With social networking and making money becoming favourable ways to while away the hours, it comes as no surprise that that a US startup has found a way to combine them both.
Luvocracy is the latest social sharing shopping business to offer participants the chance to ‘share what they love’ – while earning cash. It is based on advice, trust, rewards and social, and works by utilising the affiliate programme model.
For example, say you are an avid surfer; you can go to Luvocracy and see recommended products and collections from the likeminded surfer ‘community’, alongside this is also that person’s explanation of why they love a certain product.
We caught up with San Francisco-based Michael Weller, who heads up the business/corporate development area of the business.
Q: Luvocracy utilises the affiliate marketing model by helping members earn commission for their recommendations. Can you elaborate?
MW: Luvocracy was founded on the premise that consumers want advice and feedback regarding their online purchases, and that they are looking for a two-way dialog with other consumers who they trust.
Of course, members whose recommendations created purchases want feedback on their recommendations and to be acknowledged for them, so we built a rewards structure for members who create purchases in the marketplace. Members can earn a percentage of purchases that were generated from their recommendations.
Everyone is welcome to join and build collections of products they want to recommend.
Q: You claim to be offering a ‘new angle on social shopping’. How? Who are your main competitors and how are you better than them?
MW: There are many companies who are innovating the ‘social shopping’ market, all with their own perspective on what is important.
One of the unique features of Luvocracy is that we operate our own multi-brand shopping cart. When a purchase is made, we manually place the order on the retailer’s site and Luvocracy charges the consumer's credit card. Our partners receive our billing information and credit card and the consumer's shipping information. We never take possession of the product as the retailer ships the order directly to the consumer with all of the branding and packaging intact.
This is key benefit for our consumers because they get a consistent shopping experience across all of our retail partners. Additionally, this provides a great experience when purchasing collections of products provided from multiple retailers as the consumer places one order with us and we replace the orders across multiple retailers.
Our members have built a marketplace of recommended products so their friends, family and others who trust them to purchase great products. We then connect members with other consumers who have similar taste. Purchases based on recommendations from people you trust creates a better experience for all involved, as buyers are predisposed to have a positive expectation before receiving their product.
Q: We recently profiled MyEndoShop, a US-founded platform that allows users to earn commission for their influenced purchases. How is your offering different to this and why has the concept of a recommended-style social marketplace really taken off?
MW: Our multi-brand card functionality allows consumers to receive a consistent buying experience across Luvocracy regardless of retailer, while retailers still get brand recognition, as members know where the product was purchased. As we are involved in the transition flow, we make a commitment to stand behind the transaction to both the members who are recommending and consumers buying products.
We have a team that acts as a shopping assistant for our members, providing a concierge-like service in both recommending and purchasing of products. Each transaction is assigned to a team member to ensure that from the start of placing the order until it is delivered, the consumer experience is positive.
Also, members are not restricted to products that they can recommend based on only products present in a contained product feed. We allow our members to recommend any products they want, which has allowed significant growth in our catalogue of products.
The concept of recommended style social marketplaces has taken off because most consumer purchases are influenced by a word-of-mouth recommendation.
Consumers value advice and recommendations from friends and families above all other forms of advertising when making a purchasing decision. Recommended-style social marketplaces are bringing this experience online and allowing consumers to extend beyond their networks to find other people whose advice and taste they trust.
Q: Who is your target audience and what countries is Luvocracy available in?
MW: The community has grown organically as our members invite their friends and families to join Luvocracy. Therefore, the community determines the ‘target audience’ and product categories that are recommended.
Q: How has the business been received since you launched?
MW: Since launching we have seen great acceptance by our members. Our community has generated over 700,000 product recommendations.
Q: The company recently gained $11 million in a funding round. How did this come about, who was involved and how will this cash boost impact the business?
MW: The company’s investors include Kleiner Perkins, Google Ventures, Marissa Mayer, Ali Pincus, Jim Lanzone, Tony Robbins, CrunchFund, RPM Ventures, and XG Ventures. They are enthusiastic about our vision of recreating the influence of word-of-mouth online. Being well funded has allowed us to build the business where we have prioritised our members’ experience by providing the best recommendation and purchasing experience possible.
Q: What are your wider views on the affiliate marketing/incentive driven marketing industry in the US? Will incentive advertising breed a new generation of consumer that will only recommend a product off the back of a bribe?
MW: The affiliate channel as a whole, and specifically, top performance marketing networks including Rakuten LinkShare, are based on an action-driven incentive model where companies are rewarded for creating purchases. Luvocracy's reward structure is also an action-driven incentive model, yet it is focused on rewarding individuals who created purchases of recommended products. These two models are similarly aligned and poised to grow together.
Affiliates who drive poor traffic to advertisers cannot succeed long term as advertisers will stop working with them or reduce their commission. Conversely, affiliates who drive valuable traffic and add value with the purchasing process will succeed and have great brands work with them. Similar to affiliate marketing, consumers who provide genuine recommendations for excellent products on Luvocracy will build large audiences of members who trust them.
Q: Prior to running the business did you work in any similar roles and did you have much knowledge of the affiliate industry and how it works?
MW: I was on the original team that founded Schoolpop and ran the affiliate and consumer facing (revenue generating) functions. Schoolpop was one of the first super affiliates. After Schoolpop, I founded Incentive Networks, which was a technology provider to many super affiliates in the loyalty space. We also hosted and managed over 190 shopping malls for multinational loyalty programs such as A&P Properties, British Airways JetBlue, and Virgin Atlantic. After Incentive Networks was sold, I joined the team at Luvocracy.
Q: What expansion plans do you have and to what markets/sectors and when?
MW: Today Luvocracy is primarily a US business, but we will be expanding internationally in early 2014.
The community and the catalogue it creates grow organically. Our members invite their friends and family and are the primary source of new members joining the community. Likewise, our members create their own recommendations for the members who trust their taste. Our members determine the markets/sectors where we have recommended products, but as the community has been growing rapidly, so has the breadth of products and categories that have coverage.