Simplifying F-Commerce White Paper

WHITE PAPER // VERSION 1.1
22 SEPTEMER 2011

SIMPLIFYING FACEBOOK COMMERCE //
CUSTOMER EXPERIENCE LED DEVELOPMENT //

www.valtech.co.uk, www.blog.valtech.co.uk
Twitter: valtech, Facebook: valtechuk, LinkedIn: valtech-uk, Slideshare: valtechuk
© Valtech 2011

TABLE OF CONTENTS //

TABLE OF CONTENTS

1. Abstract..................................................................................3

2. Open Minds...........................................................................3

3. Customer Centric Analysis......................................................5

4. Concept Planning...................................................................7

5. Minimum Marketable Features................................................9

6. Building Blocks......................................................................10

7. Measurement........................................................................13

8. Change Agents......................................................................16

9. About Valtech……………….…………………….………………………..17

Date Description Author
22nd September 2011 Final Version Jonathan Cook

© Valtech 2011 2

ABSTRACT //

OPEN MINDS //

1. ABSTRACT
This White Paper outlines concepts and approaches that support building
commercial relationships with customers via Facebook (F-Commerce).

The emphasis of this paper is with respect to putting the customer at the heart
of planning and the tools and techniques that enable companies to more
easily deliver the customer experience that people want and that generates
profitable sales. Social media platforms by definition are people orientated,
hence the emphasis on customer centric planning.

2. OPEN MINDS
There is a wealth of examples of firms relating their successful F-Commerce
stories to the outside world. Our first recommendation is to ignore these case
studies, since as soon as people start reading success stories they
subconsciously start to forget their own customers and inadvertently begin
developing plans that replicate what other people are doing.

Suffice to say that there are strong indicators that F-Commerce is an area that
warrants some thought:

 Facebook has over 800m active users globally.

 Transactions on Facebook are forecast to overtake Amazon’s annual sales
($34Billion) over the next 5 years.

 In the US, users now spend longer on Facebook than they do on Google.

 Click through rates on Facebook walls are 6.5%.

 The average number of people who see a friends “word of mouth”
recommendation is 130.

 117% is the additional amount a fan of a brand will spend, compared to a
non fan.

 If someone has clicked “like” there is a 51% increased chance they will
also click buy.

 Each new fan acquired by retailers on Facebook equates to 20 extra
visits to their website over the course of a year.

 Companies experience between 30% and 200% increase in registrations
when a Facebook sign on is used.

 10,000 websites integrate with Facebook every day using social plugins.

 200 million people access Facebook using mobile devices.

 70% of Facebook users engage with Facebook applications.

© Valtech 2011 3

OPEN MINDS //

There is a long list of interesting statistics like this and if you correlate the
themes it is clear that the following can be said of Facebook:
"For us it's about being at the forefront in order
 Drives e-Commerce traffic growth.
to recruit future customers. You could say that
we are positioning ourselves for the future; we  A location where customers are and where they spend a lot of time.
provide tools that allow people to make
purchases whenever the need shows up."  Drives loyalty sales.

Jonas Sjöstedt, Social Media Manager  Increases likelihood of word of mouth sales.
at Oriflame
 Industry adoption of F-Commerce is accelerating.

 Mobile adoption is increasing (suggesting this is a platform to fuel future
growth).

The reason we recommend that people retain an open mind when planning
their F-Commerce strategy is that it is tempting to look at these growth
statistics and run full steam ahead and build an all singing and all dancing
feature rich Facebook Store.

However, even for a big brand there is no guarantee that people will come
flocking to you and press “click to buy”. It is important to put yourself in
the shoes of the customer and to determine what makes sense for them in
a social setting.

Successful F-Commerce practitioners have an open minded, customer led,
long term vision of what they are trying to achieve.

© Valtech 2011 4

CUSTOMER CENTRIC ANALYSIS //

3. CUSTOMER CENTRIC ANALYSIS
Arguably social commerce provides little different to what a shop keeper or
chain of shops who know their customers really well can already do. The key
difference, however, is that we have to reset the way we have been thinking
over recent years.

In many respects traditional E-Commerce platforms were all about getting a
shiny and easy to use store on-line. With the advent of social commerce,
however, companies now have the opportunity to digitise a more natural
relationship with their customers. We now have to learn how to harness the
opportunity that the more complex and more human interaction provided by
social media platforms allows.

The on-line store front is no longer the only place where meaningful
interaction occurs. For instance with a view to specifically generating sales,
companies are interacting with people on social platforms across a range of
different business processes:

 Research and Development – Some companies are crowd sourcing
ideas and collect customer feedback to influence the entire design
lifecycle, in order to sell products as complex as cars.

 Customer Service – Happy loyal customers are always the most
profitable. Companies are actively seeking to build social media brand
advocates, who are proven to have a direct positive effect on sales
performance. Bad news stories can spread really quickly across social
platforms and social strategies to counter this effect are also being
Stop Thinking “Campaigns”. Start Thinking implemented by many.
“Conversations.”
 Marketing – Companies are targeting specific social groups, such as
Anon.
influential early adopters and using them to drive waves of people to
store fronts from their position “on the social high-ground”.

This is quite a limited range of business process examples, but so it should
be. What matters is what matters to your customers.

For instance, it makes sense for some to interact with a supermarket on a
social platform as part of a local crèche community, which provides the
option to click and order a basket of baby and toddler related products?

Maybe high wealth individuals might find themselves sufficiently engaged
by an investment fund’s social commerce platform, to pay to deal in a high
stakes social gaming equivalent of a commodity trading “squash ladder”?

© Valtech 2011 5


The point is that you could spend thousands of pounds analysing what
customers might want and then spend even more building out imaginative
social commerce platforms and you still might end up wasting your time.

Successful F-Commerce companies identify a good initial target concept,
implement something quite light weight and then watch, listen and observe
their customers before adapting to apparent need.

The key to identifying good initial social commerce concepts is to put yourself
in the shoes of your customers, which is where rapid analysis techniques can
really help. We recommend undertaking some early and basic analysis of your
business and your customers and to sketch out several different ways in which
you could build a commercial relationship with customers via Facebook.

The following techniques are useful because they provide a structured way to
quickly analyse your business from a customer centric perspective:

 Value Chain Analysis – Map out the key functions of your business,
including your partners, which have an impact on your customers’ overall
experience.

 Persona Driven Analysis – Who are your customers? What motivates
and drives their behaviour?

Value Chain Analysis has long been a tool that is used to generate innovative
ideas. When you consider how key customer types experience each stage of
your business it will throw up a range of different social commerce
concepts for you to evaluate.

A key insight to remember, however, is that your value chain is no longer
linear as Michael Porter originally described pictorially in 1985.

MICHAEL PORTER’S VALUE CHAIN

FIRM INFRASTRUCTURE
HUMAN RESOURCE MANAGEMENT

TECHNOLOGY

PROCUREMENT

INBOUND
OPERATIONS OUTBOUND MARKETING SERVICE
LOGISTICS LOGISTICS & SALES

PRIMARY ACTIVITIES © Valtech 2011

© Valtech 2011 6


CONCEPT PLANNING //

You are now seeking to influence a digital social conversation, your value
chain is circular. Your customer service reputation really does influence your
ability to sell:

4. CONCEPT PLANNING
“Customer Service is the new marketing”
The point of customer centric planning is to get something out into the
Lane Becker, President at
marketplace quickly, that provides an experience that customers value, that
Get Satisfaction
feels intuitive and that works. In short, make it easy for people to buy.

All too often people come up with new and imaginative ideas, they bring
in a design agency to flesh out the concept and mock up some screens and
then go to their technical colleagues to get an estimate on what
something will cost to deliver.

The sharp intake of breath following the initial technical estimate, is often
followed by a prolonged period of re-shaping and re-estimation, during
which people lose the will to live and the initial energy and enthusiasm for
a concept is lost.

The solution to this inertia is to bring in multi-disciplined teams from day 1.
As soon as you are able to articulate a concept in its loosest form, bring in a
technical architect, and a user experience specialist and discuss the concept.

© Valtech 2011 7

CONCEPT PLANNING //

Apart from breaking the concept planning inertia, there are other benefits of
working with a cross-skilled team from the beginning:

 Moon-On-A-Stick – Engineers have a habit of telling business people
that anything is possible, it just might cost a lot to build. Involving
technical people very early, will help you kill off outlandish concepts, or
simplify concepts without losing the strategic intent of what you are trying
to achieve.

 Highest Priority – If engineers understand the heart of a concept whilst
it is forming, it is easier for them to emphasise the aspects that make your
strategy a winner within their technical solution. Too often technical
people are blind-sided by all the bells and whistles that business people
have added as they fleshed out their concept. It is easy to accidently
obscure the strategic intent, since the technical person is thinking about
the complexity of delivering everything you have described and not the
aspect that you value most.

 Usability – A great user experience improves the sales conversion rate
and promotes a positive attitude towards your business. A clean design,
intuitive information architecture and smooth technical operability are the
foundations of great user experience. You need to plan for great user
experience up front, you do not want to have to accommodate technical
fixes late in the day that impact your on-line sales performance.

In essence teams with combined skill sets are able to get to a better answer
“A lot of what we do is getting design out of the way” sooner, wild expensive ideas are crushed and the user experience of the
delivery is cleaner, which is better for sales. You will also be able to generate
Jonathan Ive, Senior VP of more realistic construction estimates earlier and get to market faster,
Industrial Design at Apple generating return on investment sooner.

There are two further insights worth considering:

 Traditionally companies, including external suppliers, set up silos
of skill. Although it is common sense to combine skills sets from the
outset, tradition is hard to break and you need to put in effort to
overcome a business as usual mentality.

 It is important to keep mixed team skill sets throughout the life of
product development. In particular people all too often only deploy
usability and design skills upfront. Regular input from people with
these skill sets over the life of the development will ensure that user
experience is optimised.

© Valtech 2011 8

MINIMUM MARKETABLE FEATURES //

5. MINIMUM MARKETABLE FEATURES
So you have the broad brush concept, you want to launch it, you don’t intend
to build an all singing all dancing Facebook store because you intend to be
guided by your customers in order to grow your social commerce platform
over time in accordance with their needs. The question now, is what should I
deliver to my target customers on day one?

Since the advent of Agile development methods, people have got better at
focusing in on a minimum feature set, but this has not eradicated a tendency
to over engineer initial releases.

The MoSCoW prioritisation technique (Must have, Should have, Could have
and Won’t have) does eventually help an analyst grind out a reduced
requirements list, yet in many cases it is possible to launch with less.

What seems to be missing is the confidence to know how little you need to
do to launch (assuming that you are listening to your customers and plan to
respond rapidly to them after release).

The following is a case study from the Public Relations (PR) firm for IKEA,
who accidently stumbled upon the minimum marketable feature set neces-
sary to launch IKEA’s new iPhone app:

Everyone is making iPhone apps nowadays – it’s nothing new. Launching an app which is essentially a flat PDF of a store catalogue
and making a splash about it to drive downloads was going to be tough.

The IKEA team was realistic in its expectations around the launch of the app, expecting “a few online sites” to cover the story.
IKEA’s PR firm, however, decided to turn the negative of having an asset that was not particularly newsworthy nor technologically
advanced, into a positive. Bearing in mind IKEA’s philosophy of being “for the many”, the PR agency decided to use this approach
and put IKEA’s customers in charge. Recognising that the best ideas often come from the consumer themselves the PR agency
decided that they should reach out to online communities from within the store’s core customer base and ask them to feedback on
how they would improve the apps themselves – what kind of features would they want to see in an app from IKEA?

The app was released, positioned as a “beta test”, inviting people to use it and then to tell the team how to improve it. Users were
asked to feedback via email, using the hashtag #IKEAappideas, or by phone with their suggestions. Every tweeted suggestion was
immediately responded to from the bespoke Twitter feed, with all improvements logged. A variety of users were identified in the
blogger outreach research, from IKEA fans, to environmental activists and mobile and app enthusiasts.

This led to widespread buzz online, which in turn provided the PR team the perfect opportunity to speak to leading national print
journalists alerting them to the noise which had been created through the Version 1 launch.

This PR strategy resulted in the app launch securing over 1,807 pieces of coverage for the IKEA catalogue application, including
1,383 tweets and 328 blog posts on the story. The chatter ultimately generated over 300,000 downloads of the application in the
first month – 12 times the industry average for mobile application launches (roughly 25,000).

© Valtech 2011 9

MINIMUM MARKETABLE FEATURES //

BUILDING BLOCKS //

Version 2 was launched just three months later – a record in time taken for app updating – now featuring the public’s most popular
suggestions of a contents page, a search function and a bookmark function. All suggestions collected will now continue to inform
IKEA as they look to update and improve their app on an on-going basis.

IKEA Catalogue App Launch by PR firm Cake

There is nothing worse than launching your hard work to near silence.
How much better to start recruiting your customers whilst you build and even
better to be confident that every penny you are spending will be valued by
your target audience? IKEA did a great job launching their app.

The leverage of social media platforms such as Facebook and the power to
connect and enthuse a very wide network of people, who actually enjoy
helping you and who will convert the trust you show in them into sales, is an
opportunity that should not be missed with F-Commerce.

Another lesson to take from the IKEA case study, however, is to observe how
slowly it took to respond to customer feedback and build really basic
functionality for their second release (ignoring the PR firm’s report where they
state they released in record time). The use of combined skill sets within a
team, who planned to respond to customer feedback and needs, would have
largely eradicated this three month delay.

In summary, do not over engineer. Only do enough to meet the minimum
needs of your customers. Ensure you plan to respond to your customers
quickly.

5. BUILDING BLOCKS
When designing your F-Commerce concept you need to be aware of some of
the basic building blocks available. The following table outlines components
to consider for transactions conducted whilst users are on Facebook:

TRANSACTIONS ON FACEBOOK FACEBOOK STORES:

 Consumer – Use real currency to purchase goods without leaving
Facebook.

 Company – Customers can buy directly from your Facebook page and
newsfeed.

© Valtech 2011 10

BUILDING BLOCKS //

TRANSACTIONS ON FACEBOOK FACEBOOK DEALS:

 Consumer – Pre-pay credits that you use to buy goods across Facebook.

 Company – Easily attract new customers with a frictionless payment
mechanism that people are familiar with.

FACEBOOK CREDITS:

 Consumer – Buy credits using a card or PayPal to easily pay for deals across
Facebook.

 Company – A simple purchase mechanism for deals on Facebook.
Mandatory currency for games.

These components are important to consider when engaging people on-line
on your own website external to Facebook, or to drive foot-fall to your
physical locations:

TRANSACTIONS OFF FACEBOOK FACEBOOK CHECK-IN DEALS:

 Consumer – Check in on Facebook with a smartphone to see special deals
from nearby businesses.

 Company – Drive foot-fall and loyalty towards your business for customers
near you.

FACEBOOK STORE FRONTS:

 Consumer – Find on-line stores that your friends or social groups have
recommended.

 Company – Drive e-commerce traffic with product catalogue apps
installed on your Facebook Page.

FACEBOOK AUTHENTICATION:

 Consumer – Click the Facebook login button on sites across the web to
ensure that the retailer automatically recognises you and your details.

 Company – Improve the customer experience on your web site and
make it easier for people to do business with you.

© Valtech 2011 11

BUILDING BLOCKS //

TRANSACTIONS OFF FACEBOOK OPEN GRAPH PROTOCOL:

 Consumer – If you see familiar Facebook features on a different companies
website such as “like”, you can click and update your Facebook newsfeed
so that your friends can see what you’ve liked or commented on. You can
also see which sites across the web that your friends enjoy.

 Company – Drive internet traffic to your website by encouraging people to
interact with Facebook’s social features installed on your own website.

FACEBOOK SOCIAL PLUGINS:

 Consumer – You can keep your friends up to speed with what you like, by
clicking like on other companies websites.

 Company – You can both push updates to and target your advertising
directly towards people who have liked content on your own website.

FACEBOOK GRAPH API:

 Company – Create shopping app and sites that integrate with (read and
write to) Facebook.

FACEBOOK ADVERTISING:

 Company – Drive e-commerce traffic or foot-fall with Facebook advertising.

FACEBOOK MARKETING:

 Company — Drive sales and loyalty with news and promotions posted to
your Facebook page.

Whilst you can work out how to leverage these components yourself, there
is merit in bringing in external expertise in order to benefit from people who
have implemented F-Commerce before. Specifically external assistance
should be able to help you:

 Understand what works well and how to deploy simply.

 To optimise the profitability of transactions.

 Manage the customer data ownership contention. How much do you
know about your customers, compared to data which is wholly owned
by Facebook?

© Valtech 2011 12

MEASUREMENT //

7. MEASUREMENT
Over and above listening to your customers, it is important to observe the
data in order to improve your service. In essence, on a continual basis, it is
good practice to inspect, adapt and improve.

Why is it so important to take this continual improvement so seriously with
F-Commerce? The simple answer is that you should be doing everything to
harness the power of the social network. If you recruit brand ambassadors
who “like” your products and services, you will drive more people to your
store who are statistically proven to be more likely to buy. Continual
improvement is a tactic to ensure you grow your quantity of brand
ambassadors, who in turn add further leverage to your influence over an ever
wider network of potential customers.

The simple way to manage this is to set Key Performance Indicators, which
define the various goals that you want to achieve and measure your
performance in hitting them. There are some examples below which show
typical aspects which are useful to measure.

Firstly, and possibly most importantly, you need to measure the engine of
F-commerce, your ability to attract new customers and recruit brand
ambassadors to leverage the power of the social network and drive even more
people to your store:

© Valtech 2011 13

MEASUREMENT //

The Google analytics graph below shows data from a live Facebook Store
showing visitor numbers. It is useful to observe the impact of major changes,
in this case the store being launched in the Czech Republic and Poland.

The example below shows goal conversions. If there are defined steps the
customer has to take before clicking buy, then measure your effectiveness in
converting them towards paying customers.

© Valtech 2011 14

MEASUREMENT //

Product order value not only gives you a view on daily sales, but helps inform
you of the effectiveness of promotions, or the impact of changing the layout,
wording or product mix in some way.

© Valtech 2011 15

CHANGE AGENTS //

REFERENCES //

8. CHANGE AGENTS
Whilst we have outlined the benefits of simplification and customer driven
planning and development, it is a truism that you can often only really make
something simple once you have mastered it. The simplest approach for your
organisation might be to bring in people who have done this before.

Although an external company would not understand your business and
customers as well as you, adding external experience into the mix often has
some useful effects:

 Innovation – Internal people can’t always see wood for trees.

 Forces pace – Internal projects often suffer from inertia.

 Expertise – Bring in skills that complement and enhance your own.

If you are inspired by the topic of F-Commerce or would like to either follow
or influence Valtech’s own F-Commerce journey then why not join the
conversation and click “like” at http://www.facebook.com/ValtechUK

REFERENCES

 http://socialcommercetoday.com/f-commerce-statistics-roundup-facebook
-commerce-by-the-numbers/

 http://econsultancy.com/uk/blog/7694-one-facebook-fan-20-web-visits

 http://www.haystackonline.com/page/23660/agencies/cake/iphone-app-
launch

 http://www.slideshare.net/paulsmarsden/fcommerce-and-the-solomo-
consumer

 http://econsultancy.com/uk/blog/7540-101-f-commerce-examples

 http://apps.facebook.com/oriflamestore

 http://www.facebook.com

 http://www.facebook.com/ValtechUK

© Valtech 2011 16

ABOUT VALTECH //

ABOUT VALTECH
We are a Digital Consultancy providing strategic results using engineering
muscle and creative edge.

Our 1,500 employees across the UK, France, Germany, Denmark, Sweden,
USA, Korea and India are passionate about helping our customers deliver a
fantastic user experience for their own customers.

We have mastered the knack of combining creative skills, digital strategy, user
experience and design, together with software engineering to turn our client’s
digital aspirations into reality. The way we do this is really unique. We deliver
value to our clients across the full lifecycle of a project from strategic
consulting and conception, right through to design, development and
optimisation of business critical digital platforms.

Our commitment to innovation and agility enables us to help global brands
build business value and increase revenue through digital technologies and to
generate early ROI.

Our customers include global luxury brands, media, international
pharmaceutical companies, major investment banks and many more …

For more information,
please contact us:
digital@valtech.co.uk

Valtech
120 Aldersgate Street
London, EC1A 4JQ
+44 (0)20 7014 0800, www.valtech.co.uk

© Valtech 2011 17

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