Peer-to-peer recommendations and retailer recommendations in social networks

One name to start this post with: Amazon. As you know, Amazon, just like many other online retailers works with a system of recommendations.

You bought 3 books on philosophy, 2 on marketing and 4 on some programming language? Amazon will regularly send you new titles in function of your buying history and show you some cool ads and recommendations when you visit the website.

The ads that consumers see on retailer websites are based on their buying history and what they do on the sites (even from third parties) and what pages they visit (behavioral targeting).

However, many retailers, including Amazon, also offer the possibility to buyers to add comments regarding the products they bought.

In the meantime, the social networking revolution, gave birth to numerous platforms and tools where people can share their opinions and recommendations regarding products and services (in fact, people always did that, long before social media existed).

Some smaller and niche social websites are even entirely built around this concept, for specific types of products or services like restaurants, holiday resorts and much more.

The state of product recommendations

Peer-to-peer reviews and recommendations are mainstream and people seek the advice others, especially if these peers are people they trust for one reason or the other (reputation, personal connection, etc.).

In its 2009 Personalization Survey, that “measures consumers’ interest in and perceptions of personalization and product recommendations” ChoiceStream found that “retailers are missing the mark on product recommendations”.

Of course I am not talking peer-to-peer recommendations anymore now, I’ll come back to that later. Now, I’m talking recommendations by retailers.

According to the ChoiceStream survey, “the quality of product recommendations on retailers’ sites declined 31 percent year over year with many more shoppers reporting that they received poor quality recommendations in 2009 versus 2008”.

Furthermore, many consumers express concern about their data.

I quote: “Overwhelmingly, consumers report that they are aware that publishers share information about their demographics and online click behavior with retailers to help retailers target ads. 74 percent claim to know that this takes place. And, 83 percent of those shoppers express concern about the practice. The biggest concerns are that retailers might share their data with other retailers that the shopper doesn’t know or trust, or that their data might not be secure”.

Social networking not a hot spot for recommendations in 2010?

The survey also looked at social networks as a way for retailers to spread and share product recommendations. The result? Social networking is “not a hot spot for recommendations in 2010”.

I quote again: “Of the respondents who belong to a social networking site, only 8.5 percent report that they have ever made a purchase while on the site. And, only 27 percent indicated any interest in product recommendations from trusted retailers. Based on these results and other market research, retailers are advised to promote their brand experience and offers using social networks but defer significant investment in product recommendations until the market for commerce on those networks matures.”

This is where, according to me, peer-to-peer reviews and recommendations come in and the results of the report lead to some wrong conclusions.

First of all, social networks are not about online shopping. OK, social tools such as Twitter, do generate sales for businesses that know the rules and best practices, but in general social network users are not in a buying mood. They are in a mood of sharing, connecting, discovering, communicating, etc.

But that doesn’t mean retailers should leave social networks “until the market for commerce on those networks matures.”

They can even use them in their recommendation strategies. However, they have to understand how social conversations work, what word of mouth marketing is about and how you create and spread stories in a relevant way.

I agree with the report where it says that recommendations, including those of trusted retailers, are important but, according to me, retailers should increase their focus on peer-to-peer recommendations and inviting their customers to share their experiences and at the same time enhance them.

But they can also spread recommendations themselves, if they realize that trust is something you have to earn in the social media space too.

Just some thoughts. What do you think?

Read part 1 of the survey here
Read part 2 of the survey here

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