What does it take to successfully rent customers on social commerce platforms?
Through a special arrangement, presented here for discussion is a summary of a current article from the blog of Jason Goldberg, chief commerce strategy Officer, Publicis. The article first appeared on Forbes.com.
The key to successful social commerce is to understand that, in most cases, you are renting rather than buying customers that you own. For any product sold directly on a social platform, you very likely don’t own the resulting customer data. Rather, you are gaining access to those customers from a social platform who has a financial incentive to rent them to the highest bidder.
While renting customers is not inherently a bad practice, the key is to do so profitably.
To avoid overpaying, you need to know how successful you will be converting that rented customer to an owned one, what the cost will be to do so and what the present value of the projected future cash flows from that customer relationship are likely to be. In short, you need to understand customer lifetime value (CLV).
There are so many different experiences in the broad category of “social commerce” so it is imperative to pick the right tactics for the business outcome you hope to achieve.
- Social discovery: Creating awareness and desire for products, even when the transaction happens elsewhere
- Social commerce: Conducting the transaction natively on the social platform
- Video commerce: Conducting the transaction natively in video content on a social platform
- 1-to-many live-streaming: Conducting the transaction natively in live video content on a social platform
- 1-to-1 live-streaming: Providing real time clienteling and one-to-one shopping experiences over a video stream
Some brands may find they are best served by focusing on social discovery with a goal of moving consumers to their owned platforms to make purchases. Other brands with a firm understanding of their particular CLVs may well be able to lean into video commerce, or even one-to-many live-streaming using the native checkout experiences on the platforms. Retailers may find one-to-one live-streaming leveraging their existing sales associates delivers a higher ROI than any other flavor of social commerce. The answer is likely very different for a retailer, a luxury brand or a CPG, for example.
One thing is certain, COVID-19 has rapidly accelerated the potential of social commerce, creating an opportunity for fast movers to yield outsized results.
DISCUSSION QUESTIONS: What’s the key to driving profitable sales across social platforms? What advice would you have for brands and retailers about determining the right approach?