Trends with Traction: Social shopping is hopping.

The cover of Forbes magazine last month let the cat out of the bag. Social Shopping site GroupOn is the fastest-growing company... ever.

First came Google, then came Facebook, now comes GroupOn. Yes, ladies and gentlemen, this is the next big thing. Half a billion dollars in revenue in less than one year. That's right, I said dollars. Not impressions.

What is GroupOn? Well, it's the leader of the pack in a new phenomenon called "social shopping" or "social buying." The site is simple and compelling. Every day they have a new fantastic coupon for a local business—the other day they had 50% off of Go-Kart racing at a place near San Francisco (guess what the gang at Traction is doing next month). The only catch? The deal is only valid if 200 people whip out their credit cards and pay for it on the spot. So, people are incentivized to go bonkers trying to get their friends to join in to "unlock" a GroupOn coupon they really want.

Today's GroupOn Deal of the Day

The site went legit last month when Gap pulled in $11 million running a nationwide promotion on GroupOn. They sold nearly half a million vouchers in one day.

Of course, just like Facebook isn't the only social network, GroupOn isn't the only social shopping site. There are plenty of copy cats and plenty of other models that combine social media dynamics with e-commerce.

  • Gilt.com also reports having $500 million in revenue. It's an "exclusive" club (if you can call over two million members exclusive) that gives members access to great deals on luxury items.
  • Delta airlines now allows passengers to book tickets in Facebook.
  • Sites from Amazon.com to Kaboodle.com have social recommendation engines and shared shopping lists based on what others are buying.

There's plenty more (Would love it if you'd share other examples in the comments!).

As a marketer, it's important for you to think strategically about how your brand can take advantage of it. Clearly, there are a lot of directions you can go, but one thing is clear. Social shopping is a trend with some serious Traction.


The Learn Phase: HTML 5, Recasting Agile and a Content Strategy Toolkit

Every month or so at Traction, we host The Learn Phase, a four hour session of shared ideas, debate, conversation and pizza. It's named after the first phase of our process, "Learn," because that's what we hope to accomplish.

We created a SlideShare channel so you could learn too. Enjoy!


Trends with Traction: The Internet's Free Lunch Program is in Peril

When I was in 10th grade, my math teacher ,Mr. Steen, scrawled T-A-N-S-T-A-A-F-L in giant letters across the board on the first day of school. It stood for "There Ain't No Such Thing As A Free Lunch."

Seemed like an odd duck thing to do at the time—and I have no idea what it had to do with math—but it was Mr. Steen's intent to make an impression and I still remember it 25 years later. It seems this math teacher knew a thing or two about how to engage young minds.

Sadly, many "Web 2.0" entrepreneurs were not lucky enough to have Mr. Steen for 10th grade math and are suffering the consequences.

A must-read Newsweek article this week titled "Take this blog ands shove it." laments the passing of a foundational tenet of the Web 2.0 "movement." It seems that vast armies of people actually won't provide free labor indefinitely.

This is a big problem because a great number of online businesses that have risen to prominence over the past several years have been built on the premise that vast armies of people actually will provide free labor indefinitely. Oops.

A couple of years ago, hoards of individuals volunteered their time to edit Wikipedia entries in their spare time. Thousands became reviewers on Digg. Zillions started their own blog.

No more.

Today, Digg is trying to shift from a social news channel to a social network (because the world needs one?) because they don't have enough contributors. 95% of those blogs people started never saw a second post. And holy of holies, Wikipedia, has been subjected to the disdainful task of actually recruiting college kids to edit its entries.

Clearly, this has implications for you, dear marketing professional, as you lift heaven and earth to engage your customers to develop content on your behalf. Beware. They are a fickle bunch, those "users" out there.

As Newsweek describes the problem:

Many other elements of the user-generated revolution, meanwhile, are beginning to look sluggish. The practice of crowd sourcing, in particular, worked because the early Web inspired a kind of collective fever, one that made the slog of writing encyclopedia entries feel new, cool, fun. But with three out of four American households online, contributions to the hive mind can seem a bit passé, and Web participation, well, boring—kind of like writing encyclopedia entries for free.

nuance that's important to understand here is that people respond to value. There used to be value in the esteem of being able to brag to your friends (or digital equivalents thereof) that you edited for  Wikipedia. But now that's old news, so there's not so much esteem there. New players on the scene like Gawker and HuffPo have taken a cue from the emerging success of FourSquare and started issuing badges to their most fervent contributors (like this one on the left).

Those badges have value——for now.

Unfortunately, for organizations with a more altruistic mission like Wikipedia, their business model is doomed. Not to failure, but to selling ads so they can pay people to be editors.

Truth be told, I don't remember how Mr. Steen was as a math teacher. But I know he taught me one thing. If someone hands you a sandwich and tells you it's absolutely free, somewhere, something doesn't add up. There ain't no such thing.


Trends with Traction: Meaningful "social" measurement with Net Promoter Score

If you're a CMO, you might feel like many of the business metrics you're chasing around in social media seem futile. The tactical click-throughs and engagements on marketing programs make sense, but the aggregate business ones don't quite make sense under close inspection. Volume of brand mentions kind of makes sense if you can measure if the mentions are positive, but take a close look at sentiment analysis tools and you'll notice they don't work very well.

Of course, you must measure something. But what?

A growing number of companies are maturing their social media measurement programs by shifting their focus to optimizing their Net Promoter Score. I'm seeing this more and more in the marketplace and I think it's a damn good idea.

What is Net Promoter Score?
There's been a zillion blog posts and a great Wikipedia entry on exactly how NPS works, so I won't go into detail of that here. It is a concept that was introduced first in Harvard Business Review, then in a book called The Ultimate Question by Frederick Recihheld. Essentially, you take a survey of your customers, add up the people (promoters) who are most likely to recommend you to others, subtract the people who are less than enthused with your brand (detractors) and you've got your Net Promoter Score.

Why NPS is a vital metric.
According to Forrester Research, over 83% of purchase decisions today are influenced by word-of-mouth. That means traditional "top-down" approaches to marketing their wares through advertising are simply not enough. Marketers today have no choice but to be concerned with creating an entire brand experience that delights their customers.

NPS shows you if you're doing that. Counting tweets doesn't.

Too simple to be valuable?
No, it's not. Not only does its simplicity make it relatively easy to measure accurately, it also makes it understandable to everyone on your team, both internally and externally. And because they can understand it, they can make it their mission in life to make it better.

Contrast that to most brand valuation measures. They're based on some kooky formula. They're abstract. They're not tangible to your people. They don't deliver accountability.

And if logic isn't enough to cover your arse, it's being used right now by brands like GE, American Express and Intuit.

How it's impacting agency/client relationships.
In recent months, my agency is getting more and more requests from clients to help optimize the brand experience for their products. One is a Fortune 500 client with an online software as their product. They came to us with a challenge to increase their conversion rates—and to increase their Net Promoter Score. There was a different cast of characters in the room when we presented our approach to their problem: alongside the Marketing Director was a Product Manager who had never worked with an agency before.

Increasing NPS is a new area where agencies experienced in both interaction design and in unearthing the kind off insights that fuel great advertising can provide great value to their clients. But NPS is not just something for your agency to enhance from the outside. It's a measure that can get your whole organization on a path to creating happy customers. And that's important because you don't control the conversation anymore—your customers do.

Make sure they say nice things.