How Social Commerce Works: The Social Psychology of Social Shopping

As a social psychologist, I’m interested in how social commerce works. Not for academic reasons, but for a purely practical reason. Understanding why it makes commercial sense to help people to connect where they buy and buy where they connect provides businesses with a strategic advantage; the opportunity to reap the rewards of a powerful insight-led social commerce strategy,  as opposed to merely deploying social commerce as a set of tactical tools.

Jumping to the conclusion of a rather long post, I think that a psychologically informed understanding of how social commerce works points to the possibility of six particularly effective social commerce strategies.

But first the obvious. Social commerce makes commercial sense because it is good marketing, marketing with a big M that is, in the sense of Marketing as the business of solving people’s problems at a profit (as opposed to mere messaging). By providing online shoppers with useful tools to make better and more informed choices, social commerce helps shoppers do smart and savvy shopping. And in doing so, retailers can deliver expectation-beating shopper experiences that drive loyalty (purchase-repurchase) and advocacy (word of mouth).

The second more-or-less obvious reason why social commerce makes commercial sense is that social commerce allows brands and retailers to sell where customers spend their time; and today that means on social media platforms.  Social commerce solutions are thus a cost-effective way to capture traffic and market reach.  And if deployed smartly, they even raise the possibility of the impulse e-purchase, a huge and largely unplundered opportunity in e-commerce. For instance, it’s now possible to do virtual pop-up retail, throwing up campaign stores to accompany and monetize marketing campaigns.

But the third, and possibly most powerful reason why social commerce makes commercial sense is a little less self-evident; it’s based on the social psychology of social shopping.  The takeout of what’s outlined below is that social shopping tools, when properly deployed, can harness the processes of social influence that take place when we’re shopping to improve propensity to purchase.

The Social Psychology of Social Shopping

At one level the social psychology of social shopping is easy; social shopping harnesses the human capacity for social learning, learning from the knowledge and experience of others we know and/or trust.  This social learning faculty is part of our social intelligence, the ability to understand and learn from each other and profit from social situations.  But social shopping tools also work at a more fundamental level, by playing to cognitive biases in how people are influenced by people when shopping.

In a nutshell, social psychology, the branch of psychology that deals with how people think about, influence, and relate to one another, has found that shoppers do what is popularly known as ‘thinslicing’ when they are out shopping. Thinslicing is a style of thinking (psychologists call it heuristic-thinking) that involves ignoring most of the information available, and instead using (slicing off) a few salient information cues, often social in nature, along with a set of simple, but usually smart mental rules of thumb (known as heuristics) to make intuitive decisions. Psychologists have identified six universal heuristics (mental rules of thumb) that shoppers use to process thinsliced information; social shopping tools are powerful because they harness these heuristics to make purchase decisions more likely. (See here and here for a quick overview).

Heuristic #1: Social Proof
The Rule: ‘Follow the Crowd’

How it Works: To resolve uncertainty of what to do or buy, we often look to what others are doing or have done, and take our cue from them. When something stands out as particularly popular or dominant, we instinctively perceive this as social proof that it is the correct, most valid option – it’s classic peer power in action.

The Classic Experiment: The 42nd Street Experiment (1969). A single passerby was asked to stop in 42nd Street NYC and gaze skyward for 60 seconds. Other passersbys walked past, ignoring him. But when15 passersby were asked to do the same thing, 40% of people on the busy street also stopped to look up, almost bringing 42nd Street to a complete a halt within a minute.

Classic Marketing Application: Using the ‘Power of Lists’ to associate a brand with the #1 spot ‘best selling’, ‘market leader’ ‘#1 choice’ or ‘fastest growing’.

Social Commerce Application: Social shopping tools that use social proof to stimulate heuristic-thinking shopping decisions include:

• Pick Lists such as wish-lists and gift-lists offer social proof about what people want and what is desirable
• Popularity Lists that allow shoppers to view options by ‘most popular’, ‘most viewed’, ‘most favourited’, ‘most commented’ etc provide social proof as to what’s best to buy
• Share-Your-Story tools for publishing customer testimonials provide social proof with a human-interest angle
• Social Media Reviews from other customers provide trustworthy social proof about product or service quality
• Social Recommender Systems tools provide social proof through personal recommendations derived from people with a similar profile

Social Commerce Examples: Pick Lists; Amazon, Best Buy, Kaboodle, StyleFeeder, ThisNext. Popularity Lists; Amazon, Apple (iTunes). Share-Your-Story; James Avery Jewellery. Social Media Reviews; Amazon, Apple, WineLibrary, Zappos. Social Recommender Systems; Netflix, Apple (Genius), Stylefeeder, Honk User Galleries, Burburry (in the trenches).

Heuristic #2: Authority
The Rule: ‘Follow the Authority’

How it Works: People have a natural tendency to defer to the conclusions of an expert or authority, regardless of what they say. With specialist knowledge, experience and expertise, they save us time and energy thinking things through.

The Classic Experiment: The Shockbox Experiments (1961). A majority (61-66%) of people recruited to participate in memory tests gave each other increasingly severe electric shocks up to and including a “fatal” 450V dose as part of the test, if asked to do so by an authority figure – a distinguished looking experimental scientist (participants receiving the shock were stooges, there was no real shock).

Classic Marketing Application: ‘Four out of five doctors recommend’ type supports in advertising (including using actors associated with authority roles, and putting actors in white coats to appear authoritative)

Social Commerce Application: Social shopping tools that use authority to stimulate heuristic-thinking shopping decisions include:

• Referral Programs stimulate recommendations from people in the know who shoppers trust
• Social Media Reviews by authoritative professional reviewers (blog reviews, webzine reviews, YouTube reviews), and also by existing customers because we assign authority to voice of experience
• Social Media Services that establish the retailer or brand as an authority
• User Forums are a source of authoritative information – the voice of community authority

Social Commerce Examples: Referral Programs; Amazon Affiliates, Gilt, VanRosen, Rue La La, Ideeli, Vente-Privée, Sky invite-a-friend. Social Media Reviews; Amazon, Apple, WineLibrary, Zappos. Social Media Services; Best Buy, Nike+. User Forums; Apple, eBay.

Heuristic #3: Scarcity
The Rule: ‘Scarce Stuff is Good Stuff’

How it Works: Our minds are hardwired to value scarce resources; we instinctively assign more value to opportunities as they become less available – part out of fear of potential loss (this is known as psychological reactance).

The Classic Experiment: The Cookie Jar Experiments (1975). Participants were asked to rate chocolate chip cookies. Experimenters put 10 cookies in one jar and two of the same cookies in another jar. The cookies from the two-cookie jar received far higher ratings, even though the cookies were exactly the same. (Also of note; ‘Romeo and Juliet Effect’ research that shows teen lovers who are restricted/prevented from seeing each other value their relationship more; and the Plexiglass Experiments that proves toddlers prefer toys that are made unavailable to them (by a plexiglass barrier)).

Classic Marketing Application: Limited access, limited offers, limited availability, limited editions, time-sensitive deals.

Social Commerce Application: Social shopping tools that use scarcity to stimulate heuristic-thinking shopping decisions include:

• Deal Directories that list exclusive time-sensitive shopping deals (often with a count-down clock), from those in the know
• Deal Feeds to get that exclusive deal the majority don’t know about
• Group-Buy tools that allow shoppers to be part of a great one-off deal
• News Feeds give get-it-first inside scoops to share and spread
• Referral Programs for private shopping events such as those on private shopping event portals
• Social Network Storefronts with great exclusive deals/products for social network members only

Social Commerce Examples: Deal Directories: Deals.Woot, JustBoughtIt, Ikea. Deal Feeds; Dell, Amazon, Carrefour. Group-Buy; Dell, Adidas, Groupon, Intel (FanPlan); News Feeds; Best Buy, NorthFace, Nokia (WoM World). Referral Programs; Amazon Affiliates, Gilt, VanRosen, Rue La La, Ideeli, Vente-Privée, Sky invite-a-friend. Social Network Storefronts; Best Buy, 1-800 Flowers, Reebok, Carrefour (FaceShopping).

Heuristic #4: Liking
The Rule: ‘Follow those You Like’

How it Works: We have a natural inclination to emulate and agree with people we like, admire or find attractive, partly because it builds social bonds and trust (saying yes is a form of social grooming – the human equivalent to animals picking fleas from each other), and partly because it’s part of impression management, managing our image and identity by association.

The Classic Experiment: Nixon/Kennedy Debate (1960). Radio listeners and television viewers were asked to rate the performance of two presidential candidates in a live broadcast debate. Radio listeners rated Nixon’s performance higher, but television viewers did the opposite – overwhelmingly handing the debate to Kennedy. The difference? Kennedy came across visually more likeable, more attractive and fresh-faced. Nixon, on the other hand was looking haggard (just coming from a hospital visit), unshaven and sweaty. (Also of note; research showing physical attractiveness (closely linked to liking) influences things as wide ranging as our salary and our likelihood to be found guilty in court (less attractive people twice as likely to be found guilty)).

Classic Marketing Application: Network marketing (Tupperware parties), likeable user-imagery in ads aspiration or similarity, selling with sex.

Social Commerce Application: Social shopping tools that use liking to stimulate heuristic-thinking shopping decisions include:

• Ask-Your-Network tools for realtime recommendations and opinions from shopper social circles (‘friendsourcing’)
• Deal Feeds to share and spread deals from brands shoppers like with people they like
• News Feeds to follow, share and spread social media news (on Twitter, YouTube, Facebook, RSS) about brands shoppers like with people they like
• Pick Lists such as those in social shopping portals for shoppers to follow and be followed by shoppers they like
• Referral Programs such as those on private shopping event portals that spread membership through affinity networks
• Share-With-Your-Network tools that allow shoppers to share shopping experiences/finds with their social circle (affinity network)
• Shop Together tools that allow shoppers to co-browse online stores together and get influenced by people they like
• Social Network Storefronts that allow shoppers to share and discuss shopping experiences with people they like within the safe walled garden of a social network

Social Commerce Examples: Ask-Your-Network: Charlotte Russe, Mattel, Jansport. Deal Feeds; Dell, Amazon, Carrefour. News Feeds; Best Buy, NorthFace, Nokia (WoM World). Pick Lists; Amazon, Best Buy, Kaboodle, StyleFeeder, ThisNext. Referral Programs; Amazon Affiliates, Gilt, VanRosen, Rue La La, Ideeli, Vente-Privée, Sky invite-a-friend. Share-With-Your-Network; Kaboodle, StyleFeeder. Shop Together; Charlotte Russe, Mattel, Jansport. Social Network Storefronts; Best Buy, 1-800 Flowers, Reebok, Carrefour.

Heuristic #5: Consistency
The Rule: ‘Be Consistent’

How it Works: When faced with uncertainty, we’ll opt for the one that is consistent with our beliefs and past behaviour. When our beliefs and behaviours don’t match up, we feel psychological discomfort, “cognitive dissonance”, which is a big motivator for trying to be consistent; particularly with any active, public and voluntary commitments we’ve made.

The Classic Experiment: The Big Billboard (1966). Experimenters, posing as members of the “Community Committee for Traffic Safety”, knocked on the doors of residents in an affluent residential area in Palo Alto, California, asking if they could put up a huge “Drive Carefully” billboard on their front lawn, completely obscuring their view. Not surprisingly, the vast majority (83%) refused outright, except for one group of residents, 76% of whom agreed. What this group had in common was that two weeks prior, they had been contacted and asked if they’d put a small “Be a Safe Driver” car sticker on their cars – virtually all had agreed. Once the residents had made a public commitment to a small request, they felt the need to be consistent with the large request, and accepted the big billboard.

Classic Marketing Application: Lifestyle ads (demonstrating why a product is consistent with audience lifestyle), free trials (become a user for free and stay consistent by buying later), sign up for free membership schemes, foot-in-the-door sales (ask for a small commitment (e.g. petition signing) then asking for a large commitment consistent with this (e.g. donation, purchase).

Social Commerce Application: Social shopping tools that use consistency to stimulate heuristic-thinking shopping decisions include:

• Ask-Your-Network tools involve a small public commitment to an item (asking friends about it) that is consistent with purchasing it later
• Social Gaming stimulates behavioural consistency between playing a branded game and later buying the branded product or service
• Pick Lists are the social shopping equivalent of petitions, small free public commitments to products consistent with subsequent purchases
• Share-With-Your-Network tools harness the consistency heuristic to drive loyalty and repurchase by creating publicly association between the shopper and purchased products and the e-commerce site
• Shop Together tools uses peer power to stimulate purchases by creating a social event around a store visit, that is consistent with purchasing
• Social Media Entertainment uses the small commitment of paying attention to make future purchases more consistent with past behaviour
• Social Media Listening uses the small commitment of providing ideas or feedback to make future purchases more consistent with past behaviour
• Social Media Reviews uses the small commitment of rating or reviewing to make future purchases more consistent with past behaviour
• Social Media Services uses the small commitment to a product or brand involved when using its services to make a purchase more consistent with behaviour
• User Forums allow shoppers to solve each others problems on behalf of the brand, a commitment that is consistent with purchase
• User Galleries create a public association and commitment to a brand, consistent with ongoing custom

Social Commerce Examples: Ask-Your-Network: Charlotte Russe, Mattel, Jansport. Social Gaming; Levi’s. Pick Lists; Amazon, Best Buy, Kaboodle, StyleFeeder, ThisNext. Share-With-Your-Network; Kaboodle, StyleFeeder. Shop Together; Charlotte Russe, Mattel, Jansport. Social Media Entertainment; Blendtec. Social Media Listening; Dell, Starbucks, Simple, eBay. Social Media Reviews; Amazon, Apple, WineLibrary, Zappos. Social Media Services; Best Buy, Nike+. Social Recommender Systems; Netflix, Apple (Genius), Stylefeeder, Honk. User Forums; Apple, eBay. User Galleries; Burburry.

Heuristic #6: Reciprocity
The Rule: ‘Repay Favours’

How it Works: We have a natural desire repay favours, whether those favours were invited or not. We feel good when we reciprocate favours, partly because of our innate sense of fairness and social contract, and partly because reciprocity is socially rewarded because it is the social glue that makes cooperation, relationships, community and society possible. Now you know why you feel bad when you receive a Seasons Greeting card from someone to whom you haven’t sent a card.

The Classic Experiment: The Coke & The Raffle Ticket (1971). Experimenters posing as art students joined group museum art tours and found they could sell significantly more student raffle tickets at the end of the tour to other members of the tour, if during the tour they did (unsolicited) favours to tour members – such as buying them a Coke. Tour members felt the need to reciprocate the favour, even though they had not asked for the Coke in the first place.

Classic Marketing Application: Sampling (reciprocating to uninvited gift with purchase), local CSR (corporate social responsibility) initiative, causal marketing and sponsorship. Door-in-the-face sales technique (making a big request upfront designed to be rejected, then making a concession, so shopper reciprocates and buys.

Social Commerce Application: Social shopping tools that use reciprocity to stimulate heuristic-thinking shopping decisions include:

• Deal Feeds that allow shoppers to do other shopper a favour by passing them on
• Group-Buy tools that allow friends to do their friends a favour and get them deals, which get reciprocated with participation
• Referral Programs that allow friends to offer exclusive access or special deals to their friends stimulate take-up and sales
• Social Media Listening tools that offer shopper a quid pro quo, we listen, you buy
• Social Media Services that are genuinely useful and that can be passed on
• User Forums that allow shoppers to offer each other buying/support advice – which through reciprocity translates to selling to each other

Social Commerce Examples: Deal Feeds; Dell, Amazon, Carrefour, Group-Buy; Dell, Adidas, Groupon, Intel (FanPlan), Referral Programs; Amazon Affiliates, Gilt, VanRosen, Rue La La, Ideeli, Vente-Privée, Sky. Social Media Entertainment; Blendtec. Social Media Listening; Dell, Starbucks, Simple, eBay. Social Media Services; Best Buy Nike+, User Forums; Apple, eBay

6 Social Commerce Strategies

The practical utility of looking at social commerce through the lens of social psychology is that is provides brands and retailers with a strategic approach to doing social commerce.

Rather than deploy social shopping tools based on a whims or sales pitches, the 6 social influence heuristics provide a framework for six distinct shopper-centric social commerce strategies, with their associated tools and which can be adopted and developed based on their fit with broader marketing strategies.

1. The Social Proof Strategy
2. The Authority Strategy
3. The Scarcity Strategy
4. The Liking Strategy
5. The Consistency Strategy
6. The Reciprocity Strategy