The Economist has a special section this week on social networking.  They include the chart below pointing out that friend recommendations are the most trusted source of product information.  What’s interesting here is just how far ahead friend recommendations are from the next closest source; eyeballing the “trust completely” bar, the factor appears to be almost 3X.

So if trust is important in your sales and marketing, you really need to be thinking about how to harness the power of social networks.

This will sound like self-promotional hyperbole, and I’m going to say it anyway.  When we started TurnTo a bit over 2 years ago, it was clear that the viability of the business hinged on delivering measurable, positive business results for the ecommerce sites we planned to have as customers.  But, of course, there was no way to know for sure what the numbers would look like without building a product and finding customers to really use it.  So we plunged in, built the product, brought merchant partners on board, gained experience, and put in place the systems to measure if we were really doing any good.  And today, in conjunction with three of our partner merchants, we announced some actual results.  So this is the self-promotional, hyperbolic part: it truly did not occur to me when we set out that we’d be able to deliver numbers this positive.  I thought if we would able to show a conversion effect of 10% or 20% we’d be doing pretty well.  And here’s the data from over the holidays for these three sites:

Conversion rate of shoppers who opened the TurnTo widget vs. the baseline (shoppers who didn’t):

Jomashop.com (IR #209) Watches and luxury goods: 6 X the baseline (i.e. 500% higher)

ChristianCinema.com, Christian-themed DVDs: 8X the baseline

ePartyUnlimited.com, gifts and party supplies: 8X the baseline

To be sure, we know we’ve got a lot more measurement work to do before we fully understand the effect the TurnTo system is having on shopping behavior.  But still, after 2 years, it’s very nice to be able to announce numbers like these.

Optaros’ “Social Ecommerce Ebook” makes for great reading if you are trying to optimize the performance of your ecommerce site.  You can download it here.

They make the points that: 1. higher levels of shopper engagement on retail sites drive improved business performance, and 2. social commerce tools are a powerful way to drive engagement.

A couple highlights:  From the Harvard Business Review Article, “In Ecommerce, More is More“, they cite,

The majority of managers we spoke to in our global study told us they believe that a broad array of information diverts attention from the core offerings. But we found it helps customers search for solutions, invites them to think of all the ways the core products might add value to their lives, wins their loyalty, and entices them to buy. In fact, we found that exploiting consumers’ desire for engagement is the single dominant driver of superior shareholder value for e-commerce companies.

In the section titled “Making Shopping a Social Experience,” (p.44 on) they cite an article in the Wall Street Journal on the benefits of social shopping.  (The article features the positive results Teavana and Compsource are seeing from their TurnTo implementations!)  Their “Business Takeaway”:

People like to go shopping with others when shopping in person. With Facebook Connect and other social shopping applications, you can replicate this experience for your customers online.

The bottom line of their study (well, it’s actually more like the title): “Retailers Achieve Higher Conversion Rates Using Social Shopping.”

There’s a session at the next ANA Shopper Marketing Committee I’d really like to attend.  (But I’m not a member - sigh…  If you are a member, you can find it here.)  The point of the session is so important for multi-channel retailers, I’m copying the description here.  I’d put it this way: don’t just use your web presence to sell; use it to create a connection to your brand that will bridge from your site all the way to your store.  One of the most powerful ways you can do this is with social merchanising tools (like TurnTo) that show visitors that their friends are also customers.

11:30AM- How Shoppers Shop: The vast majority of shoppers conduct research before they go to store, with an increasing proportion of them spending time online, not only looking for deals, but also getting recommendations from friends, looking at product reviews, and comparing product information. Moreover, online research and recommendations are having a greater impact on what makes it onto shopping lists. With roughly half of women indicating that they have purchased products based on recommendations from friends, viral marketing represents an important opportunity to engage shoppers before they go to the store. While significant attention has been paid to the roughly two thirds of brand decisions that are made in the store, the growth in digital shopper marketing represents a major opportunity to increase preference and purchase intent earlier along the path to purchase.

A new Forrester report predicts that 2010 will be the break-out year for social marketing.  Online retailers, presumably, will be affected by this more than anyone.  Internet Retailer has a nice write-up of the report.  Forrester subscribers can get the full version.  Here’s the summary:

In 2009, the majority of interactive marketers tested Social Computing tactics, ranging from Facebook pages to blogs and communities. In 2010, marketers will move out of test phase and treat Social Computing as a mature channel, setting budgets and establishing formal listening and measurement plans. This maturation will push the value of Social Computing and its insights deep into company departments beyond marketing, setting up organizations to fully embrace Social Computing and becoming more transparent and interactive with consumers. As Social Computing matures, both marketers and vendors will feel pressure to not only prove its profitability but also ensure consumer privacy.

Data from comScore as reported in the Wall Street Journal shows holiday sales up 4% over last year.  Not bad considering the economy. But the growth appears to be driven largely by a huge increase in promotions:

“Data from Shoplocal.com show that online retailer promotion activity is continuing at a high rate with the number of offers in the last week up 21% versus a year ago,” said comScore Chairman Gian Fulgoni.

The strong sales numbers won’t mean much if the January headlines are all about the carnage from over-discounting.  (Remember the joke about making up for negative margin on volume?…)

I’d like to see an analysis that compares the cost of all that discounting to the cost of tools that could drive equal sales volume without compromising price.  For example, for a small percent of the cost of their holiday promotions, most retailers could dramatically expand initiatives like social shopping.  And in the end, their bottom lines might look a lot better.  Please comment if you know any work that looks at this.

Most of the focus on social shopping has been on how stores can build a presence on Facebook and Twitter.  But new research from BIGResearch for Shop.Org suggests this is backwards.  Online stores will likely benefit far more from bringing the social networks of their shoppers into the buying experience within the store.  Here’s why:

[Social networks] are rarely the starting point for shopping per se. When we asked consumers, “Where do you typically start your online shopping? (Check all that apply)”, consumers told us that they are most likely to start their online shopping at merchant Web sites (almost three-quarters), search engines / directories (one third), and catalogs or offline stores (about a quarter) — with social media sites trailing far behind.

So if you want to truly tap into the power of your customer base and the social network of your shoppers to influence purchases, do it ON YOUR SITE.  That’s where real buyers come to do their research.  And that means leveraging tools like Facebook Connect to make all that social data available to shoppers when they’re really in-market.  (TurnTo can make this easy.)

Here’s data from the report, available here. (You must be a Shop.Org member for access.)

Paul Dunay, The Global Managing Director for Services and Social Media at Avaya, gave this description of social commerce in an interview in eMarketer:

Social commerce is working with or using your social graph, which is defined as your followers or your friends, and allowing them to help you make buying decisions.

Social commerce can be anything from a buying suggestion or recommendation—perhaps a tweet from a Dell outlet saying, “Hey, we have a special on this”—to something like Facebook Connect.

Facebook Connect would allow you to go to a Website like Dell.com and authenticate yourself using your Facebook profile, allow your identity to be known and access your friends so you could spark up a chat. So I could say, “Hey, Jeff, I’m looking at this new fancy laptop or this netbook. I heard you bought something. Would you recommend this to me?”

So you could almost take your friends shopping with you. That is the potential with this example.

Hey Paul, come look at the sites using TurnTo.  Your vision is alive today!

Business Week just published a piece on the potential for Facebook in online shopping.  They focus on the role of Facebook Connect in enabling shoppers to post questions to their Facebook network before making a purchase.

It makes sense that this is the primary way Facebook Connect has been used so far in online shopping, since it’s the easiest to implement.  But it’s just scratching the surface.  The real potential is in bringing the social network to the shopping site (not the other way around).

For one thing, many people are hesitant to blast questions that they know are only relevant to a small portion of their network out to everyone.  No one wants to be a spammer.

Also, most shoppers don’t think of Facebook as the place to go when researching a purchase.  The primary research destinations are merchant sites and content sites that address the product category.

Combine those two considerations and what you get is a requirement for a system that runs on the merchant (or content) site and tells a shopper which particular people can help them with their purchase decision, so only relevant people receive the shopper’s questions.

If you sell online and this makes sense to you, check out the way TurnTo’s merchant partners are using the TurnTo system to achieve exactly this.  www.turnto.com/partnerlist.

According to a new Nielsen report, 20% of “social consumers” now discover content through their social contacts, instead of through search engines or content portals. Commerce is a type of content. This means that for “social consumers” (defined as those who spend 10 percent or more of their online time on social media), Social could become the new Search. What can online retailers do to tap into this new trend? Deploy tools that let your shoppers discover your products by looking at what friends and neighbors bought.