Remember Friendster, that popular social network that came into the scene rather early and somehow got eclipsed by Myspace and Facebook along the way? The truth is that Friendster started declining in its own ways, thus paving the path for Myspace to really take over circa 2004. While technological scaling was an issue that precipitated the downfall of Friendster, the biggest issue was probably spam. Suddenly, you had unknown people writing nonsensical, commercially-driven Wall posts (I mean, testimonials) on your profile. Then, Friendster got smarter and plastered our profiles with ugly advertisements. The rest is history.

As marketers and brand owners, we probably believe, sometimes unduly, that our offering is always relevant to our target market and adds value to their social media existence. The problem is that the definition of spam is growing wider among social media users. Back then, any unsolicited message from an unknown person is considered spam. In the era of social networking, however, any content posted on social media is by default from a known source: our friends. Users are thus trained to be more discerning in assessing content, perhaps via closeness factors (“Maybe I should only care about content shared by my closest friends...”), or they simply ignore certain categories of content (links, products, promotions, etc.), regardless of who posted said content.

While the correct term to describe irrelevant content from a known source is noise, as in signal-to-noise ratio, not spam, the end result for marketers is the same: at the end of the day, nobody gives a damn about your offering. Sometimes more impressions on social media can mean increased visibility; sometimes more impressions on social media can create in the minds of consumers an irreversible association between the brand and spam. We ourselves certainly have to be mindful, because we partly help brands to create multiple impressions on Facebook, what we call increase “brand visibility” on Facebook. This is a point of caution that is not really given attention by a lot of marketers.

Facebook is also historically kinder to users than developers – remember not too long ago when our notification box was flooded with application notifications and users seemed to be threatening to leave? Facebook stopped developers from further harassing its users, and it did so firmly. If Facebook blocks commercial content-sharing in the future, marketers, brand owners, content creators, etc. will have some real problems penetrating the biggest and fastest-growing social media platform in the world.

One of the most popular definitions of social commerce is that it is about consumers helping one another make better buying decisions (see a rather comprehensive list of definitions here). This definition seems to suggest that social commerce is a social movement based on altruism and common benefit. The question to ask is whether the explosive growth of social commerce is even driven by this so-called digital altruism or actually fueled by selfish consumers using social media as a facilitative technology to get what they want.

One of the clearest examples of “selfish” social commerce is group-buying websites, like Groupon. While Groupon itself may not be considered social, it is no secret that deals are often spread via social integrations on the Groupon website, allowing consumers to share deals on Facebook and Twitter. This form of sharing is merely self-serving, since deals are only unlocked if enough people commit to the deal. Conversely, collaborative social commerce services (or “altruistic” social commerce), like Polyvore and ShopSocial.ly, are centered on community-style interactions that present no immediate direct benefit to the contributor.

It is vital to distinguish between the two forms of social commerce, as lumping them together under one umbrella may paint an inaccurate picture of what precisely is growing explosively. Though other forms of social commerce are successful in their right, the group-buying model seems to be the most successful. The possible lesson for all is that consumers care for themselves first and foremost, thus ecommerce must be persistently focused on helping consumers realize their own selfish agendas. Social sharing, communities, and fan pages would only work on a big scale if there is an immediate huge benefit to consumers.

Marketers generally view the Facebook Like button in a positive light. It seems to make sense – provide onsite social proof for content or products by displaying the number of Likes as well as bring in new visitors or leads via Facebook itself without additional CPC costs. It is a tiny plug-in that purports to solve (at zero financial cost, no less) the two biggest pain points in online marketing: traffic and conversions.

There are, however, two problems with the Like button, depending on what you use the data for. First, as a marketer, there is little value in knowing who likes what. Many people liberally click the Like button, thus it is a very poor indication of purchase intent or even interest. If they truly like a product, for example, they would have bought it, not play around with a plug-in that adds little direct value to their shopping experience. Second, as a consumer, the number of Likes that a piece of content or a product garnered is useless. Knowing that, say, 16 people like a particular product has no effect on my purchase decision if I cannot know how many people would have disliked it, had there been an option to dislike it. With onsite product reviews, consumers can access and assess the pros and cons of a given product, so there is value in them as a conversion-optimization tool. Likes, conversely, are one-sided, vanity numbers (this is a bold statement coming from me, as I represent a company that offers a decision-making social shopping tool that relies on the number of Likes for purchase planning).

I would have less reason to doubt the Facebook Like button’s value in driving traffic, but, as onsite social proof, the Facebook Like button may be of dubious value. Any consumer who has any semblance of discernment would take the Like count of a piece of content or product with a pinch of salt. The only value that can be derived from the Like count is that of comparison: where many pieces of content or products are juxtaposed, the relative number of Likes may be useful in gauging consumer sentiment.

What do you think of the Facebook Like button?

We all have been in a physical retail store, considered items that looked pretty or even useful enough, felt convinced enough to buy, and then left with nothing. Something just did not feel right – oh yes, the store was empty except for you. It is almost a law that empty stores and restaurants especially will find it hard to get customers, regardless of the offering.

Unfortunately, as much as we would like to think that consumers are rational, independent-minded creatures that assess offerings based on their merits, they are doubtful by nature and thrive mostly on a herd mentality. With higher-end products or services, consumers always want to know who else is buying, just as investors always want to know who else is investing. The effect of seeing boatloads of people buying something is so powerful that, while it definitely can provide assurance to a doubtful prospect with some purchase intent, it can convert non-potential customers with no purchase intent whatsoever into customers.

Things are no different online, though the mechanisms may be different. Having an online business presence does not mean that retailers can shelter themselves from the “empty store” effect by using alluring graphics and having an elaborate product line. Most ecommerce websites are assumed to be ghost towns, unless proven otherwise onsite or offsite. An effective tactic to generate tremendous buying interest and/or confidence is to show off existing customers. Even better, show off customers that can talk and act independently a.k.a. a community, who will continually create the asset that we want most for free: user-generated content (read: SEO benefits and generic social proof, not of the “customer testimonials” variety).

Give onsite customers the chance to show off their purchase or that they exist. A community might seem like a distraction, but think about it, online shopping is really an individualistic, unilateral activity. Even if you have millions of customers, they all shop in individual silos and go through identical yet separate sales funnels, unaware of each other’s presence. Nurturing a community is basically removing the silos and just letting them see and communicate with each other. That seems to have a positive impact on sales in real life; there is no reason that that would not have a positive impact on sales online as well.

Shoppers are not the most decisive people when it comes to purchase planning, often needing third-party advice, validation, and recommendations from both friends and strangers alike. Shopper engagement thus becomes an important priority for retailers, lest doubtful shoppers drop off to third-party platforms (such as consumer review portals) to get the information that they want or, worse, to competing online stores that can offer a more holistic shopping experience.

Consumers consulting each other as a form of product research is common; take a look at the overwhelming list of “which should I buy” threads on Yahoo! Answers here. Most shoppers browsing an ecommerce website have a need for reassurance and third-party information in general, or at least overwhelming social proof, before they complete a purchase or even contemplate it. Any opportunity for shoppers to obtain unbiased, diverse consumer research information would thus be immensely helpful in building trust, which is a critical differentiator in the cut-throat online retail sector.

Since consumers are already helping one another make better buying decisions, or practicing social commerce, there lies an opportunity in baking this common experience into the shopping experience, right on the retailer’s own platform. One plausible tactic is to allow shoppers to consult one another on purchase decision-making, in real-time or otherwise, while still retaining them on the storefront. This appraoch (and indeed our approach) departs considerably from the idea of merely installing a message board that is separate from the sales funnel. The value proposition of this onsite social commerce strategy is two-fold: 1) expanding the traditional online storefront into a platform for consumer research leads to a tremendous increase in engagement and brand equity (e.g. the Amazon effect), and 2) shoppers with access to third-party information are more confident buyers, thus letting them complete their purchase during their moment of assurance is likely to save a non-trivial amount of sales that could otherwise have gone to a competitor.

This has long been a possibility that is largely ignored by the change-resistant ecommerce industry, despite the growing variety of social technologies available for socializing the storefront. Perhaps now is a good time to take a bold step forward and essentially give shoppers what they have always wanted.

Jennifer Saranow Schultz recently explored the growing potential of leveraging on our social networks to get product recommendations. The clearest advantage of tapping on our own social network for shopping recommendations and other research information is trust and reliability. Conversely, product recommendations and reviews by strangers are usually unverifiable and possibly unreliable, e.g. consumers with malicious motives giving unfavorable reviews, merchants masquerading as “reviewers” giving over-favorable reviews, consumers recommending products for discounts/coupons, etc. Of course, with friends, there are critical mass issues, since it is unlikely that our relatively-small social circle has all the answers to our multifarious product research queries.

However, consider the possibility of marrying the trust-and-reliability advantage of personal friends and the diversity-and-breadth-of-knowledge advantage of a larger pool of nonetheless like-minded strangers. While information broadcasted to the public by a stranger may be questionable, information shared with or by the personal friends of said stranger is likely to be more trustworthy and reliable. In other words, personal conversations among strangers who know each other in real life hold just as much credibility as our own personal conversations with friends. Any product recommendation system that allows consumers to access their personal friends while still allowing them to view the information shared within the private circles of other strangers is likely to be markedly more useful than either a friends-only or strangers-only platform. This simple new approach solves the respective problems of either of the traditional approaches.

The problem with this system is that it treads on the fine line between respecting and violating user privacy. It is unlikely that, in their ordinary states of mind, people would be willing to share their private conversations with the world, even if it is for “common good.” Consider, however, that social media norms and exhibitionism are becoming more acceptable and even celebrated on the social web. While privacy concerns are nonetheless common, people are generally more open than ever when it comes to sharing their personal life.

Our latest iteration of Zuupy Social Commerce Solution synergizes trust/reliability and breadth of information by not only allowing shoppers to solicit advice from other friends but also view past advice shared within other social circles (i.e. strangers soliciting advice from their own friends). Therefore, any possible dearth of information within our own social network is supplemented by additional trustworthy conversations from outside our social network. While it remains to be seen whether this approach is more effective for both the consumers and the merchants, we believe that social commerce will, in the future, evolve into and somehow be based on a hybrid of friendsourcing and crowdsourcing, and not just a plain amalgamation of the two approaches.

The concept of leveraging on existing customers and advocates to drive online retail sales has been explored extensively in the application of recommendation/cross-selling algorithms, social media sharing tools, onsite consumer reviews, and wish-lists as well as recent innovations, such as the Facebook’s Like button. With cross-selling specifically, shoppers can gain access to starting points or suggested items for consideration, removing some cognitive costs and mental barriers-to-buy. Introducing the “social” aspect into cross-selling provides a credible basis for the cross-sell and thus creates trust, in that the source of endorsement is people within the shoppers’ social circle.

Prior to the introduction of open social network APIs (application programming interfaces), to leverage on an existing customer base’s personal identities to drive sales has been difficult, involving painful registration processes and additional headaches about remembering yet another username and password. However, Facebook’s introduction of its Open Graph API has now enabled online retailers and content publishers on the web to socialize their offerings with simple integrations, which, on the consumer’s end, means one-click functionalities (the Like button being the most prominent).

At Zuupy, we have been exploring the possibilities of taking portable social identities to the next level with deep two-way integration with Facebook, social cross-selling features, and facilitating product and brand conversations that drive conversions. Social cross-selling is the overarching objective of what we do – a new paradigm that centers on creating conversations to optimize the sales funnel and accelerate sales cycles, instead of the traditional social media paradigm of using conversations to create “engagement” or “brand awareness.” Below are some suggestions on how you can leverage Facebook’s new API to create dramatically-enhanced shopping experiences using instant personalization:

1. Leverage on product recommendations
Putting social media sharing buttons on a product page and then hoping for healthy, sustainable word-of-mouth marketing activity to happen is negligent at best. With Facebook’s Open Graph API, the opportunity to capture these product recommendations, as well as the valuable comments and advice attached to the recommendations, and display them on the storefront is increasingly obvious. Archiving user-generated content for mass consumption is one of the easiest ways to provide social proof; besides, the more content is accumulated on the retail store, the more SEO and research/purchase planning value said retail store holds.

2. Encourage social purchase sharing
Attaching buyer identities to specific products is powerful, because a purchase is unequivocal in conveying social endorsement: the buyer has actually paid money for the product. Furthermore, the purchaser is more likely to have first-hand knowledge about the product than a non-purchaser. In a way, purchase sharing holds greater substance than mere product recommendations or Likes. The limitations of social purchase sharing are two-fold: privacy and the critical mass issue. Most consumers are unlikely to want to share their purchases, and, even if they do, possibly none of the people in our social circle (the people whose references we trust) happens to have shopped in a given online store, resulting in a dearth of data. However, with social media norms going mainstream, it is expected that consumers will be more open to sharing their purchases and shopping destinations, which in turn would attract their friends to said destinations to make and share their own purchases.

3. Enable solicited social reviews
Ratings and reviews are first-generation social commerce tools that are used to provide social proof and credibility for a certain product or online store. The opportunity offered by Facebook’s Open Graph API is to infuse greater trust, targeting, and contextual relevance into the process: allowing reviews to be requested for from someone known and trusted, instead of showing random reviews from anonymous writers whose knowledge, background, and motive are likely to be questionable. Requesting a review from within one’s social graph also solves the contextual relevance and targeting issue. Unsolicited product reviews are likely to be seen as obtrusive or abrupt, especially on social networks where the prevailing purpose is to socialize.

Of course, these social cross-selling suggestions should be applied in the context of ordinary cross-selling good practices. With social media going mainstream and becoming increasingly open, online retailers can expect that the opportunities to socialize the storefront to increase over time. Notable merchants are already taking bold steps in socializing their stores (here and here), so what are the rest of us waiting for?

Note: This article is a follow-up post to a previous article, 5 Reasons that Social Recommendations Don’t Work.

We all know that word-of-mouth marketing is king. Yet few of us realize that word-of-mouth marketing can only be facilitated at most and not engineered from the ground up. If even possible, the only way to “engineer” word-of-mouth marketing, specifically the viral type, is to have a really, really compelling offering. That is all there is to it. We all know, after all, how hard it is to sell a poor product. Customers are not a voluntary sales force, and they only care about sharing good content or products to win some social capital for themselves. Customers only care about making their own lives better.

Retailers especially are fond of placing social media sharing features on their websites, hoping to piggyback on the high value of social endorsements and to reach out to friends within the social graph. The problem is that 1) people rarely share, and, 2) even if they do, their friends rarely care. Clearly, sharing is not caring when the offering stinks.

Of course, the more simplistic-minded of retailers take the low referral rate as an invitation to “over-facilitate” the social recommendation and referral process by introducing incentives. “Refer a customer and get discounts/freebies for yourself” is the basic idea. At first glance, it looks like a reasonable, win-win proposition for retailers: get a new customer, and keep an existing customer happier than he would have otherwise been.

I think that it is a terrible idea, from both an ethical as well as a business point of view, for three reasons:

Incentives encourage people to recommend unworthy things, diluting their own personal authority. Freebies can cloud the minds of even the most rational, sincere people (and I do not mean “rational” as in economics), because it puts them in a position of conflict of interest. When tangible rewards are involved, the intention of sharing is no longer to help, to sustain friendships, but to manipulate people for personal gain. People can sense insincerity from miles away. When people see that someone is “sharing” products more often than usual, people avoid the barrage of marketing spam and accord less respect to said person. I have an (aptly-called) ex-friend like that.

Incentives merely shift the bottleneck from the sharing stage to the caring stage. It is not difficult to see how incentives would make people share more, but it is harder to see how sharing more would necessarily cause others to take notice. In other words, incentives are not a panacea to the problem of low click-through rates commonly associated with social media. Incentives do not answer the questions of purchase intent and targeting.

Activities based on exploitation of personal relationships are simply unsustainable. The last but most important issue is that of ethics. Incentivized referrers are, in a way, the new multi-level marketers, and they will predictably have the same level of success, or lack thereof, as their manipulative, self-serving counterparts. No one likes to be monetized, feel swindled, or feel taken advantage of in the most opportunistic ways. Perhaps all incentivized referrals should be disclosed, in the same manner that bloggers are mandated, by law, to disclose their paid endorsements.

My opinion is that those who want to generate word of mouth should not try to hack the process but should merely provide the infrastructure to make recommendations and referrals more convenient. Let customers be and not confuse them with incentives, even if it drives action. Social behavior and interactions are more complex than marketers would like to think; it ultimately pays more to just focus on the offering.

Social colonization is a term coined by Jeremiah Owyang to describe the gradual yet increasingly-ubiquitous socialization of the web, supported by technologies like Facebook’s Open Graph API and OpenID. Jeremiah predicted that, essentially, social will be the web itself in the near future, and our social graph – or the cumulative network of people connected to us – will be an integral part of our web experiences. A simple observation of our own web experiences today would conform to this picture, but the social web is not without its skeptics. Marcelo Calbucci has argued that products limited to or based primarily on the social graph will not work, and I have also previously explored some possible pitfalls of social recommendations.

I believe that there is immense value in exploiting the social graph of consumers to create instant familiarity and significantly increase engagement, but it is crucial to understand its limitations in order to mitigate them. Here are some of its disadvantages worth noting:

As the social graph becomes increasingly commonplace, its value becomes increasingly diluted. While slapping on a friend’s name on content might have helped to increase engagement in the past, consumers are gradually immune to such friend bait due in part to the sheer volume of activities coming from within the social graph. Social used to be the best thing since sliced bread because it pandered to the needs of the exhibitionistic as well as the voyeuristic, creating a mutually-reinforcing, perpetually-growing supply-demand cycle. It was personal, and it allowed us to learn a lot about the people close to us using very little effort. However, it also allowed people to actively share with very little effort, resulting in a low signal-to-noise ratio and diluting the average endorsement effect of each activity shared. It is, after all, human nature to equate rarity to value.

Conversely, our social graphs are sometimes just too small to be useful. Mobilizing the social graph for active sharing, i.e. chronicling who read what documents and bought what items, may be intriguing to consumers, if not helpful, but the social graph may prove to be less useful for passive sharing. Passive sharing basically involves the recipient of information requesting information from her social graph: “What outfit should I get for tomorrow’s concert?” The more niche or specific the nature of the information queried (e.g. “Who is the best divorce lawyer in Singapore?”), the less likely are our constrained social graphs going to have answers. Broadening the definition of “social graph” is not helpful either; the further we move away from our inner, trusted social circle, the less trusted are its people.

There is also evidence suggesting that we are placing less trust in our friends and peers over time. One possible reason for this trend is that the definition of “friend” may have undergone systematic bastardization over time via the liberal use of the term by social media to describe people who are somehow connected to us, no matter how superficially (remember when the term “friends” referred to people with whom we share our best and worst moments, not random Twitter followers?). Another possible reason is that we are indeed placing less trust in our friends and peers less because of suspected puppeteering and mobilization of our friends as vehicles to push marketing messages by social media marketers. The unique value proposition of social graph-based services is that they tap on pre-existing links of trust to drive action, thus any evidence of a decline in peer influence would render said services fundamentally irrelevant over time.

Our friends are not likely to be the most reliable source of information. Even if we trust our friends, there is still the issue of reliability that impairs how useful our social graph can really be. Reliability and trust are two different concepts, as I have explained here. There is a strong selection bias within our social graph, as we primarily only associate with people who are like us or whom we like. There are many activities from which we can benefit a whole lot more by infusing some diversity, such as, say, finding solutions to a mathematical problem and sourcing for holiday ideas. Eventually, as the excitement surrounding social colonization subsides, so will our artificially-inflated expectations of the social graph, as we will increasingly turn to the combined wisdom of friendsourcing and crowdsourcing.

What do you think of social colonization and the social graph? Do you buy the concept of instant personalization using the social graph as frequently touted by Facebook’s CEO Mark Zuckerberg? Do leave a comment below; I would really like to hear what you think.

For traditional marketers, marketing techniques prefixed with “social” are often perceived as some miraculous low-cost, high-quality, and viral way to generate leads. Examples include social media marketing, social commerce, social shopping, and social recommendations. With regard to social recommendations in particular, the underlying reasoning is simple: your customers have families and friends with whom they already have a relationship, so leveraging on these pre-existing affinity links and connections and exploiting social trust to sell a product would be less of an uphill battle; the not-so-uphill battle now lies in convincing your onsite customers or leads to sell to their friends on your behalf.

Any marketer who buys into this thinking would then naturally plaster landing pages with social sharing widgets, “email a friend” links, and Facebook Like buttons, hoping that a good chunk of visitors would share the product link with their 500 Facebook friends and 2,000 Twitter followers, who would, in turn, share it with their countless friends and followers. Except they very often don’t, or at least not as often as marketers hope. Perhaps some examination of the different motivations and concerns of consumers would help us to better understand the mechanics behind social recommendations and to thus tweak our tactics to better fit reality.

The Limitations of Social Recommendations

Whenever one decides to deploy social recommendation or social sharing add-ons or features, one has to understand the following realities:

Social networks are escapist congregation platforms for friends to socialize and share things about each other’s lives. People on social networking websites are looking to enjoy themselves and largely do mindless things like voyeuristically viewing their ex’s photo albums or watching a video of a baby panda sneezing; any cognitively-expensive task (read: evaluating purchases) is likely to be avoided like the plague. Thus, any feed item that lacks contextual relevance is unlikely to be viewed favorably, an obstruction to the pursuit of fun, pleasure, and relaxation. It is arguable that some people window shop online for fun, but, even then, these people most likely have low purchase intent and trying to convert them into a buyer within a short sales cycle would be difficult. Good or bad, any outbound link from inside Facebook (not so much Twitter) is likely to be viewed only transiently and out of curiosity, given that people can’t wait to get back to liking random status updates of their friends on Facebook.

Sharing products is different from sharing FML entries, George Bush parody videos, or a Lady Gaga upskirt shot. Anyone who over-promotes products and brands on Facebook reminds me too much of a pesky salesman or a multi-level marketer eager to clear his stock. Nobody likes to be marketed to directly because it makes people feel like all you care about is their money, in the most greedy, manipulative, and self-serving ways possible. Although the promoter might not have hidden motives and merely share out of good intentions, the impression is hard to shake off, and, in the land of social media, first impressions count a lot by virtue of the sheer amount of rubbish pumped out of each person’s social megaphone.

Even if brand advocates and influencers (i.e. the people other people listen to) can be leveraged to endorse products and brands, social recommendations from them will experience diminishing returns over time. Needless to say, trust corrodes over time if abused. Over-sharing makes people feel like they are doing you a favor by visiting the links you share; nobody wants to feel taken advantage of, especially if they are predisposed to believe that their favors would not be returned. Nobody wants to deal with a person with overwhelming indebtedness, or “overdrawn emotional bank accounts,” as Dr. Stephen Covey would say. Not only will your social recommendations not work, your brand advocates will also lose friendships and blame your brand for it. Not good. It is best to limit all advertising to the Facebook fan page, unless you don’t mind your brand being associated with spam, excessive salesmanship, and invasion of personal lives.

People who share your product or brand are also putting their reputation on the line, investing some social capital in hope of more. The core idea here is that people will only share things that they find compelling, useful, valuable, or special in some way, because they will feel socially invalidated if their friends don’t agree with them. Clearly, nobody likes to be made to feel like a pariah or weirdo. The retailer’s task is not only to convince the sharer but also to convince the sharer that her friends would love the product as much as she does. The truth is that social recommendations are a form of borrowing of goodwill from others; you will not be able to tap on reputation you haven’t earned (this applies beyond ecommerce as well). When put in this manner, social recommendations no longer sound so sexy. There is no free lunch!

Alas, your products or brand may simply be lame or uninteresting. In a similar vein, nobody wants to be made to feel like a boring dork by sharing uninspiring content and a-dime-a-dozen offerings. People want to share a compelling story, something noteworthy, and will not indulge in any sharing if there is no clear benefit to themselves. If this is the case, there might be a more fundamental issue – that the brand lacks a unique selling point.

Suggestions for Better Social Recommendations

As an avid social media user myself, here are some tactics that I would find useful:

1. Offer unique, novel, or rare content worthy of sharing. See Uncommon Goods.

2. Provide instructions for guided, personalized social recommendations to allow better targeting (“Which of your friends are most likely to be interested in this product? How can you capture his or her attention in a personalized manner?”)

3. Encourage masked/indirect social recommendations. This may involve sharing a product in the guise of soliciting for shopping advice or opinion. This method panders to the needs of the egotistical, who constantly wants and needs to feel important.

4. Leverage on customer satisfaction during the purchase cycle to push out social recommendations. The best moment to ask for a social recommendation is when the buyer is most obliging (right after payment is made), because they felt that you have done them a favor by selling them a valuable product.

What do you think of my analysis on social recommendations as well as my suggestions? Have you tried any of these approaches? Leave a comment below and I will respond to you personally.