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October 28, 2020

The world of commerce is evolving. A number of years ago, before “Google” was a verb and Amazon was still best known as a bookseller, consumers purchased brands with which they were familiar, brands their social circles used, and brands they could find in brick and mortar stores. But in a market that’s increasingly digital-first and marked by rampant price switching, brand loyalty suffers.

Today, it’s easier than ever to start a brand. Successful direct-to-consumer brands like Purple, Allbirds, and Dollar Shave Club proved early in the eCommerce age that companies no longer needed an in-person buying experience to be viable. And as artificial intelligence, machine learning, and the promise of a blockchain-backed future make headlines, eCommerce revenue continues to grow at a breakneck pace.

But technology’s blistering growth in the sector doesn’t come without growing pains. The death of what some call “bad retail” came when some businesses failed either to seize the digital day or realize what technology could not replicate. Many retailers doubled-down on their physical spaces, recognizing the power of so-called “third places” and the value of tangibility.

Even as retailers have invested billions of dollars in technology and physical spaces to avoid the fate of their defunct retail brothers and sisters, some aspects of the customer journey stay constant. Namely, 80% of consumers still purchase on recommendations from people that they know— but unfortunately, consumers are less sticky when shopping online. Cart abandonment rates are high, conversion rates are low, and price switching is rampant.

Social commerce eliminates many of those brand-weakening, price-switching moments. When a consumer purchases on a recommendation from a real-life human, the purchase funnel is shorter, effectively harnessing the existing trust and relationship to increase conversion rate. Case in point: referral traffic, though lower in volume, generates twice as much revenue for its share of traffic as compared to paid or organic search.

To improve the efficacy of online commerce, many brands have contracted with macro influencers (folks with hundreds of thousands of followers on social media) to advertise their products. One of the most common influencer models in the wild goes something like “Hey, check out this product I’m trying! I love it for reasons x, y, and z. Click the link in my bio and enter my coupon code to get 10% off your order!” Followers are incentivized by the discount and influenced by the perfectly-polished social media star in their feed. Behind the curtain, brands measure the success of a relationship with a particular influencer by the number of coupon codes redeemed in addition to top-level engagement metrics (reach, link clicks, likes, comments, saves, etc.) on co-sponsored posts— but it’s far from a perfect model.

Macro-influencers have earned a reputation for inauthenticity. Their online presence may be the stuff of dreams for many of their followers, but consumers increasingly realize that influencers have “sold out” on their fame to make money. In fact, engagement rates on accounts with more followers on Instagram, Facebook, and YouTube are often much lower than those on typical personal accounts. Brands and influencers alike have responded with more authenticity and transparency about ads themselves and deeper discounts on influenced purchases— the former requires a significantly higher investment of time to craft the right message, and the latter directly erodes profits for brands that would otherwise sell more product at full price.

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The future of social commerce, if it is to remain a lucrative business practice, will have to be more personal. Many brands have found their influencer marketing efforts are more effective when they partner with micro influencers, or those with less than 100,000 followers. These folks typically have a more niche following, so brands can more reasonably predict the interest of an influencer’s followers in an effort to increase engagement. For example, a cosmetics brand would much more likely partner with a young female micro influencer than a male athlete micro influencer, knowing that the followers of the former are far more likely to be interested in cosmetics than the followers of the latter. But managing these relationships takes much more time for a brand, and their engagement rates still fall far from those of the everyday person.

Researchers agree that in general, social media accounts with a smaller, more focused following have better results than their larger counterparts.

CMS Wire defines mega influencers as those with 100,000 to 1 million followers, micro influencers as those with 1,000 to 100,000 followers, and nano influencers as the “new breed” with less than 1,000 followers.

Mention defines nano influencers by their valuable characteristics, emphasizing that they have:

  • Closer relationships with their followers
  • Higher engagement rate
  • More trust from followers
  • Increasingly niche interests
  • More potential for scalability because there are more of them

When it comes to social commerce, it’s about the quality of followers more than the number you have. And as it stands today, this new breed of nano influencers have by far the best relationships with their followers. This shouldn’t come as a surprise given that most of the folks under our definition of “nano influencer” are everyday people interacting with their established circle of family and friends rather than strangers that have found them online. They’re typically more authentic and provide much more personalized attention to every interaction on their accounts. These relationships fill in the gap where it fails with larger influencers, and it’s indicative of the larger problem with social commerce: a lack of personal connection.

Successful companies in the future of social commerce will strike the balance between modern digital and people-based marketing.

In fact, the rise of social commerce shows us that shopping is (and always has been) an inherently social experience. Social commerce sales are on the rise even in spite of a dropoff in in-person shopping. Ultimately, conversations about brands and products are still happening— in fact, they’re happening more often than ever before with social media, and customers prefer to make loyalty purchases online rather than in-store.

What is social selling?

Social selling is the act of developing, nurturing, and leveraging relationships through social media to sell more products and services. It’s all about leveraging your social networks to find the right prospects, build meaningful relationships, and ultimately, make more sales.

The case for social selling grows stronger every day: Social media usage is at an all-time high. In fact, according to Brandwatch, people spend an average of 142 minutes a day on social media. With billions of active social media users across the globe, social media networks are only becoming more and more powerful, adding as many as 10 users every second.

Massive market potential exists where consumers build their personal online presence— instead of following folks around with cookie-based advertising, brands can establish more meaningful relationships with their customers using their existing social circle. In other words, you must develop deeper individual connections rather than increasing ad impressions per person. That way, you will gain customers who will come back for more— building incredible brand loyalty. In fact, 31% of B2B professionals claim that a peer-to-peer social selling strategy helped them build deeper relationships with their customers to increase lifetime value.

Selling Transformed

Platforms like Instagram and Facebook change the way we communicate and consume. Some of the more popular features that can be used during a social selling strategy include Instagram Stories, IGTV, Facebook Live, Facebook Stories, and the new Reels format on Instagram. When compared to traditional posts, these newer formats infuse more personality to the messages being shared.

One new ‘tool’ that really inspires creativity is TikTok. There’s no denying that this platform’s popularity has sky-rocketed over the last year, and it seems it will only grow more popular in spite of recent (now resolved) regulatory concerns. This kind of social video app will gather large numbers of people and that is a clear sign that companies need to take advantage of it if they want to increase their sales figures.

Social selling has never been more important. It now constitutes a major part of the sales cycle since consumers demand information in real time. Moreover, social media platforms have become places where brands need to nurture trust if they aim at success, and using a trusted source of truth in a consumer’s existing circle of friends is the natural path to modern digital selling.

The future will bring even more importance to social selling as more and more brands use social selling methods to personalize the way they sell their products. Today’s market requires you to meet your customers where they are to engage them, otherwise you risk lower sales and the stagnation of your business.

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Leveraging the gig economy

Of course, a social selling strategy requires buy-in from the folks who will connect with your end customers. Companies who leverage gig workers enjoy immense scalability while conserving the effort that typically surrounds managing full-time employees. This doesn’t mean ignoring other marketing efforts, it just shifts the strategy to reflect the shrinking digital world. In fact, DirecTech Labs suggests that companies must leverage technology to “increase the quality of the communication” and “make sure they are getting more personalized experiences to keep [gig workers] loyal.” Building better relationships with customers through their existing, real-life social network inspires lasting brand loyalty.

This autonomy is especially valuable for people who have to juggle their work responsibilities with taking care of children or other important responsibilities. Parents, for example, are often forced to do whatever they can to drop their children off at school and get to work on time. In many cases, they have to rely on family or friends to help out. Worse, these parents, students, and other busy professionals may be forced to turn down job opportunities that conflict with their other responsibilities. Not only is this demoralizing, but it can also jeopardize their careers and financial security. Gig work is inherently flexible, providing meaningful opportunities for folks who might need additional income and who interact with customers that aren’t reached by your other market efforts.

Case study: Levi’s

Traditional influencer marketing is reaching its third, “mature” phase, according to Euromonitor International Now that platforms for communication are established and macro influencers have successfully monetized their reach, new types of influencers (like micro and nano, which we mentioned above) are emerging along with new tactics for influence.

Savvy brands like Levi’s have already leveraged these evolving trends in social commerce. The iconic denim brand employed influencers as gig workers earlier this year on TikTok, where they documented the design of limited-release printed denim customized by fashion influencers like Gabby Morrison and Everett Williams. The campaign created a product that had ownership for the influencers- instead of an outdated and impersonal product promotion, Levi’s shifted the responsibility for enthusiasm to the creator of the denim designs. Videos featuring the bespoke designs included “Shop Now” calls-to-action that generated twice as many product views on Levis.com and doubled the average video view time on TikTok.

In the months since Levi’s successful partnership with TikTok, the video platform has launched a new partnership with Shopify, which signals the industry’s trend toward social commerce at scale. Shopify powers startup to enterprise businesses worldwide, and this new partnership opens the door for a massive new opportunity with gig workers, like Levi’s fashion influencers, who have a palpable passion for what they’re doing.

Successful gig workers in social commerce are more than just good salespeople: they believe in what they are selling because, in many cases, it has changed their own life. Think about the busy mom who has clear skin for the first time in her life, the athlete making performance breakthroughs, or the chronic pain sufferer who has found relief, all because of a unique product. These folks are more than just brand champions— they should be using their energy to build teams of like-minded people and finding customers who truly benefit from what they’re selling.

The gig economy is here to stay. Corporations should leverage this flexible workforce addition to their advantage, but doing so successfully requires a deliberate approach. Scalable technology that enables social selling, particularly for nano and micro influencers, is essential to success in the world of social commerce. But when deployed successfully, technology can provide the resources and training that gig workers need to be rewarded for their brand evangelism.

About DirectScale, Inc.

DirectScale has been setting the standard for social sales software platforms since 2013. DirectScale’s powerful SaaS platform boasts fully configurable management tools that are vital to not only running, but to efficiently tracking and growing a business.

With its focus on providing an intuitive and impactful customer experience to both corporate clients and independent influencers, DirectScale has revolutionized the way social selling businesses can be launched and managed. To learn more, visit directscale.com.

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