By Chris Rallo, COO, BevyUp
E-Tailing has come a long way. Early on, online shopping was solitary with no real differentiation between competitors except for price. Rudimentary web stores provided very little in the way emotional connections for shoppers. With low levels of engagement and loyalty, e-tail sites produced very little business intelligence.
Over time, web store technology evolved. Most advancements, however, were retailer oriented. For example, historic and behavioral data, gathered from click streams, was used as a proxy of intent to inform merchandising, marketing and pricing decisions. Next algorithmic, predictive tools used behavior, past purchases and demographic data to suggest products a shopper might like. In the past 15 years, chat with an expert technology was one of the few customer facing advancements to emerge.
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That is changing fast. The primary reason? Social networks like Twitter, Facebook and Pinterest are stealing e-tailers lunch. It’s a well-known fact that many buyers consult with friends and family before making a purchase. In the brick & mortar world, friends frequently go to a store together to try on clothes, shoes, jewelry, compare electronics, etc. They also ask each other for opinions, feedback and recommendations. Without the ability to shop together online, consumers have usurped social networks to create a crude feedback and validation loop.
Recognizing this incursion by social networks into online shopping, e-Tailers responded. They created incentives for customers to post/spam their friends’ Facebook walls with recommendations in an attempt to generate quality traffic. Unfortunately, social network traffic typically delivers very low conversion rates. Also, because it occurs outside the e-tail site, “social” sharing doesn’t create a real and engaging collaborative shopping experience. As social network users are inundated by ads and sponsored posts, recommendations from friends that are commercial in nature become less effective or overlooked.
Today, using technology, e-tailers are stepping up their game. They are adding elements from the brick & mortar shopping experience to their online stores. Like providing visitors the ability to invite friends in real-time to a shopping session where they can browse products together and share recommendations, sentiments, etc. Unlike the physical world, the web transcends time zones and geographies, allowing people in different cities, states and even countries to shop together anytime.
But it gets better. This new engagement model produces a wealth of business intelligence that isn’t available to brick & mortar retailers and has the potential to revolutionize e-tailing. We call it Social Revenue Optimization or SRO.
SRO encapsulates how e-tailers can increase revenues, improve profit margins and deepen user engagement by tapping into the deep well of business intelligence on their sites. Mining buyer sentiment enables e-tailers to take the guess work out of optimizing pricing, promotions and products.
SRO is made up of four categories:
Sentiment: Data on how customers feel regarding particular products and their price enables e-tailers to personalize product placement and pricing
Revenue: Tracking changes in incremental conversion rates, revenue per visit and average order value that result from adjustments made based on customer sentiment and social signals exposes the success and failure of individual pricing and promotion strategies
Margin: Dynamic analysis of the impact of positive, negative and neutral price changes, allows e-tailers to precisely achieve optimal price elasticity
Engagement: Quantifies the link between the ability of customers to collaborate with friends on the website and increases in time-on-site and pages viewed
SRO, or the ability to collect, analyze, correlate and extrapolate intelligence from social online shopping, promises to finally unlock the full potential of electronic retailing that many have always envisioned for this data-centric channel.
About the Author: Chris Rallo is COO of BevyUp, a provider of collaborative shopping technology for online retailers. A former management consultant, he has provided brand building expertise to Microsoft Retail Stores, Bing.com and Fortune 500 companies in the online travel, retail and online services industries. He can be reached at: (206) 370-1366, www.bevyup.com, Twitter, LinkedIn, Facebook, and YouTube.
