Peer-Influenced Consumption

Description

"So much has been said about social media and the rise of social commerce as the new marketing frontier that we’re not going to (re)make the social case here. Instead, we’ll focus on how the influence of friends, fans, and followers on consumers’ purchasing decisions continues to become more sophisticated and thus more powerful. Let’s call it the F-FACTOR:

THE F-FACTOR | Consumers are increasingly tapping into their networks of friends, fans, and followers to discover, discuss and purchase goods and services, in ever-more sophisticated ways. As a result, it's never been more important for brands to make sure they too have the F-FACTOR.

Why is the F-FACTOR important to consumers? It offers the promise of a consumption arena* that is more efficient, more relevant, and more interesting than before, where consumers either had to spend endless time and effort on trying to discover the best of the best, or had to rely on sources that were distant, unknown or untrusted (read: brand-driven), and therefore potentially unreliable or irrelevant.

Of course, consumption has always been social: people have forever been influenced by what those around them think and buy. KellerFay, a US word of mouth marketing research consultancy, estimates that there are nearly one trillion conversations about brands every year in the US alone. But, just as with so many consumer trends, while the core consumer behavior isn’t new, technological developments are unlocking new manifestations of that behavior, which here amplify its importance and impact. Indeed, the F-FACTOR is being fueled by new tools and platforms available to both consumers and brands, and by the sheer numbers of people now using and contributing to these tools." (http://www.trendwatching.com/trends/ffactor/)

Typology

Via Trendwatching.com :

"here are just five of the ways that the F-FACTOR influences consumption behavior:

Discovery

1. F-DISCOVERY: How consumers discover new products and services by relying on their social networks.

1. Polyvore bills itself as ‘a community of tastemakers’, where users can clip products from around the web and compile them into virtual ‘looks’ or sets which can be shared across social networks. The site also features sets from brands and celebrities, with users able to follow, like and buy desired items.
2. Boutiques.com is a personalized shopping site from Google where users can establish their own collection of favorite items from around the web.

Ratings

2. F-RATED: How consumers will increasingly (and automatically) receive targeted ratings, recommendations and reviews from their social networks.

In April 2010, Levi's was the first big brand to integrate its online store with Facebook, allowing shoppers to view which products their friends had ‘liked’, interact with them and create a 'like minded shopping' experience.

Feedback

3. F-FEEDBACK: How consumers can ask their friends and followers to improve and validate their buying decisions.

"anonymous reviews aren’t always what consumers need or want; they can lack relevance and context, and consumers with many options sometimes just want an unambiguous, or finite opinion.

Which is where F-FEEDBACK comes in: consumers actively disclosing their purchasing intentions and reaching out to their friends and contacts for personalized feedback.

Some indicators:

• Product recommendations from family (63%) and friends (31%) are the most trusted. However 81% of US consumers now go online to do additional research, with 55% looking for user reviews, and 10% soliciting advice from their social networks. However amongst people aged 25-34, this figure rises to 23%. (Source: Cone Inc, June 2010)

• 90% of people trust the recommendations of their Facebook friends (Source: ExactTarget, August 2010)

• 31% of daily Twitter users ask their followers for opinions about products and services. (Source: Edison Research & Arbitron Internet, April 2010)

One more key driver here: with more and more consumers increasingly viewing their online reputation as something to enhance as well as just protect, the quality of answers on Q&A services is rapidly improving."

1. LoveThis is a user review website for people to write tips and recommendations to share among friends on their network.
2. Travel Q&A sites Gogobot and Hotel Me are trying to bridge the gap between known friends (who are trusted but may not have the answer) and wider audiences.

Social Shopping

4. F-TOGETHER: How shopping is becoming increasingly social, even when consumers and their peers are not physically together.

"consumers usually don’t actually know the other members of the group that they’re buying with. So, while consumers get to leverage the power of the web to benefit from better deals, the actual shopping experience frequently lacks the F-FACTOR. Consumers, of course, have strong incentives to share certain purchases, especially for F-FACTOR-friendly experiences such as buying event tickets: what’s not to like about automatically inviting friends to a concert or movie right after purchasing a ticket?

• 83% of consumers state that they tell their friends if they get a good deal. (Source: JWT Intelligence, December 2010)

• Facebook announced in April 2011 that every time a user posts on Facebook about buying a ticket from Ticketmaster, the company estimates they receive an extra USD 5.30. (Source: New York Times, April 2011)

• Eventbrite, the event ticketing site, found that users are 10 times more likely to share details of events they have bought tickets to (than those events they are still considering whether to buy). The ticket sales generated by people who share details of purchased events are 20% higher than if they haven’t yet bought tickets. The site estimates that the value of a Facebook share is USD 2.53. (Source: Eventbrite, March 2011)

1. Disney’s Tickets Together Facebook app enables users to buy theater tickets directly from Facebook, posts details of the screening on a user’s wall and enables them to invite friends to buy tickets.
2. Indian consumers can do something similar with ticket site BookMyShow’s Ticket Buddy Facebook app.
3. Ebay’s Group Gifts feature, launched in November 2010, allows users to invite friends to split the cost of a gift. The application integrates with Facebook to allow friends to be privately invited, while information from the recipient’s profile can even be used to suggest suitable gifts.

Social Networks as Service

5. F-ME: How consumers’ social networks are literally turned into products and services."

personalized products and services based on the activities and output of one’s social network:

• Flipboard is an app that integrates tweets and updates into a single, personalized online magazine. Launched in July 2010, the free app automatically creates a magazine from the user's social content, letting readers quickly flip through the latest stories, photos and updates from friends and trusted sources. Links and images are rendered right in the digital magazine, so users no longer have to scan long lists of posts and click on link after link; instead, they instantly see all the stories, comments and images in one place.

• March 2011 saw the launch of LinkedIn Today, a socially curated news homepage for users that rounds up the stories and links that are being read, shared and discussed by a user’s network."

(http://www.trendwatching.com/trends/ffactor/)

Discussion

Trendwatching.com:

"In 2011, word of mouth and recommendations will be even more dependent on P2P dynamics. If TWINSUMERS* (consumers with similar consumer patterns, likes and dislikes, and who are hence valuable sources for recommendations on what to buy and experience) are all about improving 'search curation', SOCIAL-LITES are all about discovery, as consumers become curators; actively broadcasting, remixing, compiling, commenting, sharing and recommending content, products, purchases, experiences to both their friends and wider audiences.

• An update on our TWINSUMER trend will find its way to you soon. That is, if you're signed up to receive our monthly Trend Briefings.

Why would consumers want to become curators? Because many of them are investing time and effort in building BRAND ME, via online profiles that record their opinions and recommendations. And as audiences in knowledge economies value interesting, relevant and useful tidbits, they bestow status on those curators or SOCIAL-LITES who share.

Furthermore, it's never been easier to be a SOCIAL-LITE. Rather than having to call, text or even email people personally, social networks' streams allow users to easily broadcast information to a wide range of people without interrupting or intruding.

So, consumers will talk more about brands this year than ever before, and opportunities for brands that create engaging content that consumers want to share, or that have personalities that actually engage consumers will also be bigger than ever. Making it easy for SOCIAL-LITES to retweet or 'like' this content is of course requirement number one." (http://www.trendwatching.com/trends/11trends2011/#sociallites)

Examples

1. Three quarters of Facebook users have 'Liked' a brand. (Source: AdAge/ Ipsos, February 2011)
2. Over 50m users 'like' brands every day (Source: BrandRepublic, May 2011)
3. Juicy Couture found that their product purchase conversion rate increased by 160% after installing social sharing features (Source: CreateTheGroup, February 2011)
4. Incipio Technologies, a gadget accessory retailer, found that referrals from Facebook had a conversion rate double the average (Source: Business Insider, March 2011)
5. But it’s not just about Facebook. Take for example the explosive rise of the daily deal site Groupon, which used referrals from friends and colleagues to drive sales of over 40 million deals in the two and a half years since it launched in November 2008, via email