Social commerce (the combination of ecommerce & social media) is, in many peoples minds, the future for shopping. A lot of the ideas relate to behavioural economics (how we're not as rational as we like to think). A piece at Social Commerce Today raises some great points on the psychology that drives shopping in general. Using Dan Ariely‘s book, Predictably Irrational they highlight some of the ideas that drive us to consume and how they relate to social commerce. Here are some of the key points:
▪ The Cost of Social Norms: We are happy to do things, but not when we are paid to do them. Financial rewards or penalties create a market norm, a paid-for transaction that legitimises behaviour – even when undesirable. Social norms and market norms (business, financial rules) are not the same – recognise the difference between the two, and don’t attempt to turn a social norm into a market norm.
▪ The High Price of Ownership: We Overvalue What We Have. We don’t like to lose things – so once we own them, we tend to overvalue them. This may explain why influencer strategies can work – once someone owns your product, they’re likelier to advocate it.
▪ The Cost of Zero Cost: We often pay too much when we pay nothing. Consumers will trade-up, wait in line, and pay more just to be able to get a free gift or bonus, such as free shipping. Free is valuable.
▪ The Power of Price: More expensive is perceived and expected to be better and more effective. Price has an effect on experience. Consider how price is presented and how prices are compared in your product presentation/UX strategy.
▪ The Influence of Arousal: In a state of excitement or arousal, people think and behave very differently. Emotional states trump rational thinking; it’s easier to sell to people when they are excited. Potentially you could use social commerce for live event shopping as opposed to simply adding a retail layer to social platforms and a social layer to your retail platform.
Behavioural economics tells us that we're far less rational in our purchase decisions than other models predict, but that those behaviours aren’t random – they are rather systematic and predictable (as is human nature). For instance, we will often sacrifice personal pleasure for public image – sometimes going against the current simply for the sake of being viewed as ‘different’, even if we prefer what most are doing. Behavioural economics can offer insight into consumer behaviour, which should be considered in social commerce strategies and programs to present things in the most desirable, compelling manner.