November 17, 2011 by George Eberstadt
This is such an important validation of the effectiveness of social merchandising that, if we’d thought of it, we would have commissioned a market research firm to write this study for us. But, even better, it’s actually a peer-reviewed article produced by a team of university marketing professors and published in the journal of the American Marketing Association, the Journal of Marketing Research. It’s titled: Online Social Interactions: A Natural Experiment on Word of Mouth Versus Observational Learning. (There’s also a nice write-up and interview with the lead author on Red Orbit.)
The findings are straight-forward: Online, as in the physical world, people are more likely to buy things that they see other people bought. There’s no word of mouth here. This isn’t about customer ratings and reviews. This is just about seeing the purchases of other people. The merchandising lessons are simple:
- You can improve conversion rates by showing shoppers that other people have really bought a product (on the product detail page)
- You can encourage consideration by showing the purchases other shoppers made (in your product discovery/recommendation/cross-sell merchandising)
The study looked at a period when Amazon put up and took down the “what other people bought” section on their digital camera products to see what effect having/not having this information had on sales. Using these data,
The authors observe a herd behavior among consumers when the OL or sales information is positive, but surprisingly, they observe no herd behavior when consumers face negative OL or sales information. [OL stands for “Observational Learning”, which in this case means “seeing what other people bought”.]
In other words: when shoppers saw that other people were buying a particular item, they became more likely to buy it. But if an item didn’t have peer-purchase information, that absence didn’t hurt sales. So you don’t need sales coverage for your whole catalog – show purchase information where you’ve got it, and don’t worry about it where you don’t.
Here are a couple examples of stores using tools that deliver the OL effect. For lesson #1 (on the product detail page, showing shoppers that other customers are also buying the item), have a look at the 98 check-out comments on these shoes at GoJane (scroll past the Q&A). For lesson #2 (showing products that other customers are buying to encourage consideration and cross-sell), have a look at the “See what your friends bought” tab on the right edge of the window here at emitations. What effect do these tools have on you? Does this sort of merchandising make you feel like buying?
If you want to take advantage of the OL effect to improve your sales, give us call.
February 27, 2011 by John Swords
This is a reprint of a guest post I wrote for ZippyCart, originally published there on February 22.
Beyond marketing and customer service, Social has the power to help convert visitors on retail sites. A large majority of online retailers today are using at least one of the most popular social media platforms: Twitter, Facebook, and YouTube. These platforms have been used for brand marketing and customer service. Retailers are beginning to explore their utilities as sales tools. When it comes to selling, these platforms are in essence today’s equivalent of shoppers signing up to direct mailing lists. Shoppers give retailers permission to reach out to them and share information. Shoppers allow retailers to reach out to them directly, by following retailer tweets and Facebook wall postings, and indirectly through their friends in the form of retweets, friends’ postings, and friends’ likes.
Reaching out to shoppers through Facebook and Twitter, much like direct mail to shoppers, works at the wide end of the sales funnel. If successful, it draws the shopper into the store, with a buying intention. It drives traffic. Most online retailers stop there. When they do so, they leave a lot of value on the table, the value of utilizing the power of social beyond traffic, as the shopper is moving along the sales cycle- browsing products, seeking further information and insight about products, and adding products to the shopping cart.
When a shopper is going through your online store, you should let the collective social wisdom and experience of your entire customer base help them complete the sale. This can be done in a number of ways, according to where the shopper is along their decision making progress.
A new visitor might be hesitant about buying from your site. They read copy on your site that is at its core a set of claims and promises, and they need to decide how much they can trust your editorial voice. A likely question going through their mind at this time is “do other people trust this site?” “do other people shop here?” “do I know anybody personally who has already bought at this site?” You, the retailer, can help by letting the visitor see other real people who shopped on your site before. You can earn extra trust points by providing visibility into people in the shopper’s zip code, or in the shopper’s circle of social contacts, without, of course, ever going beyond the level of visibility such people had authorized.
With a comfort level in the store that’s high enough, shoppers are ready to start considering your products. As in physical stores, some shoppers come in to browse, while others walk in with more specific product buying intentions. Browsers tend to be socially curious about what products people are buying around them. Some online retailers help these browsers with a display of the best selling items. Another way to support the browsers’ product discovery phase is by letting them see what other individuals recently bought. This can be done digitally in a socially convincing way, without breaching any shopper’s privacy – you can show initials of shoppers, profile pictures of those who joined your “customer wall”, and full identities of social contacts of the shoppers that have opted in to be there for their friends. Emitations, a leading retailer of silver jewelry, displays a “see what your friends bought” button on its home page, its category pages, and all of its product pages. Visitors to Emitations who interact with the button convert at a rate that’s more than 5 times higher than those who do not.
Next, and only one step removed from the shopping cart, your shopper might have product specific questions. Retailers provide an array of resources here, from details product information, product images, through how-to videos, to live chat that chimes in when it’s clear the shopper needs advice. All this might not be sufficient in such cases where the shopper is not looking for hard factual data, but for a color commentary from others who have used the product. Ratings and reviews have been added in recent years as the first layer of social input by the individual item. Recently some retailers have gone one step further, and empowered their shoppers to reach out to the broad social circle of product owners, and ask product specific questions. Answers to these questions provide buyers with social insights that cannot be gleaned from product information, ratings and reviews alone. One such retailer is Club Furniture that added an “Ask people who bought this” button on their product description tab. Club Furniture’s tool allows shoppers to reach out to the retailer’s entire customer pool, with questions that are best answered socially such as how comfortable a piece of furniture is, and how it wears. 13% of ClubFurniture’s customers who receive a shopper’s question answer it. (This means that a question which is sent to 40 customers will receive, on average, 5 responses.)
Embedding such social tools within an online store lets you harness the power of social beyond driving traffic, and throughout all key decision points along the on-site buying process.