Social Commerce: Leveraging the Consumer Evangelist


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The growth of social media and the emergence of social commerce

Social media plays an enormous role in all facets of modern life. With over a billion social media users worldwide, and over 900 million users on Facebook alone, social media has become a must for any company interested in engaging with their audience. Individuals rely on it to make decisions: according to Buddy Media founder Michael Lazerow, social media influences 90% of purchasing decisions. With electronic commerce on the rise, social commerce has emerged as a way for companies to achieve ROI through social.

Image 1: Social media is everywhere you look

What is social commerce?

Social commerce has multiple definitions, but at Moontoast we stick to the core premise: commerce that takes place in the social space. To succeed, companies engaging in social commerce must leverage both their own social networks and the networks of their customers. Social commerce includes consumers in the selling process, allowing people to share their opinions and purchases with others in their network, and ultimately creating a more effective sales channel at a lower cost.

Image 2: Consumers make more effective salespeople than companies

Present trends

Despite holding the position of largest social network, Facebook does not currently provide the most effective channel for increasing sales. While some companies like Starbucks and American Express have been able to generate brand interest through their Facebook presence, Facebook was created as a consumer-to-consumer platform. One way companies like Eventbrite have managed to increase revenue using the social giant is through having customers share their purchases organically, rather than paying for ads or sponsored stories.

To further engage with fans in the social space, other brands have started conducting the entire sales process within the Newsfeed or other social channels. As we mentioned in our eBook, The Social Commerce Opportunity, placing messages in a highly visible space and limiting the number of steps in the transaction leads to better results: one company was able to increase conversion rates on Facebook 300%!

Image 3: Potential consumers are far more likely to follow a CTA from a friend

Thus far, companies like Ticketmaster and Spinback have claimed great success through these social commerce initiatives, demonstrating the value of consumers organically sharing their purchasing habits. When a Facebook user clicks on a friend’s “shared” ticket purchase, TicketMaster earns $6-8 in new ticket sales, while Spinback claims that shares for a product, service, or event generate an average of $2.10 in incremental sales. This represents phenomenal news for businesses achieving revenue at minimal cost.

New wave social media embraces social commerce

Pinterest, the community designed around “pinning” images on various boards, embodies a social media company with social commerce integrated into the core website design. Pinterest fans often use the site to share images of products they own, desire, or admire.

Image 4: The visual layout of Pinterest encourages sharing products

This focus on products creates a business-friendly environment, and Pinterest users have rapidly grown to account for 26% of total social media shopping visits. Pinterest created a community that promotes sharing products, including both consumers and businesses in this community. Within this business-friendly ecosystem, consumers referred to Wayfair (a home-goods retailer) by Pinterest were 10% more likely to make a purchase than those referred by other social networks, and those consumers also spent an average of 10% more. Pinterest could facilitate the brand-fan relationship by enabling convenient options to purchase directly through the site, effectively monetizing the platform.

Moving forward

While social commerce already occurs, there is still much room for improvement, both with regard to incentivizing customers and monetizing social commerce for Facebook, Pinterest, and other social media platforms. Pinterest competitor The Fancy already drives $10k/day in sales with only a million users, and plans on increasing product sharing by offering users credit when their shared posts result in sales. This should result in even more consumer “salespeople”, in turn outsourcing companies’ online sales teams.

Facebook plans to increase consumer sharing of products by introducing “want” and “purchase” buttons, which will operate similarly to “liking” something, but with a more direct focus on products. Claiming direct control over these buttons, companies would once again pay for premium spots on a user’s page, hopefully ending up with a more favorable and quantifiable ROI than garnering Facebook ‘Likes’.

Image 5: A “purchased” action for Facebook timeline could lead to increased ROI

An industry shift

With social media ads faring poorly and users increasingly turning to their mobile devices to connect with social media, social commerce provides countless opportunities to pinpoint and evangelize customers. Targeting customers at their point of impression and evangelizing customers are the Holy Grails of effective marketing, and the future holds more location-specific deals, rewards for referrals, public purchasing, and direct purchases in the newsfeed.

If the last decade was spent building the social infrastructure, this decade will be spent exploiting it, and both consumers and businesses will benefit.

Errol Apostolopoulos

Errol Apostolopoulos
Moontoast's Social Activation Engine is a SaaS and cloud-based social marketing, social commerce and social analytics platform. As VP Product, Errol leads product strategy and management for Moontoast's innovative social technology platform. Previously, Errol was Head of Innovation at Optaros, where he provided Mobile & Social Commerce solutions for top retailers. Prior to Optaros, Errol founded, led and successfully sold an angel-backed venture delivering original social content programming via TV, web and physical entertainment venues. Previously, Errol was GM of Razorfish Boston.


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