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It comes as no surprise that social influence impacts upon sales both online and offline. Ecommerce success, especially in the business consumer area, is determined in part whether the consumer trusts a seller and product they can’t see or touch.
Retailers understand this importance, which has been outlined within the recent IT in Retail 2013 report. The report analysed the IT strategies of 150 top UK retailers, which represents sales of £203bn and 70% of the UK market.
It’s now been the second consecutive year where ecommerce has taken over spending on store systems. From the report it became apparent that ecommerce has now become their number one priority.
Referrals from friends have also proved to have a significant impact on typical buying behaviour, and for this reason social influence is why marketers get excited about the potential of social networks.
However, although the potential is there, marketers and brands still need to understand the relationship between sales and influence. Friends clearly have some impact on buying decisions across social media but to what extent? Below are some examples to help us understand the impact:
Consumers are 71% more likely to make a purchase based on social media referrals (Hubspot).
Out of 53% of consumers who said they use Twitter to recommend companies or products in their tweets, 48% bought that product or service (SproutSocial).
70% of active online adult social networkers shop online, 12% more likely than the average adult internet user. (Nielsen).
Clearly social influence plays a key role in purchases but social influence has yet to have an effect on product discounts… until now.
Now with launch of PeerIndex’s new site, this promises product discounted based on your social influence.
The site will simply gives you a discount code to use on a partners site. PeerIndex measures influence by measuring activity, audience and authority across the major social media platforms, currently Facebook, LinkedIn, Twitter and Quora.
The metrics they monitor have been chosen to maximize relevance and insight, while evaluating spam, bots and users gaming the system.
Ferenc Huszar from PeerIndex says:
We extract hundreds of signals, and a statistical machine learning algorithm gets to decide which ones it actually pays attention to and to what degree. The goal is to maximise the predictive power of our scores, on certain key gold ‘standard datasets we have collected. Among other things the formula looks at how often you get mentioned and retweeted. How influential the people are that interact with you. Crucially, it's not about how active you are, it's about your ability to drive conversations.
Ultimately, social influence can be manipulated to an extent, and possibly more so on Klout (we’ve personally noticed simple measures to influence your score) but could something similar pave the way for a new shopping era online?
People may argue “why high profile influencers should receive discounts?” Ultimately however, maybe it could only take one tweet for sell an extra five units and, let’s be honest, it all boils down to sales.
Brands have been trying to offer customer discounts depending on social influence for several years but not a single platform has got it right.
Back in early 2012, Volga Verdi, California based fashion brand trailed customer discount depending on the number of friends, followers or fans they have on popular social networks. For example, if they have between 20 and 200 followers they receive $7 discount, or $15 if they have more.
We all know fans and followers can be bought. Klout has also been offering percentage off a purchases equal to each user’s corresponding Klout score. So for example, if your score were between 21-40 a user would receive 40% off, but again this has failed to gain traction.
Another factor that will no doubt influence purchases is how a product appears in SERPs. It’s know that both social media posts now show in search results, and social media can influence search rankings, therefore products shared via influential account have the ability to get in front of more eyes.
Interestingly, 23% of the UK’s top 150 retailers don’t have a transactional website. Ultimately ecommerce, along with the high street, is survival of the fittest and the winners and losers will become determined by technology.
Consumers are in the driving seat, and social influence is just the next step of ecommerce. How long before a brand or shopping platform will incorporate a ‘PeerIndex’ style login – similar to that of Google+ or Facebook?
If you could imagine cheaper products on a site such as ASOS based on influence, the virality of products has a whole new social & sharing element. If this is the case this could be huge step for ecommerce, but at the moment it seems to be kept within PeerIndex.