Social Commerce And The New Rules For Local Businesses

Editor’s note: Guest writer Craig Donato is the CEO of Oodle, a social maretplace that powers the Facebook Marketplace.

Ecommerce today is imbued with the same DNA that runs through Google. It’s automated. It’s algorithmic. It’s certainly not human. And the marketing campaigns that are built with this DNA are similarly data-driven. They employ number-crunchers to capture their leads and build their databases, all the while looking for incremental ROI and arbitrage opportunities.

But a new marketing game has come to town—social commerce. And at its core is an entirely different bit of DNA: the DNA of Facebook. This new variety of social commerce is about conversations. It’s about relationships. It’s about re-humanizing online commerce. And for marketers to succeed with social commerce, they are going to have to rethink their game plan. Facebook has given us a brand new color palette. Now it’s up to us to figure out how to use it. I like to call this learning process “de-ecommercification.”

Succeeding with social commerce requires marketers to act human. Rather than searching for information, consumers are discovering things through trusted referrals and recommendations. Instead of being a marketing medium driven by click-through rates and lead conversion, Facebook is a medium of relationships and conversations. This is going to require some adjustments by marketers, and in this new game they are going to need to:

  • Practice the art of conversation. Social commerce is not about capturing leads and building databases. It’s about talking to people with an authentic voice, the same voice you would use if you were talking to them in person.  (Remember, you’re talking to your customers in the same place they use to chat with their friends.)
  • Build and deepen customer relationships. Customers are the trusted network, the community that surrounds a business. By taking care of your customers, you not only deepen those relationships, but you also fuel referrals.

It’s true that many other people in our industry besides me talk about “social commerce.” What they are really talking about, though, is “social shopping.” For example, if you were thinking of getting a new video camera, you would probably want to get recommendations from your friends about which one to buy. This is pretty cool, but it’s also very incremental. It’s social icing on the ecommerce cupcake.

Social commerce will have its biggest impact with a different set of businesses—businesses that are naturally “relationship businesses,” and these are easy to spot. They’re typically local businesses, those whose primary form of marketing has always been word-of-mouth referrals: local service providers, real estate agents, landlords and employers.

If you’re looking for a new house cleaner, which would matter most to you:

a) A half-dozen reviews from people you don’t know.

b) A coupon for 10% off the cleaner’s first visit.

c) Two friends that use the same cleaner—and are fans?

Say you’re looking for a new apartment and trying to figure out where to live, do you want lots of data on maps, or advice and recommendations from your friends and co-workers?

While social commerce is going to be disruptive to local businesses, that doesn’t mean it’s going to all be about deals (at least not yet). The DNA of Groupon (despite winning the Crunchie for Best Social Commerce App) is ecommerce while the deals it offers, which are cost-effectively generating leads, are ecommerce icing. In the new realm of social commerce, deals will evolve to serve a different master. They will be focused on deepening the relationships you have with your current customers, and through this end, fueling referrals.

This may sound complicated and confusing, but local businesses should get the hang of this quickly. It’s all very back-to-the-future stuff for them. Great local businesses have always been people-based businesses that understand the power of relationships and the importance of participating in a local community. There’s a reason the car dealership sponsors the local little league team.  What these businesses haven’t yet been able to figure out is how take what they’re already doing in their local communities and transfer it to the new world of Facebook and the Web. But they’re learning . . . and when they do, it will be transformational not only for them, but also for us—their customers.