Blog

Here’s the full video from our webinar on Tuesday with our partner and leading Yahoo Store design and development shop FastPivot.  It’s about an hour.

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.

In short: keep it simple.

In the first version of TurnTo, we were determined to set a gold standard on privacy control.  We provided a multi-level model for authorizing purchase information sharing.  We had forward and reverse models for specifying friend relationships.  We let users create groups of friends then share with groups while excluding individuals or sub-groups.  We provided time-based controls that let users specify review periods.  And that’s just the stuff we implemented; our plans went even further.

You know how that movie ended: no one used these functions.  And we’ve been stripping them out of the system one by one ever since.

Here’s what we learned: when it comes to sharing purchase information, there’s them that do, and there’s them that don’t, but there’s no one in the “I would if only I had more granular controls” group.  The best way to serve your users is to keep the model very simple so that it’s obvious at first glance what sort of information sharing is going to happen.  It’s OK to be very open, very restrictive, or anywhere in between, as long as the rules are obvious.  Granular controls don’t help you increase your audience. At best they’re ignored, and at worst they cause confusion and bad feeling.

In contrast, Facebook has been moving in the opposite direction.  They wanted to make their environment more open to enable functions that would be valuable to their members.  But they felt a significant part of their membership might prefer the old, more restrictive model.  So to keep everyone happy, they added granular privacy controls.  “Everyone can have it just the way they want it.”  But in trying to keep the old and the new at the same time, what used to be simple got complicated.  And that hasn’t worked.  People get their settings wrong and are surprised.  People feel duped if their settings change without warning, or they feel coerced if pressed to change settings they were happy with.  Or they feel burdened by having to learn complicated rules for something that used to be simple. Or they lose confidence in the system and back away.  And what about those conditions where A meant to share only with B, but B shares everything with everyone, and A didn’t see that one coming?  Now Facebook has added the Bandaid of bundling those granular controls into higher-level preferences.  “You want it small, medium, or large?  Don’t worry about the details.”  That might help – we’ll see.

But if Facebook had asked us, we would have told them this: it’s OK to change, even radically.  (You of all companies know that and have shown the guts to do it.)  Decide on the basic approach to privacy you think is best for your users and your business.  And throw everything else out.  Some users will gripe about the changes (like they did when you introduced the news feed).  But then they will see the wisdom of your new model, their behavior will adapt (some may share less, others more), and they will thank you thank you thank you for keeping it simple.

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!