Tag Archives: social commerce

Using social to bring the ‘sizzling fajita’ to online sales

A real-life recipe of mine.

Chris Brogan recently blogged, that “[t]here’s no sizzling fajita effect online,” that is, online commerce does not provide that visceral experience to causes others around you to buy the same thing on an impulse. He wondered if social media could be used as a proxy. It can. Here’s why—and more importantly—how…

Why? The endorsements of friends mean more

Granted, no one had built yet technology that lets you smell and hear what your friends are doing. However, social media—especially Facebook and Twitter—have come up with widely used ways to see what your friends share online. This is really important for commerce because of a particular fact: you are 9x more likely to buy, view or using something recommended by a friend than you are something recommended by a reviewer you do not know (even a professional reviewer). Seeing a friend Tweet, Like or Recommend something he or she just bought online is more likely to cause you to take a look than any advertisement. This is why social media, when used correct, can generate so much ROI.

How? Reward generosity with generosity

Social media brings new power to an old-fashioned value: generosity. It rewards those who are generous and penalizes those who are greedy. If you keep this in mind, you can design a really nice experience that encourages your customers to share the fact they bought your product with their friends:

Step 1: Make the buying experience a good one

If you want people to endorse their experience buying your product, make the experience a good one. If you don’t, not only will your customers not endorse you, the also will complain about you (e.g., “your name” followed by “#fail”).

Make the buying experience intuitive, fast, reliable and safe. Take a look at Apple, Amazon and Zappos for examples.

Step 2: Ask your customers (politely) to endorse you

When you customers are checking out, offer a box that asks them if would please share with their friends (on Twitter or Facebook) that they bought your product. Yes, actually ask, and, yes, use the word “please.” People are much more likely to be generous if you are polite to them; they are much more likely to help if you ask and indicate how much you will appreciate it.

Step 3: Offer to be generous back

"Wheat Thins is now following me on Twitter!"
“Wheat Thins is now following me on Twitter!”

If you are going ask your customers to be generous to you, you should offer the same. In addition to indicating how much their endorsement will mean to you, offer to do something for them. Ask your customers if they would like you to Mention them (in a Twitter or Facebook post) or Follow/Friend them in return for their endorsement. This achieves two things: 1) it rewards them and 2) it connects you to them to enabling all the benefits of Social CRM. This type of offer will likely attract those who use social media the most—in a way that they like.

Step 4: Make this really easy

Don’t complicate things by making people pick from a huge list of social media widgets, share their user name and password, etc. Let people ‘click’ if they want to “Login with Facebook” or “Login to Twitter” to endorse you. This usually takes one or two clicks at most and is familiar and proven. Yes, this ignores all those other networks. However, concentrating on Facebook and Twitter gives you 80+% of the social media benefit with <20% of the work and complexity.

Step 5: Don’t abuse this

If you got this far, you have won a loyal customer. Reward this loyalty with the occasional promotion that includes special discounts. Don’t reward it with spam or hard sells. If you don’t follow Step 5 you will regret it (your most social media vocal customers will let you know this).

Will this become the norm?

This is not hard to do from the technical perspective. It IS hard to get right from the social one. Many will try this. Over time, we will all learn from those who connect with customers really well. Eventually, this could become as commonplace as online ratings (one of the first forms of social media) – at least for those who create positive customer experiences.

The Social Networks that Are (and Would Be) King

man_who_would_be_king_w_masonic_280pxYesterday, I argued that the reason that Groupon is worth 100x the value of MySpace is inherently due to the Total Net Value of the connections between their members. To create a social network with value, you need focus on using it to create valuable connections between members—from two different points of view:

  1. Your members must easily see more value from maintaining connection on your network than the time and effort required
  2. Your company must be able to realize higher revenue from these connections than it costs to operationally support them

If you achieve the first point, your network will organically grow quickly through word-of-mouth. If you achieve the second, you will realize value from this growth. When you combine both together you tap Metcalf’s Law to generate valuations that grow geometrically, becoming a Social Networking King.

Applying this to today’s four Social Networking Kings

Looking at today’s leading social networks through the lens of Net Connection Value explains why they are so large and valuable:


Many have questioned the value of Twitter: some love it; others simple do not “get” it. Regardless of how you feel about it, Twitter is the King of Low Cost Networking. It currently has an estimated value of almost $7 billon.

From the member’s perspective, connecting with others (and maintaining these connections) requires the minimum amount of effort possible (i.e., one click). As such, the value I obtain from perusing a Twitter stream, even if it is minimal, comes at no cost to me. This has fuelled explosive growth.

From Twitter’s perspective, the cost to maintain each member’s simple profile and the sharing of 140-character messages is also about as low as one can get (just compare it to the cost of hosting and sharing videos on YouTube). The trick is focusing on extracting revenue from this low cost—something Twitter is doing more of these days.


Everyone focuses on Facebook’s sheer size. However, Facebook is the King of Personal Connections. It is the most valuable social network in the world, valued at up to $70 billion on the secondary market.

When you ask people why they are on Facebook, they talk about how much it does for them: it makes it easy to keep in touch with friends, share pictures, etc. Thanks to the Social Graph, it is just easy to use Facebook to share things of interest you find on the Internet with your friends. To most, the value of Facebook greatly exceeds the effort required (and associated privacy risks). This is why it is so big.

This size is critical to Facebook’s success. The cost of maintaining so many images, posts, etc. is not cheap. However, Facebook is now so large that it is sitting on one of the most valuable—and exploitable—demographic data sets in the world. This provides enormous selling power for advertising and eCommerce. As Facebook continues to grow, its profits will grow geometrically (a simple expression of Metcalf’s Law). However, if it shrinks one day…


LinkedIN is the King of Professional Connections. Three years ago it became my primary Rolodex. It has filed for an upcoming $170-million IPO, which would give it a $2 billion valuation.

People join LinkedIN because it gives them immediate value at virtually no risk. With minimal effort they get low-level advertising of their professional background (and can maintain low cost connections with colleagues they meet). Increasing their activity brings higher rewards, from outreach by headhunters to demonstration of “thought leadership” on professional groups.

LinkedIN’s has taken great proactive steps to extract as much value for cost from its members and their connections. Its data is highly structured, enabling very targeted searches. This is good for advertisers, recruiters, sales professionals and anyone seeking a job. This has given LinkedIN pricing power to charge for higher-fidelity searches, targeted advertising and job postings.


Groupon is the King of Social Commerce. More specifically, it uses social networking to make real-life shopping networks easier and more efficient for all. It has been valued as high as $15 billion.

Consumers join Groupon to save money. They recruit their friends to save more money (and have fun shopping together to save). Businesses join Groupon to sell more of their existing inventory (if they have excess inventory, they have a clear reason to join; if not, they have no need). The value of Groupon to members is as clear as it gets: it’s all about money.

The cost mechanics of Groupon’s technology infrastructure more closely matches that of a commerce platform than a social network (i.e., the revenue it obtains from each transactions is far, far greater than its cost). It simply needs to get large enough (something it has already done) for this revenue to pay for its underlying capital investments. This is a very clear financial model for investors.

What is interesting about Groupon is its human network: it relies on thousands of employees to find sellers and close deals. On the negative side, this is labor-driven cost; on the positive it is a huge barrier to competitors (and a proven financial model). Again, Groupon’s size wins out (due to Metcalf’s law). Of course, the way to beat this is to add social networking to an existing sales network with existing connections…that is another post.

And the Social Networks Who Would Be King

gorgeSimilarly the Net Connection Value concept explains why other social networks have failed to create similar value:

MySpace. MySpace is Facebook “gone wrong.” It targeted the wrong demographic, leading most to question the value of joining it. This led to smaller size and lower ability to extract value from connections between its members. It is now selling for 15 cents on the dollar.

YouTube. YouTube is an interesting idea. However current technology infrastructure costs are enormous. So far, it is still struggling to achieve profitability. However, I would bet that Google is the company who can eventually make costs low enough to extract search value from its content.

Flickr. I use Flickr so I can share pictures beyond my circle of Facebook friends. However, to most people Flickr is a specialist provider of a service Facebook already provides—without the need to sign up for an administer yet another login. Many are asking if Yahoo! will eventually disband Flickr.

Delicious. I was an early Delicious user. However, I have not added a bookmark in over a year. It too, is a specialist service that Facebook already provides—with one-click—through the Social Graph. Yes, Delicious provides better organization. However, to the average user the effort is not worth the benefit. The future of Delicious is also in play.

White Label Social Networks. Since 2005, many companies have strived to create their “own Facebooks, YouTubes and Twitters” for their employees, partners or customers. Their small size and focus makes them victims of Metcalf’s Law—when it was free, the average Ning network had less than 10 people. To combat this, they need to focus their perceived value as high as possible—and to relentless focus on business returns that outweigh their costs. Some have done this; others have not.