Here’s a brilliant infographic just out from the Financial Times showing the eye-watering sums that Facebook founders and investors stand to gain from today’s $104bn ($38/share) IPO. From Zuckerberg’s $19.1bn to his dad’s $76m. Not a bad return on genetic investment for Edward – we wonder if he’ll cash in?

Insiders

• Mark Zuckerberg $19.1bn
• Eduardo Saverin $5.2bn
• Dustin Moskovitz $5.1bn
• Sean Parker $2.65bn
• Peter Thiel $1.1bn
• Edward Zuckerberg $76m

• Accel $1.9bn
• DST $1.7bn
• Goldman Sachs $1.4bn
• mail.ru $1.4bn
• Elevation Partners $1.3bn
• Meritch $1.3bn
• Tiger $1.2bn
• La-Ka-Shing $780m
• T Rowe Price $691m
• Interpublic $520m
• Mark Pincus (Zynga) $163.6m
• Reid Hoffman $143.3m

Just as social media is not a revolution (it’s just media – get over it), the idea that you have a revolutionary new kind of customer – the social customer – is nonsense too.

Your customers have always been ‘social’ – learning from each other and even benefiting from collective buying power – through intermediaries.  It’s just that digital technology allows customers to shop smarter with their social intelligence by removing space, time and scale barriers.  The revolution, if it exists, is digital – not social.

So here’s an interesting infographic from the UK social commerce platform Gloople that puts the so-called social customer into a broader perspective.  Customers are doing what they always have been doing, i.e. using their social smarts to learning socially and collaborate but now digital technology – particularly technology –  allows them to do it faster, more efficiently and more conveniently.

So it’s IPO time for the leading social commerce platform on the planet, and Facebook thinks it’s worth half of Google ($104bn vs $196bn), as much as Amazon ($101bn), and twice eBay ($52bn).  But here are three reasons why a psychologist wouldn’t invest, and why, if you are in the social commerce game, a psychologist wouldn’t put all their eggs in the blue Facebook basket.

1) Intention trumps Interest: Commerce notwithstanding, Facebook’s future will depend largely on its advertising revenue, which will depend on advertising effectiveness.  But the Facebook advertising value proposition – superior targeting based on peoples interests – pales to insignficance compared to the value proposition of search advertising based on intentions. Psychologists know that interests are lousy predictors of behaviour – intentions are far better.  Your likelihood to drink champagne tonight is very poorly correlated with how much you like champagne, but highly correlated with whether you intend to drink champagne. Which is why the intentionality of Google search ads stand head and shoulders above Facebook ads based on interest.  With GM the latest business to pull Facebook advertising, businesses get this.

2) Scarcity drives Value: Economists like to talk about the network effect – the more people use something the more valuable it becomes.  Psychologists like to talk about the opposite –  the power of scarcity – the fewer people have something, the more valuable  - and the more cool – it is perceived to be.  Diamonds are perceived as – and are – valuable precisely because they are a scarce commodity.  Facebook is perceived as cool so long as your aunt and grandparents aren’t on Facebook.  With low barriers to entry for alternatives, Facebook’s very ubiquity could trigger a mass exodus.

3) Mind Myopia: Minds are myopic, which means we tend to overvalue the importance of the ‘here and now’ and see the present an an insight into necessity, rather than an opportunity for change.  Facebook is big today, so we tend to falsely extrapolate that Facebook will be big tomorrow.  History and MySpace et al prove us wrong over and over. Our inability to look at things without the sensory data of the here-and-now means we over-invest in the present and the status quo, and not enough in the future.

So whilst a psychologist may see the value of Facebook as a social commerce super-platform, helping people buy where they connect and connect where they buy, that psychologist would be wary of investing in a $100bn valued Facebook.

Thoughts?

Today’s article is sponsored by Milyoni: The Leader in Social Entertainment

Have you integrated social scrapbooking app Pinterest into the purchase funnel yet?

Perhaps you should.  It’s quick, easy and could be very profitable.

New research from London-based specialist e-commerce site for women Boticca selling handbags, jewellery and accessories from independent designers from 40 countries has found that Pinterest users drop 2.1x more cash with them than Facebook customers.  Overall, Boticca has 40,000 Pinterest followers across 67 brand boards, compared to 26,000 Facebook fans, and more transactions now feature Pinterest (10%) in the purchase funnel than Facebook (7%).  Pinterest may hurt their conversion rates – driving more casual browsers than buyers than Facebook – but the overall sales result is positive.  And in business, it’s all about the money – the rest is just conversation.

Of course there more There’s more to social commerce – helping people buy where they connect and connect where they buy – than driving e-commerce traffic from social media apps, but drumming up paying customers from social media posts is a good place to start and can be a simple and effective way to profit from social media. So, if you’re in the business of selling to women, especially in fashion, cookery or home sectors, the message is clear – you’d be mad not to add Pinterest buttons to product images and syndicate your product catalogue to Pinterest boards.  It’ll cost you nothing, and could drive more sales than managing a Facebook page.

Great post by venture capitalist MD Jeremy Liew of Lightspeed, picked up by the ever-insightful Jason Soo and Jochen Krisch, confirming a prediction about the future of social commerce has come to pass; the rebirth of the shopping party.

Yep, it’s Avon parties reconfigured, re-branded and teched-up for the party generation.  Forget Tupperware, we’re talking fashion and jewellery – direct sales style – from the likes of Mark, Thirty One Gifts, Stella and Dot,  Gigi Hill, Miche Bags and of course Chloe and Isabel with their recent $8.5m round of investment.  The goal is to make direct sales hip, fashionable and to profit from technology – iPads as sales aids and interactive catalogues, iPhones that take credit card payments, plus really simple CRM and inventory management.  And not forgetting to profit from the sales skills of all those smart young pro-moms taking a career break for their sprogs. You get the picture.  It help explains why Coty’s uninvited $10bn bid for the 126 Grand Dame of direct sales Avon.

A priori, we like the Shopping Party model – especially for a demographic that likes parties and shopping. In a previous pre-social media life, we were (and still are) very bullish about traditional word of mouth marketing, and we even wrote a book about it.  And one of the smartest word of mouth companies at the time was the Australian Word of Mouth Company, made up of buzz agents who’d throw parties to demo – and sell – new products. Simple and smart.

So what do you think of Shopping Parties? Will technology and rebranding re-launch an old model, taking the best of keep-what-you-want-return-the-rest subscription commerce (the other ‘It girl’ in digital retail right now) – and make it social by turning the subscriber base into a field force of sales agents ready and primed work? What do you think?

So is customer happiness your business model?  It should be.  Delivering experiences that beat customer expectations results in happiness and drives growth; according to Bain research, companies that are best in class at creating customer happiness by delivering experiences that beat expectations grow at twice the rate of their competitors (see here for overview and data).

But how do you know if you’re delivering expectation-beating experiences?

Easy. Simply ask whether the experience delivered is worth recommending.  That’s the solution offered by the Net Promoter System, a system for reorienting a business around end-user experience – the people who ultimately pay your salary.  Apple has successfully used the Net Promoter System to enter the field of retailing as a newbie and quickly dominate it; Apple retail today sells more per square foot than any other retailer.

Based on a simple question; propensity to recommend (based on your experience, how likely are you to recommend us on scale of 0-10?) the NPS score is like a Quality Seal (like ISO 9000) for customer experience.  Forget the Klout score for influence, your need the NPS score for customer happiness. To get your customer happiness score, simply take the percentage of your customers who score you 9 or 10, and subtract the percentage who score you 6 or less. That’s your happiness (NPS) score.

Award yourself an NPS smiley – your quality mark for customer experience – only if your score is higher than your top competitor (note the Bain NPS smiley is proprietary, you’ll need your own).

What’s all this to do with social commerce?  Well, the value of selling with social media is that it helps you monetize the recommendation economy.  By creating smiles, you drive recommendations which drive sales, and do so more efficiently with social media.  The secret to selling with social media?  Make happiness your business model.

Of course, like all business solutions, the Net Promoter System is not perfect, but it’s a great way to put you on the path of true growth and sustainable profits by making customer happiness your business model.

Here’s a short FAQ we put together this week on the Net Promoter System for a brand looking to make customer happiness its business model.

What is the Net Promoter System? An open-source business system developed by Bain, Fred Reichheld and Satmetrix to drive consumer-centricity; building companies and brands around end-user experience

What Problem Does the Net Promoter System Solve? The NPS solves the problem of revenue lost due to a lack of consumer focus on end-user experience; 80% of CEOs think their brand delivers a superior brand experience; 8% of end-users agree

How does the Net Promoter System Work? At it’s most basic level the NPS adds stage-gates and feedback loops to marketing, service and innovation processes (simple screening/pre-testing and post-testing) – based on the need to consistently beat end-user expectations. For example, only if digital marketing content delivers an end-user experience that beats expectations will it be launched. The NPS smileys are like ‘Quality Marks’ (like ISO 9000) but for user experience, and come from a single experiential question; Based on your experience, how likely is it that you’d recommend…?

How much does the NPS cost? The Net Promoter System is an Open-Source system so is free to deploy. Costs involved are those of implementing stage-gates and feedback loops into business units. This can range from simple and systematic NPS pre-test and post-test surveys.

What can the NPS deliver for your brand? Enhanced growth; Brands with the highest NPS score in their category grow at 2x the rate of the category average. Apple, which has built it’s new retail empire around the NPS, has come from new-entrant to the most successful retailer on the planet with more sales per square metre than any other retailer.

What are the first steps you take with the NPS to test its value? Deploy NPS in one area of your business (service, marketing, innovation) or in one region/market by obliging all initiatives to pass the NPS test (delivering an experience that beats expectations, based on the one question NPS survey); if the NPS works, the unit market where NPS is deployed will outperform relative to others.

Where can we find out more about the Net Promoter System?: Read the book, read the summary – contact Bain, Satmetrix, or any certified Net Promoter Associate.