvoice)
http://www.camerasdirect.com.au/webapp/wcs/stores/servlet/Product2_10001_10002_19502
http://www.camerasdirect.com.au/webapp/wcs/stores/servlet/Product2_10001_10002_10620
http://www.camerasdirect.com.au/webapp/wcs/stores/servlet/Product2_10001_10002_11838
http://www.camerasdirect.com.au/webapp/wcs/stores/servlet/Product2_10001_10002_11588

Bazaarvoice is a registered trademark of Bazaarvoice, Inc.PowerReviews is a registered trademark of PowerReviews, Inc.

It used to be simpler.  Advertising was the main bridge between content and commerce.  If you had the sort of business that generated an audience (a content business), you’d monetize that by selling ad space to the sort of businesses that sold “stuff” (a commerce business).

Then, along came the internet, and the amount that content businesses could get paid per eyeball fell drastically relative to the old print world.  The content businesses that worked online were those that either developed a radically lower cost of content creation (esp social) or those that were able to generate vastly more eyeballs.  But many content businesses still have the relatively high cost of professional content production and haven’t expanded their readership online enough to compensate for lower ad rates.  These businesses, in particular, are (finally) starting to get more creative about alternatives to advertising to monetize their audiences.

Today, the New York Times reports on an interesting example.  The title says it pretty clearly: Magazines Begin to Sell the Fashion They Review.  This struck us because we’ve been working with another business that has been pursuing that strategy for a few years.  FW Media is a print publisher for enthusiasts of writing, painting, collecting, and similar subjects.  When they brought their publications online and saw the fall in ad revenue, they  tackled the changed environment head on.  Instead of selling their audience for pennies per visitor to advertisers, they decided to capture 100% of the commerce value of their visitors by opening their own online stores offering products that the readers of their content properties would want.  It’s a great case of taking lemons and making lemonade: the internet diminished their advertising revenue, but at the same time it made it possible for them to skip the advertising step entirely and directly fulfill the commerce demand they were creating. And now, in the NYTimes, we read:

“What magazines have always done is to create desire in consumers,” said Mr. Granger of Esquire. “The next logical step is to fulfill that desire by selling the product. If we don’t do it, somebody else is going to.”

While this strategy of directly joining content and commerce under one roof appears to be working for FW and may also work for Vogue, GQ and Esquire, we think there is a third path to bridge content and commerce that will prove at least as powerful: community.  In addition to changing the way content is delivered and stuff is bought, the internet has also made the way people participate in both for more active.  Got an opinion about something you just read?  Comment on it.  Got an opinion about something you just bought? Review it.  Got a question about something you are thinking of buying?  Ask about it.  Bought something?  Answer those questions.  Community no longer means “the people who read your content” or “the people who buy your stuff”.  Now community means “the people who interact with each other around your content and your stuff”.

Today, content site communities and commerce site communities are separate because that’s how the technology works – one community per property.  But technology limitations fall when they don’t match the way people really interact.  Communities, in the real world, are defined by shared interests, not URLs.  So in the future we see, whether the commerce and content businesses are managed separately or share a roof, their communities will be joined.  Fashionistas will read Vogue, buy from Saks, and interact with each other seamlessly on both.  Watercolorists will learn technique at  The Artists Network, shop at NorthLightShop, and interact with each other seamlessly on both.  Photographers will read Popular Photography, shop at Adorama, and interact with each other seamlessly on both.  And that seamless interaction will provide a new and powerful way for content businesses to monetize.

So if you manage a content business and are trying to find more value in your audience, think about building ecommerce capabilities, and also think about ways to build stronger bridges to your ecommerce partners by leveraging your shared communities.

The New York Times recently published a piece about the industry of paid customer reviews.  This story surfaces periodically.  Even if it’s only a small percent of reviews that are paid for, the perception that positive reviews are bought (or that negative reviews are suppressed) undermines the value of all reviews, even the legitimate ones.  Here’s a typical comment responding to the NY Times article:

“When I search Amazon, I only trust the negative reviews. Too many of the 5-star comments sound phony.”

So if you have customer reviews on your storefront, what can you do to address review-skepticism?

One option is to augment your customer reviews with a Social Q&A system that enables shoppers to get their product questions answered by people who actually bought the item or service they are considering.  Done right, a Social Q&A system delivers answers to a shopper question within hours from multiple buyers of the item, and it enables the shopper to continue a back-and-forth exchange with those purchasers for follow-up questions.  In other words, it provides the sort of social experience that would be very hard to fake.  So shoppers can be confident that the answerer’s sentiment is trustworthy.

Further, a store’s willingness to put shoppers directly in touch with real customers says a lot about the confidence the store has in its products, service and customer satisfaction.  This confidence produces a “halo effect” that adds to the credibility of the store’s customer reviews, too.  Shoppers might figure “why would this store fake their reviews when they are giving me direct access to their customers?”

While customer reviews will continue to be an important part of the online shopping experience, complementing them with Social Q&A is a powerful way to improve review credibility and address the concerns of the review skeptics.

– – – – –

Have you ever spotted a customer review online that you just knew was not legitimate?  Tell us about it below.

In the most recent Ecommerce Podcast, host Shaun Ryan (the CEO of SLI Systems) interviewed our CEO, George Eberstadt, about recent innovations in social commerce and broader topics in Social, including the potential of Google+.  (This podcast series includes interviews with leaders in ecommerce to help educate online retailers on best practices and current trends.  Highly recommended!)

In discussing the state of social commerce, George noted that the quality of innovation in social commerce has increased substantially this year when compared to previous years: “After 10 years of very modest innovation in ecommerce, all of a sudden the innovation level is just exploding; new business models, new shopping tools, better shopping experiences… The macro trend is innovation…”

Sean also asked George his thoughts on the potential of Google+.  In considering the circles feature specifically, George noted that in his experience developing social commerce applications, “People do not want to deal with that level of granularity around permissioning. People want to manage their sharing and their social graph at the level of the complete network, not at the sub-network level.”

CLICK HERE TO LISTEN TO THE FULL ECOMMERCE PODCAST.

We’ve been noticing an interesting correlation between the well-known 1-9-90 rule derived from online forums and the participation rate in our ecommerce-based Q&A system.

Initially noted by Bradley Horowitz in 2006, the 1-9-90 rule claims that online forums can be divided into 3 participation groups: Creators (1%), Contributors (9%) and Lurkers (90%). Creators will initiate content production unprompted. Contributors will respond to content others have initiated. And lurkers just read. (For a primer on the 1-9-90 Principle check out Bradley Horowitz’s post, and for some serious number-crunching check out Dr. Michael Wu’s articles.)

Here’s what we noticed. The TurnTo system emails questions from people shopping on an online store to past customers who bought the item that the shopper is considering. The people who receive those emails are a pretty random sample of the overall customer base of the store. And those randomly selected customers answer those shopper questions at an 8% rate per email sent (average across all stores using TurnTo – top stores get a 10-12% answer rate). That’s awfully close to the 9% that Horowitz observed on forums. And it suggests that from a “participation” point-of-view the composition of an online store’s customer base may look a lot like the composition of the membership of an online forum. Namely, a small percentage will initiate a dialog, around 9% will respond, and the rest will read what the other two groups produce.

This is a significant insight if you run an ecommerce business and want to build deeper customer relationships through online community. There’s a big part of your customer base that is very willing to engage if given the right invitation. You can’t count on them to actively seek out ways to contribute, but if you reach out to them, they will respond. Don’t settle for 1% when you could have 9%!

– – – – –

Have you noticed online activity that relates to the 1-9-90 Principle? Tell us about it in the comments below.

I just got an invitation to Google+.  After a brief time with it, I’m making a prediction: the Circles thing isn’t going to work.  With Circles, Google+ is making the play to become one network spanning many types of relationship and purpose by letting you restrict your sharing and filter your view of the global feed by sub-group.  Work.  Friends.  People I follow.  There are two reasons I doubt this will work.

Reason #1: I blogged a while ago about something we learned (the hard way) at TurnTo about granular privacy control.  It doesn’t work.  There are people who will use your system, and there are people who won’t use your system, but there are very few people who would-use-your-system-if-only-they-had-more-granular-privacy-control.  Early on, we built a very similar privacy model to Google+: it provided groups to enable users to restrict what got shared with whom.  Like Google+, we offered a set of starter groups and allowed user-customization.  Later, we ripped the whole thing out.  We came to understand that (most) people want to manage privacy at the level of the network, not sub-groups within the network.  People do their work-related networking on LinkedIn and their personal sharing on Facebook.  Twitter is great for following people you don’t know personally (and therefor also useful for businesses to promote themselves).  People decide who to connect to on each network based on what they plan to share (or read) there, and then they share fully with all their connections.  That’s as granular as it gets.  An item that isn’t suitable for someone’s whole audience on a particular network doesn’t get restricted to a sub-group, it just doesn’t get shared at all (or it gets shared with everyone with whatever consequences…).

Reason #2: Different system services are optimal for different types of network; there’s no one-size-fits-all collection.  As a professional network, LinkedIn provides a great structure for exhibiting your work history.  As a personal network, Facebook has great photo sharing.  As a network of mostly-nonpersonal-following, Twitter provides great link sharing.  The network services and the community co-evolve and specialize over time.  If Google+ members really do try to maintain many different types of relationships within the system, they’ll end up unhappy with the tools the system provides.  Either the tools will be too sparse, or the tools to support one type of network will be clutter to the others.  (Would an elaborate resume system be appropriate for your Facebook profile?)  In order for a social network to provide relevant services, there needs to be some level of focus to the type of relationships the network supports.  And once the network has that focus, groups become irrelevant.

If I’m right, someone buy me a beer.  If Circles works out, the drinks on are me.

It is interesting to see that the same message-based approach that is finally making social Q&A work for ecommerce is also making social Q&A work for education.  Today’s New York Times profiles a new site called Piazza, which enables students to get help from classmates through a Q&A model.  As the Times describes it:

Although there are rival services, like Blackboard, an education software company, Piazza’s platform is specifically designed to speed response times. The site is supported by a system of notification alerts, and the average question on Piazza will receive an answer in 14 minutes.

That’s exactly what we see from our shopping Q&A system, Ask Owners.  By sending shopping questions directly to people who are likely to know the answer (because they bought the product!) Ask Owners outperforms bulletin board-style Q&A systems in 3 ways: many more answers, much faster answers, and higher quality answers.  It makes a lot of sense this model would be powerful for class-based communities, too.

Kudos to Piazza founder Pooja Nath.  We’re excited to see your success!

Forrester and GSI just released a study by star analyst Sucharita Mulpuru showing social networks are not effective channels for ecommerce.  The oldies – email and search marketing – perform far better.  (Available free on the GSI website here.  Data cited in Mashable here.)  In a universe of endless, self-promotional, vendor-funded studies, this one should get more than it’s share of your attention because the sponsors gain nothing (but credibility) from spreading these conclusions.

In the face of this withering evidence, we think it’s a good moment to review the distinction between social media marketing and social commerce.

• Social media marketing is about delivering a commercial message on social media sites.  It is a hub-and-spoke model of communication where the brand is the hub and customers/prospects are at the end of each spoke.  It’s getting people to Like your fan page or to Follow you so they’ll accept your messages in their news feed.  Social media gurus say you must “listen” carefully and that your tone when you speak must be “authentic”, advice that inherently assumes the dialog is between YOU and THEM.  Social media marketing is comfortable to most organizations because it’s basically the old stuff, just in a new place.
• Social commerce is about facilitating interaction between your customers and prospect about you.  You are not at the hub of the network; rather you provide tools that encourage discussion amongst the members (and prospective members) of your community.  That discussion about you is happening anyway, but usually only in response to extreme experiences – positive and negative.  But if you lower the barriers by providing the right tools, you can greatly increase the amount of discussion about you (and improve the tone, too).  And that leads to increased sales.  These tools can run on your own ecommerce site, on social networks, or on content sites across the web.

The Forrester / GSI study takes an ax to social media marketing, but not to social commerce.  I like the analogy Fiona Dias of GSI uses to explain why social media marketing doesn’t work: just because lots of people go to church doesn’t mean church is the right place to advertise.  Similarly, just because lots of people are on Facebook doesn’t mean Facebook is the right place to deliver your commercial message.  Context matters.  And while the Facebook context may not be right for brands to deliver their commercial messages, it is definitely a good place for brands to facilitate discussion between members of their community.

We think most brands should reconsider their social strategies – and especially their Facebook presence – in light of these findings.  In particular, they should stop using their Facebook presence as just an extension of their existing brand or ecommerce website and instead think of it as a place to host discussion among the members of their community.  They should also think about how to add tools to their ecommerce sites that facilitate dialog between prospects and customers.  And finally they should think about how to tie all of these community presences together so that dialog in one location is visible on all.

That’s social commerce, and it’s alive and growing.

I now count 6 start-ups offering tools that enable online stores to pay their customers for posting to Facebook about the things they’ve bought.  The flavors and features vary, but pay-for-share is the core mechanism for all of them.

The model that seems to be getting most traction looks like this:

1. Offer the customer a discount for posting news of their purchase to Facebook (and Twitter).

2. Assure the customer that by posting they are also providing a discount to their friends. (With some of these tools, I’ve been unable to figure out how the friends actually get their discount, but that’s probably a failure of my research…)

It’s essential to provide both discounts to maximize sharing.  If the store provides a discount only to the customer, she feels like a shill for promoting the store to her friends just to get a discount for herself.  But if she feels like she is providing her friends with a discount, too, then she can share away to get her own discount guilt-free.

I get the appeal of this model to stores as a way to reach new customers through Facebook, but I don’t get the economics.  Isn’t “paying” your customers to share discount offers with their friends an expensive way to get offer distribution?  Presumably, the customers who sign up are those who plan to use the discount they get for sharing, so the incremental sales / new customer acquisition / many-coupons-expire-unused arguments don’t apply (at least not much).  One store using this tool offers a customer 25% off on their next purchase of $65 or more to share about their purchase on Facebook – so a minimum cost to the store of $16 in lost margin on a future sale.  Say we cut that in half for incremental sales / expired-unused effects.  That’s still an $8 min cost per post.  And the most aggressive estimates I’ve seen of the value of a purchaser-post on Facebook are $2-5.  So that doesn’t work.

On the other hand, if my calcs are wrong, and the economics of pay-for-share really do work, and the model becomes wide-spread, what will this mean for Facebook et al?  Will they have to enforce disclosure rules?  Do paid-for posts harm the community, or only (if discovered) the reputation of the poster?

Hey, if this model proves out, we’ll probably add it as an option in our Social Commerce Suite, too.  But what I’m really hoping is that, in the end, social commerce will be about people sharing with each other just because it’s helpful, not because they’re paid to.

As discussed in a couple recent posts (one, two), it’s much harder to get people to share purchase-related information than other types of personal news and content.  And the type of sharing you can get people to do in bulk (“contextual sharing”) is more limited than the broadcast-to-all-your-friends type that most merchants dream about.

But there’s one big exception: discounts!  Discount offers and social are a perfect symbiosis. Access to deals is the #1 reason people fan brands on Facebook (driving brands to offer more deals to get more fans).  Deal-a-day services (Groupon, LivingSocial) and private sale sites (Gilt, Rue La La) owe much of their explosive growth to the eagerness with which members share their deals.  And new services like CureBit and SocialFeet have realized that even paying customers to share purchase news with their friends doesn’t work unless you also give those customers a discount offer to share with their friends at the same time.  In a nutshell: social networking is driving discounting to levels never seen before.

But how far can discounting strategies go before full-price has no meaning any more?  Discounting has always been used in a limited way to bring in new customers and as a price-discrimination tool.  (Clipping coupons is a pain, so only people who care more about the savings than their time did it.)  But those uses of discounting are only affordable to merchants when the bulk of sales remain at full price.  Also, most customers don’t mind paying full price if just a few people, for special reasons, got a discount; but no one wants to be the only jerk who paid full price when most others got a discount.  With too much discounting, the full-price-with-occasional-discount model breaks down, and everything has to be sold at a discount.  And then the discount price has to be raised to preserve margins, so the full-price price becomes a meaningless number no one would consider paying.  And that sort of price confusion is paralyzing to buyers.

Clearly, the discount tsunami is still coming in – no one knows where the high-water mark is going to be.  But in this environment, we think it’s more important than ever that merchants continue to explore tools that help them grow without compromising margins and not just get swept along in the discounting frenzy.

Last month, I wrote about the challenges of social commerce – in particular, why it’s so hard to get people to share purchase-related information.  And I promised I’d follow up with a more optimistic post about an approach that’s working.  We call this “contextual sharing”.

Try this: Ask a random sample of people how they feel about telling their friends about recent purchases.  Most of the people you ask will probably give you an answer like this: once in a while they’ll tell some friends about some purchases, but the idea of mass-sharing their purchases is repulsive.  Now ask them how they feel about answering questions about their purchases.  You’ll probably get a very consistent response: sure, I’m happy to help; in fact, I enjoy sharing my experience.  Now try a 3rd question.  Ask these people if they’d be willing to let people who are shopping for items like ones they’ve already bought know that they are available for advice, if needed.  The answer will probably sound like this: as long as I’m not broadcasting about my purchase in a spammy or self-promotional way, sure.

This is the big idea behind contextual sharing: people will share purchase-related information when they have confidence that it will be relevant to the audience.

If you sell online, this has huge implications for your sharing strategy.  Don’t over-reach by trying to get your customers to mass-share.  Instead, start by asking for contextual sharing.  You’ll get a much higher sharing rate, and you can always put the request for a mass-share at then end, to catch that small % of customers who will participate.

Here’s some data from our experience running the TurnTo Purchase Sharing application, which uses a contextual model, on several dozen websites spanning a broad range of verticals for over a year. The system opens an overlay box on the order confirmation page (ie immediately after purchase) that looks like this:

15% of customers click “Sure” (!!).  Then the system asks for an answer to the question “Why did you choose this?”

About 1/3 of the people who clicked “Sure” also add a comment.  That means that about 5% of all items purchased are getting one of these check-out comments attached, along with permission to show that comment to other shoppers. Finally, the system offers shoppers the opportunity to post that comment to Facebook and Twitter.  The rate there is much lower.  But by having asked first for the contextual sharing permission, the store at least got that.

This is a reprint of a guest post I wrote for ZippyCart, originally published there on February 22.

Beyond marketing and customer service, Social has the power to help convert visitors on retail sites. A large majority of online retailers today are using at least one of the most popular social media platforms: Twitter, Facebook, and YouTube. These platforms have been used for brand marketing and customer service. Retailers are beginning to explore their utilities as sales tools. When it comes to selling, these platforms are in essence today’s equivalent of shoppers signing up to direct mailing lists. Shoppers give retailers permission to reach out to them and share information. Shoppers allow retailers to reach out to them directly, by following retailer tweets and Facebook wall postings, and indirectly through their friends in the form of retweets, friends’ postings, and friends’ likes.

Reaching out to shoppers through Facebook and Twitter, much like direct mail to shoppers, works at the wide end of the sales funnel. If successful, it draws the shopper into the store, with a buying intention. It drives traffic. Most online retailers stop there. When they do so, they leave a lot of value on the table, the value of utilizing the power of social beyond traffic, as the shopper is moving along the sales cycle- browsing products, seeking further information and insight about products, and adding products to the shopping cart.

When a shopper is going through your online store, you should let the collective social wisdom and experience of your entire customer base help them complete the sale. This can be done in a number of ways, according to where the shopper is along their decision making progress.

A new visitor might be hesitant about buying from your site. They read copy on your site that is at its core a set of claims and promises, and they need to decide how much they can trust your editorial voice. A likely question going through their mind at this time is “do other people trust this site?” “do other people shop here?” “do I know anybody personally who has already bought at this site?” You, the retailer, can help by letting the visitor see other real people who shopped on your site before. You can earn extra trust points by providing visibility into people in the shopper’s zip code, or in the shopper’s circle of social contacts, without, of course, ever going beyond the level of visibility such people had authorized.

With a comfort level in the store that’s high enough, shoppers are ready to start considering your products. As in physical stores, some shoppers come in to browse, while others walk in with more specific product buying intentions. Browsers tend to be socially curious about what products people are buying around them. Some online retailers help these browsers with a display of the best selling items. Another way to support the browsers’ product discovery phase is by letting them see what other individuals recently bought. This can be done digitally in a socially convincing way, without breaching any shopper’s privacy – you can show initials of shoppers, profile pictures of those who joined your “customer wall”, and full identities of social contacts of the shoppers that have opted in to be there for their friends. Emitations, a leading retailer of silver jewelry, displays a “see what your friends bought” button on its home page, its category pages, and all of its product pages. Visitors to Emitations who interact with the button convert at a rate that’s more than 5 times higher than those who do not.

Next, and only one step removed from the shopping cart, your shopper might have product specific questions. Retailers provide an array of resources here, from details product information, product images, through how-to videos, to live chat that chimes in when it’s clear the shopper needs advice. All this might not be sufficient in such cases where the shopper is not looking for hard factual data, but for a color commentary from others who have used the product. Ratings and reviews have been added in recent years as the first layer of social input by the individual item. Recently some retailers have gone one step further, and empowered their shoppers to reach out to the broad social circle of product owners, and ask product specific questions. Answers to these questions provide buyers with social insights that cannot be gleaned from product information, ratings and reviews alone. One such retailer is Club Furniture that added an “Ask people who bought this” button on their product description tab. Club Furniture’s tool allows shoppers to reach out to the retailer’s entire customer pool, with questions that are best answered socially such as how comfortable a piece of furniture is, and how it wears. 13% of ClubFurniture’s customers who receive a shopper’s question answer it. (This means that a question which is sent to 40 customers will receive, on average, 5 responses.)

Embedding such social tools within an online store lets you harness the power of social beyond driving traffic, and throughout all key decision points along the on-site buying process.

I was recently on a Social Commerce panel (photos here) for Social Media week hosted by Digitas in NYC.  (Thanks Beth McCabe, Noah Mallin, Jonathan Burg, and fellow panelists Matty de Castro of Facebook and Bob Tuttle of 8th Bridge!).  One of my fellow panelists put up a screen shot of the Levi’s Friends Store as an example of Social Commerce and provided an opening I couldn’t resist.

Look in the lower right: Levi’s has 2.9m Facebook fans.  That’s 2.9m people who have agreed to allow Levi’s to send them messages in Facebook.  Not bad!  Now look at the Original 501 Stonewash jeans.  450 people have liked this.  Only 450 people.  How many people do you think own these jeans?  And Levi’s Friend Store was Facebook’s poster-child ecommerce partner when they launched the Like button.  In fact, for several months, Levi’s entire online store was the Friends Store.  (Even now, the Friends Store is one of the main menu options.)  So it’s not like the feature was hidden.

Thank you Levi’s for providing such a clear illustration of the main challenge of Social Commerce.  What’s working well for Levi’s is leveraging Facebook to enable dialog between the brand and their customers.  That’s the 2.9m fans.  But that’s not Social Commerce, it’s Social Media Marketing.  Social Commerce is encouraging commerce-related conversation between customers.  That’s what the Like button next to the individual products is for.  That’s the 450 people who have Liked the 501 Stonewashed.  And that’s what’s not working.  (You can define the terms differently if you like – I don’t really want to provoke an argument about definitions; the distinction between customer-to-brand vs. customer-to-customer is what’s important.)

Why is it so much harder to get people to share product and purchase information with each other than it is to get them to accept marketing messages from a brand?  The biggest reason is this: the stigma against shilling has not disappeared just ’cause now we share on social networks.  Any time a statement can be (mis)interpreted as “trying to get your friends to buy something”, all sorts of alarms go off.  Not to mention all the other baggage that goes along with sharing on wealth-related topics.  (She can afford that?!  Is that the best he can afford?!)  Content sharing on social networks has been a runaway success.  But when the subject of the sharing is product/purchase/commerce, the sharing rate falls off a cliff.  (Acknowledging some exceptions: discount offers, especially deep ones, get shared.  And commerce objects of exceptional interest get shared – I’d argue that this is better understood as content sharing, tho.)

Does this mean that if you sell stuff, you should forget about trying to connect your shoppers and your customers with each other?  No way.  You can try the discount-offer and too-cool-not-to-share end-runs.  You can even go the full-on viral content route where your brand/product message is just a low-profile passenger.

Or you can try a radically different approach we call Contextual Sharing.  More on that in a later post.

Together with our partner, leading Yahoo Store builder FastPivot, we produced this webinar on Social Commerce strategies on Wednesday.  Here are all the slides plus the complete audio (controls are just under the slides). Thanks to the many attendees! The

FastPivot part runs through slide 35.  They provide a broad overview of social media marketing packed with actionable recommendations.  Starting at slide 36, we do an 18 minute discussion of Onsite Social for e-Commerce.  If I do say so myself: it too is insightful and practical.  Enjoy!

I gave this presentation at the MIT Enterprise Forum of NY a year and a half ago.  The NY Times Bits blog piece today on comments by Venrock’s Brian Ascher about the “Right Time Web” made me dust it off.  I tidied it up a bit (but not much).  My predictions about the imminent arrival of the “Trusted Reference” model in the e-commerce world were at least a year too soon – I left those unchanged.  (Brian’s colleague David Pakman also blogged about this in the spring.)

Amazon has just hooked up with Facebook to add social shopping features powered by the shopper’s Facebook friends list.  (NY Times article. WSJ article.)  My guess is that this will prove to be the watershed moment for social commerce.  Where Amazon leads, others follow.  Amazon pioneered customer ratings and reviews, which are now found on commerce sites across the web.  Amazon pioneered community cross-sell tools (“customers who looked at this also looked at that”, “customers who bought this also bought that”), which are now provided to online merchants by at least half a dozen vendors.  And while Amazon may not have pioneered the integration of 3rd-party social graphs into online stores (we’ve been at this for a few years), the ecommerce world is likely to take its cues from Amazon in this area, too.

Here’s what it looks like on my Amazon profile page:

And this is just their initial feature set; lots more must be just around the corner.  Merchants interested in the potential of “on-site social commerce” should check out what Amazon has done here and keep an eye on where they go next.

(For those interested in archeology: before Facebook built the one-social-graph-to-rule-them-all, Amazon had social-graph-building aspirations of their own.  They called it “Amazon Friends and Interesting People.”  Dig here to learn more.)