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!

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…

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!

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’

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.

Online Communities and Brand Site Design

Have you checked the traffic to your corporate website of late? And if you have an online customer community or even an industry forum frequented by your customers – have you checked out the traffic to those sites? It is pretty clear that customers have a strong message for traditional corporate websites…

Forrester analyst Josh Bernoff asks what does that mean for the traditional corporate websites:

- Does the brand site become the community?
- Does the brand site have a prominent link to the community? (Much like Dell)
- Does the brand site remain completely separate from the community?

I suspect that in the longer term there will be pressures to integrate social functionality seamlessly into corporate websites so that customers can remain in active mode – rather than having move to another part of a website to somehow switch from passive to active persona. Active mode will just be expected and will be “chips to play” for most brands. For strong brands with demanding interactive customers this will of course happen sooner rather than later.

However, it does raise some interesting questions of how you design websites for both informational and interactive/social requirements – without one requirement detracting from the other.

Influencing the Influentials

 

Mr Natural: the original Key Opinion Leader (KOL)

The debate about the effectiveness of marketing through opinion leaders is an important one for us.

We run online communities so that our clients can, among other things, identify their advocates and community opinion leaders and amplify their voice. The objective is higher marketing ROI as marketing-numb customers still listen to their peers even if they have stopped noticing advertising.

The pharmaceutical industry has experimented with this style of marketing for many years, with most large Pharma companies having explicit Key Opinion Leader (KOL) marketing strategies and programs to launch and promote their products. This is easier in the US than in Australia, as individual physician’s prescribing data is available – allowing marketers to promptly measure the impact of their actions on the script-writing behaviour of targeted doctors.

Things were not looking good for the idea that KOL doctors can influence the speed-to-volume for new drugs when a 2001 study around the launch of the antibiotic tetracycline found no evidence of ‘contagion’ (WOM influence) [Van den Bulte & Lilien, AmJSociology, 2001]. Old fashioned marketing explained that product launch on its own.

Things look a lot better for Pharma KOL effects after an  2008 MSI study on ‘Opinion Leadership and Social Contagion in New Product Diffusion’ by Iyengar, Van den Bulte & Valente. They found evidence of contagion working over network ties, after controlling for marketing effort, in a new anti-viral drug launch.

Their findings are really illuminating for Key Opinion Leader marketers; oversimplified they are -

1. Contagion from KOL’s may not always occur. The difference between the 2001 product launch and the 2008 study is that a life-threatening illness was the target of the second drug launch; consequences were much more serious than for tetracycline. Appears that contagion is more likely when the category is a serious one. “Depending on the product, target audience, the amount and effectiveness of traditional marketing communications deployed… contagion is or is not likely to be at work.” Test!
2. The 2008 study distinguished between self-reported and peer-reported opinion leader status. The two turn out to be only moderately correlated. You may think you are influential, chances are your peers do not agree. This is an issue because so much of influentials marketing relies on the self reporting of social connectedness and influence. Both types of opinion leader tend to be early adopters, but the peer-reported are much more likely to be.
3. Doctors who perceived themselves to be opinion leaders (though their peers did not generally agree) responded less to peer behaviour. In network terms this meant that inbound social links facilitated contagion, outbound links did not. There is such a thing as the quiet achiever.
4. Contagion was affected most by the prescription volume of the doctor – ‘Physicians who prescribe a lot are a more credible source of information…’ Heavy users are likely to be more influential than light users when contagion requires evaluation rather than awareness – if there is low risk, awareness through standard marketing is enough to cause adoption – if there is high risk and evaluation is required, volume-enhanced credible WOM causes adoption.

The implications…

• Research/determine if more than awareness is required to cause your target customers to take up your new product. Is your product risky?

If evaluation is required for prospects to become customers…

• Identify the largest volume users of products, in your category, that are already in the market. They are the most likely and the most credible opinion leaders and causes of contagion. (Opinion leaders have the highest lifetime value by the way; they adopt early, and are heavy users). Then,
• Promote to them, recruit them, amplify their voice so other customers can hear them

Social Sigma or Getting Close to Your Customers

Well you’ve probably heard of Six Sigma or perhaps even lean Six Sigma but what about Social Sigma…(no, not Social Stigma!)

Just when you thought it might be safe to listen to another Analyst here comes Social Sigma – a process to improve the customer experience by looking at their online activities.

But let’s just roll-back for a minute. You will recall of course that Six Sigma is a data-driven methodology that provides businesses with the tools to improve the capability of their business processes. The ultimate aim is to increase profits by eliminating variability, defects and waste that undermine customer loyalty.

Social Sigma uses continual online feedback from your customers to perfect your products. So pretty much the branded online communities that we discuss on this blog plus any other feedback that can be garnered from the social media universe. This data – from blogs, forums, polls, surveys etc – is analysed and fed back across the company to inform everything from product development to sales, marketing and service to improve the customer experience.

So you might say that our new fangled term – Social Sigma – is really just the traditional concept of customer feedback updated to leverage online communities and the social networking phenomenon more generally. You might even wonder why we need to invent a new term to cover the concept of staying close to your customers…

The acid test for our newly acquired jargon will be whether the disciplines and techniques of Six Sigma can start to drive real value back into the organisation – speed to insight, innovation and advocacy. If the term facilitates this – by somehow providing credibility to a new discipline – then perhaps it will pay its way!

And as pointed out by George Colony (CEO, Forrester Research) the reason why social sigma works is “because the social network for a company is trusted and interested – they have a stake in improved services and products and have built-in incentive to contribute time and ideas to the cause.” And “Companies who fail at social sigma will claim to be listening but will fail to incorporate ideas from the social network into its products. They will be faking it – and customers will figure that out quickly.”

The parallels between authenticity and quality are interesting and are also explored by Gilmore and Pine in their book “Authenticity – What Customers Really Want”. They see rendering authenticity in the experience economy as the new consumer sensibility – as important as improving quality is to a services economy.

Loyalty schemes buy you knowledge, not loyalty: loyalty can’t be bought.*

We have come from the CRM world, are currently active in social media and online communities – really feel like we have one foot in each of two generations of marketing.

From this (sometimes uncomfortable) stance, let me make a prediction; Loyalty programs will become the bridge between these two apparently different worlds, for savvy companies.

Why? Because loyalty program members identify themselves.

In fact, loyalty programs are the price you pay for individual customer data. You make money from the careful use of this data. When you also know the identity of the customers in your (branded) community, you can;

• look introspectively at their behaviour within your business
• identify your best and potentially best customers
• enrich this with third party data if you choose
• match it all to their behaviour in the community – what do they post about, what ideas do they rate highly, what do they disagree with, how do they rate us (in Net Promoter terms) – segmentation by ‘behaviour in the community’ allows you to profile your brand advocates usefully using insight into their attitudes and beliefs.

The road to success is paved with good information*.

Not just right customer, right offer, right channel, right time but also right content in your marketing communications. We have had gratifying success by taking note of what different types of customers want us to talk about and reflecting that in our targeted, personalised direct marketing with good reductions in member churn for a sporting organisation.

In all customer segmentation there is a risk that your customers are homogenous – they all want and need exactly the same thing from you. If this is your case you may end up with the first online community ever that has no customer politics!

If you cannot segment through your community, you will just have to live with the goodwill that comes from being open to a conversation with your customers. Not a bad consulation prize.

* Quoted in “Loyalty Marketing: The Second Act” by Brian Woolf

The buzz about David & Goliath

 

High DaG risk index

I am sure you have all been following the Conroy Telstra twitter controversy as it unfolded last week. It occurred to me that this story would have been a non-starter if  Telstra (or some other large company) was not involved.

Nothing like a large company and a hint of controversy to create buzz – not just on the interactive web but in the real world. I wonder why?

Mark Hughes in Buzzmarketing lists the 5 most written stories in any media;

1. The David-and-Goliath story
2. the unusual or outrageous story
3. the controversy story
4. the celebrity story
5. what’s already hot in the media

Australia loves the underdog, the media love to write about the underdog (i.e. David) and do so time and time again.

The hint that Leslie Nassar was taking on Telstra  Goliath was enough for blogs, headlines and twitter storm. Same thing happened when bloggers took on UBank a few months back.

As our clients are generally (but not always) large companies, we are particularly sensitive to this David-and-Goliath syndrome.

Extending the metaphor just a little – it was David who shed Saul’s armour, sword and shield and confronted Goliath in his civvies with just a superior targeting weapon.

This is still the best way to engage with customers when the DaG risk index is high.

• Drop any pretence of armour and shields (aka corporate PR), be genuine and personal
• Let go of the control and let the community / customers talk about what they want to talk about in your community
• The major advantage you have as a large organisation, that will not make you a baddie Goliath if applied, is information and (perhaps) knowledge. Flex your information muscles to extend the conversations, not to beat anybody into submission.
• Ensure all participants from your company follow the WOMMA ROI – always declare who you Represent, always state whose Opinion you are presenting, always declare your Identity.

If you are a Goliath and want to create positive buzz? I quote Hughes; “Can’t find a Goliath aiming to crush you? You do have other options. Creating an unusual or outrageous story is also a tried and true winner…Stir up a controversy…”, pick one of the other 4 frequently published stories.