Social Commerce for Small Businesses

Shoppable ads and social commerce offer small businesses an effective tool to capitalize on their efforts in building an engaged social media community. By harnessing the engagement they generate, small businesses can make social commerce pay big dividends, despite the cost of advertising and other fees charged by social platforms. Read on to learn how to add social commerce to your marketing toolkit today. We’ll start with the challenges small businesses face with their social media marketing campaigns.

social commerce for small businessesChallenges to social media marketing today

A few years ago, I recommended a strong social media tactic as a natural for all my small business clients. Today, I don’t recommend it and, in fact, usually counsel against using social media as part of your digital marketing plan. That’s because, in searching for more revenue, all social media platforms now use an algorithm that results in posts that don’t often reach even your most loyal community members. If you’ve been working hard to build your brand’s social media presence over the past few years, you may already know that it’s getting harder each year to gain traction, regardless of your platform.  Organic reach on most social media platforms is declining, with some of the top social media platforms facing steep declines in organic reach. Organic reach is the type of reach you gain from posting content on social platforms.  As an example, Instagram’s reach declined 29% in 2022 alone, and Facebook’s organic reach dropped from about 10.5% to about 8.5%. You likely already noticed these declines if you monitor your website’s performance (and, if you don’t monitor performance, you have even bigger problems than low organic reach. Learn how to monitor website performance and make data-driven decisions by clicking the hyperlink). This hit small businesses especially hard since social media marketing offered these businesses a way to compete with larger brands due to the low cost of this marketing tactic and their ability to create engagement because they focused on their customer base and its needs.

With less reach, social media traffic to your website is lower. In a recent study, researchers found that social media now accounts for an average of only 2% of a website’s traffic, a drop of over 19.6% in recent years despite rapid growth in the number of users on social platforms and the amount of time spent on these platforms. Not only do you experience less traffic visiting your website, the conversion rate is dropping. In one study from 2023, organic traffic from social media sites showed an average conversion rate of only 1.7% (slightly higher at 2.4% for B2B companies).

These changes increase the cost of running social media marketing campaigns as you must now pay for advertising if you want to succeed instead of relying on organic reach.

Social commerce

Enter the option of using social commerce, which involves using social media to help sell products and selling them directly from social media platforms using shoppable ads. It’s like moving your e-commerce or physical store inside a social media platform. Let’s take a look at this alternative in more detail using this image to demonstrate how businesses can benefit from it.

social commerce
Image courtesy of Metranomic

Shoppable ads

Most popular social media platforms allow businesses to create shoppable ads where customers shop without even leaving the platform. Here’s an example from LocalIQ:

shoppable ads
Image courtesy of LocalIQ

When a user clicks the product, they’re taken to a product page to learn more about the product and make a purchase. In this way, shoppable ads work much like Google Shopping Ads, although without the nasty side feature of showing your competition, as happens with Shopping Ads, as you can see below.

shopping adsWhy use shoppable ads and other forms of product advertising on social

Shoppable ads, like other forms of social media advertising, are great for small businesses for several reasons. First, social media ads are very cost-effective in terms of CPM (cost per thousand reached, which is the metric used to evaluate ad campaigns) and conversion rate, as you can see below.

cpm for social versus traditional
Image courtesy of Lyfe Marketing

As to conversion rates, social media conversion rates vary based on social platform (Facebook delivers the highest rate) and by industry but you’ll likely see a conversion rate between about .5% and 9.9%. Compare that with conversion rates for traditional media, which range between about .3% and .8%, and you can see why companies are flocking to social advertising.

The other major benefit of social media advertising, especially for small businesses with limited resources, is that you can selectively target the right users who are most likely to purchase from you. That means you waste less of your advertising budget.

Excelling in social commerce

The first step is to create shoppable posts on the social platforms where your target market tends to hang out.  Utilize features like Instagram Shop or Facebook Marketplace to create posts where customers can purchase products directly. This reduces the friction in the buying process and capitalizes on impulse purchases as customers browse through their feeds.

Next, leverage user-generated content (UGC) to provide social proof that helps reluctant users overcome fears about the quality or suitability of the products. UGC also enhances interest in your products as consumers favor ads from people they trust over brand advertising. Of course, UGC doesn’t happen out of the blue. Encourage your customers to share their experiences with your products on social media. You can repost this content on your own channels to build trust and authenticity.

Of course, social commerce works best when you already have a built-in, engaged presence on the social network you plan to use. That means you still need to produce valuable content to engage your existing audience and bring new members to your community. Use social media platforms to engage in conversations with your followers. Respond to comments, answer questions, and participate in relevant discussions. This builds a community around your brand and enhances customer loyalty​.

Offer exclusive social media discounts and promotions:

Create special offers, discounts, or promotions exclusively for your social media followers. Offer content that’s only available to your followers. Taylor Swift is great at this as she shares original cuts of songs first through her social media platforms with her followers. You can offer social media-only discount codes or insights into new products you’re working on. This encourages more people to follow your accounts and increases the likelihood of conversions through social channels​. By introducing products first on social media, you also gain insights from your community that can help you promote your product, create UGC about it, and gain suggestions for improvements before the product even launches to the public.

Utilize influencer marketinginfluencer marketing success

Partner with micro-influencers who have a genuine connection with their audience. Not only are micro-influencers more affordable for small businesses, but their engagement has a bigger impact on their followers’ purchase decisions than that of mega-influencers. As consumers become more and more jaded regarding the authenticity of recommendations made by these mega-influencers, their ability to promote your products has dwindled.

Invest in social media advertising

Earlier, we discussed the affordability of social media advertising relative to traditional advertising. The other benefit is that you don’t waste money reaching consumers who don’t need or want your products. That’s a major factor in why social media advertising is so valuable for small businesses. Instead of reaching millions of eyeballs (and that’s the way advertisers think of reach), you target your ads on platforms like Instagram, Facebook, and TikTok to reach potential customers. These platforms offer sophisticated targeting options based on demographics, interests, behaviors, and more, allowing for a more efficient use of your advertising budget​.

Analyze and optimize your performance

Regularly review your social commerce performance using analytics tools provided by social media platforms. Look at metrics such as engagement rates, click-through rates, and conversion rates to understand what works and where you can improve​. But, don’t stop there. Follow clicks through to your website so you can evaluate whether traffic sent to your landing page converts or not. By tagging the links used in your advertising, you can follow clicks from individual ads through the conversion funnel to determine which ads work best and which you should drop.

Incorporate AR and VR experiences

As technology advances, consider integrating augmented reality (AR) and virtual reality (VR) to offer immersive shopping experiences as part of your social media advertising. For example, AR can allow prospective buyers to try on clothing (which is a major factor when it comes to making a sale) or test out your products in their own rooms. This enhances the online shopping experience​ and helps overcome factors that interfere with purchasing something from you.

Conclusion

By employing these strategies, small businesses can effectively use social commerce to drive success, reaching and engaging their target audience where they spend significant time online. The key is to create a seamless and integrated shopping experience that leverages the unique aspects of social media to foster discovery, engagement, and conversion.

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Hausman and Associates, the publisher of MKT Maven, is a full-service marketing agency operating at the intersection of marketing and digital media. Check out our full range of services.