The age of Social Shopping has arrived - at last

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By: Wise Marketer Staff |

Posted on May 5, 2011

The age of Social Shopping has arrived - at last

While trying to marry the word 'social' to everything from 'loyalty' and 'engagement' right through to 'insight' and 'business strategy' is criticised by many marketers as pandering to the next set of buzz words, the phrase 'social shopping' is one term that is likely to be around for a long time, according to a white paper from Loyalty Truth.

The world 'social' is somehow endearing to the marketer, and it invites its user to fill in the blank with a term of their choice. For example, seemingly attractive terms often heard today include:

  • Social Media;
  • Social Networks;
  • Social Commerce;
  • Social Loyalty;
  • Social Shopping.

Shopping has always been a social activity, shared between people, so the 'social shopping' name doesn't define anything that we don't intuitively understand. But the substance of the shopping experience and the way people form purchase decisions is changing. Not so long ago, the term might have conjured up images of two friends going to the mall together.

In their hands would be a stack of coupons clipped from the newspaper or received through the mail. General intentions of which shops to visit were formed through impressions collected from television, radio and print advertising. As the friends walked the mall, they might be influenced by store signage signalling a "percent off" sale or other special offer. After a purchase is made, the satisfaction of the experience is enjoyed by the people physically present, and may or may not have been shared across a wider circle of friends.

Social Shopping today has two essential components:

  1. It refers to new ways through which brands can engage with their existing and potential customers ahead of the transaction and create positive impressions that influence the next purchase decision.  
  2. It is also a system in which shoppers collaborate to share information, opinions and recommendations, thereby impacting future purchase decisions.

With the growing influence of smartphones and social networks across a wider portion of the US population, there may no longer be a need to carry coupons or flyers into the mall. In fact, the "thrill of the hunt" is magnified by the surprise and delight people encounter as they become aware of promotions and discounts in the direct proximity the retail merchant making the offer.

Social Shopping is also a term with different meanings depending on who's talking and what they are selling. The mainstream definition of Social Shopping from a web point of view is the move of e-commerce activity from corporate websites to social networks. Facebook Deals and Google Boost are two well known examples, with Facebook Credits touted by some as the future of online payments.

Why social shopping is on the rise Generation Y or the Millennial Generation is represented by the 80 million Americans between the ages of 18 and 29. This population segment has grown up with technology and has access to an unprecedented level of information about brands and the products and services they market.

Millennials live in an always-on state of mind, rarely separated from their beloved technology. They are willing to share levels of personal information which once made older generations wholly uncomfortable. In one survey, over 58% of respondents felt that 'companies are only interested in selling products and services to me, not necessarily the product or service that is right for me'. This internalised cynicism, when taken together with the availability of data online, leads to over 96% comparing products before purchasing, and over 40% embracing recommendations from friends as a primary influencer of purchase.

Trust is seen as something rising out of interaction rather than force-fed through one way communications. Millennials tend to build brand preference through a complex process of sharing and comparing their opinions and experiences across a trusted network of friends and family. With an estimate from Nielsen that the penetration of smartphones in the US will exceed 50% by the end of 2011, these evolving human tendencies influencing purchase behaviour will be further facilitated by technology and evidenced in the broader population.

Organisations need to recognise that, when considering the impact of social shopping, they are not merely responding to a new media form; rather, they are responding to a permanent and far reaching social change, of which social media is merely one manifestation. In other words, consumers in the Millennial generation and beyond are shaping brand conversations outside of the traditional marketing channels. Brands sponsoring loyalty programmes must embrace digital tools to connect with consumers and deliver offers based on location, referral and recommendation. And consumer value propositions must be integrated with customer experience to compete effectively.

Brands can no longer settle for the legacy model which offers a "bribe" in exchange for a transaction. Loyalty models have operated behind the transaction for the past two decades or more (i.e. rewarding consumer behaviour after the purchase) but social networks and location based services are opening the door to change this strategy completely. Referral, recommendation and word-of-mouth marketing are all part of natural human behaviour and they should all become part of the equation for brands wishing to get ahead of the transaction.

Marketers were introduced to these trends 3-4 years ago, but most hesitated to advocate investment in social loyalty models. The Millennials were just getting started in life and their lifetime value was still in development. The big difference now is that a shift has taken place. The influence of the Millennials has been felt by neighbouring population segments, and the group referred to as 'Consumer 2.0' is now estimated to include some 150 million consumers in the US alone.

Among this group, there representation from Generation X and the Boomers, each of which carry significant and proven financial value for brands. They share Gen Y's preference for digital channels to make decisions about the brands they purchase from and, for the first time, brands can justify marketing investment in this highly valuable and still expanding consumer profile. Social shopping and social loyalty have truly arrived.

What comes next? Social shopping is therefore perhaps best defined as "an eco-system where the value created for shoppers and merchants is mutually and equitably generated". Shoppers are provided incentive in the form of rewards (cash back or other means) and will continue to patronise merchants in their network as long as the merchants provide a satisfactory customer experience.

Networked shoppers share opinions, recommendations, and make referrals to drive an increased share of spend to the merchants participating in the network. Local merchants seeking to compete against national competition and in a generally unforgiving market can use elements of social shopping to become more relevant and noticeable to consumers "in the moment" (i.e. when shoppers are in the same place as at the point of purchase intention).

Social shopping provides a measureable construct to enable local merchants to lower their communication costs and shift precious marketing budget from untargeted promotions and coupons to funding of the offers and discounts themselves. A clear advantage to the concept is the ability for merchants to measure new customer acquisition, share shift, and increased volume and visits through these highly accountable systems.

Interestingly, there is more than a little bit of irony at play. As Consumer 2.0 becomes more infatuated as well as comfortable with their digital devices, the tools available to local merchants are becoming more powerful, attractive, and financially advantageous. What is required at this time is education - but for merchants rather than consumers, as the consumers are the ones driving the trend.

Look at the extent to which local merchants already take advantage of Foursquare, Facebook, Google Places, and QR Codes, and you can understand that social shopping is still in its infancy today. As social shopping evolves into a mainstream strategy for merchants, the disciplines of creating and improving consumer customer experience will become more and more sophisticated.

The full white paper can be downloaded free from The Wise Marketer - CLICK HERE TO DOWNLOAD NOW (PDF document).

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