May 26, 2011

Word of mouth marketing flaws exposed

miracle on 34th street
“Miracle on 34th Street”: Lesson for today’s marketers?

 

Only 15% of word of mouth marketing campaigns show results, but WOM drives sales — when companies honor and nurture it

Christopher S. RollysonWord of mouth marketing is seen by many marketers as the economic engine of social business (or social media) because people recommend products and services to each other: All marketers have to do is give them the right information to share and make it easy for them to recommend things, right? Wrong. Or, in popular parlance, “It’s complicated.”

Here, I’ll identify some of the flawed concepts that underlie word of mouth marketing (WOMM) so that you can avoid being part of its 85 percent casualty rate. I’ll show in general how you can tweak the idea and succeed with social business initiatives more often.

Word of mouth marketing is flawed

At Alterian’s 2010 user conference, Don Peppers shared this arresting statistic in his keynote: Only 15% of WOMM initiatives show positive ROI. Shocking — at least until you start thinking about it. Loosely speaking, WOM (sans “marketing”) happens when a trusted and relatively unbiased “friend” shares her experience with a product/service with someone close to her. “Someone like me” who isn’t tainted by sales commissions or quarterly revenue targets. Marketing, on the other hand, is generally about creating need or driving sales. Do you see the problem?

In this context, WOM and marketing are mutually exclusive: The latter’s purpose is to serve the company by moving product; the former serves the person first. It’s a conflict of interest, and it will rarely work. Ever.

93% of word of mouth is offline

In a second data point, Keller Fay Group’s latest TalkTrack study revealed that the overwhelming majority of WOM (as defined by them) takes place offline and face to face (via e-consultancy and @stefanw), not online through social business. This is not surprising when you stop to think about what traditional WOM is, largely a conversation between family or close friends. Tight ties. However, neither of these references dives into WOM or WOMM deeply enough to understand why and how they can work or not.

WOM among loose ties

Digital communications significantly reduce the cost of many kinds of interaction, so WOM among loose ties will continue to grow. However, marketers should recognize that loose ties and tight ties have important differences because the motivations and level of trust are different. Loose ties are not just inferior tight ties; people form loose ties for many reasons, but the online many-to-many environment enables people to manage their reputations and influence by leveraging the network effect. Tight tie relationships are limited in number, multidimensional and high investment.

How marketers can succeed with word of mouth

WOM serves the customer, not you. Trust that if you don’t interfere, positive results will often result.

Having led marketing for several firms, I can appreciate why marketers would love the concept of word of mouth marketing. Given that they are in conflict, it’s important to focus on WOM while avoiding WOMM. I’ll wager that the majority of the 85 percent of failures result from not understanding and honoring their differences. The good news is, WOM drives sales — when companies honor and nurture it. Here’s how:

  • First — and this is a leap of faith — accept that WOM serves the customer, not you. Trust that if you don’t interfere, positive results will often result. There is no halfway here; intent and honesty are WOM’s key differentiators. Don Peppers shared Staples’ “Speak Easy” fiasco as a warning (“sponsored” tweets and bloggers are other traps). All companies say that they put the customer first, but many aren’t being honest with themselves or their customers.
  • Second, the company must put itself first to be congruent with itself as a business. It shouldn’t try to do WOM. But the company, acting in its self-interest, can support WOM. Marketers must safeguard these boundaries if they want to succeed because they form the foundation of trust among the three principal actors: company, friend and customer.
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February 2, 2011

Social businesses: Glimmers of a macro trend


Social Business Design (CC image by Dachis Group)

Annual look at the best strategies, tactics, case studies & insights in the enterprise space

Christopher RollysonCompared to 2009 and 2008, the past year was a relatively calm one because the amplitude of market gyrations clearly diminished and businesses began to find a new floor on which to build stakeholder expectations. Although I watched with high interest the unfolding financial drama in Europe, I didn’t have the time to conduct the research necessary to do a rigorous interpretation, although I published a brief reflection last week. The big story of the past year was this: 2010 marked a turning point in the adoption of social technologies and in the recognition that analysis and strategy are necessary to achieve consistent results with social initiatives.

Macro trends: Moving from broadcast to relationship building

Until recently, being on Facebook was an end in itself, agencies produced vapid content and little interaction occurred because people rarely interact when brands are talking at them instead of listening

Social has been in adolescence until recently — “being on Facebook” was an end in itself, agencies produced vapid content and little interaction happened because people rarely interact when brands are talking at them instead of listening. People feel it when a brand is interested in using social tools to promote itself. They also feel it when a brand is interested in building relationship, which is marked by active listening and responding, along with a relative absence of self-promotion. Brands that build relationship learn that they don’t have to try so hard to promote themselves: when they are truly interested in people, people will promote them. However, this approach remains a future state for most companies. Relationships take serious work — thus, a need for a strategy.

The growing use of strategy is also a harbinger for what I call “social business” (a step beyond social media), in which leaders use social technologies to transform their businesses by collaborating openly with various outside and inside stakeholders to innovate constantly. Early movers will begin emerging this year: Only a few gutsy players will aggressively adopt social business practices in 2011. I believe they can change markets.

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September 13, 2010

CMO guide to Foursquare, Gowalla, Loopt & Brightkite

Gowalla
A Gowalla heat map of Austin, Texas, by Bramus on Flickr

Evaluating the business potential of location-based social applications—is the tail wagging the dog?

Christopher RollysonIf you read any mainstream media or social media sites, you might have started to get the impression that a Foursquare, Gowalla or Loopt application is your only hope to make this quarter’s numbers because check-ins are on everyone’s lips, er, fingertips these days. However, for chief marketing officers of large brands, what’s the real business potential of these apps in 2010? What can they do for your business, and what and where are their limitations?

Below I’ll share some due diligence I’ve conducted for one of my clients and give you some general guidance for using these apps this year. I’ve also included links to the best information sources. First, let’s start with an introduction of geosocial and how it fits into the ecosystem you already know.

A brief introduction to geosocial applications

FoursquareGeosocial — or geolocation or location-based services or applications — represents an emerging space within the Web 2.0 ecosystem, so I’ll spend a minute here positioning them because their development is moving at warp speed. Geo refers to exchanging information related to your current temporal and physical location via a mobile device. Social applies the now-established bundle of practices called “social networking” to your physical location — interacting with friends or friends of friends.

You might think of geosocial as “situational social networking based on where you are” (and what you’re doing). Many geosocial applications use GPS technology to automatically report the physical locations of their users, subject to their privacy settings. For some quick visuals, see Geosocial Applications and the Enterprise (PDF).

Small niches of people have been active in geosocial, using text messaging, for many years. Progenitor Dodgeball was founded in 2000 and enabled users to SMS each other to report their location, notify them about other people nearby to enable “meeting in real life.” Geosocial applications try to increase opportunities for socializing with existing friends or people users don’t know but have certain things in common, based on each user’s privacy and sharing preferences.

It’s worth noting that geosocial is related to but distinct from geotargeting, which usually denotes serving precise marketing messages to people based on their locations. Citysearch has been doing this since Web 1.0, and current players like Yelp and Facebook are converging into the geosocial space. Google tried to morph its Dodgeball acquisition into Google Latitude, but it hasn’t really worked, and I’ll speculate that they are channeling much of their geosocial energy into Google Buzz.

Some key players

Key players in the space include the following:

  • Loopt launched in 2006 and claims 3 million users.
  • Brightkite launched in 2007 and claims 2 million users.
  • Gowalla was born in 2007 and claims 150,000 users.
  • Foursquare launched in 2009 and claims close to 1 million users (with this growth, is it any wonder it receives the lion’s share of the buzz?)
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February 23, 2010

17 visionaries predict impact of social on the enterprise

Nicholas de Wolff, National Film Fes­ti­val for Tal­ented Youth: "Too many peo­ple are div­ing into the Web 2.0 and 3.0 pools before they even know with whom they are swim­ming."
Nicholas de Wolff, National Film Fes­ti­val for Tal­ented Youth:
“Too many peo­ple are div­ing into the Web 2.0 and 3.0 pools
before they even know with whom they are swim­ming.”

Social business seen as making seismic waves in marketing, sales, operations

Christopher RollysonThe adoption of Web 2.0 and social networking accelerated significantly over the past year, and it shows no sign of stopping. Global digital word of mouth is disrupting growing swaths of business models, and CEOs want to understand its opportunities and threats. Although the Web is resplendent with prognostications from social media gurus, the voices of enterprise practitioners are too rarely heard.

To remedy that, I’ve gathered the perspectives of highly experienced executives who share their thoughts on how Web 2.0 is changing their businesses and mindsets. They also share its limitations and problems. Keep in mind that each contributor wrote independently, and I have made no attempt to unify their views, although I will offer my analysis and conclusions as well as the intriguing backstory below. Here is a sampling of the group’s eclectic insights:

  • A seismic shift in marketing is emergent, and chief marketing officers will require robust strategies to succeed consistently with Web 2.0 and use it to their advantage.
  • Gamification will redefine “work” and “play” and gradually make them indistinguishable.
  • Performance demands on government will force it to shed its laggard stereotype and pioneer social business at local and federal levels.
  • Arguably the biggest disruption of all is that green energy is enabling billions of previously unconnected people to join the world as participants; China and India are two of the fastest growing economies of the world, and millions of people are jumping online every year. Infrastructure limitations are forcing extreme innovation.

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January 11, 2010

2010 predictions & recommendations for Web 2.0 and social networks

How mass collaboration is transforming company and culture

2010_PredictChristopher RollysonAs chronicled in the just-published Decade in Review 2000-2009, the 21st century is proving to be volatile and disruptive in every way, and 2010 will continue the trend. Three disruptive forces are converging: the relative value of the Industrial Economy continues to fall as overproduction reigns. Globalization is replete with extras that people at the head table didn’t order. Most imperceptibly yet poignantly, the emerging Knowledge Economy is digitizing communications and changing the economics of knowledge and relationships.

Web 2.0 and social networks drive down the cost of communication, which accelerates volatility because when people talk, ideas change and lead to action, and digital conversations happens faster and less expensively. Social networks are rapidly making the Web human, thereby attracting an ever-larger portion of all human communications online. In 2009, adoption reached critical mass, ramping strongly among consumers, so many enterprises are following. The Web 1.0 adoption rhythm is very instructive.

Pervasive Web 2.0 also means reexamination or disruption of most areas of life, culture, society, government and business because social networks alter how many and what kind of relationships people have. The impact is similar to Ford’s production line, except it is more powerful: it scales relationships. Large organizations will remain in a profound state of turmoil because they were not built with withstand the volatility these forces are unleashing. Many Fortune 500 companies will be confronted with their survival, and some will not make it. Entire industries will consolidate over the next several years (automotive, airlines, banking, hotels, food, consumer goods…). Web communications mean we consume novelty far more quickly, which curtails product life cycles and leads to ultra-fast commoditization. Companies will require unprecedented innovation to even stay in place. New entrants around the world compete for customers and leverage their lower costs and better innovation processes. And Web 2.0 is still in the early stages of adoption.

This dynamism elevates opportunity and threat for executives and their organizations, so our focus here is to lay out probable milestones for 2010 to assist executives in business strategy and career planning for 2010 and beyond. First, I will lay out predictions, on which I’ll build for my 2010 recommendations. By the way, this follows Year in Review—2009/Social Networking Gains Legs on Heavy Seas and Decade in Review 2000-2009/The Rise of Web 2.0, the New Pervasive Human Space. Continue reading

August 18, 2009

5 quick tips on using LinkedIn to start up

Christopher RollysonToday I was reminded that many entrepreneurs don’t fully appreciate how LinkedIn can shrink the business cycle in their favor, so here I’ll recount a hallway conversation in the hope that it will help you, too. Although the context is “starting up” an entrepreneurial venture, the same principles apply to job search — and for the same reasons. Entrepreneurs and job seekers all have burn rates and the need to find people with specific problems who are ready to act on the solution that the entrepreneur or job seeker proposes.
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