powerreviews and forrester research present on social commerce in new york city on july 28, 2011
DESCRIPTION
Cathy Halligan from PowerReviews and Sucharita Mulpuru from Forrester Research present on social commerce at the Hotel Gansevoort in New York City on July 28, 2011TRANSCRIPT
with special guest
Social Commerce Trends and More………
Click to edit Master title styleToday’s Agenda
2
Introductions & Announcement
Forrester POV – Sucharita Mulpuru
PowerReviews POV - Cathy Halligan
What’s Next on Facebook – Nadim Hossain
Q&A
Join us on Twitter: #NYCSocial
@NadimAHossain@Smulpuru@CathyHalligan
Click to edit Master title styleIntroducing the World’s First Open Social
Commerce Network
3
NEW
Now ANY brand can syndicate conversations across our network
It’s a simple law of e-commerce: the more consumer reviews there are on a product, the
more sales will result.
“ ”
TechCrunch, July 26, 2011
© 2009 Forrester Research, Inc. Reproduction Prohibited
The State of Social Commerce
Sucharita Mulpuru, VP and Principal Analyst
July 28, 2011
Social commerce isn’t what it
seems
© 2011 Forrester Research, Inc. Reproduction Prohibited7
Myths and facts about social commerce
A broader social commerce framework
What about Facebook?
Agenda
© 2011 Forrester Research, Inc. Reproduction Prohibited8
The expectations around social are not small
© 2011 Forrester Research, Inc. Reproduction Prohibited9
Low costs are also tempting
© 2011 Forrester Research, Inc. Reproduction Prohibited10
―Social‖ requires small spend (if it requires anything at all)
Source: The State of Retailing Online 2011, a Shop.org study conducted by Forrester Research
© 2011 Forrester Research, Inc. Reproduction Prohibited11
But ―social‖ is still largely experimental
Source: The State of Retailing Online 2011, a Shop.org study conducted by Forrester Research
© 2011 Forrester Research, Inc. Reproduction Prohibited12
Sales are not the biggest metric for success
© 2011 Forrester Research, Inc. Reproduction Prohibited13
Not surprising, even the most generous attribution modeling doesn’t gain much from social
1 23
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Myths and facts about social commerce
A broader social commerce framework
What about Facebook?
Agenda
© 2011 Forrester Research, Inc. Reproduction Prohibited15
Stepping back, ―social‖ means many things
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The 8 ―top ranked‖ social tactics
1. Ratings and reviews
2. Microblogs
3. Social recommendations
4. Company blogs
5. Customer generated outfitting
6. Product sharing on social network sites
7. Social shopping aggregator sites
8. Open APIs
© 2011 Forrester Research, Inc. Reproduction Prohibited17
1. Ratings and reviews
Already used by
most retailers
Opportunity to
reduce content
creation costs
Benefits to product
development, returns
and sell-through
© 2011 Forrester Research, Inc. Reproduction Prohibited18
Seven Key Elements Of Customer Reviews
Verify buyers where possible
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2. Microblogs
Inexpensive to launch
Opportunity to quickly dispose of excess
inventory
Customer service benefits
© 2011 Forrester Research, Inc. Reproduction Prohibited20
This also puts a face to a brand
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3. Social recommendations
Opportunity to leverage
―wisdom of the crowds‖
Exposes customers to
content deeper in the site
Increases time and site
and upsell opportunity
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4. Company blogs
Provides some opportunity
with SEO
Not a huge traffic or sales
driver but relatively low cost
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5. Customer generated outfitting
Coutourious.com Assists in
merchandising support
and cross-sells
Engages shoppers in
tactile purchases
© 2011 Forrester Research, Inc. Reproduction Prohibited24
6. Product sharing on social network sites
Much more effective than
company social network pages
Opportunities to use your
customers to evangelize your
brand
Best with relevant sharing (e.g.
local events, sales vs item level
communication)
10%+ of traffic and revenue comes
from social network sources, mainly
Facebook and Twitter
© 2011 Forrester Research, Inc. Reproduction Prohibited25
7. Social shopping aggregator sites
Opportunity to drive
incremental traffic
Often more engaged and
relevant shoppers than
traditional CSEs
Conversion is moderate
because shoppers are
usually earlier in the
purchase funnel
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8. Open APIs
Opportunity to crowdsource technology
Great for ―shovel ready projects‖
© 2011 Forrester Research, Inc. Reproduction Prohibited27
Myths and facts about social commerce
A broader social commerce framework
What about Facebook?
Agenda
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Facebook in particular struggles with being useful in commerce
Source: North American Technographics® Retail Online Benchmark Recontact Survey, Q2 2010 (US)
© 2011 Forrester Research, Inc. Reproduction Prohibited29
© 2011 Forrester Research, Inc. Reproduction Prohibited30
Yet retailers are not heeding the obvious
Current usage and effectiveness of social media tactics
Source: The State of Retailing Online 2011, a Shop.org study conducted by Forrester Research
Percent
Ranking as
very effective
Base: 68 online retailers
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Even Facebook tacitly acknowledges this
―When new technologies arrive, it
takes awhile [for them] to be
embraced…when television was a
new medium, advertisers had a hard
time figuring out how to use it…the
first ads looked like radio ads in front
of a video camera…‖
Dan Rose, VP Partnerships and
Platform Marketing
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Why the disconnect? Developers are leading the vision
for commerce…
…and Facebook just doesn’t have
time to sell a better vision
―We think one of the best ways to stay small is just to stay
smaller.‖
COO Sheryl Sandberg on Facebook’s ~3,000 employees
© 2011 Forrester Research, Inc. Reproduction Prohibited33
But there’s actually a really interesting vision
―We have this concept of serendipity.—humans do. A
lucky coincidence. It’s like you go to a restaurant and
you bump into a friend that you haven’t seen for a while.
That’s awesome. That’s serendipitous. And a lot of the
reason why that seems so magical is because it doesn’t
happen often. Bit I think the reality is that those
circumstances aren’t actually rare. It’s just that we
probably miss like 99% of it. How much of the time do
you think you’re actually at the same restaurant as that
person but you’re at opposite sides so you don’t see
them, or you missed each other by 10 minutes, or they’re
in the next restaurant over? When you have this kind
of context of what’s going on, it’s just going to make
people’s lives richer, because instead of missing
99% of them, maybe now you’ll start seeing a lot
more of them.”
Mark Zuckerberg, to Time magazine
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Here’s the execution
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Personalization itself isn’t all that lucrative
Source: November 2010 “What You Need To Know About Third-Party Recommendation Engines”
© 2011 Forrester Research, Inc. Reproduction Prohibited36
But this fuels Facebook’s display advertising model (and why ―likes‖ could be so important)
BILLIONS in spite of
currently abominable CTRs!
© 2011 Forrester Research, Inc. Reproduction Prohibited37
And for retailers this could solve the multichannel measurement conundrum
+
© 2011 Forrester Research, Inc. Reproduction Prohibited38
Think of Facebook this way…
Data layer
extraction
Off-
On-
Greater value to
large retailers Illustration Description
F-commerce initiatives such as stores, fan
pages, peer to peer contacts ―within the
four walls‖ of Facebook
Example retailers: JCPenney, 1-800
Flowers
Extraction of Facebook’s open graph data
onto key selling pages, ―likes‖ on product
detail pages
Example retailers: Levi’s, Jansport, Wet
Seal
Using Facebook data to extract trends,
identify influencers, monitor competition,
glean customer insights
Example retailers: Zappos
Dire
ct sa
les
―To
p a
nd
bo
tto
m o
f th
e fu
nn
el‖
Ind
ire
ct sa
les
© 2011 Forrester Research, Inc. Reproduction Prohibited39
And just to reinforce the role of ―likes‖
“Please indicate which statements below you agree with regarding
Facebook as a substitute for email:”
(please choose all that you agree with)
Source: The State of Retailing Online 2011, a Shop.org study conducted by Forrester Research
© 2011 Forrester Research, Inc. Reproduction Prohibited40
As for Facebook Credits, they’re unlikely to extend beyond Facebook
30% commission
Locked with FB now
No one transacts on FB for
physical goods
Significant low-hanging fruit for
FB with games
Initiatives are develop-led, not FB
led (e.g. Dark Knight)
© 2011 Forrester Research, Inc. Reproduction Prohibited41
Social is many things, but not a silver bullet
© 2009 Forrester Research, Inc. Reproduction Prohibited
Thank you
Sucharita Mulpuru
www.forrester.com
Twitter: @smulpuru
Click to edit Master title styleAgenda
44
The case for Social Commerce exists
Social is a Net New source of growth
Google AND Facebook AND……..
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45
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46
A range of social tools in the tool box . . .
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47
. . . deployed to drive the intended performance
Increase brand reputation and marketing awareness & engagement through innovative
social marketing and engagement
Social
Brand & Marketing
Social
Commerce
Social
Insights
Social
Support
Ob
jec
tiv
e
Drive sales through
customer conversation, joint buying, or game dynamics
Understand and interpret the collective voice to drive brand, merchandising, and product
development decisions
Reduce costs by letting customers assist other in answering support questions
Exists
Bu
sin
ess
Ca
se Emerging EmergingExists
Me
tric
Brand Strength &
Stature
Awareness
Customer
Acquisition
Traffic
Conversion
Cross Sell/Up Sell
Average Order
Actionable
Product level
insights
Actionable Brand
level insights
Customer
Satisfaction
Cost to Serve
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48
Social programming drives to a
range of outcomes
Brand Marketing Commerce Service
Oth
er
Ne
two
rks
(via
de
skto
p o
r m
ob
ile
)
On
-site
(via
de
sk t
op
or
mo
bile
)
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• Social content
(reviews, Q&A)on
your site increases
SEO performance
25-49% if your
content is indexed
by Google directly
on your product
page
• Content distributed
on the social web
increases referral
traffic, clicks back
to your product
page
• Social
content on
your product
page
increases
conversion
15-85%
based on the
star rating
and
substance of
social
content
49
The core case for Social Commerce DOES exist
Sales =Traffic * Conversion * Average Order
• Social content
increases
average order
value 20-50%,
giving
consumers
objective
information from
people like them
to increase
confidence to
‘add to cart’
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• The UGC quantity you have on your product pages? (e.g. customer reviews, Q&A)
• The % of transactions that have UGC?
– A baseline is 2% of transactions
– Best practice is 5%+ of transactions
• Your UGC SKU coverage?
– Best practice is 50%+ of your core catalog and 40% of your full catalog
• The UGC quantity shared on the social web? And, the referral traffic and resulting conversion?
– The value of a review shared to facebook is $15.72 (with a $132 AOV)
• Your SEO traffic to your product page?
50
Do you know?
If you don’t know and aren’t managing these metrics,
you risk social commerce results
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51
UGC Quantity & Coverage is core to
Social Commerce
PowerReviews’ Clients
6%
38%
74%
49%
88%
Toys Office Apparel Sporting
Goods
Health &
Beauty
46%
10%
16%
29%
Multi Billion $, Multi Channel Retailers
Internet Retailer Top 100
Customer Reviews Coverage,
% of total SKUs
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Increase product coverage lifts conversion,
resulting in a meaningful sales increase
Site Visits 100,000,000 Product Page
Visits 55,000,000 55%
Checkouts 5,500,000 10%Checkouts Completed
(orders) 3,025,000 55%
SKUs 75,000 Coverage 10%
SKUs w/o a Review (product pages) 67,500
25% increase in coverage 16,875
Total Product Page Traffic 55,000,000 Traffic to pages w/o a review 25%
Traffic to pages w/o a review 13,750,000
Traffic to pages that achieved a 25% increase in coverage 3,437,500
Conversion Lift to Checkouts - 20% increase with 1-2 reviews (assuming 4.2 star aggregate rating) 2%
Incremental Checkouts 68,750
% who complete checkout 55%
Completed Checkouts 37,813
AOV $ 132.00
Online Sales Increase -doesn’t include impact to Store Sales $ 4,991,250
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UGC is core in Social Search
Google values keyword-rich, publicly available user-generated content:
• Wiki Entries• Customer Reviews• Q&A• Discussion Forums• Twitter and other real-time content
Semi-public UGC valued by Google:• Facebook• LinkedIn• YouTube• Flickr
To the PRODUCT Page
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Google is more ‘Social’ than meets the eye
To the PRODUT Page
2008
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Google is more ‘Social’ than meets the eye
To the PRODUT Page
January 2010
Innovations but no Social
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Review Quantity and Coverage matter. UGC
is a key driver of Google presence
To the PRODUT Page
UGC Quantity and Coverage key to Google presence
Today UGC fully
integrated into
Google search &
shopping
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Review Quantity and Coverage matter. UGC
is a key driver of Google presence
To the PRODUT Page
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Review Quantity and Coverage matter more
than ever
To the PRODUT Page
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Social SEO improvement to the product page
increases sales
To the PRODUT Page
Case studies show 25%-40% increase in SEO with PowerReviews vs. an’ I frame implementation
Site 20% improvement 10% improvement
Site Visits 100,000,000
% visits to product page 55%
Product Page Visits 55,000,000
% from SEO 25%
SEO resulting product page visits 13,750,000 16,500,000 15,125,000
% continue to Checkout 10% 10% 10%
Checkouts 1,375,000 1,650,000 1,512,500
% who complete checkout 55% 55% 55%
Checkouts Completed (orders) 756,250 907,500 831,875
AOV $ 140.00 $ 140.00 $ 140.00
Online Sales from SEO $ 105,875,000 $ 127,050,000 $ 116,462,500
Online Sales from improved SEO – does not include impact to store sales $ 21,175,000 $ 10,587,500
PowerReviews was issued a patent relating to the method in which we deliver user-generated content, enabling our SEO solution. Key word rich UGC is indexed DIRECTLY on the product page by Google, Bing
& Yahoo! Work arounds are no substitute for your UGC being indexed directly on your product page
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60
Previously, sharing with Facebook was a one-
way conversation
To the PRODUT Page
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To the PRODUT Page
Today retailers and brands are integrating
Facebook into their on-site experience
Facebook profile in the
review
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UGC distribution is core to Social Commerce
To the PRODUT Page
http://powerreviews.com/facebook-calculator.php
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Social Commerce Best Practice TipsTo the PRODUT Page
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Maximize User Generated Content
Product Reviews
• Post-Purchase Follow-up Email
– Send to online and in-store customers
– Send 2nd follow-up email
– Test promotions promotion
64
Tip #1
• Supplement with reviews from brands
AnswerBox
• Add product questions & answers
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Optimize Search Traffic On Site… Tip #2
PowerReviews Solution:
JS In-Line
Alternative Solutions:
iFrame
Amazon Solution
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…and in Google Products Tip #2
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Engage in a two-way conversation with
Facebook..Tip #3
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68
Review posted on Facebook =
$15.72 in SalesTip #3
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Leverage UGC online and offlineTip #4
Comfortable, walking
shoes with 4+ stars
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Listen to your customersTip #5
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Social is a net new source of traffic
To the PRODUT Page
comScore and J.P. Morgan (January 2011).
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Will Facebook be the next Google?
73
To the PRODUT Page
Click to edit Master title styleFacebook and Google are complementary
74
To the PRODUT Page
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The Catalyst
To the PRODUT Page
Introduction of the Like Button (anniversaried on 4/21)
• More than 2.5 million websites have
integrated the like button
• 10,000 new websites integrate with
Facebook Like each day
• Every month, more than 250 million
people engage with Facebook on
external websites
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The Driver
To the PRODUT Page
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What consumers tell us
To the PRODUT Page
1 Source: 2010 Social Shopping Study, the e-tailing group/PowerReviews
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Endorsements from Facebook Friends
drive sales
To the PRODUT Page
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5X Increase in sharing with Facebook Connect
To the PRODUT Page
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Evolution of Facebook Integration
To the PRODUT Page
Op
en
2
-wa
y
1-w
ay
On Facebook
On Facebook & lightly on-site
(Like/share count)
On Facebook & Facebook-
powered on-site profiles
Personalized commerce experience
(Facebook + native data)
You
are(likely)
here
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Multi-directional Like Integration
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Facebook-powered Profiles/Community
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Facebook-powered Personalization
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Integrate Facebook Connect now in a
meaningful way
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Thank you.
@PowerReviews
@CathyHalligan@Smulpuru
@NadimAHossain
To learn more about the PowerReviews social commerce suite, please contact: