Social Commerce – Should Brands Grab This Tiger?
Eenie, meenie, miny, moe. With social media rapidly changing business, it often feels like we’re stuck in that ages-old kid’s rhyme…reaching out, grabbing the tiger, hoping it doesn’t holler back. Social commerce, like flash deal or social shopping sites, is the latest tiger to stroll by. Do you grab this social media beast by the toe or do you let it walk by? Here’s a list to start the decision-making process:
PRO: Lead Generation
Utilizing social commerce can be an effective lead generation tactic, especially for markets with a high customer acquisition cost. For example, by offering a heavily discounted coupon on a community/“deal of the day” B2B site like OfficeArrow, a software company can attract the leads that generate valuable monthly subscription or service fees.
PRO: Increased Engagement
A well-considered social commerce offer naturally generates action: the consumer must choose to purchase the deal, invest their money, and redeem the coupon. Some social buying sites further incentivize engagement by offering rewards to shoppers who get friends to buy in on the deal.
A Rice University study found that, among businesses who reported a successful Groupon promotion, 50% of their customers bought more than the value of the Groupon offer. Those businesses also reported increased sales downstream: 31% of the shoppers repurchased from the business.
CON: Post Promotion Dip
Some shoppers were planning to buy your product anyway. When they purchase from you through a social commerce site, you get the cash immediately but may not see cash next month because the consumer simply purchased earlier than they’d planned.
CON: Bad Math
One Oregon entrepreneur was forced to inject money into her business after its highly successful Groupon deal deprived her of the revenue needed to cover overhead. The lesson is to ensure you understand the numbers before committing to a deal.
Learn more about social commerce.
Check out the B2B Shopping Panel Discussion of the Impact of Flash Sales Sites from Lift Summit 2010, featuring Jeffrey L. Cohen of SocialMediaB2B, Eric Bradlow of Wharton, Robert Ball of OfficeArrow, Mike Lewis of ILD Corp., and Steve Ennen, now of Social Strategy1.