Why 'Social Inference' is Emerging as the Next Gotta-Have-It Tool for Retailers

Black Friday is now officially a statistic, and an impressive one at that: According to a recent comScore report, over $1 billion in online sales were transacted on Black Friday, representing a 26 percent year-over-year increase. At the same time, early reports indicate that brick-and-mortar sales were actually down 1.8 percent on Black Friday. We can expect more of the same for the remainder of the holiday season as offline sales migrate online.

Though much of the revenues will be eaten up by the usual suspects (Amazon.com, eBay, Wal-Mart), the steady consumer adoption of Facebook Connect combined with game-changing analytics and personalization technologies to turn Facebook activity into more effective marketing have dramatically leveled the playing field.

Armed with the power of social inference, retailers can now be sure they won't be left in the dust. Here's how.

Take the Step and Connect
The secret of the e-commerce titans isn't just their size — although that helps — but their excellent service. One key element of that service is personalization. Now any business can know as much or more about a given user than all the information that Amazon and Google have been collecting on us for years. How? Through Facebook Connect.

The real brilliance of Facebook Connect isn't just that it saves users from having to memorize a new user name and password for every site they visit. Rather, it's the data. The data that a user shares via Connect can easily eclipse the prior purchase behavior that drives the current state-of-the-art in personalized recommendations, so-called "collaborative filtering" technology.

Smart social analytics companies are now introducing new technologies that take advantage of Facebook Connect's increasing popularity and make sense of the billions of social data points found on Facebook to turn them into profitable insights for your business.

Dropping the 'Cold Start' in Favor of Warming Up Client Engagement
The biggest problem that retailers face is that they generally don't know what their users are looking for until the user expresses purchase intent. And prior purchases — if the retailer even has access to them — aren't necessarily great indicators of future buys. The key is to understand who the buyer is today and to help her discover what she wants on your site before she goes elsewhere.

Facebook data allows retailers to solve this "cold start" problem of not knowing much about their first-time visitors. The results are a win-win: increased profits for businesses and a better experience for customers.

Cross-channel retailers along with pure-play e-tailers looking to boost online profits should focus on two key elements to better understand and serve their users:

1. Gather a clear macro view of all your Facebook Connected users by summarizing key demographic segmentation and user interests, both declared and inferred. This macro analysis is critical to understanding who your users are as well as reducing new customer acquisition costs. For example, once a retailer discovers that a large segment of its engaged audience comprises teenage girls who love Rihanna, it will know to target more of its ad spend on similar demographics — i.e., the low-hanging fruit.

2. Delve into the micro level to personalize the user experience on your site. If you're a middle-aged man who's constantly posting status updates on Facebook about football, you won't see recommendations for purses when you visit an online retailer's site (unless it's for your wife's upcoming birthday). You'll see items directly related to your explicit likes and implied Facebook interests. This social personalization is a game changer that promises to dramatically boost user engagement, turning what used to be cold starts into hot purchasers.

It's this personalization-driven strategy that will empower retailers to close more deals, engage their users and turn one-time visitors into repeat customers. The road to profits has never been easier as innovative startups pave new paths to success.

Shahram Seyedin-Noor is the co-founder/CEO of GraphDive, a data analytics startup focused on delivering profitable insights to businesses from social media activity. Shahram can be reached on Twitter @graphdive.