Stirred not shaken – Your social network says something about your style

In the last month we have been chin-deep, managing & moderating a mixture of client; blogs, idea exchanges, ratings and twitter channels.

I have not been personally immersed in several disparate channels, simultaneously, to this extent before – personal use of these channels is nowhere near as intense as client projects. But bleary eyes and elevated caffeine levels have resulted in a new understanding of the different conversational styles that take place on various social platforms.

My modest insights;

• Regular contributors to our blogs are rarely on twitter and if they are, tend to be active in one place at a time (those that use consistent screen names anyway), either twitter or the community
• twitter users are very open to reading blogs, especially linked from tweets. When they click through and visit our blogs they spend significantly more time and read more pages than visitors from other sources. I do not know if this is because they are avid blog readers, slow readers or just have never visited before, are curious, so take a good look around
• Power users rule, and they tend to be regular commenters rather than regular idea generators – though they refine ideas from others regularly
• There is a distinctly different rhythm to each network – twitter is the most frenetic, facebook in the middle (depending on the brand involved), then ideas exchanges (depending on the category under discussion) and even our most energetic blog has a leisurely pace and a long active life compared to the average tweet.

To add some rigour to this anecdotal research, I recently read a research summary by Anderson Analytics. Their more studied findings;

• Facebookers are more likely to be; married, white and retired than users of other social networks, and have an average of 121 connections
• Twitterers are the super-user group, with a high interest skew to news, restaurants, sport, politics, personal finance and religion. They shop more online than other groups.
• MySpacers they classify as the young, the fun and the fleeing.
• LinkedIn users are all about business, the only place where there are more men than women, have the highest incomes and are more interested than others in gambling and soap operas…

Why do you favour one venue over another? Do you?

Your customer community story – the 4 critical elements

We have developed an implementation methodology for brand communities over the last several years and projects; summarised as ECHOES (we will run out of allusions to ‘resonate’ eventually).

The ‘S’ stands for “Story” – the stance of interest that underpins the community and makes it interesting, moves the narrative forward and provides Clay Shirky’s “plausible promise” that lets participants feel other people will also find this interesting and a worthwhile investment of time.

For a brand community the Story is particularly important – neutral platforms where communities of interest, practice or celebrity can gather freely exist already; Facebook, LinkedIn… The Story has to be the reason participants gather in your venue rather than their own to have conversations about your category and brand.

Or else they will come to make ‘cash for comment’ – an approach we do not favour and generally leave to the online survey panelists.

I came across an excellent discussion of ‘dynamic stances’ in the context of challenger brands by Adam Morgan;  Eating the Big Fish . So good I am going to internalise his 4 critical elements and ensure they are in every community story we implement. The concepts that follow come from his book excerpt.

Stories must;

• be dynamic, move the narrative of the community forward, and the personal narrative of the participants
• have some inherent tension and conflict – which provide human interest to members.

So, the 4 elements;

1. Unexpectedness – “Stories that demand our attention never focus on the banality of life conforming to expectation”. What is the unexpected course we are looking to take with the community and why should they be interested in it?
2. The Inciting Incident – the moment the frustration got too much and we determined to start doing something different. “Some truth about why we embarked on our current new course, that makes it more than just this year’s positioning” The ‘Aha!’ moment.
3. The Objective – the desire created by the Inciting Incident. For a story to be compelling it has to be driven by a personal desire, coming from the inciting incident; an objective that propels the ‘brand’ and the community forward. We want to achieve something specific that is visible to the community. What is it we are trying to achieve?
4. Conflict. If there is no conflict in a story, it doesn’t move forward, and the way the brand deals with conflict reveals their true character. It is the source of energy for the conversation. What are we struggling to overcome?

An engaging brand community allows membership to know why they (the ‘brand’) started the community, what they are trying to do, what they are struggling against and who their enemy is. Perhaps even a sense of their hopes and fears – especially for us as members. Morgan gives a great example – he references a leading anthropologist who observed that President Clinton did not retain his popularity through all the scandals because people liked him, but because people though he liked them.

Good community moderators let the members know they are liked and respected; “We are not just target markets and demographics and share objectives – they share their stories with us, and invite us to participate with them in realising them.”

Reading this paper was one of my ‘Aha!’ moments.

The Buzz Exchange has some of these elements, take a look. (We helped with this one)

I wonder if I will ever get a client with a story as interesting as my namesake did….

No relation (damn)

‘Customer-centric’ does not mean paint bull’s-eyes on their foreheads

We seem to read a lot of Forrester. I guess they have a focus on the sort of direct marketing / social media mash-up our customers are struggling to implement.

Anyway, the latest paper was a little closer to our roots; “Defining an Enterprisewide Customer Contact Strategy” from October 22 last year by Dave Frankland. The (mandatory) list, the “5 Building Blocks for an Enterprisewide Contact Strategy” seems to get it right;

1. Customer-centric marketing culture
2. Business process collaboration
3. Technology as key enabler
4. Analytics and segmentation drive the strategy
5. Consistent measurement framework ties it all together.

Nods in agreement.

But hang on. Take another look at #1. Skipped over it like me; brain numbed by the sheer number of times you have read this business oxymoron?

Focus for a moment on these 2 rhetorical questions,

• How many marketers / product managers do you know who disagree with the need to be ‘customer-centric’? Most swear they already are. Focus groups to prove it.
• How many organisations do you know that actually ‘…manage P&L’s by customer groups…’ – the money where the mouth is test?

So what has changed except the level of marketing self deception?

Making each organisational silo (each product manager, each channel manager, ATL / Below The Line managers…) separately and independently customer centric does not really achieve the objective does it?

If you do it this way, the decentralised leave it to them way, the customer may feel she is now the bull’s-eye in several product manager’s marketing plan, but she does not feel the organisation is customer-centric i.e. has her interests at heart.

We contend that customers translate ‘customer-centric’ to ‘relationship’. They look for proof there is a relationship on offer in the relevance of your communications – this proves you are working at recognising and remembering them. This is a prerequisite for trust, but you can’t have a positive relationship with a supplier you do not trust to honour their promises. “In full, on price, on time, everytime” is mandatory (and sometimes enough for a relationship to exist).

Let’s make the anthropomorphic basis of this customer-centric strategy explicit; the plan is to make the organisation behave as a real individual person would. Customers have relationships with people, so the closer your company can emulate the behaviour of a person, the easier it is to build customer relationships. With your advocates – not everyone but much better than no-one. Relationships promote loyalty, loyalty increases positive customer behaviour including WOM… and you make more money, for longer.

This is one of the reasons we like ’social media’ marketing. It is conversational, 2-way, open… the style of marketing that makes relationships between people more likely.

Back to ‘customer-centric’.

If each product management (or channel) silo is open, conversational, remembers the customer- but independently of the others – the customer still thinks you have selective amnesia. You cannot have much of a relationship with someone who welcomes you as a close friend in the office but ignores you in the bar.

To be customer-centric the organisation needs a single customer view to match the customer’s single company view.

In social media terms this means juggling a single (but multi-faceted, those pesky customers are complex human beings) conversation across the many places customers want to converse with you. Behaving like a single person relating to them. This is where you must generally focus on your advocates and trust them to leverage the relationship through their networks in order to achieve scale.

Sorry, a little more complex than putting up a company blog we know – but that is not a bad start!

Anybody Home? The Power of Online Presence

We are all familiar with the real world impact of “presence” – and the powerful clues to social context that it provides…

Ok, ok, some examples.

Do you think twice about entering an empty restaurant surrounded by thriving atmospheric venues?

Do you feel a lift in adrenalin at one of the world’s great sporting venues filled to capacity with screaming fans? (I was lucky enough to be at the Melbourne Cricket Ground in 2005 for the mighty Swans victory…).

On the other hand, have you read about the great European soccer clubs who have had to play matches in stadiums without fans able to attend – due to previous fan behaviour? Can you imagine the (lack of) atmospherics and adrenalin in an empty stadium?

You may also be aware of how just the act of observation can influence behaviour – the so-called Hawthorne effect observed in controlled studies. Or at a more intense level of scrutiny or adulation, the commonly referred to “fishbowl” effect. Think Michael Jackson (apologies) or Hollywood starlets…

So if these are real and quite powerful phenomena in the real world – how does this all relate to our experience online particularly in online communities?

Clay Shirky describes the decision to join an online community in the following manner…

Any new claim on your time must promise something of value – and presumably some higher value than something you already do… But it is not a promise alone. You must not only assess that it will be of value to you but “will enough other people feel as I do to make it take off?” Shirky calls this the “plausible promise”.

And once you have joined such a site you will be looking to assure yourself that this is indeed a healthy and active site worthy of your time.

This, of course, is the same power of presence we recognise in the real world just adjusted to the foibles of the online environment. Just remember, that “on the internet, nobody knows you are a dog…”

And it is a similar phenomenon to the power of recognition, reputation and embeddedness mentioned by Tim that can ultimately develop in online communities. But it has to start somewhere, and just knowing that “somebody is home”, that “there is a pulse” provides a very powerful and necessary context.

So, to continue our line of inquiry… have you been to social websites where…

You can immediately see a number of recent member generated comments…? (thebuzzexchange, everydaymatters)

The number of registered members or members currently online is displayed? (essentialbaby)

Have you been to a “social” website that measures contributions, has leader boards or recognition badges? (digitalministry) Did this perhaps lift your adrenlin levels and competitive spirit just a smidgeon…

My case rests, your honour.

Social Networking as a Forced Move

Humans are innately social – I think we can be safe on that one…

However there is another force at work with the social networking phenomenon.

The sheer amount of information and choice we’re faced with forces us toward practical “sharing” activities  as a means of navigation for better decisions and actions – quite apart from any innate social impulse. We see this in our work environments in particular where the explosion of data requires ever increasing knowledge management capabilities beyond any one person or any one person’s vocational training. Effective sharing simply wins.

Not just a forced move. Social networking becomes a smart move.

Mark Pesce talks about this in The Power of Sharing… Well worth a look!

What struck me here is the proposition that much of the business world is still stuck in the “more sharing equals less value” mode with all of the accompanying legal and cultural reinforcement. Versus a new hyperconnected model of “more sharing equals more value”, where more knowledge develops its own gravitational pull (eg. wikipedia, open source software) and where hyper-connected individuals can become hyper-empowered groups that cannot be ignored (eg. ratemyprofessor, patientslikeme).

How this plays out for large market-based organisations in competitive environments will of course be fascinating… perhaps more a case of understanding when does it pay to share!

Tremor, cognitive science and word-of-mouth

NOT the P&G Tremor

You have to take your hat off to the marketers at P&G – I have just finished looking over a presentation by their Janelle Zurek called “Leveraging Cognitive Science to Create Word-of-Mouth (2009) published by MSI in a conference summary.

Tremor is the P&G agency that offers marketing services related to WOM for P&G and other customers. “Tremor’s (US) database includes 350,000 moms (sic) with higher than average networks and ability to influence others.”

The nuggets of wisdom?

1. Tremor confirmed previous findings – 90% of word-of-mouth happens off-line
2. People talk when their equilibrium is disrupted i.e. they are surprised. Reminds me of a quote (author’s name escapes me) “Most innovation does not start with ‘aha’ it starts with ‘that’s funny’.” She presents the example that 2-in-one shampoos are no longer a surprise, they match our cognitive schemas now. “But waterless shampoo disrupts our equilibrium; it is a surprise. That is a first step for word-of-mouth.”
3. This disruption requires we all get back to equilibrium and we do this by referring to others or by nurturing others, both WOM activities.

Tremor now measure surprise in their concept testing research.

When is the last time your marketing or value proposition surprised your customers? Would you know if it did?

Customer Loyalty, Profitability and Mythology

In The Mismanagement of Customer Loyalty, Reinartz and Kumar take a surgical look at the false assumptions that underlie many Customer Loyalty programs. And whilst the research they quote is somewhat dated now (2002), their findings have an uneasy and contemporary feeling of truth about them.

The popular mythology is of course that the best customers are the loyal ones:  low cost to serve, willing to pay more, and to act as strong word-of-mouth.

The claim by our researchers: “Much of the common wisdom about customer retention is bunk. To get strong returns on relationship programs, companies need a clearer understanding of the link between loyalty and profits”.

Their research findings covered a high-tech corporate service provider, a large US mail-order company, a French retail food business and a German direct brokerage house. The data collected enabled them to compare the behaviour, revenue and profitability of more than 16,000 individual and corporate customers over a four year period.

They discovered “little or no evidence to suggest that customers who purchase steadily from a company over time are necessarily cheaper to serve, less price sensitive, or particularly effective at bringing in new business”.

However, they also claim that the reason that the apparent link between loyalty and profits is weak has a lot to do with the crudeness of the methods most companies use to decide whether or not to maintain their customer relationships.

RFM (Recency, Frequency, Monetary value) analysis is a popular way to sort customers. In practice, this method tends to overweight in favour of recency (eg. doesn’t distinguish different pacing patterns between frequently and infrequently purchased goods) and the monetary value component is almost always based on revenue rather than profitability. In short, it can be a very blunt instrument.

And as valuable as segmentation is, there is no substitute for identifying customers at any individual level. Knowing that 50% of your customers are loyal doesn’t exactly inform:  right offer, right customer, right time, right channel.

The really interesting findings from the research came from probing further into the attitudes of loyalty – sifting out the self-declared true believers. At the grocery retailer, for example, customers who scored high on both actual and attitudinal measures of loyalty generated 120% more profit than those whose loyalty was observed through transactions alone. And in the B2B environment of the high tech corporate services provider, loyal customers of both “thought and deed” were 50% more profitable than those designated loyal by transactions alone.

This certainly mirrors our experience with CRM programs and branded online communities. It is one thing to know about transactions – “who, what, how and when” are all critical to providing context in understanding customers. However, going the last mile to understand “why” is absolutely critical. And can turn a blunt instrument into something of surgical precision.

Campaign Management & Conversations with Customers – so how?

Money does make the world go round – if nothing else the Global Financial Crisis has demonstrated this hypothesis in a dramatic fashion. There are global warming skeptics but few ‘money makes the world go round’ skeptics have you noticed? Arguments are generally about how much of the planetary rotation is due to currency, not if.

I digress.

Much of what our team does to make our part of the economic world revolve involves campaigns. Helping clients put the right offer in front of the right customer at the right time over the right channel. To some extent, our embrace of social media/networks/conversational marketing is so we can add a 5th dimension to this process – relevance.

2 way conversations with customers tell us directly what is important to them and what they are looking for, hopefully from us.

But scale has its challenges. Being relevant & personal to a few million customers is, ironically, tough without impersonal; automation processes, computers and mathematics.

So there is a healthy and growing market for campaign management systems that started as tools to facilitate customer list selection and then expanded to add workflow, analytics and optimization.

All enhancements that make it easier to manage the task of placing an offer that is (most) likely to be accepted in front of a customer. Inherently a one way communication, though the listening bit has got much better.

How are these tools going to evolve to deal with the growing reality of customers talking to each other about you and wanting to talk directly to you – just like they did in the marketplaces and bazaars before mass marketing?

Forrester has a good summary of the leap that campaign management systems need to take – you can download a free copy here.

I agree generally with their ‘8 Principles to Guide the Next Generation’ of campaign management systems…

1. Support an institutional memory of the customer. (The ubiquitous Single Customer View requirement of CRM projects)
2. Enable dialogues not just programs [campaigns]
3. Bridge the online & offline gaps. (They are talking about response attribution across multiple channels, not twitter meet ups)
4. Unify inbound and outbound marketing programs. (Here they mean conversations over social media I think)
5. Move optimization to the forefront. (Could not agree more – put the most relevant offer to customers every time. Makes them feel better and increases your chance of a sale).
6. Include social insights – incorporate listening platform learnings. (Easier said than done…)
7. Provide functionality at marketers’ desktops.
8. Incorporate planning and resource management capabilities. (That centripetal force again)

Seems to be a big job & opportunity to me. Will Aprimo/Unica offer a twitter module?

Community Scripts: Tell Us a Story!

The importance of framing your online community with a story should not be underestimated.

Fournier and Lee illustrate this as follows:

“A script suggests a set of behaviors that are appropriate for a particular situation. Companies can design brand communities by establishing and reinforcing a base script and then layering on new scripts over time.

Vans, a maker of skateboarding shoes, initially sold its products to tight-knit surfer and skateboarding communities. Building direct relationships with these groups and cultivating lead users within them reinforced an implicit Tribe script. By sponsoring competitions and skate parks, Vans introduced the Performance Space script. And through skateboarding clinics and demonstrations, the company added features of the Sewing Circle.”

Some community script examples:

The Tribe:

A group with deep interpersonal connections built through shared experiences, rituals, and traditions.

The Fort

An exclusive place for insiders to be safe and feel protected.

The Sewing Circle

A gathering at which people with common interests share experiences, provide support, and socialize.

The Patio

A semiprivate place that facilitates in-depth, meaningful connections.

The Bar

A public space that grants reliable although shallow connections.

The Tour Group

A way to participate in new experiences while staying inside a comfort zone.

The Performance Space

A place where members can be sure of finding an audience for their talents.

The Barn Raising

An effective way to accomplish tasks while socializing.

The Summer Camp

A periodic experience that reaffirms connections.

What is your community script?

Build it and they will come? Not likely!

One of the Seven Deadly Sins or myths about getting brand communities right is “Build the brand, and the community will follow”. For most of us involved in social media, the myth is self-evident  – the brand lives more in the minds of customer advocates than in the Agency brand strategy. And a brand community exists to service the people in it (not to serve the business! – Myth #2).

The Reality offered by Fournier and Lee is “Engineer the community, and the brand will be strong”.

This has certainly been our experience although it is easier to say than do! The hard work is in working out how best to engineer the community without destroying the implicit social contract with community members.

Jump Associates distinguish three forms of community affiliation that assist in this challenge:

Pools: where members are united by shared goals or values but tend to atrophy if not strengthened by Webs and Hubs

Webs: where affiliations are based on strong one-to-one connections – the strongest and most stable form of community

Hubs: are united by their admiration of an individual – an inherently unstable form of community but can help communities acquire new members who hold similar values

These categories offer clues as to how to establish and develop communities through a lifecycle and Fournier and Lee also offer this example from L’Oreal:

L’Oréal “maps its brands along two dimensions:

(1) brands of authority versus brands of conversation, and

(2) mainstream versus niche brands.

Each cell in the grid suggests a different community approach.

Brands of authority offer expert affiliation and advice. L’Oréal (the company’s mainstream brand of authority) builds community through heavy TV advertising featuring celebrity spokespeople to inspire hub affiliations. La Roche-Posay (a niche brand of authority) nurtures a worldwide community of dermatologists, both online and face-to-face, to expertly represent the brand.

Brands of conversation thrive on social interaction and engagement. L’Oréal’s Garnier (the company’s mainstream brand of conversation) enlists well-known bloggers to share what they’re doing to make the world a better place, using these hub figures to strengthen the brand’s pool. Kiehl’s (a niche brand of conversation) uses a grassroots focus on local charity sponsorships, in-store customer bulletin boards, and required employee volunteerism in the surrounding community to create the social glue.

Although the tactics vary, the goal of L’Oréal’s community-building strategies is always to connect with the people who make up the community in ways that reaffirm the essence of the brand.”

Now that sounds like smart brand engineering…

Everyday Rewards, Qantas and Twitter

 

Earn Qantas Points

Last week, Woolworths and Qantas announced a program that will, from June 22, allow Everyday Rewards cardholders to earn Qantas Frequent Flyer points when they shop in supermarkets. They also announced that the $82.50 joining fee otherwise charged by Qantas would be waived if customers join the Qantas program through the Everyday Rewards site or call centre.

Big W and then other Woolworths’ stores will join the program in the coming months, making it possible to earn Qantas points on a large portion of the average Australian household’s budget.

The Qantas Frequent Flyer company is working to establish their points as the ‘default’ loyalty currency in the Australian market – the same goal as for the Nectar loyalty coalition in the UK. To succeed in this quest, earn and burn options for Qantas points must be ubiquitous, and the Everyday Rewards link-up takes a big step in this direction.

For Everyday Rewards it will provide a common loyalty currency across Woolworths’ brands, providing an incentive for customers to remain loyal to Woolworths across their shopping categories.

We are however, specially interested in the  twitter support initiative that Everyday Rewards has offered to help customers come to grips with maximising their rewards. It joins a number of other Australian brands that have active twitter programs to better communicate to some portion of their customers. A partial list (from my personal ‘following’ community)

• EverydayRewards – Woolworths
• UBank
• ColesCard
• Westpac_help
• nab
• ANZozCEO
• tabdotcom
• iinet
• BigPondTeam – the most famous?
• SmartyPigAu

Follow the EverydayRewards team, and other suppliers in your life; it is a good idea for us to encourage traditional organisations looking to be more accessible and flexible!

Full disclosure – we are helping Everyday Rewards on twitter and help with their blog.

Hen’s teeth? An Australian company with high Net Promoter Scores…

 

Australian NPS study

 

Back in 2006 the Melbourne Business School researched Australian customer satisfaction / loyalty using Net Promoter Score (NPS) as the metric. They looked at a range of service and product categories and found generally poor NPS results (apart from Broome being a great holiday destination).

This research has recently been (coincidentally) updated in this report which looked at the NPS in Australian Banks, Insurance, Mobile, Health Insurance and online shopping.

Several of these categories overlap with the 3 year old MBS study and I thought it would be good to look at how some of our national icons have progressed in the last 3 years – from a customer perspective. No illusion of precision here as I am sure the customer samples are not apples to apples, but illuminating never the less.

So – some example changes in NPS follow…

Banks

Bendigo topped both studies with an NPS of +7 in 2006 and +33 in 2009 for a whopping increase of 26!

ANZ went from -24 to -5 increase of +19

St George went backwards from -29 to -30 decrease of -1

Westpac from -39 to -18 increase of +21

NAB from -42 to -30 for an increase of +12

CBA, last in both studies, from -54 to -39 for an increase of +15

Property Insurance – generally has improved

APIA was not in the 2006 study but overwhelmed the field with NPS of +69, world class

AAMI from -22 to +5

RACV from -25 to +2

NRMA from -33 to -10

CGU from -41 to -15

GIO still at the bottom but moved from -53 to -20 a +33 increase!

Health Insurance – generally getting better, but still low as a category

HBF on top, from -15 to -4

HCF from -30 to -18

MBF from -46 to -23

NIB from -27 to -23

Medibank from -48 to -30

Mobile Phones

Virgin with a bullet! From -29 in 2006 to 0 in 2009

Vodafone from -26 to -4

Three from -24 to -7

Optus from -34 to -22

Telstra still at the bottom but up 10 points from -44 to -34

Overall, there appears to have been a general improvement in customers’ willingness to promote Australian companies in these categories. But this is no cause for celebration – there were only 7 positive scores in the 2009 study and only 2 companies achieve world-class scores; APIA and Bendigo Bank.

Time to look to your Customer Experience Management (CEM) efforts integrated with your Customer Relationship Management (CRM) systems to improve your Net promoter Score (NPS) in this world of Three Latter Acronyms (TLAs).

Influencing friends online

Jenni Beatty put me on to this study in a recent post. Fascinating.

In summary, friendship influence caused the following changes to purchasing behaviour in user categories that were based on social connectedness and activity in the online Korean community CyWorld;

• High status (large number of in and out friendship links) were 12% of users and their purchases dropped 14% as others emulated their purchases. Their social, non-purchase behaviour increased as they appeared to try and make themselves uber-kool again.
• Medium status were 40% of the users and their purchases increased 5% as they ‘kept up with the Joneses’ in the high status group
• Low status (small number of links, low activity rates) at 48% of the users were unaffected by other users’ purchases – felt no social pressure to keep up with anyone.

As ‘influentials’ marketers this is useful. It means our planning should take into account the fact that our word of mouth advocacy targets – the high status power users – will stop buying our cool product at about the same time Duncan Watts’ “critical mass of easily influenced individuals” start.

Is a 5% increase in the purchases of the 40% of the population that are followers enough to offset the 14% drop in the 12% of influentials… mmmm?

The users in the study were buying virtual decorations for their minihompys (home pages); wall paper, furniture, music etc.

The Buzz

Ever wondered how to best design and launch a better insurance company?

IAG decided to ask their customers what they wanted. And use their feedback to develop a new online insurance company from the ground up.

We posted on the launch of their on-line community some time ago; myinsuranceideas.

Today the company was launched, welcome The Buzz please. Take a look.

An excellent post on the process of getting to The Buzz can be read on the Better Banking Blog.

A  quick comment from an online community pioneer and innovation expert (an Aussie in Japan, Terry White) on his blog Socially Ept.

 

Interest declared: we contributed in a small way by helping run the myinsuranceideas community

Designing for the Social Web

A hat-tip to James Breeze at Objective Digital for recommending the book “Designing for the Social Web” by Joshua Porter.

This book describes a simple prioritization scheme for designing social web applications called the AOF Method. AOF stands for Activities, Objects and Features and the method is made up of three steps:

1. Focus on the primary Activity – What is your audience doing?

2. Identify your social Objects – What are the objects that people interact with while doing that activity?

3. Choose your core Feature set – What are the actions people perform on the objects and which are important enough to support in the web application?

There are some very interesting insights in this book and an approach demonstrated by plenty of real-life examples.

An important starting point is focusing on the primary activity – rather than perhaps the more intuitive “know your users”. Porter’s point is that paying attention to the people you’re designing produces a never ending list. A deep understanding of the specific activity that you are supporting with your design is far more productive.

The social applications that are the most compelling tend to excel at a single activity: sharing photos (Flickr), shopping (Amazon), managing a project (Basecamp), sharing videos (YouTube).

Another important lesson is that “personal value precedes network value”. In our rush to get to social network value it is very easy to forget that you must first deliver personal value to an individual. As Del.icio.us’ founder Joshua Schacter points out, the major value of the site was “memory first, discovery second”.

With this in mind, Porter then talks about “identifying your social objects” (eg. photos, videos, events, products, jobs, news stories, auction items, bookmarks) and “finding your verbs” (eg for video: play, stop, edit store, share, comment on, embed) in order to define your core feature set.

And then, of course, all wrapped up in some advice that I’m sure most of us are guilty of not following: just say NO in the face of too many features. Accept only the most important features and keep the others on the back burner until they are truly necessary!

In marketing, what do we really know?

Stepping out of the virtual world for a moment, (we do old-fashioned marketing too), this book answers an intriguing question; “After years of research by the best brains spending hundreds of millions of dollars, what generalisations can we make about the impact marketing has on the business?”

An interesting level-setting browse – no mention of global warming or world peace, but good insights nevertheless.

Some of these seem obvious, but it is better to know that common wisdom is in fact wisdom, not just common. Some that appealed to me;

• High levels of customer satisfaction produce significant financial pay offs
• Companies should have service recovery strategies. But, when a service failure is infrequent or not your fault, customer do not expect to be compensated so do not waste it.
• Consumer belief about how much they know of products, services and other marketing contexts are related to the amount of their actual knowledge. But not strongly.
• Innovation in organisations is driven by a history of innovation, resources, processes and cultural factors. The rich get richer (think Apple?). An organisation’s motivation to innovate – customer and competitor orientation – are key drivers.
• All else equal, innovation has a persistent, long term positive effect on company value and this effect is greater for radical rather than for incremental innovations.
• Price promotions do not only seduce customers to switch brands, they also induce them to buy in the category in the first place.
• Price promotions – in unit sales terms, brand switching is a much smaller contributor to the sales bump (33%) than temporary category growth (67%), some of which may be ‘larder stocking’. [Comment: price promotion appears to increase category sales in proportion to market share, so category champions benefit most from price promotions no matter who pays for them]

Nice to know we have learned some thing(s)…

Any to add?

5 Eras of Online Communities II

I thought I remembered reading about Era 5, Social Commerce, somewhere before, so I searched my presentation archives (it seems I have been talking about internet marketing for a long time, where did my youth go) and found this reference from 1997. Twelve years ago.

In ‘Net Gain’ Hagel and Armstrong  predicted  ”electronic communities”  would emerge – communities of interest is what we call them now – whose commercial value is their ability to aggregate customer demand. Prescient.

They did call it ‘cyberspace’. Haven’t heard that word for a while.

A couple of years back, while doing a project in South Korea, I was surprised by the routine way in which my Korean customers joined online buying groups to get better prices. For example, one was in the market for a Nikon camera, so he joined a Nikon buying group on Cyworld. When enough potential buyers had signed up the group organiser would ’shop’ the volume to various retailers and suppliers to get the best deal for the group as a whole. Job done, group closed.

Whose in charge in this scenario? The Era 5 community clearly.

During my miss-spent youth this was called ‘Power to the People’

Your Place or Mine: Online Communities

According to new research by the Internet Advertising Bureau (UK), “nearly a third (31%) of social networkers dislike constant requests to join groups and download applications.”

“However, the study of nearly 2000 internet users found that 28% of people would be happy to join a group if they were offered exclusive content or something relevant and free, whilst over a third (37%) would join a group if there is a genuine interest in what is being offered.”

Bearing in mind that brands do not use Facebook Groups anymore but reside on the new Facebook Pages (where you can become a “fan” of a brand) and cannot be sent a request to join…

According to the IAB, the study also shows that greater insight into the effectiveness of advertising in this space is required, with 16% of members stating they are turned off by irrelevant advertising. However, only 5% dislike messages from brands.

This research demonstrates that spam is spam – regardless of whether it comes from a “friend” or a brand but it does make you wonder more generally about the nature of broad-based social networking sites versus for example online communities dedicated to one brand.

From the brand’s point of view, there is of course a reason to have a presence on social networking sites – especially as a means of recruiting advocates (fans!) and having a conversation with them. Given the numbers of Facebook users – on a brand awareness measure alone this appears to be a worthwhile endeavour for many brands with the appropriate resourcing and approach… (but when we hear social media marketers telling us that their Facebook CPM is much lower than TV’s CPM we have to wonder if the old and the new really do fit together so interchangeably? Just a thought.)

However, the contrasts between branded (or “destination”) communities and social networking sites – and their relative strengths and weaknesses, are slowly being better understood.

First up, the consumer has to have the intent to find the branded site and to register as a member – not always a trivial matter. Especially when there is profiling or other customer registration data (eg loyalty card) to provide. From this viewpoint, the consumer has self-selected just a little further as an advocate and even more importantly they have identified themselves. We are now dealing with an identifiable customer rather than a generic consumer… The customer has come to your (brand) place!

When you are at their place, even if they invited you in, you are just one of the crowd of things customers do on SNS’s. At your place, for as long as they are there, it is clear what their focus is. Your brand.

And, confirmed identity is critical for brands. Social networking is all about being personal, so, insight should not be anonymous. You want to be able to act on it! And having identity that can link preferences and aspirations to transactional behaviour is very powerful. What do my most valuable customers think? What do my Promoters think and how is it different from what my Detractors think?

Once the customer has arrived at your place, the conversation is arguably a more focused one – far more likely to be about the brand or related issues without the general clutter that you would get on a Facebook site for example. It also places the customer in a position to more readily solve any problem they might have with a brand – by having more information, links and other genuine customers available that relate to the brand context.

The next contrast relates to increase brand control and influence in branded communities. OK, OK – to the extent that you can control any online conversation…

In a branded community, the brand can ‘digest’ user content before it is released; it can select the conversation “vehicles” (blogs, forums, idea exchanges, polls, surveys, competitions) and recognition programs (for example) that it considers most appropriate for a healthy community. In short, the “customer experience” if not the conversation itself can be far more controlled or influenced by the brand than on a third-party social networking site.

I hasten to add that this control needs to be exerted with a light touch and with the authentic and open approach espoused more generally on this blog! But nonetheless, the ability to shape the development of a branded community is far greater in branded communities.

And at the legal extreme of this distinction, remember Facebook owns the data and, however unlikely, could remove several years of your sweat and tears!

Finally, the back-office of some branded community platforms can allow for analysis and the management of ideas and responses so that “like ideas” or themes can emerge for further action in the community – producing a powerful combination of qualitative and quantitative outcomes.

Where  social networking sites do come into their own however - is sheer reach and pervasiveness.

This is where the complementary nature of branded and social networking sites come into play. Whilst the sales funnel is not what it used to be – I see Facebook or similar social networking sites as being further “up the funnel” and ideally positioned as recruitment vehicles for branded communities – encouraging prospects to “come to your place”.

But in both types of communities, we remember the words of a marketing manager in Coca Cola; “in the new social media, you have to be invited into the customers’ private space, you can no longer barge in. When you are invited in you have to bring a plate or you will not be invited again.” The plate is rich and engaging content, from you or other guests.

Just because you build it, does not mean they will come.

Online Communities: Don’t Waste a Good Crisis!

If ever there was a chance to do something significant, to break-through, to achieve something extraordinary in business it would have to be now – during the current global financial crisis and its fallout.

Call it “the glass half full”, “rose-tinted glasses” or even the “Pollyanna view”… but I think most of us know that nothing focuses the mind like adversity and that fear is not a particularly helpful reaction. It is a time for courage and creativity – a time to push through with passion!

In our neck of the woods – helping brands to engage with and become relevant to customers – this is very timely. The confluence of economic crisis with the extraordinary rise of social media usage amongst consumers and cynicism towards traditional push marketing all point to a rare opportunity for marketers – or anyone else who can see it coming.

The key ideas here for brands and online communities are speed (to customer insight, advocacy and co-creation) and the low cost of experimentation that social media affords. And a tipping point where customer driven momentum cannot be ignored.

In “Turning Goals into Results – The Power of Catalytic Mechanisms“, Jim Collins takes this idea of a “good crisis” a step further. Catalytic mechanisms help to mobilise organisations away from the status quo – to propel commitment levels past the point of no return.

The example that he gives here is the shortpay commitment by star performer Granite Rock – a California based company that sells crushed gravel, concrete, sand and asphalt. This commitment mobilised Granite Rock employees to feverish levels of performance with a radical policy that invites customers who are not completely satisfied to reduce their invoice payment – without returning product. Clearly, not for everyone! But you get the drift… the idea of propelling commitment levels beyond the point of no return.

Collins describes catalytic mechanisms “galvanizing, non-bureaucratic means of turning visions into reality, usually involving a redistribution of power.”

This observation is particularly relevant to branded online communities -once they have been nurtured and grown to a critical mass – a tipping point – where companies not only recognise their asset value but are compelled to engage and grow them. The catalytic component then comes into play – “we promised the community that we would do this – we either deliver or explain…” or “we can’t turn the community off – these are our biggest advocates, the customer backlash would be severe”.

Not as dramatic as a shortpay commitment but for those serious about brand building – just as critical!

5 Eras of online community

We received a nice mention on Reputational Democracy where Jenni reviews the recently published “5 Eras of the Social Web” from Forrester.

Era 5 is the one that certainly interests us the most; Forrester call it the ‘Era of Social Commerce’.

In our own small way we have been helping clients participate in this social commerce and have been calling it ‘co-creation’. 

We are not alone of course, nor is co-creation a new strategy. Innovative companies have been involving their customers in the design of products and services for some time. And of course there is Wikipedia and Linux. But these are notable because they are exceptions – Era 5 predicts that this will be the bog-standard way of running a commercial enterprise given the evolution of the Social Web.

We agree.

When it comes to new product development, ‘Why guess when you can know’?

Clearly the 5 Eras are not exactly sequential in their arrival – and as the following diagram shows, technology based co-creation initiatives have already yielded remarkable success (thanks to McKinsey for the case studies).

I wonder what financial models will emerge to support Social Commerce?

Will consumers settle for relevant products and services as payment or will they insist on being compensated for their contributions – keeping the 90-9-1 rule in mind – since not all will contribute equally? Will vendors be charged for access to insight from communities of interest or practice by the communities themselves? 

Perhaps the Digital Concierge concept will be expanded to cover whole online communities which would then be called ‘markets’?

We live in interesting times.