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The new Nielsen trust report is out.  (Write up at Social Commerce Today.)  Duck – here come the inflated claims from social commerce companies about how this proves the effectiveness of what they do.  The problem is, it’s not that simple.  First, here’s the data:

The temptation is to conclude that because “recommendations from people I know” are most-trusted, a sure-fire strategy is to get your customers to recommend your stuff to their friends.  The problem is that the whole reason friends are trusted is because they WON’T recommend your stuff to their friends – not unless they sincerely and spontaneously feel it’s in the interest of their friends to do so.  And as soon as you throw in an incentive for your customers to tell their friends about you, you are going against the whole trust equation – no one wants to feel like a shill, and no one wants to be shilled to.

Also important: social trust affects the purchase cycle in different ways at different stages.  “Consumer opinions posted online” are effective at the evaluation stage, but not at the awareness stage.  No one reads customer reviews unless they already have purchase intent.  On the other hand, recommendations from friends tend to matter more at the awareness stage than at the evaluation stage, and this varies a lot by product category.  For example, I just got a new Dyson hand vac because I saw it at my friends’ house this weekend and they told me it was awesome, but I would never have called them to ask what brand of vac I should get at the moment I was about to buy one.   Of the last 40 items I bought at Amazon.com, 6 of them had some sort of social influence at the discovery stage, but only 1 had any social influence at the evaluation stage.  That was a ping pong table, and I didn’t seek out the advice about which to get; I just mentioned to a friend that I was thinking of getting one, and she said to get a Stiga because it’s a Swedish brand and she’s Swedish.  Similarly, for vacation plans, I sometimes call friends for advice during the evaluation phase, but since it can be hard to know which friends have relevant experience, my process tends to be haphazard.  Fashion is a tricky category – people ask friends for advice, but assessment of a friend’s expertise is often based on their taste rather than their direct product experience.  (You don’t have to own a particular brand to answer “does this look good on me?”)  How do you, as a brand/store, affect that conversation?!?

So, the next time someone makes a blanket statement to you about how you need to be doing social commerce because people “trust” their friends and fellow shoppers so much, say “whoa there!”  Trust is not the same as influence, and leveraging the trust that’s inherent in social relationships to promote your business is not that simple.

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.

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!

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 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.)

It’s a big day at TurnTo: we’re introducing our Social Commerce Suite.  (Yes, we know that it’s ambitious to call it a “Suite” with just 2 products – please humor us. Also, there’s more in the pipeline…) Official press release here.

So what’s new? 1. We’ve done a nearly complete overhaul of our current product, now branded “Social Merchandising” and 2. We’re introducing a new product called “Social Purchase Sharing”.

Social Merchandising. We’ve made improvements top to bottom.

• Shoppers who open the widget but don’t personalize it by checking for friends will now see a range of other customers and their purchases designed to give the site that buzzing busy-store feeling and to encourage consideration and purchase of more items. (The goal is to address one of the big limitations of the shopping online: lots of stuff in the stores, but no people.)  We’ve built a ranking engine that selects which customers and which items to show, ensuring the greatest relevance given limited data.
• We’ve made the value and process of personalizing the widget a lot more transparent to the user, so many more of those who open the widget will go the next step and personalize it to see their own friends in place of those the system picks. Underlying this is a simplification of the sharing rules to a vanilla Twitter-style “follow” model. (See our last post about the importance of simplicity when it comes to privacy and sharing.) We’ve also switched to delegated login for most of the friend list sources we support, including the newest Facebook protocols. (The short explanation: it’s better.)
• The widget now shows big, attractive product images throughout, so not only are shoppers seeing which of their friends also shop at that store, the purchases those friends made look particularly inviting.  Good for cross-sell and order size improvement.
• The comment mechanism has been redone to both capture more input from buyers and to show it more visibly to shoppers.
• We’ve made significant enhancements to the guts of the system to provide greater speed and reliability. These include use of a Content Delivery Network as well as a range of server-side caching and summarizing strategies. The design point was to be able to support the largest ecommerce sites out there.
• We’ve added new tools for optimizing the button that calls up the widget. It doesn’t do stores any good to have a fabulous social merchandising tool if only a few shoppers use it. We now provide a range of more interactive button designs as well as tools for doing rotation tests (randomized A/B/C tests) of alternatives. In its initial use, we’ve already seen large engagement rate improvements.

In a nutshell: you have to see it. So here’s the first screen shot we’ve released:

Social Purchase Sharing. Our partner merchants have been telling us how valuable it is when a customer posts to their social network (most often Facebook and Twitter) about their purchase. So we’ve added a simple tool to significantly increase the amount of purchase sharing online stores can generate. It’s an overlay that appears on the order confirmation page right after a purchase and makes a clear, persuasive appeal to share. The permission obtained from the buyer is also used to power the Social Merchandising widget, so the “sharing” appears both on the social networks and on the store site itself. Here’s an example of the overlay – just picture it on top of your order confirmation page. (See also our blog post on “Like” vs. “Bought”.

The TurnTo Social Commerce Suite will be generally available to online retailers at the beginning of Q3, 2010. If you are in Chicago this week for the Internet Retailer show (IRCE), please come by booth #431 and we’ll give you a full demo. If you’d like more information on the thinking that went into these products, please have a look at the white paper we just released: Onsite Social for Online Commerce.

After over a year in the market helping a few dozen innovative online retailers add social shopping features to their stores, we thought it was time to synthesize and share the big lessons we’ve learned.  So here [drumroll] is our new whitepaper: Onsite Social for Online Commerce.  In it, we get specific about things like:

• How to leverage social networks for Social Merchandising within your store
• How to most effectively encourage shoppers to share news of their purchases with their social network friends
• Why adding Social to ecommerce sites requires different strategies than for content sites
• What sort of results are realistic to expect

We’re just putting it out there – no registration required to get it.  If you find it thought-provoking, we hope you’ll get in touch with us and pass it on to others.  Enjoy!

Here is the conversion lift data for the larger sites using TurnTo for the last couple months.  We’re comparing the baseline conversion rate for the site to the conversion rate for shoppers who interacted with the TurnTo system at some point in their shopping path on the site.  The 2-7X lift factors we were seeing in the first couple months of the year are still evident.

First: we wholeheartedly agree with the ideas underlying Facebook’s big announcements today. People want to be able to interact with their friends on sites all across the web, not just within Facebook.  And sites don’t all want to have to become Facebook apps to support this.

TurnTo has been working to enable contextual delivery of social networks on ecommerce sites since our founding in 2007.  And we’ve proved that the benefits for both shoppers and merchants are significant.  So we applaud Facebook, appreciate the validation that their heading in this direction provides, and are already hard at work incorporating their new API.

We also think that to derive maximum advantage from an Onsite Social strategy, ecommerce sites should not rely exclusively on the new Like-based functions that Facebook is providing, but should – more importantly – leverage their purchase transaction data.  Here’s why:

It’s useful for your shoppers to see which of their friends know about your store and the products you sell.  Facebook’s API takes care of the problem of determining who you shoppers’ friends are.  But how do you determine what those friends know about?  Facebook’s new Like button lets shoppers register a connection to items on your store that they, well, like.  But Like does not equal know-about.  And many people who buy from you – and therefore REALLY know about you and your products, will never click Like.  In other words, there will be loads of false positives and false negatives.

If you were a content site, this might be the best you can do.  But as a commerce site, you have a unique asset: the purchase transaction.  You already have a massive set of people who really do know about you and your products, and the list grows every day.  They’re called: customers.

So go ahead and use the new Facebook plugins.  But also, and more importantly, leverage your transactional data to socialize the shopping experience on your site.  That’s where the big opportunity lies.

Optaros’ “Social Ecommerce Ebook” makes for great reading if you are trying to optimize the performance of your ecommerce site.  You can download it here.

They make the points that: 1. higher levels of shopper engagement on retail sites drive improved business performance, and 2. social commerce tools are a powerful way to drive engagement.

A couple highlights:  From the Harvard Business Review Article, “In Ecommerce, More is More“, they cite,

The majority of managers we spoke to in our global study told us they believe that a broad array of information diverts attention from the core offerings. But we found it helps customers search for solutions, invites them to think of all the ways the core products might add value to their lives, wins their loyalty, and entices them to buy. In fact, we found that exploiting consumers’ desire for engagement is the single dominant driver of superior shareholder value for e-commerce companies.

In the section titled “Making Shopping a Social Experience,” (p.44 on) they cite an article in the Wall Street Journal on the benefits of social shopping.  (The article features the positive results Teavana and Compsource are seeing from their TurnTo implementations!)  Their “Business Takeaway”:

People like to go shopping with others when shopping in person. With Facebook Connect and other social shopping applications, you can replicate this experience for your customers online.

The bottom line of their study (well, it’s actually more like the title): “Retailers Achieve Higher Conversion Rates Using Social Shopping.”

There’s a session at the next ANA Shopper Marketing Committee I’d really like to attend.  (But I’m not a member – sigh…  If you are a member, you can find it here.)  The point of the session is so important for multi-channel retailers, I’m copying the description here.  I’d put it this way: don’t just use your web presence to sell; use it to create a connection to your brand that will bridge from your site all the way to your store.  One of the most powerful ways you can do this is with social merchanising tools (like TurnTo) that show visitors that their friends are also customers.

11:30AM- How Shoppers Shop: The vast majority of shoppers conduct research before they go to store, with an increasing proportion of them spending time online, not only looking for deals, but also getting recommendations from friends, looking at product reviews, and comparing product information. Moreover, online research and recommendations are having a greater impact on what makes it onto shopping lists. With roughly half of women indicating that they have purchased products based on recommendations from friends, viral marketing represents an important opportunity to engage shoppers before they go to the store. While significant attention has been paid to the roughly two thirds of brand decisions that are made in the store, the growth in digital shopper marketing represents a major opportunity to increase preference and purchase intent earlier along the path to purchase.

Data from comScore as reported in the Wall Street Journal shows holiday sales up 4% over last year.  Not bad considering the economy. But the growth appears to be driven largely by a huge increase in promotions:

“Data from Shoplocal.com show that online retailer promotion activity is continuing at a high rate with the number of offers in the last week up 21% versus a year ago,” said comScore Chairman Gian Fulgoni.

The strong sales numbers won’t mean much if the January headlines are all about the carnage from over-discounting.  (Remember the joke about making up for negative margin on volume?…)

I’d like to see an analysis that compares the cost of all that discounting to the cost of tools that could drive equal sales volume without compromising price.  For example, for a small percent of the cost of their holiday promotions, most retailers could dramatically expand initiatives like social shopping.  And in the end, their bottom lines might look a lot better.  Please comment if you know any work that looks at this.

Most of the focus on social shopping has been on how stores can build a presence on Facebook and Twitter.  But new research from BIGResearch for Shop.Org suggests this is backwards.  Online stores will likely benefit far more from bringing the social networks of their shoppers into the buying experience within the store.  Here’s why:

[Social networks] are rarely the starting point for shopping per se. When we asked consumers, “Where do you typically start your online shopping? (Check all that apply)”, consumers told us that they are most likely to start their online shopping at merchant Web sites (almost three-quarters), search engines / directories (one third), and catalogs or offline stores (about a quarter) — with social media sites trailing far behind.

So if you want to truly tap into the power of your customer base and the social network of your shoppers to influence purchases, do it ON YOUR SITE.  That’s where real buyers come to do their research.  And that means leveraging tools like Facebook Connect to make all that social data available to shoppers when they’re really in-market.  (TurnTo can make this easy.)

Here’s data from the report, available here. (You must be a Shop.Org member for access.)

Paul Dunay, The Global Managing Director for Services and Social Media at Avaya, gave this description of social commerce in an interview in eMarketer:

Social commerce is working with or using your social graph, which is defined as your followers or your friends, and allowing them to help you make buying decisions. Social commerce can be anything from a buying suggestion or recommendation—perhaps a tweet from a Dell outlet saying, “Hey, we have a special on this”—to something like Facebook Connect. Facebook Connect would allow you to go to a Website like Dell.com and authenticate yourself using your Facebook profile, allow your identity to be known and access your friends so you could spark up a chat. So I could say, “Hey, Jeff, I’m looking at this new fancy laptop or this netbook. I heard you bought something. Would you recommend this to me?” So you could almost take your friends shopping with you. That is the potential with this example.

Hey Paul, come look at the sites using TurnTo.  Your vision is alive today!

Business Week just published a piece on the potential for Facebook in online shopping.  They focus on the role of Facebook Connect in enabling shoppers to post questions to their Facebook network before making a purchase.

It makes sense that this is the primary way Facebook Connect has been used so far in online shopping, since it’s the easiest to implement.  But it’s just scratching the surface.  The real potential is in bringing the social network to the shopping site (not the other way around).

For one thing, many people are hesitant to blast questions that they know are only relevant to a small portion of their network out to everyone.  No one wants to be a spammer.

Also, most shoppers don’t think of Facebook as the place to go when researching a purchase.  The primary research destinations are merchant sites and content sites that address the product category.

Combine those two considerations and what you get is a requirement for a system that runs on the merchant (or content) site and tells a shopper which particular people can help them with their purchase decision, so only relevant people receive the shopper’s questions.

If you sell online and this makes sense to you, check out the way TurnTo’s merchant partners are using the TurnTo system to achieve exactly this.  www.turnto.com/partnerlist.

According to a new Nielsen report, 20% of “social consumers” now discover content through their social contacts, instead of through search engines or content portals. Commerce is a type of content. This means that for “social consumers” (defined as those who spend 10 percent or more of their online time on social media), Social could become the new Search. What can online retailers do to tap into this new trend? Deploy tools that let your shoppers discover your products by looking at what friends and neighbors bought.

That’s the title of a recent article in the New York Times on research showing that the power of friend-influence is so great it even has a significant effect on your health.  The research was done by Nicholas Christakis and James Fowler using data from the long-running Framingham Heart Study and published in July 2007 in the New England Journal of Medicine.  We see implications for social shopping, as well.

Findings from the study cited in the article include:

• When a Framingham resident became obese, his or her friends were 57 percent more likely to become obese, too.
• A Framingham resident was roughly 20 percent more likely to become obese if the friend of a friend became obese — even if the connecting friend didn’t put on a single pound.
• A person’s risk of obesity went up about 10 percent even if a friend of a friend of a friend gained weight.
• A friend taking up smoking increased your chance of lighting up by 36 percent, and if you had a three-degrees-removed friend who started smoking, you were 11 percent more likely to do the same.
• If a person at a small firm stopped smoking, his or her colleagues had a 34 percent better chance of quitting themselves.
• The article also cited, a 2006 Princeton study which found that having babies appears to be contagious: if your sibling has a child, you’re 15 percent more likely to have one yourself in the next two years.

So, if the example of thin friends can make someone thin, and the example of friends quitting smoking can help someone quit, imagine what seeing friends shop at your store does.

The enhancements in this release improve both the user experience and the value for sites that use the system. Here’s a summary:

The widget now shows basic social shopping content to all users without requiring any sign-up:

• Items recently recommended by other shoppers
• Popular items
• The number of neighbors who also shop at the store and the items those neighbors have purchased (based on zip code matches)

Users can now import their friends list without ever leaving the widget and immediately see how many of their friends are also customers of the store and what those friends bought. All the information is anonymous, but shoppers can request the store to send a connect invitation on their behalf to those friends. This new approach has a number of benefits:

• Shoppers see more first-degree friend reference information
• Shoppers have a way to connect to friends who have not yet opted in to the site’s “trusted reference system” while still preserving customers’ privacy
• The sign-up flow for shoppers is cleaner and more intuitive

We’ve made a slew of visual and usability improvements.  Please go to one of our partner sites and have a look.

Sites currently using the TurnTo system will get this upgrade without any action required.

Here’s the full article: http://bit.ly/14Wl0n

And here’s what they have to say about us: New York-based TurnTo Networks Inc., for example, which was launched in September, helps retailers link their customer accounts with social-networking accounts and email accounts using Facebook Connect and other tools. TurnTo charges retailers a percentage of the revenue from sales attributed to the system.

Tea retailer Teavana Corp. is a TurnTo client. Jay Allen, Teavana’s vice president of e-commerce, says the conversion rate—a measure of how many shoppers make purchases—for people who use the application is 20% higher than the rate for others, and their average orders are slightly more expensive.

TurnTo founder George Eberstadt says preliminary data for the company’s first 20 clients show that using TurnTo tends to increase conversion rates 20% to 50% and builds traffic to retailers’ sites. Some 700,000 new users, for instance, have come to computer retailer CompSource Inc.’s site through its TurnTo application since July. TurnTo is “a lot better than average” in terms of price per new customer compared with pay-per-click advertising, says Dean Bellone, CompSource’s president.