Manufacturing consumer consent: The future of social commerce

There’s a lot of talk about using social media to harvest consumer conversations and feedback about their shopping experiences. Most companies are already having one strand of these conversations via their own channels. But what if merchants had access to an overview of all social media conversations, not only on their own Facebook page, say, but across the landscape of social media sites, including ones run by competitors? After all, to fully seize the opportunities that social commerce represents all the separate strands of social media must be brought together to provide a much bigger picture.

A platform that ensures insights gleaned from virtual conversations find their way back to merchants is clearly the next frontier in merchant marketing. This article looks at why such a platform must be built upon consent.

The typical company already engages in a limited form of social commerce through a combination of in-house and outsourced resources to complement their sales and branding efforts. They might, for example, create a Facebook page, a Twitter account and a company blog. They may even start a YouTube channel. This approach usually involves one technology or tool (Facebook, YouTube) within four social commerce categories – social networks, multimedia, micro-blogs and blogs.

Unfortunately, all this serves just one business function – sales and branding. And that is a waste of the adaptability and versatility of social media. Ideally, every business should use every applicable tool in every category for every business function, to connect to more customers than ever before, to communicate faster than ever before, to create deeper consumer loyalty and to create more trust than ever before. Much of this involves making the right connections with online consumers, which can be done much more cheaply than ever before.

Some service companies have already reinvented themselves to serve up the big picture to clients.  For example, Canada-based Marketwire, a press release distribution company, recast itself as Marketwired. Now it does as much listening as pushing out and it is able to analyze two years’ worth of historical data, grabbing all searchable social media database information that indexes millions of new conversations every day. This can provide clients with useful knowledge such as the best hour of the day to tweet to followers. Another example, Toronto-based Turnstyle Solutions, uses passive technology to sniff out the radio signals that are constantly broadcast by your mobile phone. This enables a merchant to pinpoint a customer’s physical location. The knowledge of where the customer spends time, other than in the store – say, at the gym or down the street – is another powerful marketing tool.  

When looking at what’s out there in terms of social media, most of what you read generalizes the landscape, leaving you with the impression that everything basically serves one function.  But different social media outlets perform different and definable functions.

Some sites such as eBay, Etsy, and Amazon Marketplace enable peer-to-peer sales, where, in a community-based marketplace, individuals communicate and sell directly to one another. These sites are like the personal ads in newspapers. They connect buyers and sellers, and stay out of the way of the transaction.

If you move up a rung on the technology ladder, you find sites that enable social network-driven sales, where sales are driven by referrals from established social networks or in some cases take place on the networks themselves. Examples of this type of site are Facebook, Pinterest and Twitter.

Sites like Groupon and LivingSocial operate on a group buying premise. If enough buyers agree to purchase, products and services on these sites are offered at a reduced rate. This is somewhat like car-sharing or a building co-op, where a consortium of people get together to reduce everyone’s cost of a normally high-ticket item.

Moving further toward the consumer’s voice, there are sites that offer peer recommendations exclusively. These sites aggregate customers’ reviews of products or services. In some cases, they recommend products based on other customers’ purchasing history and/or reward individuals for sharing product and purchase information with friends through social networks.  Examples of this type of social media include Amazon, Yelp, JustBoughtIt and TripAdvisor.

Finally, there’s the virtual girls’-weekend-in-the-city experience offered by social shopping sites such as Motilo, and Rent the Runway. These sites attempt to replicate the experience of shopping with friends in physical stores offline by including chat and forum features for exchanging photos, advice and opinions.

As you can see, there’s a deep well of information available on consumer preferences and behaviors. By aggregating the sum of the conversations on these sites, merchants and marketers can come a long way toward understanding the customer and their needs, their interests and what makes them tick. Looking along a single, isolated social media channel, on the other hand, is dangerous because seeing only a narrow band of consumer-related information can lead to the wrong conclusions. To enable social media to really evolve into social commerce, you must use the Internet in a collective way.

In the last decade, the most forward-looking brands have started to adopt data analytics. By examining customer transaction behavior, they can tell if a customer segment bought W, X and Y, then they’re likely to want Z as well. Similar data models can be built using social media conversations.

One possible approach to analysis of customer conversations on social media goes like this: If a customer segment had conversation A, B and C, they might be interested in product D, and at the same time they might be interested in other things offered by brand X, or they might become a follower of the celebrity spokesperson for brand Y. Up to now, data analytics and targeted marketing have only addressed purchasing behavior. But in this new model, virtual conversations on social media channels can form an adjunct to purchasing behavior. Analyzing social media conversations may even offer a more accurate way to understand purchasers’ intentions and propensities. Indeed, by listening to multiple conversations on multiple sites, aggregating, anonymizing and making sense of these, it’s possible to gain a much broader view of customers. And the landscape of possible outcomes becomes much richer.

In the post-Snowden era, of course, it’s vitally important to deal with privacy issues in a way that bridges the needs of both the consumer and the merchant. The status quo for sites like Facebook, Google, eBay and others is that users’ data exists in a distributed and siloed format. They collect, manage and utilize user data in an organized way to facilitate their businesses. However, they leave little opportunity for people to control the management and use of their data. Every site typically has a different privacy policy, which duplicates sensitive data needlessly and makes it difficult for consumers to manage privacy settings or consolidate their passwords and user names. Consumers also face a lack of being able to consolidate the verification of their online identity because, again, each site has a different approach and level of assurance.

Simply put, it is relatively normal for today’s companies to collect, use and disclose customer data for their own purposes, pegged to their own privacy policies, as well as to disperse it among outside organizations. But social media-based marketing in this form is always certain to raise some hackles among consumers.

As a result, the future of social commerce needs to be more transparent, enabled by an overarching mobile ecosystem in which participating companies share the belief that individuals should be able to control their own data. It’s imperative to offer technology to help collect, store, use, share, grant access to and manage consumers’ own personal information in a manner that is completely within their own control.  Furthermore, this mobile/social ecosystem should empower individuals to act at the point of data integration, and enable them to collect, use and disclose information for their own purposes and according to their own personal privacy settings.

Ontario Privacy Commissioner Ann Cavoukian has led the global conversation on this crucial subject. She developed a set of principles (now adopted by many other privacy commissioners) that she believes are necessary for gaining ongoing user trust in the online marketplace. They include the following:

• Privacy measures should be proactive, not reactive (preventative, not remedial)
• Full privacy should be the default setting
• Privacy should be embedded into design
• Privacy should operate at full functionality (positive sum, not zero sum)
• Privacy measures should offer end-to-end security with full lifecycle protection
• Privacy measures should feature visibility and transparency
• Privacy measures should be user-centric, respecting user privacy first and foremost

To take full advantage of the opportunities that social commerce represents, more companies must accept these principles. And developing  a mobile ecosystem that brings all available consumer information together, in addition to facilitating payments and incentivizing all those interactions and transactions with an internal rewards program – while also ensuring transparency and accountability regarding data flows – is the necessary next step in mobile conversion and acceptance. What’s needed is an ecosystem that offers a full range of services from new payment options to new ways for consumers to share, connect, and research products, convert foreign currencies, receive cash-based loyalty rewards, and yes – aggregate social media conversations for better and smarter marketing. But customer data should not be controlled by service providers and third parties who seek to create value in the so-called “age of big data.”

Consumer control is the key to unlocking the potential of social commerce because consent will ultimately determine the level to which consumers allow marketers into their lives.

Reprint from Ivey Business Journal
[© Reprinted and used by permission of the Ivey Business School]