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Mar 25 2011

Consulting Magazine - Is 'Social Commerce' the Next Big Thing?


By Taposh Dutta Roy and Rekha Rajasekharan

“My life has become a lot more interesting,” thought Chuck while brunching with three friends on the Horn Blower Cruise in San Francisco. In fact, thanks to Groupon, Chuck and 5000 of his fellow Groupon groupies all had the opportunity to enjoy the Horn Blower Cruise Brunch for just $35 – a discount of $40 per person. How was such a massive discount offer possible? Simple: the power of Social Media.

“The Cluetrain Manifesto” pointed out that “Markets are Conversations”. And to be successful, commerce needs to be rooted in the needs of its target market. Marketing teams have finally started investing in conversations with end users. In this article, we discuss the impact of social media on individuals and businesses and provide an insight as to what consultants need to know while recommending strategies for Social Media to their clients.

As consultants, we weave our way through a plethora of buzzwords. Over the last few years, the biggest buzzword of all has been “social”. A few years ago, the term “social” simply meant a presence in social networks and providing avenues for user generated content (blogs, forums, ratings & reviews, etc). The objective of social was to focus primarily on existing customers and use their feedback to solicit new customers. But we were quick to see the untapped potential of using social networks as a mode of marketing to attract new customers AND as a new channel to sell and communicate with them.

In 2009, SapientNitro tapped into the power of social media to create a hugely successful marketing campaign to promote the Islands of the Great Barrier Reef for Tourism Queensland. SapientNitro’s “The Best Job in the World” campaign focused on a recruitment drive to award one lucky winner the job of caretaker of Hamilton Island. The only job requirements were for applicants to submit an online video application, be able to swim, live on a tropical island for 6 months and contribute to a blog.

Recruitment ads were placed in local newspapers and online recruitment portals directing traffic to—a website featuring stunning imagery of the region and driving job applicants to generate content promoting the region. Throughout the campaign, a presence on MySpace, Facebook, YouTube and Twitter allowed the audience to engage with the brand. The results are—close to 35,000 entries from 200 countries, 610 hours of user generated content, 8 Million website visits and $150 million of estimated media coverage.

A recent offshoot of social media is social commerce sites like Groupon, LivingSocial and BuyWithMe. Social commerce takes social media marketing to the next level. With the deal-of-the-day offerings on these sites, consumers get an opportunity to buy a product or service for much less than its market value. Consumers get to discover new products, deals and local businesses that might not have caught their eye or wallet share. Since there are thresholds for these deals, the consumers will also act as an advertiser or promoter by sharing the deal with their friends and family via Twitter, Facebook, etc. Retailers are saving on marketing costs and reaching a wider market through this unique model.

In contrast, email campaigns reach customers whose information they already have—registered users and members who have signed up for marketing and promotion communications. Print & media ads reach a wider audience, but at a higher investment with no certainty of a return on investment.

Taking off the consumer hat and focusing on the consultant lens, social commerce, like any other strategy, requires upfront assessment and planning. The ease of putting a company on the social shopping map does not make it a default marketing choice. There are still some basic questions that need to be answered before moving forward with a social shopping solution: What is your current brand image and how much does it align with your brand vision? What are your key products or service offerings? Who is your target market? What objectives are you trying to accomplish with this new strategy? What measurable benefits do you expect to accomplish?

The answers to these questions form a case for or against social commerce. For example, if you are high-end designer label selling exclusive apparel or accessories, this strategy might negatively impact your brand. Exclusivity and group selling do not intuitively go hand in hand. It should also be noted that like most marketing and selling channels, social commerce sites focus on driving traffic but not necessarily retention. How clients and brands engage and retain their consumers is another challenge that should be considered. Capability to fulfill the deal, providing consistently good customer service and showcasing other product offerings that are relevant to the consumer are some examples of how clients can convert one time visitors into long term consumers.

So whether or not you’re taking advantage of Groupon deals like Chuck, Social Commerce will soon impact all aspects of human interaction. But for now, we can revel in how it has changed the face of marketing today. For consultants, this will open up a new era of strategies that can be used to help our clients reach consumers in new and relevant ways.

Taposh Dutta Roy and Rekha Rajasekharan are part of the Commerce practice at SapientNitro—a leader in multi-channel marketing and commerce. Taposh Dutta Roy and Rekha Rajasekharan can be emailed a and We would like to hear your comments, experiences and examples on how social media has impacted you and your clients. Feedback will be incorporated into a more comprehensive article.

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