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Beyond the Transaction: Every Transaction Has a Story

Merchant Branding in the Era of Social Networking

As social networks become more central in people’s lives, they are providing an increasingly important forum for people to get product information outside of corporate marketing efforts. It’s become imperative for merchants and brands to understand where the discussion about them is happening, and who is taking part. Ignoring the social media conversation will spell doom for those who don’t get involved.

According to MasterCard research conducted by GFK Roper,  the explosion of product choice has left many consumers feeling unsure of whom to trust when making purchasing decisions. To get honest feedback from other users, consumers are relying on social networking sites to learn about products and express their views on what works, what doesn’t, and how they feel about it.

Unsurprisingly, this trend is driven by Generation Y, consumers who are more likely to go out of their way to talk about products they like and to solicit other people’s opinions when making purchases. Affluent consumers are also turning to the web to assess purchase options and express their views; what’s more, affluent consumers tend to be continuously on the lookout for new products and services.

According to the research, 48% of users of social networking websites say they use the sites to “post comments or read what other users have said about a brand, product, or company.

Software developers are tapping into this growing trend by creating apps like Gripe—a mobile phone-based service that lets consumers air their grievances with merchants and enables merchants to learn about and resolve problems. Consumers’ desire to broadcast their opinion and user experience has shifted some of the power away from merchants, and represents the new reality of  brand communications.

The conversation around brands that takes place online is critical for all businesses to understand. Consumers are turning to each other in order to learn about what they’re buying, and are willing and able to speak out when they don’t get what they want. In order to succeed in this new environment,  merchants and brands must ensure they are driving the social media conversation with their customers, willing to hear about problems, and committed to solving them.

Also appears on MasterCard’s Payments Perspectives Blog.