Do Alternate Payment Methods Help Retailers?

moneyAlternate payment methods (APM), in eCommerce terms, are ways to complete a transaction without using the normal credit card authorization process.  For the past couple of years Rosetta has completed a quick study of a hundred leading online retailers using the big players in this space.  Paypal, BillMeLater, and Google Checkout are the ones we have measured mostly due to marketshare in the large online retailer category.  New services and startups continue to crop up, as evidenced by the buzz related to Chris Brogan’s sponsored post around the new service eBillMe.

The major play for each of these payment methods is the additional uptick in conversion – the premise that providing alternate ways to pay will reduce people from abandoning their shopping carts and more broadly appeal to those worried about giving their credit card to a website.  Our study shows that both Paypal and BillMeLater have gained retailer adoption in the last 18 months.  Google Checkout appears to have maintained ground at the same relative group.apm

The list of retailers surveyed is the same list from our recent study on Facebook.  While not scientific, it shows us some trends in the marketplace.  The major points of the APM study this round are that the growth rate is continuing among retailers, and Google Checkout is stagnating.  Two major questions have come up:

  • Why is Google Checkout not keeping pace?
  • Why are other big name retailers still sitting on the sidelines?

Google Checkout recently dropped their incentive program for AdWords customers, but retailers aren’t typically quick to respond.  BillMeLater was recently acquired by eBay from Amazon, who also owns Paypal.   I wonder if the ROI is really there, despite low cost to implement these programs.

What I am more interested in is hearing from you.  Do any of the online sites you shop at regularly offer these methods?  Do you use them, or would they influence your buying decision?  Why or why not?  Our study was picked by DM News and Storefrontbacktalk.com (thanks!) but I’d love to hear what people use and why.

Photo credit:  nicmcphee via Flickr

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Untapped CRM: Social Breadcrumbs

listeningpostMarketers have a lot of data. Online, they know where you live, what you clicked on, and what page layout (among other things) is more likely is going to drive you to make a purchase. They know what you searched for, what ads you saw and how long you spent on their sites. Signs are pointing to an elevated sophistication of using that data – get ready, because with the ability to combine your activities in social media with your online behavior, targeted, personalized approaches to marketing to you could be what’s next.

Exhibit A: CMO’s want to read the tea leaves

Mark Taylor, colleague at Rosetta, recently mentioned a study from the CMO Council that highlighted some key insight as to how CMOs feel they are deficient at understanding and leveraging customer data. Some key findings:

Marketers were asked about their top three areas of focus. Among the responses cited:

* 47% want to leverage existing resources to enhance customer communications.
* 41% would like to explore new customized communications technologies.
* 39% want to move marketing investments to Internet and mobile channels.
* 33% wish to improve behavioral targeting of advertising and online marketing campaigns.
* 32% want to adopt and use CRM and sales automation applications.

Exhibit B: Online activities reveal customer emotions and behaviors

I had a conversation earlier in the week with Evan Schuman, former retail technology editor for eWEEK.com and PCMagazine and author of the retail industry blog StoreFrontBackTalk.com. Evan recently posted a provacative article about how semantic information about a user’s activities could lead to more targeted marketing activities, and I’ve had it on my mind since.

Extensive analysis of a consumer’s Web interactions has been used for years to try and target pitches more effectively. But new research suggests that…every digital comment made by consumers anywhere—in a product comment, an IM, on a social network site, in E-mail and via, exchanges with a live chat tech support person, coupled with Web traffic analysis—can be mined for hints as to emotions and other thoughts.

What it could mean

Imagine what organizations who are savvy enough to tie their CRM data to semantic, social media content left as breadcrumbs out there. Evan rightly suggests that every consumer responds differently to emotion. When you’re sad, so you seek out comfort food or buy some new music? When you’re happy do you surprise your spouse at home with a gift? Could your social media activity be somehow tied, through emotion, prior history, or simply by subject, to your purchasing or brand buying behavior?

Some examples

Consider some possibilities. I’m sure we could come up with better ones together but here’s a stab at some.

  • In Twitter your posts could be mined for relevant information. Say, you have a cold and are under the weather, and you like to post about it as you are down in the dumps. Imagine a coupon for Advil Cold & Sinus showing up in your email shortly after you have a conversation about cold remedies, and a targeted ad on a news site gives you 20% off on a home humidifer.
  • In Friendfeed, you show a pattern of mentions about football in blog posts and comments, and favorited Youtube videos – and your favorite team wins the next playoff game. Knowing that when you are on an emotional high you tend to make an online purchase, retailers start showing specific discounted offers pop up on eBay and Amazon related to your team. Beyond the fact that the team won, taking it to the next level targeted people whose buying behavior changes at these peaks.
  • Imagine if in a Myspace posting you share the loss of a beloved pet. You start seeing ads and receiving offers for “comfort” items.

Evan responds,

What consumers receive is nothing bizarre: A pitch from Amazon or Borders or Walmart for a particular kind of product. But what they won’t likely know is that the pitch was prompted by … a MySpace posting the software thought “sounded sad.”

Technologically? This is quite do-able. Psychologically sound? If the software is done properly, yes, these predictive packages can be frighteningly accurate. But here are the big two questions: What about privacy and morality?

Sure there are many concerns about privacy, morality, and transparency. Is it going above and beyond using this type of data to target customers, or just the next logical evolution? It sure makes me think a little more about what I share on searchable outlets, but I am not so sure connecting me with the right products at the right time would be a bad thing. What do you think?

Photo credit: fenchurch via flickr

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Redefining Social Commerce

shoppingDanger?

Folks shy away from the term “social commerce.”  Why?  I asked the question on Twitter, “What’s the first thing that pops in your mind when you hear the term ‘social commerce?’” and I received quite a number of cynical (and humorous) responses:

  • @k_seas: “Pyramid Scheme : – ) kidding”
  • @illig: “Social commerce: Prostitution, human trafficking and ice cream socials. In that order. But I’m not normal. : ) “
  • @heatherrast: ” (1)selling out your friends (like personal info?) (2) the cost of selling out your friends (3) revenue from adsense ads”
  • Taken out of context, my question also sparked a little debate about what social commerce is and caused friend Aaron Strout to weigh in with some great dialog happening in the comments. 

Here’s the danger: People want conversation in social networks to be genuine and to avoid overt marketers hawking their wares.  Social networks bring people to connect, not to shop.  But as technology evolves and people look to leverage their networks as information sources, invariably those networks will turn to helping each other make purchases.  I, for one, take a friend’s recommendation as an important information source before buying – and I have to admit consumer ratings and reviews are helpful and important to me.

Back to the Future

As far as I could dig up, one of the first posts defining social commerce was back on December 23, 2005.  Steve Rubel wrote an intriguing post on 2006 Trends to Watch.  Steve started to predict the trend of advertising and commerce shifting to blogs:

Social commerce, however, is an area that I think holds a tremendous amount of promise as a way for bloggers to make money. It’s a win-win for the bloggers, product marketers and existing e-commerce sites.”

His post went on to show examples of how e-commerce sites had extended functionality to allow bloggers to take advantage of the Long Tail and bring the ability to conduct commerce on their blogs, beyond the innovation of Google ads.  At the time, Yahoo!’s Shoposphere was the highlight, where users could collaborate on shopping lists.  More posts went on about preparing for social commerce as the next big wave of innovation that would push the continuing trend of online shopping growth (combined with broadband adoption at home and at work along with the continual adoption of Web 2.0 technologies like Flash).  But the term “social commerce” seemed vaguely defined to include innovation in customer experience on commerce sites, and overall the term remained nebulous. 

The Year of Social Commerce?

Jay Deragon predicted 2008 would be the Year of Social Commerce.  On January 1, 2008, he wrote:

While social networks continue to grow exponentially the next growth curve will be driven by the “holy grail of economics“, social commerce. Social commerce may actually become the dominant development in 2008 and subsequently turn business models upside down and inside out.

Jay is on to something here.  While the last year brought the challenges of Facebook’s Beacon product, and there continues to be large debates about ways to monetize social networks, big ticket retailers are starting to get involved by adding functionality on their own e-commerce platforms.  Already we have seen reviews, stories from other customers and ratings start to really permeate the online retail space – where retailers that don’t have them are becoming the exception. (Bazaarvoice is a business partner of my agency, Rosetta, and one of a few vendors who provide user ratings and reviews as a service to be integrated into a web commerce user experience.)  In addition to sites adding this functionality – and receiving a bump in conversion % of visitors – here are some other examples of what vendors are doing:

  • Facebook Connect and platforms like Open I/D  allow corporations to authenticate social graphs on their own sites.
  • IBM did a recent case study integrating the capabilities of Lotus Connections with Websphere Commerce.  
  • Companies like LiveWorld have launched products to integrate social interactions directly on websites, like their recently launched LiveBar product.

Based on watching what vendors out there are doing, I’d argue that beyond the initial premise of bringing commerce to social media tools and networks, it appears the next wave is bringing the social networks back to commerce sites.  Some companies like eBay and Amazon do this well, but I think more merchants will be trying to figure this out.  Bringing customers together to help on purchase decisions can be a good thing if it’s handled properly and e-commerce companies engage their customers the right way, beyond just user ratings and reviews.  What do you think?

Photo credit: racineur via flickr

 

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Study: Only 30% of Top Retailers on Facebook

Opportunity Brulant, my employer, recently completed a study of 100 of the top online retailers to see which ones have a “fan page,” a feature that Facebook launched in November 2007.  Only 30% of the retailers surveyed had a page out there.  Yep, only 30%, despite lots of hype about the platform.  That’s it?  I believe retailers are missing out.  According to the study, some of the leading brands currently leveraging fan pages on Facebook include Bath & Body Works, Linens-N-Things and Victoria’s Secret. Among those that do not have a fan page presence are Bed Bath & Beyond, Circuit City, and J. Crew. 

Let’s take a step back for a minute.  I have been using Facebook for several months.  Like many, I went through the Facebook cycle of addiction:

  1. Shock (from my younger-recent-college-grad-cousins finding me online),
  2. Elation (reconnecting with summer camp, high school and college friends),
  3. Saturation (deluge of work and professional colleagues’ connection requests) and
  4. Annoyance (no, I don’t want to be “bitten,” “poked,” or compared to a celebrity, but thanks for asking repeatedly).

During this time I have learned much about viral marketing, useful and useless applications, and even met with a Facebook rep to learn about the advertising platform (see Top 10 Things You May Not Know About Facebook…For Marketers).  Facebook is a marketer’s dream - the platform has an average of 200 data points on each user.  As more compelling applications are developed, and Facebook explores new ways to achieve better usability, the potential for “stickiness” is improving.  People are spending more time on Facebook (despite recent declines in unique user growth), the company is expanding it’s presence globally, and users have more and more platforms to express what they like and dislike.  Online retailers should be looking at this as unchartered opportunity.  So why are so many retailers holding out? 

A ‘fan page’ is a free profile that a company can set up and maintain, allowing users to declare they like a brand.  If consumers like a brand, they can “fan” the page.  If they don’t like the brand, they simply ignore the page.  Jeremiah Owyang of Forrester wrote a thoughful post about “fansumers” explaining the implications to Facebook, in November 2007.  The Facebook Page is a surefire way to connect with passionate fans of a brand.  There is no requirement to buy advertising on Facebook (although once a company has a page it’s easy to do).  The “Facebook Pages Insider’s Guide,” available to anyone who sets up a fan page, describes the opportunity:

Facebook Pages give business the opportunity to build a consumer base, sell products, run  promotions, schedule appointments or reservations, share information, and interact with customers…Pages enable customers to interact, learn, purchase, and spread the word about your business to their friends. [emphasis added]

Retailers that are not at least considering whether their customers are on Facebook are missing out on an opportunity.  With little to no investment, minimal PR risk, and big upside potential, a page can be set up and become a natural extension of their online presence.  There is no need to “push” your page – if a company already has a loyal consumer base the word of mouth proposition will be a good start.  With some experimentation and a willingness to interact with “fans” retailers can improve their customer engagement, build brand awareness and take advantage of word of mouth marketing.  What is holding these companies back?

Please reach out to me, on Facebook if you like, if you would be interested in a copy of the survey or would like to talk more about Facebook Pages.

UPDATE: Day after this was posted, TechCrunch published metrics on Facebook overtaking MySpace as the #1 social network.  Opportunity knocks…

 

Photo credit:  Iain Alexander via Flickr