1st Law of Social Commerce: Focus on Sales
On the surface, this first law of Social Commerce may seem fairly obvious, but on closer inspection there are two aims in tension:
- The aim for ‘Social’ is for people to interact and engage with each other.
- The aim for ‘Commerce’ is for people to buy.
One without the other is either a pure Social Network or a store - the key is in how the two aims are blended. To prevent product schizophrenia, one aim should lead while the other supports – but who gets centre stage?
To explain why it’s Commerce, let me illustrate the point with a story. As Lyst, we started by maximizing Social - our goal was to encourage our users to build ‘lysts’ of items they liked and to share them. While everything on the site was shoppable, we didn’t focus on sales - we didn’t even show prices on products! We assumed that if people were finding and sharing things they liked, they’d be buying them as well; however it turned out that that assumption was way off. The result of our early iterations was solid engagement but few sales.
So we took a step back and asked ourselves some deep, existential questions. We reminded ourselves that our primary goal was to help people discover and shop, and not to be a place for people to express themselves and hang out.
As a result, we rethought our product and based the next version on the premise that Social Commerce is Commerce first, Social second. In other words, it’s a Social layer on top of a Commerce engine and not the other way around. So in late 2011, we relaunched Lyst with a Commerce foundation and used Social only where it would help drive and improve the discovery and purchase process.
As a product you should focus and optimise on one thing. In our first version, we learnt that if that one thing was Social Engagement, then that’s what we saw improving. Similarly in our second (and current) version, where our focus is on helping consumers discover and buy, we are seeing sales improve (up 1200% in the last 12 months).
This is what leads us to the first law – that the aim of Social Commerce is sales.
With that goal in mind, life becomes simpler. Actions and decisions have a clear yardstick they can be measured against, not only within Social Commerce companies like Lyst, but also for their partners.
Many businesses complain about how hard it is to measure effectiveness of Social Media campaigns. What is a retweet or a fan actually worth? With Social Commerce that question is much easier to answer – it’s fairly straightforward for partners to measure ROI.
This first law is the source from which the other laws flow – next week I’ll cover the second law: Purchase Intent in Essential.