What a steal! The science of social selling

26/11/2018

P2P resale platforms such as Depop have boomed in recent years, but should brands fear these digital communities? Our research partner, Canvas8 look into how social selling impacts brand perceptions and loyalty.

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Insights and Data 

  • People who sell through branded social communities form close relationships to the focal label, spending more on it via second-hand and traditional channels
  • They begin to see their standard purchases as investments that they can use, lend, and resell
  • For those who are new to a brand, a dedicated social selling community can signal product desirability and may provide an accessible entry point
  • These groups offer a template that brands may adopt to engage and learn from their biggest fans
  • Eight in ten Gen Yers claim to never buy a product without first reading a review (BOXT, 2018)
  • 29% of US Gen Yers say they’re likely to find out about new products and brands through social media platforms (Global Brand Index, 2017)
  • 58% of Britons aged 25-34 say they'd spend more on a brand's products and services if they feel part of its community (Dialogue, 2017)
  • Just 19% of American Gen Yers say they’re devoted to any specific brands (Morning Consult, 2018)

Our research partner, Canvas8, spoke to Dr Catherine Armstrong Soule, assistant professor of marketing at the College of Business and Economics at Western Washington University. Here they discuss her study on social selling.

Scope


On November 7th 2018, peer-to-peer marketplace Depop hosted ‘Wear the Movement’ at London’s Corsica Studios, a one-night-only exhibition dedicated to ‘90s rave culture. Over the following days, iconic items from the show were ‘dropped’ piece by piece on the platform and snapped up by those seeking a piece of cultural history. Picking up over 2,000 followers in less than a week, the online shop’s popularity demonstrated the power of social communities in driving purchases.

With Depop boasting more than ten million users and platforms like Poshmark finding success with a similar model, big brands are increasingly interested in harnessing the power of social selling. Beauty giant Coty, for instance, has invested $600 million in social selling cosmetics brand Younique, while Ace & Jig is trying to merge its online and offline communities through textile swap parties.

For brands, tapping the bonds built within social communities can be a powerful move. Indeed, research has found that members of such branded groups will splurge up to 20% more on the focal label, and nearly six in ten people in the UK aged 25-34 say they’d spend more on a brand if they felt they belonged to its community. “People start to do more in these communities than just buying and selling – they start making relationships with each other as well,” says Dr. Catherine Armstrong Soule, an assistant professor of marketing at Western Washington University. “These communities can be gateways into a brand for new consumers and they can be super beneficial for brands.” Canvas8 spoke to Armstrong Soule, co-author of ‘Buying Unicorns: The Impact of Consumer-to-Consumer Branded Buy/Sell/Trade Communities on Traditional Retail Buying Behaviour’, to understand the implications of social selling for people’s brand perceptions and loyalty.

Why is this topic important to understand?


Social selling is exciting because it’s so underappreciated. Marketing and behavioural science have focused on the traditional retailer aspect of consumer-to-consumer selling with marketplaces like eBay and Alibaba. But people’s consumption patterns have changed rapidly in the last decade. It’s no longer about just a few thousand people selling used furniture here and there – millions of people are involved in these activities every day.

In the past we learnt a lot about how people use eBay or Craigslist but, from a psychological perspective, it’s hard to understand how these forums change a consumer’s traditional consumption because they’re brand agnostic. In our research, we studied a specific type of social selling called branded buy-and-sell trade, which is when communities are organised around one focal brand. From a research perspective, these communities are exciting because they create a microcosm you can test and explore.

We wanted to look at how this type of social selling changes relationships with a brand, both psychologically and in terms of people’s consumption habits. We were also interested in looking beyond the impact on traditional purchases and into things like loyalty, word-of-mouth, and strength of brand engagement. In social selling groups, brand communities are not only about fandom – they are premised on exchange. We were interested in how these exchanges influence people and affect brands.

How did you go about conducting your study?


We were trying to understand social selling at a high level. Why do people do it? How does it impact brands? How is it shifting the entire retail landscape? The main thing we looked into was how engagement was changing, and how people’s increased activity in these branded buy-and-sell communities impacted their regular retail spending and consumption of the brand.

We hypothesised that social selling communities are made up of three different kinds of people. There are people who just use the communities to sell products, people who use them only to buy products, and a much bigger percentage of those who both buy and sell. We wanted to look at how these different roles changed people’s identities, relationships, and connections to the brand.

Methodology-wise, we ran some netnography and also manually collected data from Facebook and ran some content analysis on the posts and interactions. We also conducted descriptive surveys and held in-depth interviews with people who took part in social selling. We asked them what they liked and disliked about it, what types of community interactions they had around it, and how their relationships to brands might have changed as they became more engaged with buying and selling in this way.

What were your key findings?


Our main finding was that people who engaged in social selling through both purchasing and selling had changed their relationship with the focal brand. Surprisingly, social selling resulted in people having a closer relationship to brands and they ended up spending more money on them overall – not just through community buy-and-sell activities, but in traditional retail too.

Instead of these activities taking away financially from the brand, they actually increase people’s spending because these individuals began to see their standard purchases more as investments. They were buying items to use, lend, and hypothetically even resell, which is a change in the way shoppers have previously thought about their consumption.

We also found a lot of evidence that the more engaged people were, the more they valued the social relationships that formed in these communities. Some of the people we spoke to said they had been recommended a brand by a friend, but found in-store prices too expensive to justify a purchase. When they later discovered communities allowing them to get the same products second-hand, they were willing to put money down for it. Branded social selling sends a signal of desirability and quality to people that can act as a gateway to traditional purchases.

A layperson’s response to social selling might be to think that it is bad for brands and good for consumers. Brands sometimes see it as a missed opportunity to be part of the conversation. Our results showed that they have nothing to be worried about. Instead of social selling detracting financially from brands, it actually increases traditional spending on them. This was down to changed perceptions of the brands involved.

Insights and opportunities

  • Social selling doesn’t have to spell bad news for focal brands. In fact, its effects on customer satisfaction are overwhelmingly positive and some brands have seen success by engaging groups this way. Take Sephora as an example. The beauty giant successfully reached out to peer-to-peer groups Dolly&Co and UKMakeUpAddicts before launching its Beauty Insider Community. Now boasting over 40,000 active users, its high engagement levels show other brands how online communities can provide vital feedback from the people closest to their products.                       
  • Branded communities show how deeply social ties factor into buying behaviour. Nowhere is this more evident than in the Gen Y’s thirst for recommendations; eight in ten of them claim to never buy a product without first reading a review. The power of word-of-mouth marketing has long yielded returns for brands with cult followings, like Lululemon and Harley-Davidson, and this added value is amplified in social selling communities. The strong interpersonal relationships people form with one another around brands like LuLaRoe or Ace & Jig can boost perceptions of their overall value.                                                                                                                                                                                     
  • Despite traditional brand loyalty being on the decline among young shoppers – just 19% of American Gen Yers say they’re devoted to any specific brands – social selling offers a way to get around this fickleness. People might switch between brands more nowadays, but that doesn’t mean they’re less engaged. Social selling encourages them to see products from focal brands as investments, approaching them with long-term goals like reselling in mind. Part of this is owed to the blurring of lines between social and transactional formats in these spaces. “Posts from these buy-and-sell groups pop up alongside your regular social content so you’re not necessarily shopping, but this brand starts to become part of your social network,” explains Armstrong Soule. “The familiarity and the constant interaction with other people around this brand naturally deepen your relationship with the brand itself.”                                                                                                                                                                   
  • With 29% of US Gen Yers likely to find out about new products through social media platforms, social selling presents a valuable opportunity to improve brand discovery. Partnerships like Amazon x Snapchat are already harnessing the power of social ties to tap into different demographics of consumers, and feeds like Spark – an Instagram-inspired shoppable feed – are also translating social media interactions into retail opportunities. By building off the strength of pre-existing networks of people, social selling can offer a valuable route through which brands can connect with new groups of shoppers.

 

This article first appeared on Canvas8 here.

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