24 Jan 2013

The Psychology of Social Commerce

Twenty five years ago, if you wanted to buy something, anything, you had a few of options:
  1. Go to a shop / face-to-face with the buyer
  2. Order via a catalogue / respond to a classified ad
  3. Order via the phone
There was no internet, social media, and therefore zero ecommerce going on. Want to reminisce on evolution of Digital - take a look at this previous post of mine Digital evolution infographic

A customers decision to buy was based upon (in retrospect) fairly limited information, whilst the masses perception of the brand/product was largely based upon the advertising dollars pumped into the marketing, or 'pushing' of the product. 

Sure word-of-mouth influence occurred but only within a persons immediate network of friends, and the friends would have to know that the person was thinking about purchasing a specific product/service to know whether to give up their knowledge and opinion.

How things have changed!

Nowadays all you have to do is look at your news feed on Facebook or home feed on Twitter, and see what your friends are eating, where they are, what they are doing, where they are going on holiday, what they are listening to etc. This is going to change even more dramatically with the introduction of Facebook's Graph Search. And if your friends opinions aren't enough, the internet is jam-packed with millions of reviews from millions of real (and fake) people on just about every product, service and brand out there. 

Whilst commerce has changed dramatically, so has the (successful) marketing. Even though commerce direct from social networks is currently not that popular, social networks play a huge part in influencing consumers opinions of a product/brand, and therefore commerce in general. 

This is a short post looking at the psychological factors that affect social commerce.

What is Social Commerce?

According to Wikipedia's definition "Social commerce is a subset of electronic commerce that involves using social media, online media that supports social interaction, and user contributions to assist in the online buying and selling of products and services. More succinctly, social commerce is the use of social network(s) in the context of e-commerce transactions."

Product Marketing - A quick overview

When it comes to sales and getting a person over the line to part with some of their, or their companies hard earned cash, there are many factors affecting the conversion rate and sales success.

A few factors familiar to Marketers worldwide since Jerome McCarthy coined the phrase in 1960 known as the 4 Ps of Marketing comes immediately to mind; aka 'The Marketing Mix'.

  • Product
  • Price
  • Promotion
  • Place
This product focused model has since been updated to reflect the paradigm shift in consumer buying habits which is largely a result of the eruption of the internet. Consumers have a voice now, it's easy for real opinions and feedback of a product to be publicly known and accessible to all. For brands/products to have longevity, they must listen and respond. Marketing is less about the 'push' and more about the 'pull'.

This update to the 'Four Ps' is known as the 'Four Cs (hey it's marketing and we love our acronyms ;/ ):
  • Consumer
  • Cost
  • Communication
  • Convenience

Psychological Factors

There a lot of brands using social media, some rely on it more than others, and most are still struggling to calculate real return from it. I believe that will change when Facebook launches its Social Graph Search to the public. The point is, most Marketers realise the power of WOM (word of mouth marketing). A recommendation is the biggest endorsement a product/brand/service can get, and there lies the HUGE opportunity for social commerce.

There are some underlying psychological social factors that if understood and considered properly can create a substantial uplift to a brands success within social media.

A few of these elements are:
  • Social Proof
  • Authority
  • Scarcity
  • Like 
  • Consistency
  • Reciprocity
Check out the great infographic below by Tab Juice that explains these psychological factors in an engaging way. If it doesn't display, click here.

Source: Uploaded by user via Si on Pinterest

  • What are your thoughts to Social Commerce?
  • Do you think buying products directly from a Social Network like Facebook will become the norm? 
  • What do you think is stopping commerce via social media becoming popular now?
Keen to hear your thoughts on the above.

Enhanced by Zemanta

No comments:

Post a comment

Related Posts Plugin for WordPress, Blogger...