Loyalty Truth

Social shopping is one of the new terms being circulated today among business people and consumers. Shopping has always been a social activity, so the name doesn’t define anything that we don’t understand intuitively.

Not so long ago, the term might have conjured up images of two friends going to the mall together, discussing stores, brands and products, and ultimately influencing – and helping with – purchasing decisions.

What does Social Shopping mean in 2011?

To understand the concept and gain vision on where this movement is heading, break down the thought into activities that make up a social shopping experience.

1. There has to be a purchase transaction at some point. The question is, does “Social”, as it is currently being used, refer to online, offline, or both?

2. Regardless of channel, “social” implies that a sharing of information takes place. We somehow recommend favorite products and brands to each other. We might even make a formal referral of a friend to brand.

3. There is probably a role for incentives in a Social Shopping network. Sure, the engine can run on Word of Mouth marketing, but referrals in particular need to be driven with incentive and there needs to be some value offered by merchants to ignite the movement of a social network of people towards their brand.

Given the components mentioned, I’m not sure I buy the introduction of shopping carts on Facebook pages as “Social Shopping”. In my book, F-Commerce is just one aspect of the equation. In fact, one could argue that F-Commerce is just good old e-commerce delivered through a new channel and facilitated by a new payment currency, in this case, Facebook Credits.

Social shopping is better defined as an eco-system where value for shoppers and merchants is generated as networked shoppers share opinions, recommendations, and make referrals to drive an increased share of their spend to the merchants participating in the network. Shoppers are provided incentive in the form of rewards (cash back or other means) and will continue to patronize merchants in their network as long as the merchants play the game.

The fruits of “search and discover” will be on display as shoppers will recommend merchants they want to see in-network and prune out those that jumped in, but don’t deliver satisfactory product or service. For merchants, the model is highly evolved from a new customer acquisition and retention standpoint and they can be assured that their marketing dollars are well placed and have measurable return.

To provide a tangible example of a social shopping scheme that works, have a look at Zavee.com. Zavee is designed to encourage shoppers to patronize a participating group of local merchants. Their tagline of Simple, Local, Social is an apt description of the value proposition for consumers and merchants.

Zavee merchants can create their own highly flexible promotional offers, with cash back awarded on purchases. Zavee pays out cash rewards to its shoppers on a quarterly basis. Merchants pay only on activity, which rationalizes the relationship between marketing expense and revenue, and obviously reduces risk to the merchant. There are no sign-up or ongoing maintenance fees for merchants, nor are there complicated changes to point-of-sale systems.

In fact, there is not even a membership card needing to be swiped as Zavee works on a registered card basis. Shoppers enrolling can register as many of their favored payment cards as they wish. From that point, smart shoppers visit the Zavee site to identify merchants, review the available offers, and then do what they do best – shop.

On the social track, Zavee shoppers leave reviews and comments about Zavee merchants on the web site. The remarks are relevant as only shoppers making a purchase with a merchant may comment on that merchant. That squeezes out the troll-like nature of some reviews seen on line today – both falsely negative reviews from competitors and falsely positive ones from the merchants themselves (or their publicists) – and spikes the timeliness, relevancy and reliability of reviews on Zavee for other shoppers.

To complete the value generated within Zavee, each purchase made by a shopper generates not only the cash back reward, but “Care Shares™”, i.e. a unit of value that can be accumulated by the shopper and given to benefit one of the local charities affiliated with Zavee in its network. Care Shares are triggered by shopping and funded jointly by the merchant and Zavee itself, giving rise to a new take on “Social Giving”, another term being tossed about today and with multiple implications.

Zavee is focused on serving the local merchant market. It is being piloted in South Florida and early results are positive. The Zavee model and bonusing engine could easily be adapted to serve an online community or a cross-channel set of  merchants, but Zavee is about connecting local shoppers with merchants within the community and creating value for all parties including charities. It might also represent a bridge between traditional loyalty marketing programs and the way Millennials wish to engage with brands as well as the way forward for coalition loyalty in the U.S.

Given the challenges that small-medium businesses have in today’s market, Zavee is a great asset for a business owner and a more much efficient step up from spending marketing dollars on the Yellow Pages and coupon packs where the investment is non-targeted, funded up-front and the results hard to measure.

People have always engaged shopping as a social activity. Now, they have a vehicle to shop, earn, share, and give all while supporting the local merchants that are vital to our communities and the fabric of our nation.