media140: community commerce

Here’s a detailed summary of my presentation on community commerce at media140, which looked at the impulses and models framing and driving social commerce to date, the opportunity for small business and the role community management can play in supporting social commerce models (through a behavioural lens).

Defining social commerce

It’s trending red hot, it sets tech elites aflutter and has the business world excited at the prospect of making money from this social media thing.

So what is it? Depending on who you ask, it’s:

  • Customer reviews
  • Fan exclusives or discounts
  • Group buying
  • Virtual world economies (WoW, Second Life)
  • Mobile and social gaming (Farmville)
  • Social network store fronts
  • Peer to peer investment

And plenty more.

It’s fuzzy to define because commerce is innately social and social is different to everyone.

When we go to markets, we see and engage with people with know as part of the browsing and purchasing experience. The local shopping strip is full of familiar faces, including those behind the counter.

We buy things based on the suggestions of friends, invite them over to play with our new toys, and ask for presents that people like us seem to enjoy.

When people cluster, commerce emerges, and always has.

More than one person is necessary to assign value and forge a value system.

Communities develop and adapt complex, socialised commercial models (and online communities continue to lead the way in remodelling our commercial cultures).

Our things themselves have a social life. They confer status, shape our identity and behaviours, we invest them with meaning and ego, and they’ve passed through many hands.

Provenance is a social consideration of our objects. Think of the social implications of a free trade product. Or a label from a maker associated with sweatshops. What goes through your mind when you see someone with an old model phone.

No matter our world view, our things carry embedded histories and politics.

Here’s me (centre right, with the dorky grin) in the early 90s, with some members of the X-Philes Anonymous online community. This was one of many in person meet ups we had, uniting community  members from dozens of countries, usually associated with an official X-Files event, like a convention.

The jacket I’m wearing is a social purchase – sourced, bought and worn as a consequence of my participation in that social group. I went on to have it signed by cast and crew, giving it another layer of value. It was a talisman invested with the history and life of our online community – and me forking over the cash for it was a direct consequence of participation and stakehold.

The internet has given us new, and more public ways to explore and assert the social life of our things – how we acquire them, how we talk about them, how we pass them on.

Let’s call social commerce, online:

  • embedding transactional opportunities within social contexts
  • adding an authentically social element to a commercial context

Why is it valuable?

Australian consumers will spend $33B online this year and we now spend an average of quarter of our lives online (Nielsen & Forrester, 2011/12). The web isn’t somewhere we “go” to perform abstract tasks. It’s just part of who we are – our things and their social lives.

What excites people about social commerce is its ability to noise dampen.

A connected population and information saturated world has driven us to an attention economy – and relationships leap frog competition for attention. This can be a leveling force, because a relationship doesn’t demand neon signs. It simply requires that you show up, and honour the promise of the relationship.

Generating sales, sustainably, is no longer the privilege of the biggest advertising budget.

An attention economy is why we obsess over authenticity. If time is precious, we’ll spend it with the people, things, ideas and experiences that matter most to us.

Intimacy is a social shortcut. It collapses effort and negotiation. We always run a cost benefit analysis before any decision or action, and trusted relationships and recommendations tip that balance.

2012 Nielsen stats show that earned media – word of mouth and personal recommendations – are trusted by 94% of people in the Asia Pacific region, whereas traditional channels are diminishing in reach, effectiveness and trustworthiness. The internet is our number one trusted source.

We make qualified guesses based on familiarity.

This is one reason resonant storytelling is recognised as a pillar of social media success. When a story rings true, we feel connected to its author, whether we know them or not. That qualified guess becomes a qualified lead.

There are different kinds of intimacies, and this is critical to grasp in social commerce.

Mutual love of an object or an experience can become a shared emotional connection.

Friends share and recommend differently to family, colleagues, or strangers.

Initial intimacy is necessary for something to reach popular attention.

The normalisation of ‘liking’ is a challenge for social commerce, as it’s a loose, drive-by intimacy.

Sharing and taste models

There are two primary social commerce models we see in the market currently (beyond the well established and lucrative social commerce that occurs in gaming communities and virtual worlds).

The sharing model relies on atomised content and products – it asks people to like, fan, tweet, pin and pay it forward when they find or consume something they like.

Generally this is share is funnelled into people’s personal social networks where it may or may not be welcomed, have context or have impact.

The taste model uses big (social) data to bespoke product and experience. It’s usually automated or algorithmically powered. Where sharing pays it forward, taste funnels it back to you, as intuitively as possible.

These models deep dive into our personal social graphs, where, when and what we click, and deduce we’ll probably like A because we told our friends we bought something similar, we’re in an online group that loves the letter A, or we ‘liked’ something from the guy who wrote the alphabet last year.

It’s the online version of the vinyl or comic store, where we don’t have a personal relationship with the people there, but our purchase habits and rituals dictate that our tastes will intersect.

Curation straddles both – shared content is curated into a state where it’s easier to consume and share again – and curators aggregate and filter based on taste verticals, which attract minded people.

Curation is a taste-making act, and we’re seeing more and more efforts to empower and reward taste makers who drive behaviour and inspire swarming around products or services.

Each of these models have merit and traction.

Yet many are still conflating social networking with commercial opportunity in an overly simple way.

A social network does not inevitably gives way to commerce. Facebook does not equal a shopping mall (unless its users decide it does in contexts they can own or feel comfortable with).

Thinking about social commerce as grafting commercial expectation onto social networking is blunt logic that ignore the power of intention, intimacies and context. It’s thinking like a hammer and treating everything like a nail. We tend to run from hammers when they’re waved at us.

Pub. Park. Piazza

Here’s one, less hammery way to look at it (inspired by Dean Power @ Byron New Media)

The Pub is a busy social environment; you run into people and meet them randomly. You have short conversations, and sometimes you have to speak quite loudly to be heard above the noise.

The TV might be blaring, and you’ll watch it together (probably passing comment on what’s on).

It’s a good place to meet people, but not the best place to deepen a relationship.

To meet someone at the Park requires a bit more coordination.

You mutually agree to meet and the conversation can be more subdued and more intimate.

This is a place you could deepen a relationship.

If someone tried to sell you steak knives at the Pub or the Park, it’d feel odd. You might still buy them, but  there’s a native social friction in those environments that makes it less appealing a prospect.

You could say Twitter is a bit like the Pub and Facebook is a little bit like the Park.

When we go the Piazza, we understand that we’re in the marketplace.

We expect to have a social experience and to run into people that we know.

We expect to find out what’s happening around town and what’s new. And the vendors (who we recognise as real people versus ‘brands’) bring the colour, energy and excitement.

We’re going to see more and more online piazzas – and they represent a huge opportunity for small business to level the playing field in digital and social media.

There are smaller players doing awesome things, but they’re not the norm. Many of the same old players and the same old power structures are at work in our online economy. For all the talk of ‘revolution’, our digital consumption is still controlled and leveraged by a handful of large companies.

Community noticeboard

The work I’m involved with at community engine is one example of a piazza model.

We’ve been embedded with the good people of the Northern Rivers region in New South Wales for a while now, helping them bring their village economy online in a practical way that accomodates the nuance of that village.

This is a group of communities that fundamentally understand market culture and the power of connection – that’s why we chose them to work with.

Our members are existing groupings of relationship, geography and interest — village intimacies — and the platform we’ve built with them echoes the old fashioned community noticeboard, where you might see offers for a local takeaway shop posted next to a missing cat notice.

The ce noticeboard is shareable, social and transactional, whether you’re a community group selling memberships, a business selling products, or an individual learning about what’s news in the village.

One of the greatest concerns businesses have getting transactional via social media, whether through group buying sites or social network store fronts, is retaining agency over their relationships, which lowers return on investment. CRM takes time and if you don’t own your effort, what’s the point? Sustainable social commerce has to consider this.

We’ve taken care not to prescribe what social means, letting the businesses, organisations and individuals import the relationships to our platform that make sense to them, and take it from there (with our support). Existing networks and communities retain their context, and new communities are being created through taste graphing and discovery.

Users recommend businesses, organisations, notices or offers that matter to them. This community intelligence drives relevance for each individual and puts the individual at the centre of discovery.

The social graph of the entire community becomes evident (a community graph) and supports a collaborative marketplace.

Here’s the adolescence of ‘social commerce’ online:

Advertising:

  • Pay for ‘share of attention’ (per click, etc)
  • No customer relationship
  • No guarantee of transaction
  • High cost of acquisition

eCommerce

  • Pay for cost of website design, build, ongoing maintenance
  • Still need to advertise and promote site
  • Receive direct transactions and customer relationships, but scaling might be a challenge

Social networks

  • Can build new customer relationships, with real time and effort
  • Data does not belong to you, nor, unless they run deep and transgress platforms, do the relationships. Someone else owns your effort.
  • No transactions occur (they must port elsewhere)
  • Still need to promote and advertise your social presence (note the proliferating Facebook and Twitter stickers on shop windows)
  • For many it’s still a personal space where transactions may not be welcome

Group buying

  • Sell high volumes of prepaid inventory online
  • Reliant on discounting
  • Low sales margins
  • No ongoing customer relationships (the data does not belong to you)
  • Reliant on the group buying site advertising and promoting their brand
  • Capacity to handle sales volume can be an issue

Comparatively, what our members appreciate so far about our model is:

  • Fair costs (only paying when you successfully transact, which offers freedom to experiment, and fail)
  • Self-serve offers they can create in their own language, around the own contexts
  • They fact they own and manage their customer/member data (we lay no claim to those relationships)
  • Their business and offers are recommended to qualified leads effortlessly
  • No advertising costs
  • Mentoring in content creation or community management if they need it

Ours is only one way, but it’s an experiment that shows people are ready to stop approaching online commerce as a digital version of ‘broadcast commerce’, and restore the village effect to transactions.

This is where commerce that is community owned and led has real power – and could really change things. Shopping in Facebook isn’t much different from shopping at Harvey Norman as a consumer. These days, Harvey Norman would be far less noisy and claustrophobic a space to browse and buy.

And as most small business owners will tell you, selling through social networks is more trouble than it’s worth, to date.

There is room for something new, something we can’t pretend isn’t about politics or power – community, collaborative commerce that leverages honest to goodness social capital and equity in the community organism. Villages and the micro-commerce they’re made up inherently operate this way. It’s so much bigger than a coupon, or a like.

How community management makes a difference

Active community management is proving valuable to our work at ce, and can be a sustaining measure for social commerce.

Here’s some reasons why:

  • Community mangers are culture brokers. They can cultivate and sustain a culture of trust – with trust comes the courage to express, share and transact. One reason Facebook has struggled with social commerce is the systemic trust issues associated with the platform. Better change management, consistency in moderation and other matters would have helped.
  • We can develop and manage a reputational scaffolding that promotes commentary, curation and recommendation.
  • We can identify influencers beyond algorithms, because we spend time with flesh and blood members. We can offer intelligence about the many different reasons they show up and participate in a social space or group
  • We can hero behaviour and determine if you need community champions, ambassadors or helpers, what they should do and who in the network is suited to those roles
  • Identify and take up collaborative opportunities, include product co-creation or development
  • (Alongside legal) we manage community governance that impacts transactions and commercial viability such as copyright, defamation, privacy, fraud, IP and other issues
  • Responsibly, realistically moderated communities deliver safe spaces for trade and exchange. Senior community have experience with moderation and media law at the coalface.

A healthy, active community is invested in the objectives and shared outcomes of that community.

Profits can exist without a healthy social organism (just look around), but they rarely sustain, and their inhabitants may not tolerate imbalance for long.

Applying community management thinking and tactics to transactional spaces is only common sense. Look to any economic model and there’s at least some level of regulation or management, even if it’s gently voiced. Online communities are economies are powered by real people and aren’t nearly as exotic as we love to paint them. They need governance that keeps things ticking along.

So what’s next for social commerce?

What we know:

  • Promise of community commerce online is not fiction
  • In uncertain times, the pull of familiarity is strong
  • Social log ins are now indispensible and part of our identity, like a drivers licence or a passport. They make social trade more frictionless and are becoming the defacto operating system of the age
  • Businesses need alternatives to costly, ineffectual advertising pathways

Some educated guesses:

  • Taste graphs and curation will stay hot (and we’ll see new ways to incentivise them, such as gamification)
  • We’ll keep mucking about with ideas and paradigms we thought untouchable. Money, value and profit will take on new meanings
  • Social television will be one to watch, as creatives look directly to fans to help fund and monetise their productions
  • Social network store fronts will die, as we admit we only visit a Facebook brand page once
  • Small business will crack social commerce, because it’s always been better than large organisations at nurturing and maximising relationship networks.
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