“First we create our structures and then they create us”

Happy employees make for happy customers, right?

Quite apart from the research, it just seems to make sense. 

 

And of course, it runs a little deeper than that. If we hold a mirror up to our organisations - most managers are what you would call “transactional leaders” - as noted by Shaun Smith:

“They believe that employees are hired labour and see their relationship as a transactional arrangement at best with little loyalty on either side. Tranactional leadership tends to deliver compliance but not commitment. If you want people to stay you have to bribe them through increased pay and perks.

By contrast, Robert Stephens, founder of the Geek Squad, believes that a company today is like a social network that has ‘temporary custody of talent’, and that you have to build in social links to help unite talent around a common purpose. In other words you have to create an environment of learning and fun if you want people to stay with you.

 

In Robert’s view, it is absolutely fine if your people leave to advance themselves, but not for any other reason. He also believes that ‘recruitment is the most authentic form of advertising’ and so goes out of his way not to ’sell’ the Geek Squad to candidates but to tell it like it is as part of the recruitment process - the need for dedication, devotion to duty, hard work and obsessive attention to speed and quality.

 

If we look at how market places evolve and companies compete over time, the centrality of belief shaping reality becomes clear. A good example is MP3 players. If you believe that they are purely functional, then that is how you will compete and your culture will mirror that, focusing on costs and features primarily. You will tend to manage by the numbers.

 

If you believe that you can add value through service, as Apple did with iTunes, then marketing assumes greater importance and brand loyalty and market share will be your focus. If you believe that customer experience is greatest differentiator, as Robert Stephens does, then the culture you need is likely to be more engaging and emotional (EQ rather than IQ) and experiential itself. This is where Apple is heading with its retail stores.”

Food for thought indeed.

As Winston Churchill said, “First we create our Structures and then they create us”.

 

If the leaders of your organisation do not believe that the customer experience is a critical differentiator then don’t be surprised if customer-facing employees are also unenthused - and hard to hang on to.

They are not talking to you and fame happens

At the risk of turning this blog into a book review, I wanted to recommend “Here Comes Everybody” to readers interested in the real world impact of social media like this very blog.

Two pieces of insight (doh!) that jumped out at me from this book;

1. All of the consumer generated content on the internet that I find of poor quality or a waste of time - was not posted for me. They are private conversations overheard in a public place. Publish then filter is the new process, vice versa to broadcast media.
2. Truly popular people on the internet become famous. This converts them from conversationalists to broadcasters. Fame means more inputs than outputs and when this happens with volume they cannot repond to enough individuals to maintain personal interactions. With a million visitors per month, the most famous bloggers cannot read all of the comments let alone respond to them. “What technology giveth, social factors taketh away”.

In our consulting to business we often meet scepticism about social media and have to enter the ‘change in kind versus degree’ argument. I now have a great word picture answer thanks to Clay’s blog;

‘I was having dinner with a group of friends about a month ago, and one of them was talking about sitting with his four-year-old daughter watching a DVD. And in the middle of the movie, apropos nothing, she jumps up off the couch and runs around behind the screen. That seems like a cute moment. Maybe she’s going back there to see if Dora is really back there or whatever. But that wasn’t what she was doing. She started rooting around in the cables. And her dad said, “What you doing?” And she stuck her head out from behind the screen and said, “Looking for the mouse.”‘

The change is not complete but it is fundamental. A mash-up.

The folly of herding cats

-

The brave new world of social media is a reminder that old assumptions and rules are dangerous indeed!

Take the example of a Focus Group - you could certainly rely on responses (you paid for them…!) and the skilled facilitator could always find some new angle or insight admidst the rubber chicken and carefully selected vino with carefully framed questions. And there was, and is, of course value in these very close & detailed interactions with customers or prospects. But what about the unwritten rules and quirks of human behaviour:

• The facilitator who knows the answer and is hell bent to get there
• The questions that are never asked or sought due to over-scripting
• The conclusion that is confected because we have a deadline
• The attendee who answers as they believe they “should” not as they “would”
• The group pressure that gets in the way of individual “truths”

Some of these factors are of course still present in online environments but there are arguably some naturally occurring benefits:

• Artificial deadlines are not relevant to an ongoing online conversation
• Ideas are more likely to be judged by their merit rather than the personality or standing of the participants
• The larger numbers potentially involved make for broader based sampling

Now I would never have online communities go head-to-head with pure market research - there is clearly a place for both. However, the natural aspect of online communities vs consumer panels for example appeals to some of the more broad-minded researchers I have talked to. They remind me that consumer research was invented when it became uneconomic to listen to enough of your marketplace conversations!

The challenge is perhaps more to do with our own assumptions and rules - try asking a focused question in a branded community - when they are not ready for it - it is truly like herding cats. In these environments, consumers talk about what they want to talk about, regardless of the question you have asked. Much like our politicians!

We recently reviewed a German study on using online communities for ‘co-creation’ of new products (the way Dell uses IdeaStorm). Professor Doctor Manfred Krafft found that virtual co-creation works best if the community is given broad, general questions to debate rather than being prescriptive and narrow. (He also found that monetary rewards increase the volume and lower the quality of contributions - perhaps sobering for the typically paid focus group model?)

The bottom-line for we marketers is that the online environment can be a more natural and therefore potentially more productive environment BUT be careful you are still not applying old rules!

Facts are stubborn, but statistics are more pliable*

We are devout believers in the data driven market credo; ‘why guess when you can know?’ This means we keep a weather eye open for case studies and research that will move the decisions we make with our clients from the gut to the head (with or without blinking ;-).

The recently published Relationship Marketing - part of the Relevant Knowledge Series from MSI - is the mother load. Mr Palmatier analyses 97 different empirical studies covering 38,077 different commercial relationships. Head spinning stuff for relationship marketers!

At the risk of over-simplifying, (and being too dry for a blog like this), the summary ‘Best Practices: ways to build & maintain strong customer relationships’ is worth disclosing;

• do not let conflict go unresolved
• assign customers a dedicated contact person
• spend most of your budget on raising the skills of your ‘boundary-spanning’ (aka service) staff
• focus on social (person to person) and structural (system integration with customers) programs
• minimise the use of financial (discount) programs
• let your boundary spanners (sales people) control social programs but not the structural & financial ones
• if your sales staff churn rate is high, make an effort to get them to be consistent in approach and focus more on structural programs
• early in the relationship, focus on amount, frequency & quality of communication
• measure relationship; quality, breadth, composition and growth/velocity regularly. Especially velocity (is the relationship improving or decaying, not just its current state)
• audit your own organisation to make sure you are aligned to relationship marketing - strategy, leadership, culture, structures and control, business processes

But for me the biggest insight is Mr Palmatier’s insistence that if a customer relationship is not growing, it declines. If you cannot grow the relationship, go for efficiency and being ‘easy to do business with’. There is no such thing as maintaining relationships - according to the facts.

The Australian Direct Marketing Association held its annual 3-day forum last week and this ‘make marketing evidence based’ message was consistent from almost all presenters, including yours truly. Sounds like we are finally getting the message. Now all we have to do is follow our own advice!

At the conference I managed to catch up with an old friend - Terry White who is the Chief Innovator (great title) at Amway Japan. Terry - ‘Marketing used to be 90% magic. Now it is 90% science and only 10% magic’ - and he does not mean statistics, he means facts.

* Mark Twain on customer analytics

Because that is where the money is.

The American gangster Willie Sutton when asked why he robbed banks answered; “Because that’s where the money is.”

A similar strategy should be adopted by marketers as they strive to build relationships with customers - to increase loyalty and improve results.

The excellent “Relationship Marketing” recently published by Robert Palmatier gives us a good guide on how to find the marketing equivalent of Willie Suttons‘ banks. We have written before about the role played by reciprocity in building customer relationships; but we are not worthy when compared to Mr Palmatier who has analysed 97 empirical studies conducted over 17 years representing 38,077 different relationships. ‘Why guess when you can know?’

The fascinating finding - relationship marketing can improve or decrease performance; same marketing, opposite results. The critical variable is the Relationship Orientation (”RO“) of the individual customer.

Worth switching to quotes here; “Paradoxically, the same underlying psychological processes and reciprocity norms can both enhance relationship building with relationally oriented consumers and drive away those with a low RO.” “For customers with a higher RO, RM [Relationship Marketing] enhances relationship quality and leads them to perceive exchange efficiency…”…”According to one study, customers with a low RO would shift 21% of their business to another supplier if it offered completely automated transactions (i.e., no salesperson)…”

If your customers are inclined to have a relationship with you, marketing activities aimed at relationship building can work. If they have no desire to have a relationship with you the same activities will drive them into the arms of your self-serve competitor. More reasons to follow the Peppers and Rogers maxim - “Treat Different Customers Differently”. Segmenting customers on the basis of their RO levels seems like a good idea. But how?

Branded on-line communities may be an efficient answer.

We have discussed the golden ratios of branded social networks before in this post. In a B2C community, expect 1-2% of the population to participate (unless you are in a really fanatical category like football). In that 1-2%, the 90%-9%-1% rule will apply - 90% lurk, 9% comment, 1% generate content. It is very easy to confirm that the 9% and 1% of participants are customers with a high RO. Offer them a relationship so they will become word of mouth advocates for you.

The other 98% of consumers probably do not care enough about your category to spend the time needed to make up their own mind. Search has a cost for the consumer, even in the Internet 2.0 age. So the recommendation of someone who is an advocate is potent and generally enough to influence their behaviour.

Seems to me the most active participants in your on-line community, the frequent commenters on your blog, the best contributors to your idea exchange - these are the bank managers, guarding the money in their social network. Become a Willie Sutton and focus on them.

Extreme Customer Engagement

 

Working in the sporting arena, we have seen some pretty engaged customers - or fans I should say.

 

Our work with with the AFL (Australian Football League) has seen 20% to 30% response rates and ongoing engagement in online communities.

 

Well, here is one example of extreme customer engagement to marvel at…

 

In April 2007, MyFootballClub was launched in the UK with the specific objective of recruiting members online - @ £35 each - to purchase an English Football Club capable of reaching the Premiership Division.  

 

Just over one year later and membership is over 30,000 and yes, they have already bought the Club. EbbsFleet United is a club based in Kent with a proud history of over 60 years. The members of MyFootballClub voted to buy 75% of this Club for £600,000 (after being approached by 9 other Clubs!) in February of this year.

 

Ebbsfleet have already had some on-field success since the acquisition - winning their divisions FA Trophy for the first time at Wembley after beating Torquay 1-0. Up to 5,000 overseas members watched an online feed provided by the FA and Sky, and over 26,000 Fleet fans at Wembley - old and new - witnessed the historic victory. Members travelled from over 20 countries to watch the Final, including Australia, America, Canada, Turkey, Croatia, Italy and Sweden.

 

Take a look at www.myfootballclub.co.uk - it is a truly remarkable story.

 

Not quite in the same stakes for ambition - but still “brave” is British Airways new Openskies airline - where customers are asked to be part of creating the new airline experience online (http://blog.flyopenskies.com/). From the blogsite:

 

“We’re a new airline being born from the innovative minds of British Airways. As you may have heard, a new agreement between the European Union and the United States has quite literally opened the skies for transatlantic travellers. Soon we plan to take flight directly from the New York area to destinations throughout Continental Europe. We’re excited to provide a premium flying experience as we explore bold and creative ideas in air travel. Help us forge the future of airline travel. Join the conversation.”

 

The new airline starts flights this month and it will be fascinating to follow their cultivation of customers online as well as their performance as an airline.

 

As marketers, of course, these examples beg the question how do we tap into the desire of customers to be engaged?

 

Is there potential for your brand? Perhaps not. But be careful with your assumptions - customer passion comes in many shapes and sizes!  

Beware Your Brand Tags Are Showing

My link of the week has to go to www.brandtags.net recommended to me by Paul Kennedy over at mjw advertising.

The basic premise behind this site is that a brand exists entirely inside people’s heads. Therefore whatever it is they say it is, is what it is. With over 760,000 tags submitted, this is a very interesting version of the “wisdom of crowds” - more like the “crowd speaks - it is what it is!”.

The Power of First-Person Narrative

How many internal sales and marketing presentations leave you thinking “well I can’t fault the logic but it leaves me cold… Where is the story, where is the inspiration, the emotion; how can I visualise that really happening?”

Even the most left-brain analytical thinkers amongst us, love a story - a bit of colour and movement…

One of the often surprising discoveries with online communities is exactly this - the power of first person narrative (now there’s a clinical description!). Not the language of a corporate marketing brochure but the pure unadulterated voice of a customer.

The intensity of a story told in first person can be striking- especially when it is about your brand.

David Bean characterises first-person feedback as:

• Focused on the personal
• Comprises the majority of input
• Contains rich descriptions
• Explores unexpected topics
• Details the “why” of an event or opinion
• Reveals opportunities
• Expects responses
• Provides early warnings
• Affects, most likely, other people; and
• Impacts revenue

Anyone scanning social networking sites or popular blogs for an hour will likely find a slew of first-person narratives that meet all the criteria listed above.

And the volume of this free-form correspondence is enormous: with approximately 75 to 100 million blogs and 10 to 20 million internet discussion boards and forums in the English language.

This is a huge challenge (and opportunity!) that companies face today. Structured data - via data warehouses and business intelligence systems only go so far. This foundation of customer data - who, what, how, when - lacks critical customer information about “why” - floating above the fact plane in unstructured data.

Brings me back to that next corporate sales presentation of yours - why don’t you try a few colourful quotes from your online community - that speak to a few stakeholders in the audience! You may detect a pulse in the room afterall!

Online Communities and Economies of Scale?

After computerising every customer touchpoint that we can lay our hands on over recent decades - a return to treating customers individually in online communities doesn’t always sit well.

“Surely this can’t be an efficient use of resources; where’s the economy of scale in answering an individual blog comment …?!”

Well, fear not - there is light at the end of the tunnel and some great case studies emerging now that demonstrate the efficiencies and scale that can be delivered through online communities.

An example retold in Groundswell is that of Dell:

“When started their most recent support forum in 1999, they knew they’d need moderators. They pulled 30 support reps off the phones and converted them into forum moderators. Those support reps answered questions online, just as they had been on the phone.

Already, Dell was getting more efficiencies, since each answer could be read by dozens or hundreds of other people searching for it on their support forum.

Now, five years later, the support forum is many times larger than it was then. And the number of moderators is no longer 30. Its five. And that’s because the members of the community are moderating it themselves.”

We are seeing the same in marketing forums as they mature. The more embedded the members, the more likely you will see self-moderation, and a genuine desire to assist members.

Marketing with your best customers - now that’s a different kind of scale economy!

And compared with that IVR system or that CRM application - I dont think it is just a quantitative issue, I suspect the qualitative (customer experience!) outcomes might also be instructive.

Online Communities: Making Sense of Change

 

Too much information, too much uncertainty and all too fast…

Sound familiar?

We all have a need to make sense of change - to understand, to predict and to somehow be in control.

And as noted by John Todor, when the change is happening too fast, “we struggle to find understanding and value in change. When we do, it is psychologically rewarding and it enables us to derive experiential value from our new insights”

As a practitioner, who is always staggered at the number of people who want to participate in online communities - research on why this occurs will always get my attention…

The need for sense making appears to be a strong contributor to our need for social connectedness.

Research by Robert Kelly  of Carnegie Mellon University:

In 1986 when he asked people what percentage of the knowledge they needed to do their job was inside their own head, the average estimate was 75%. By 1997 the average estimate was below 20%.

In 2008, we can only imagine what this figure is…!

We are clearly dependent on others to unravel the explosion of knowledge: relationships are the essential medium.

However, for relationships to work there must be mutual trust - and not surprisingly, companies, brands & their representatives rank in the bottom third of trust scales.

Peers rank at the top of trust scales - because there is a shared perspective. Recommendations of friends or associates are contextually relevant.

And what social theorists call “weak tie relationships” are particularly important online - to populate the peer recommendations, reviews, voting etc that we come to trust over time. 

Having refreshed myself on this research -  I have made just a little more sense of what I am witnessing in online communities!

There is method in our collective madness!

The Churchill Dilemma & Balanced Loyalty Programs

 

I was talking with Wayne - a old fashioned advertising man who has reinvented his thinking after having a 1:1 marketing epiphany some years back - about where classic ‘branding’ fits with the whole concept of marketing as a conversation. (He was the one who put me on to “The New Brand World” and persuaded me to re-read “The Cluetrain Manifesto”).

In short, Wayne has convinced me that a company’s brand is the sum total of the experiences they provide to their customers. Loyalty programs included - especially.

If this is the case, Wayne pointed out, then the loyalty program is a fundamental part of the brand as far as the customers are concerned. Makes no sense to manage such an important part of the business differently than you manage the other lines of business and departments surely.

The need for alignment between your loyalty program and your brand reminds me of the famous quote attributed to Winston Churchill - when confronted by a beautiful socialite who suggested their children would be exceptional, Churchill reportedly said something like; “with my luck they would have your brains and my looks!”

It takes planning to make sure the intersection of program and brand produces an attractive prodigy, not an ugly dullard. We have seen rich, relationship focused credit card loyalty programs fail inside Every Day Low Price retailers and low value programs fail inside a “top end” department store.

There is a management tool that, when implemented in line with the manufacturers’ instructions, focuses the organisation on alignment across the various functions; the Strategy Map & Balanced Scorecard of Kaplan & Norton. We have good success in designing and aligning loyalty program initiatives by using these tools.

As a gross over-simplification for those of you familiar with balanced scorecards;

1. Financial Perspective

   Focuses on what and where the program will need to increase revenue and improve productivity - increased customer lifetime value of course, but how much and how specifically?

2. Customer Perspective

   Makes us explicitly design and measure the program (product) features from the target customers’ perspective - rules for enrolling, earning, burning, engaging and partners - then make the relationship offer that goes with the program (and brand) explicit and then define the intangibles - status, image etc. that the program should inherit from your brand.

3. Internal Perspective

   The operational things that need to get done well - these are often outsourced because the simplest of them are generic - adding points, shipping rewards etc. Some are critical success factors however, especially the customer analytics and insight functions.

4. Learning & Development Perspective

   The heart of your employee culture and infrastructure must beat in time with the brand and the customer value defined in layer 2. Loyalty programs should not be ‘bolted onto’ marketing!

We recommend you apply the same management disciplines and tools to the design and execution of your loyalty program as you do to any strategic initiative - or face the “Churchill Dilemma” - a program that destroys brand value.  

Connecting the Dots on Social Media

 

For me, the jury is still out on where social media trends will settle - refer to our post;  Working with the Social Media Juggernaut -  but the numbers tend to show  that we have a new channel here for the long haul…

Consider the following from our part of the world (Australia!):

• E-Marketer recently reported that in 2007, Australians spent more time using the internet than they did watching TV 
• Nielsen supported this with a survey that showed Australians spending an average 13.7 hours per week online compared with 13.3 hours watching TV (For a discussion of what they do online refer Jennie Beattie’s post)
• 55% of Australians used social networking in the last 12 months; 84% of Australians use Web 2.0 to upload and share content (Nielsen)
• Australians take-up of Facebook has gone from 220,000 two years back to 2.6M; we are now the fifth biggest country on Facebook internationally
• Youth may have started the movement to social networking but adults have learnt quickly; in 2008, it is expected that 69% of social networking users will be 18 and older and by 2010 it is expected to reach 81% (these are international numbers…)
• The advertising spend on digital has grown by 42% in the last 12 months to $1.4B
• Yet advertising spend on TV still outweighs internet spend dramatically (26% vs 11%)
• Anecdotally, the Ad-tech conference on Social Media in March 2007 attracted 1300 registered particpants - up from 300 at the comparable event two years ago 

What does all this mean?

Well, if you are a marketer, or indeed a CEO with an eye on market share - you had better keep a watching brief on a new channel…

 Better still, join the conversation.

 

 

 

 

 

 

 

Start a Conversation Today!

Speak now or forever hold your peace…

As marketers, we spend our professional lives trying to understand our consumer and yet when the first genuine opportunities for online conversation arise - we run a hundred kilometres…

Jaffe asks “Why Are We So Afraid of Conversation?”

It seems one-way broadcast marketing has created a mindset of treating customers as alien beings to be viewed only through one-way mirrors at focus groups. And perhaps it is this mindset that is the biggest barrier to harnessing the extraordinary opportunities that the online channel presents!

So where do these fears come from? And how do we resolve them?

Lets examine some of the common barriers that we hear to making a start…

Loss of control

Starting a conversation will open the flood gates, the chaos will be unbearable…

The good news: there are ways of framing conversations, calibrating the speed of conversations and several other techniques that keep some influence if not control with the brand.

The bad news: get used to it - a little creative chaos is inevitable and might be good for the brand!   

“The more in control we are, the more out of touch we become. But the more willing we are to let go a little, the more we’re finding we get in touch (with consumers).”

-  A.G. Lafley, CEO, Proctor & Gamble, ANA Conference

Embarrassment!

What if I make a fool of myself? What if I am criticised? On the public record forever!

Well here is a fundamental human fear!

Sorry, it doesn’t matter. If you don’t join the conversation, it will happen without you. Don’t take the criticism personally. So long as you are truthful - there should be nothing to fear in public discourse. 

Don’t know what we don’t know! 

I just don’t know enough about this social media stuff yet! 

Sorry, consumers can’t wait. Sure it’s overwhelming - it’s akin to drinking from a fire-hose! Particularly for those of us that are not of the digital generation. But jump on board its an exciting ride!

Keeping-up with those pesky consumers

What if we set expectations with our consumers that we can’t live up to? 

Conversing with your customers should be a managed process where expectations are set carefully and where honesty and integrity are fundamental. Honest mistakes will be accepted by consumers if trust has been built over time. 

Brands today have to be OPEN;

• On-demand
• Personal
• Engaging
• Networked  

At the end of the day, participating in this brave new world of marketing cannot be done in half measures. Consumers will see to that and events will overtake us. Inertia - driven by the reasons cited above - will be the biggest challenge.

And remember, brands don’t have to be perfect. Start a conversation today! 

Get them talking!

  

As we help our clients participate with their customer communities, we rely on our experience, the experience of colleagues in the US (who have been at it longer than the Aussies), some hard numbers coming from the marketing research organisations and sometimes trial and error.

All the while keeping an eye on the literature in order to capitalise on what the collective industry and academic communities can teach us.

And the volume of published work is increasing steadily as; channels proliferate and audiences fragment, the opportunity for consumers to talk to each other spreads through the web and consumers’ ability to control their own exposure to advertising becomes widespread. These developments are increasing the focus on the generation of positive Word of Mouth as a marketing strategy.

We have written about this in previous posts and the MSI research that shows that customers are more likely to participate in an online community if they feel they are insiders, feel ‘embeddedness’ . Two researchers from the European School of Management (Jacob & Oetting 2007) recently proposed a model that may explain the components and prerequisites for embeddedness in a paper called ‘Empowered Involvement and Word of Mouth: An Agenda for Academic Inquiry’ (click to download).

Interestingly they looked at the research on employee empowerment with the hypothesis that engaging employees may involve the same processes as engaging customers. Hence the success of some employee innovation communities that are extended to include customers; .Dells’ Idea Storm and Salesforce.com’s App Exchange being great and current examples.

The elements of their ‘Empowered Involvement’ (EmI) ring true to us; customers/employees must feel

• meaning
• competence
• self-determination and
• impact

All of these Resonate with our experience in delivering what it takes to create advocacy (positive WOM) through community involvement.

There is one component missing however. If EmI is to produce WOM behaviour that converts to positive business results, you cannot leave the creation of content completely to chance, or the customer. You have to provide the story that will sit inside the WOM behaviour. The best stories make WOM effective at producing the best results for the customer and the brand. Seth Godin’s “All Marketers are Liars” could almost be adopted as a text book on this subject.

Sometimes the story needs to be reinforced with props; in one case we gave working models to our advocates so they could demonstrate the story while talking.

For advocacy through online communities, give members; a subject with meaning to them, a subject about which they are competent or wish to be, a degree of choice in how they participate, proof that they are making a difference when they participate and a story to tell when they discuss the subject with their family and friends.

Charming or Tedious?

 

“It is absurd to divide people into good and bad. People are either charming or tedious.”

- Oscar Wilde

Are there “bad” customers to target when you attempt marketing with & through virtual communities? Are there “good”?

We are currently running a branded community for a client and we are experiencing Jakob Nielsens’ 1/9/90 rule; “In most online communities, 90% of users are lurkers who never contribute, 9% contribute a little, and 1% of users account for almost all of the action.” We are finding that the 90 register and read, the 9 offer input through our anonymous “Suggestion Box” and the 1 are actively commenting on our posted conversation threads.

A little frustrating to get all of those engaged customers to the site and then not have them tell us what they are thinking. Allowing lurkers to vote on the comments of the 9 and the 1 is an obvious and effective way of getting an indication of their views; an approach that is now widely used in blogs and innovation communities (all of the communities we are involved with must have this capability).

And let’s be honest, the universe of ideas for the typical consumer - vendor issue is generally quite finite. On one occasion we received 20+ unique ideas, the current project has produced 14 (11 if we eliminate web-site critiques, programme complaints and our catch-all ‘off topic’ category). So there is a high likelihood that you will receive all of the populist ideas that are in the community from the 9+1. The voting of the 90 confirms priority.

So are the 90 the ‘tedious’?

There is temptation to view them this way. A big mistake!

Kelly Mooney’s new book makes the point better than I can so I will quote her briefly “…research study supports the majority argument; it shows that a full 85-90% of online consumers acquire enough digital savvy - to become reliable ‘experts’ to friends and family. The information they share, even within their relatively small spheres of influence, can significantly influence purchase behaviour.” Even lurkers are charming to someone.

Online communities are not just about gaining customer insights. The act of sincerely listening to and acting on conversations with many customers builds engagement and then advocacy and then sales.

If your product/service is good enough.

4 Steps to a Killer Loyalty Strategy

  

Us Aussies love our points and prizes! We collect points when we use our credit cards, when we buy our groceries, when we travel, when we stay in a hotel, just about every chance we get. Partly because so many organisations give them to us.

Which raises the point of this post; why do organisations run these potentially expensive programs? Research I have seen suggests that the main reason retailers run loyalty programs is “because their competitors do” (Leenheer & Bijmolt).

But even in markets where programs are seen as a cost of doing business, only noticeable by their absence, we contend that you can do a better job of producing a return from your program if you take the time to build a strategy first.

The framework we use is deceptively simple - find the answer to 4 questions:

1. Which customers? Working out what types of customers your program will be aimed at is the first step. Unless all of your customers are identical, there will be differences which you can utilise to make the program more effective. Do not assume the target should always be your most valuable existing customers; their volumes typically mean they will be well rewarded anyway. For example, the Journal of Marketing found light buyers responded better to a retail program and recommended ‘…a need to consider consumer idiosyncrasies when studying loyalty programs and illustrate consumers’ co-creation of value in the marketing process.’ (Liu 2007). Get your customer analytics team involved right up front.
2. What behaviours? What actually do you want the target customers to do? Reward that. Nothing else. Sounds really obvious right? Then why do credit card loyalty programs reward behaviour that is the least beneficial to the issuer (spend big, pay no interest) and airline frequent flyer programs best reward customers who fly the most miles for the least money. Be clear what you really want the customers to do.
3. How much money? If the target customers behave the way you want, how much incremental profit will you make? Time to do some numbers, starting with the ’size of the prize’ if the program is effective at causing the behaviour you are after. Clearly you should aim to spend less on the program than it incrementally can produce if you get everything right.
4. How do I include partners? Few organisations can provide the ubiquity of points earning opportunities that will make a program irresistible for members. What other brands would logically support the program to mutual benefit of member, partner and you?

With clear consensus on these 4 points, it is much safer to then move into detailed program design.

Benchmarking Engagement in Customer Communities

Recruitment and retention of community members is of course critical to the success of online customer communities. It is certainly not a case of “build it and they will come”!

How do you get a handle on a “healthy” level of engagement?

The answer to this needs to be strongly qualified by the objectives that you have for the community (refer last Post!). If your community is delivering strong insight or innovation results with minimal community numbers but adequate sample sizes, then driving additional engagement is less of a concern. If word of mouth marketing is the objective, then identifying as many advocates as possible becomes a priority. 

Regardless of objectives, measurement and numbers play an important part – “if you can’t measure it, you can’t manage it”. So where does one start…?

Measuring engagement is still at a rudimentary stage and generally limited to quantitative measures (traffic!) rather than qualitative measures. Numbers involved in broader online communities are a good starting point and the ratios quoted by Forrester are useful. As a rule of thumb we use 90:9:1 - where 90% of those invited do not get involved, 9% observe only and 1% contribute.

Our experience to date says that branded communities should do better than this – particularly when the conversation vehicles include surveys that are pushed to members. We have seen participation rates anywhere from 10% to 30% in these environments.

We do believe that the relative percentages of customer involvement varies quite dramatically as brand categories vary. Our 30% was a sporting club client, where passions run high.

The guys at Copernicus report “High Customer Involvement” rates that vary between 13% and 55% of customers as categories go from low involvement (toilet paper) through high involvement (retirement planning). We find that involvement with the brand (category) relates directly to active participation rates in a branded community.

How do you go about gauging engagement or participation? 

Online Customer Communities…Be Careful What You Wish For

Setting Objectives for Customer Communities

Embarking on customer engagement online seems overwhelming at first – there are just so many possible ways of proceeding.

Keeping clear about objectives and priorities – as obvious as this might seem – is the best advice from our experience. The objective essentially becomes the conversation and shapes the audience or community.

Possible objectives broadly fall into two categories - insight and engagement. 

Detailed objectives might be as follows:

• Identify new trends in the marketplace 
• Innovate products or services
• Develop new ideas for existing customer programs
• Test new marketing ideas or programs
• Support product launches
• Improve customer processes
• Understand customer segmentation more deeply
• Develop word-of-mouth programs
• Collaborate more effectively with field representatives or channel organisations
• Keep your customer culture consistent  

Note the last two take a broader view of customer - tackling customer facing staff or channel partners.

For some inspiration on objectives and approaches, see Eight great applications win Forrester Groundswell Awards

Once you have identified the objective and the target community - useful reality checks are:

• Is the potential community large enough to achieve the objectives?
• Are there sufficient topics of interest to maintain engagement?    

You may ultimately want to run multiple communities with logical links between them - eg providing opportunities for more engaged members to move into communities with more interactive options or topics that match their profiling.  

Engagement for engagement’s sake is a risky path whatever the longer-term objectives might be. Whilst this might excite the creative urge of your Digital Agency - if you start without an end in mind, chances are that your efforts will flounder.

Any experience with this? Please let us know!  

Hushed Brand Conversations - Without You!

Why your brand needs to be part of the online conversation

The secret is out – people are talking about your brand online without you!

Hardly a revelation to most marketers. But it is the extent to which this happens and the ease with which people want to converse about brands online that is the real revelation.

I am regularly talking to clients about online customer communities and in my rush to meet with them often the last thing I include in presentations are examples of brand conversations that are occurring without their involvement.

Typically, at the last minute, I google the brand for blog material – grab one positive example and one negative. It is hardly a vote of confidence in my time management but I have not been let down yet by this habit! There is never any shortage of material. And usually it features responses to brand commentaries and the ratings of these responses.

After regaining their composure, the response of our clients is typically to broaden their objectives for an online conversation. At the very least they are motivated to have a seat at the table – “what you don’t know can hurt you”.

This is particularly relevant to managing risk, where early reaction to a corporate initiative is not as anticipated. Better to wear the damage in an online Panel of thousands than a national rollout to millions.

I challenge you to google your brand now or better still – set up a google alert – you might just be moved to join the conversation!

Embracing Consumer Passion in Online Communities

A Football Club Example 

Tim’s last post looked at research on the impact of embeddedness in online customer communities – which has prompted me to look at some of our client’s communities for examples.

The Australian Football League (AFL) stirs passions that probably only locals can really understand so when we had the opportunity to assist the AFL’s oldest Club to establish a member community – we knew we had some promising ingredients.

Melbourne Football Club is possibly the oldest professional sporting club in the world (please prove me wrong!!) and is celebrating its 150^th anniversary this year. The Club was keen to celebrate the anniversary in style and to use the milestone to achieve record membership numbers.

We had identified, in some customer segmentation and modelling work, a segment that we dubbed “passionate partisans” – representing people with both strong track record of membership and attendance at games. We also uncovered from focus group work that this group had a strong desire to engage more with the Club and to recruit other members.    

The Club’s membership last year stood at about 30,000 and so facilitating this “engagement” looked horribly like something that needed to be automated. We were able to do this with a technology platform sourced internationally.

Back to Tim’s post on embeddedness…

Members were invited by email to participate in an Advisory Panel to help shape the future of the Club and to assist in planning the Club’s 150^th Anniversary. The first three Panel surveys achieved between 20% & 30% response rates.

The quality of the engagement was also impressive – to one open-ended question, the Club received over 1000 ideas – all progressively voted and ranked on by the community. 

The principles used in the Club’s communications to Panel members were:

• Recognition. We (the Club) have some ideas about xxx but we value your opinions as Advisory Panel members…
• Contribution. I (the Member) can contribute & will be seen to make a contribution by my peers. I am listened to and can make a difference – “bragging rights”. 
• Value. As an Advisory Panel member I am an “Insider” and will receive information before those outside of the Panel… 
• Feedback (Action!). We (the Club) have listened and here is what we have done or are doing about it.

The results for the Club have been some very quick insights. And as for the members? Melbournfc Marketing Manager - Jennifer Watt - says that members have been known to introduce themselves as “Advisory Panel Members” at Club events.

Sounds a lot like embeddedness!