I believe the distinction between social and non-social business is a false dichotomy. And yet, it’s one we continually want to make. We talk about “social businesses” — those that are mission-led and focused on creating positive social change — and “non-social businesses” — those that focus on revenue and profit. Ones that contribute to more social commerce.
Social entrepreneurs launching ventures may ask themselves if their business models need to be different. Does pursuing a social purpose require something unique to describe and structure your business?
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That said, this initial evidence showed that social businesses focus more on achieving a positive impact in each of the nine business model elements — value proposition, customer segment, channels, relationships, key partners, key activities, key resources, costs, and revenues — as well as the whole model.
Many of the non-social businesses in my sample also focused on the impact of each element, and interestingly, they are very successful businesses (might there be a correlation?).
I believe all businesses are social. All companies have people with customers, employees, and suppliers. At some point, in deciding which supplier to use, in engaging your workforce, and in getting your product into users’ hands, relationships with people matter. Improving these experiences always improves the outcomes for companies.
If a business isn’t providing valuable, meaningful solutions to real customers’ problems or delivering outcomes that both make a positive difference in the customers’ lives and support the company’s mission, the business won’t have to worry about profits or outputs for long.
The market has a way of taking care of that, doesn’t it? I think so.
Check out our thoughts on creative marketing design.
More social commerce … what is social commerce?
This is where a commercial transaction occurs as a result of social interaction. For example, someone mentions a book on Facebook, and then you click on a link and buy the book.
Here are some examples of how social selling could work:
Social sharing – Someone likes a product or service, so they decide to share it with their social network. This leads traffic back to the site where further sales occur.
Incentivised social sharing – This is where you get a reward for sharing if someone purchases. You are given a special link to the product or service. When you share this link, it is tracked to see if any of your friends buy using that link. If they do, you get some affiliate commission for the sales.
Reviews – People trust their friends’ recommendations more than any brand recommendations. Encouraging your customers to share reviews of your product or services and making these available online will lead to more sales (assuming they are positive).
Just take a look at Amazon, eBay and others that generate most of their sales because of reviews. They are the best of the best, aren’t they? I certainly think they are.
Sales on social networks – This is an area that is going to grow: sales happening on social networks. You will be on Twitter and see a product or service mentioned, and you’ll be able to click on a button to buy it.
Are people buying more products or services through social media channels?
Will more social networks facilitate the exchange of cash between peers and buying/selling goods directly on their platforms?
Do you remember when lots of shops opened up within Facebook but closed down again because they were getting weren’t enough sales?
There are still examples of companies doing well with shops on Facebook, but most retailers make the vast majority of their money through their websites.
If you follow people like Robert Scoble and Seth Godin, etc., you know that we’re living in the era of “social business.” I read The Cluetrain Manifesto five years ago, though it was released over a decade ago. I highly recommend it to you.
One of the central ideas in the book is this: markets are conversations, and conversations build social commerce. Even in this day and age many companies still do not comprehend this concept (even if their employees sometimes do).
What Cluetrain was talking about a change in current company-to-consumer interactions, though their emphasis was on how technology and the web, among other things, were radically changing this interaction.
What these authors were saying, at its heart, is that communication matters and that the way we think about organization-to-customer communication needs to change.
It’s all communication
Websites, intranets, message boards, email blasts, blogs, developer conferences, and marketing presentations — it’s about communicating. It all matters.
Whether it’s a blog, an e-newsletter, or a conversation with a customer, what communities and customers yearn for from organizations is authenticity and transparency, simplicity, and a real human, emotion-without-the-BS approach to communicating.
A real conversation…for a change.
Social commerce trends
Selling products and services (excluding virtual goods) directly on platforms such as Facebook and Twitter have had limited success (though there are some social commerce companies providing shops on Facebook).
On Facebook, the main reason for the low sales is that Facebook itself didn’t support sales directly within the Newsfeed. They allowed third-party developers to install shops as apps on a Facebook Page, but no one goes to these apps unless they are directed there. Because you can’t keep on pushing your shop in your Newsfeed, these shops generate limited sales.
I know you probably have an example of a shop making lots of money on Facebook but, for every example, you’ll find 100 other shops not make anything worth talking about.
But the trend going forward is for social networks to start enabling the ability to buy products and services directly within the stream and this is where significant shopping will happen.
Will you ever buy a $500 product directly within the Facebook Newsfeed? Most of us never will. But we will buy impulse purchase for $10, $20 and maybe up to $50 without too much consideration.
Let’s take a look at what is likely to happen shortly.
Shopping on Snapchat
Recently, Snapchat announced that it has partnered with Square to deliver a peer-to-peer money transfer system called ‘SquareCash.’ This means that Snapchat users can register their debit card and then transfer money to, and receive it from, their friends on Snapchat.
Snapchat will not charge for this service so how is it going to make money?
Making money for this transaction is not important to them at the moment. They want to get Snapchat users to register their debit card and get used to exchanging money on the platform.
The next stage is to provide the opportunity to buy products through the platform, and this is where Snapchat will be able to make a lot of money.
Shopping on Twitter
Twitter is already trialing payment through their platform. They have partnered with Stripe (an Irish start-up), which will provide all the back-end payment processing. This means that all accounts set up, transactions, fraud management, etc. will be managed by Stripe.
Social networks do not want to store any credit card details. Stripe will do this for Twitter.
Directly within your feed, you will be able to view and buy a product. Here is a mock-up of what it will look like:
In the short term, this is likely to be restricted to lower-priced products as there will not be room for providing enough information directly within the feed but, over time, there will be options for expanding on the information provided.
Shopping on Facebook
Recently, we talked about a tool provider called Soldsie, which allowed users to buy products on Facebook by using a hashtag. This is a short-term solution that will be replaced with the Facebook ‘buy’ button soon.
I’m not sure which payment provider Facebook is going to partner with, but I’m sure Stripe are discussing it with them.
LinkedIn has not announced any plans to allow people buy products or services on its platform, but it makes perfect sense that this will also happen at some stage. Why can’t you buy an hour of a consultant’s time, buy a white paper or book a trainer for a day on LinkedIn?
This is certainly going to happen, but the question is: when will it be?
Shopping on Pinterest
In 2013, Pinterest introduced rich pins where you can provide additional information on a pinned item, which is taken directly from a website. You can also link to the content so that, if an item goes on sale in a store, this price could automatically be updated on your pin.
What is the next stage for rich pins?
Why should Pinterest send you to another site to buy when you might buy the item on Pinterest? Watch out for this happening.
More social commerce … what about virtual currencies?
A virtual currency is where you exchange your real cash for virtual money online. There is no printed currency; it is all on the web.
Bitcoin is a growing virtual currency. It’s difficult to get an accurate measurement of the total number of active Bitcoin users, but most say it’s between 1 and 1.5 million people.
You exchange your local currency for Bitcoins and then use them in transactions. Stellar is another virtual currency that may challenge Bitcoin.
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As virtual currencies grow in popularity, this will be just another payment method that can be used for transacting.
Stripe and Stripe back stellar is going to grow massively. As Twitter is using Stripe, it’s likely that, over time, they will allow their users to transact using Stellars.
The bottom line
The social networks need to make more money for their shareholders and selling products and services will be extremely lucrative for them.
There is no doubt they are moving this direction, and it’s going to be exciting to watch it.
What do you think is going to happen in the area of social media commerce? Am I realistic? Tell me in the comments below!
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Mike Schoultz is the founder of Digital Spark Marketing, a digital marketing and customer service agency. With 40 years of business experience, he writes about topics that relate to improving the performance of business. Go to Amazon to obtain a copy of his latest book, Exploring New Age Marketing. It focuses on using the best examples to teach new age marketing … lots to learn. Find them on G+, Twitter, and LinkedIn.
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More Social Commerce … a Case Study