Archive | September 2012

Brand Advocates: Turning Enthusiastic Customers into a Powerful Marketing Force.

An Interview with Rob Fuggetta of Zuberance

Rob-fuggetta-150x150
Brand-advocates

September 5, 2012 By Dana Stanley 

I recently had the chance to sit down with Rob Fuggetta, the CEO and founder of Zuberance and the author of Brand Advocates. Zuberance is combining a more traditional metric – the Net Promoter score – with social media. This is a great example of combining research and internet technology to create something entirely new and valuable. I hope you enjoy the interview.

Dana Stanley: We’re here today with Rob Fuggetta, the founder and CEO of Zuberance. Good afternoon, Rob.

Rob Fuggetta: Hi, Dana. Nice to be here with you.

Glad to have you. So for those who might not be familiar, tell us a little bit about Zuberance and what it is that you guys do.

Zuberance is a social media marketing company that focuses on brand advocates. And we provide a brand advocate platform that makes it easy for companies to identify their brand advocates, energize them to spread positive word of mouth online, and then tracks the results.

And how do you do that? How do you accomplish that way of helping clients?

Well, I mentioned identify, energize, and track, so let me address those three words one at a time and talk about how we identify advocates, how we energize them, and what we track.

So the way that Zuberance’s advocate platform makes it easy to identify advocates is by making it easy for customers to answer the ultimate question for customer loyalty from Net Promoter; how likely are you to recommend this brand or product to a friend? And we serve up that question to a brand’s customers across a variety of different customer touch points. That can be email, web, social, digital, even over mobile devices.

Once a customer answers 9 or 10, i.e. they’re highly likely to recommend the brand or product, so in Net Promoter lingo they’d be considered a promoter, we call them advocates. As soon as a customer answers 9 or 10 then we immediately energize them, and that’s that second word, energized.

And the way we do that is that we give those promoters tools to recommend the brand or product. And those tools make it easy for a brand advocate to recommend. And they include things like making it easy for an advocate to rate and review a company’s products, to write a story about their experience with the brand, to answer prospects’ questions, and also to share content and offers with their friends in their social networks.

So I’ve spoken about how we identify, which through asking the ultimate question, and how we energize. And that third word, track. Everything a brand advocate does, using Zuberance’s advocate applications, we measure and track in real time.

So for example, if you’re Starwood Hotels, and you’re customer of Starwood’s, a guest at Starwood’s, one of their hotel brands, and you say, I’m highly likely to recommend a Starwood Hotel’s brand. And then we give you an opportunity to rate and review a Starwood’s hotel or Starwood’s property. And you write your review using Zuberance’s advocate reviews application, and then you share it with your friends. You post it on your Facebook, you tweet it out, maybe you publish it on Tripadvisor.

Our tracking and analytics will tell Starwood Hotels, number one, that you’re an advocate. It will tell you when that person wrote the review, the star rating they gave it, or when they shared that offer with their social network. And you’ll be able to see all of that in the Zuberance dashboard.

We call it advocate analytics. It’s our version of Google Analytics, but it’s aimed at advocacy instead. And so brands and marketers can see, with great precision, the results that they’re getting from their advocacy programs powered by Zuberance. So the way we do this for brands is we offer this very comprehensive platform that goes from identifying advocates, energizing advocates, to tracking results.

So if I’m a person who uses a brand and I recommend it, what would be my experience? How would I come across one of your Net Promoter questions, and then how would I interact with the Zuberance software?

OK. Well, Dana, let me ask you. Tell me a brand or product that you recommend, whether it’s a car brand, sporting goods, hotel, consumer electronics product, any one of them,

OK, let’s go with Diet Coke.

Diet Coke, OK. Well, if you were a customer of Diet Coke, and typically a consumer brand like Coca Cola probably doesn’t have your name in some kind of an email database, although they could if you had registered to enter some sort of contest. But let’s say they didn’t.

But let’s assume, in that case, that you liked Diet Coke on Diet Coke’s fan page on Facebook. While you’re on Facebook, you might see the ultimate question from Zuberance, and it might say, Dana, how likely are you to recommend Diet Coke to your friends? And right there on Diet Coke’s Facebook page, on a scale of 0 to 10, then you could say 9 or 10, highly likely to recommend Diet Coke.

So now we’ve identified Dana as a Diet Coke advocate. Then we would reach out to you invite you to share your natural enthusiasm, your authentic enthusiasm for Diet Coke, with your friends. We might invite you to share a Diet Coke video. We might invite you to share an offer with your friends. We might invite you to create some content.

And all of that would be a hosted application served up to you by Zuberance. And that interaction, you might access that application over Facebook, might be over email, if Diet Coke has you email address, or if you included one in the Facebook page when you said you were highly likely to recommend Zuberance.

So we just make it easy for you. Wherever you are online, whether it’s on social or digital channels, or even on mobile, as I mentioned earlier, to register a, quote unquote, “vote,” maybe is a better word, vote, that you’re a Diet Coke advocate, and then we give you the tools to recommend.

What types of companies tend to work with you, and what kind of solutions do you help them with? In other words, what’s the experience for your customers, how they get in touch with you and how they work with you?

So we have about 100 brands that are on the Zuberance advocate platform. And interestingly enough, about half of them are B2B companies, and half are B2C. So you used an example of Diet Coke as a brand that you recommend. But interestingly enough, like I said, about half of our customers are actually B2B companies. And in some what you might consider to be very low passion categories.

So some of our B2B customers include companies like Intuit, Symantec, NetApp, Citrix. And these are categories that you would think that there’s not a lot of passion around, but what we’re finding is that among all of these B2B companies, actually significant percentages of their customers are highly likely to recommend them. But these companies just hadn’t been doing anything with them.

The other half of our customers include consumer brands like GMC, Lexus, Buick, Rubio’s, Hard Rock Hotel and Casino, and many others. TiVo and Ancestry.com and many others. So both B2B and B2C brands across multiple verticals and industries.

So we’re finding, for example, companies in travel and hospitality, consumer electronics, health and fitness, consumer brands and consumer products, are all very keen to find their advocates and leverage them to become a marketing force for the brand.

And what are the metrics that you provide to your brand clients?

Well, the number one metric is number of people recommending this brand. So you probably know, on Facebook, if you look on Facebook, they’ll provide a couple metrics. And one of those is number of people that have liked your brand. And by now I think everyone’s pretty aware that the number of fans or likes you have is actually pretty meaningless, unless you do something those fans and followers.

So companies have gone through that phase, now. I would say chapter one of social media marketing was to build a social audience. And for the most part that’s been done. That rapid growth in company’s social audience is starting to plateau.

And so chapter two, now, is, OK, now we have fans and followers, what can we do with them? And the high order bid, the most valuable thing you can do with your fans and followers is to find, among those fans and followers, those super fans, or as we call them, brand advocates, and then give them the tools to recommend you.

And so the key metric, then, is number of people recommending this. And that’s a key metric for Zuberance customers, is how many people from among our customers and others are actually recommending our company, or our brand, or our products?

And the reason why that one ultimate metric for social media, number of people recommending this, is so powerful and so valuable, is that there is a proven correlation between the number of people recommending this and revenue growth rates. And I invite you to take a look at the Bain and Satmetrix research that established a clear link between positive word of mouth and revenue growth rate. So that’s the number one metric that our customers look at each and every day, is how many people are recommending this and are we growing that number.

And are a lot of your customers already using the Net Promoter Score?

Yeah, I would say at least half of our customers are using the Net Promoter Score. And Intuit is a good example. Intuit, which is a customer of ours, was, as you probably know, one of the first companies to adopt Net Promoter. I think Intuit and GE are considered to be the earliest adopters of Net Promoter.

And Intuit has been tracking its Net Promoter. It’s a very important KPI insight into it. And Scott Cook, the former CEO of Intuit, has been quoted as saying that the Net Promoter Score is the ultimate metric that they run their business on.

Now it’s interesting. Although, as I said, about half of our customers are tracking Net Promoter, they really weren’t doing anything with their promoters. And so you take a company like Intuit, or even Symantec. Let’s talk about Symantec, for example. This is a great example.

Symantec has been tracking Net Promoter Scores for about five years now. And consistently, about 60% to 65% of Symantec customers have self identified as promoters. In other words, 9 and 10 in answer to the ultimate question from Net Promoter, highly likely to recommend Symantec.

The big opportunity for Symantec, and for anybody who’s listening to this who’s doing Net Promoter, is to do something with your promoters, is to invite them to recommend you. And that’s why we always say Zuberance picks up where Net Promoter leaves off. And that is, we’re going to take those 9s and 10s, those promoters, and turn them into a powerful marketing force for your company.

And that’s a big missed opportunity, because if you’re a company like Symantec, for example, and you have 50 million consumers worldwide and 60% to 65% of them are highly likely to recommend Symantec, that’s a massive marketing force. And the opportunity that companies have is to enable and mobilize that marketing force, but not to pay them. Because you don’t have to pay your authentic advocates.

Got it, OK. And so you’ve published a book called Brand Advocates. Tell us a little bit about that.

Well, the book is newly published. It’s available on Amazon and other online resellers. And the book is entitled Brand Advocates: Turning Enthusiastic Customers into a Powerful Marketing Force. And here’s what’s different about this book, because it seems like there’s probably a book a week on social media topics, and certainly social media is part of brand advocacy.

I wanted to write a book that was different in two ways. Number one, I read a lot of social media marketing books, and many of them are outstanding books. But you know where they leave me sort of dry is that, I don’t know what to do once I’ve read the book. They don’t provide a how to. So the first thing that’s different about Brand Advocates is that the entire second half of the book is, how do you get this done?

So let’s say you’re a marketer or a business leader, and you have advocates for your business. You know customers are recommending you. You have word of mouth champions. Then it really issues, well, how do I find them and how do I mobilize them, and how do I do this without paying them, or how should I reward them, and what should I track?

So the entire second half of my book is almost like a cookbook for brand advocacy. You can follow it. And, as I say, you can read the book today and tomorrow you can go into the office and you can have a formulaic, programmatic approach to how to find and activate your brand advocates. So that’s number one that’s different.

The second thing that’s different is that, a complaint that I have about books about social media is that there are no people in them. And social media is people media, right? So in Brand Advocates, it’s chock full of stories about real people. People like Starbucks Melody, the Starbucks brand advocate who is a passionate advocate of Starbucks.

So there are profiles of literally hundreds of brand advocates and marketers that are using advocacy to drive sales and leads for their businesses. So it’s really about people. So you’re going to read a lot of really fascinating stories, a lot of profiles about brand advocates and about marketers who are leveraging their advocates.

It sounds like you’re providing, both through your book and through your company, an opportunity for people to think about things that they might not have thought about before.

Well, brand advocacy is a fancy term for word of mouth marketing. And you know it, we all know it, that there is nothing more powerful than a personal recommendation. And that word of mouth has always been the most powerful sales tool.

And of course, it used to be that word of mouth happened around the water cooler. Today it happens online, on places like Yelp and Tripadvisor and Amazon.com and Facebook and Twitter . And so word of mouth, which has always been the most potent form of advertising, is now amplified. And so every company, whether you do this via Zuberance or anyone else, every company ought to be looking for ways to make word of mouth marketing the centerpiece of your marketing. And Brand Advocates the book will tell you how to do that.

Words to live by. Rob Fuggetta, thanks for your time today.

Thank you, Dana. It was a pleasure.

~ curated from: Research Access, Dana Stanley, September 5, 2012

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WOM powers xx’s new album after pre-releasing to one superfan

How the xx shared their new album Coexist by releasing it to just one fan

Superfan in London given album to share online before its official release – and snowball effect causes host site to crash
The xx, Shepherd's Bush Empire

The xx: going viral. Photograph: Jim Dyson/Redferns/Getty Images
Amanda Holpuch

guardian.co.uk, Tue 11 Sep 2012 17.33 BST

To recreate the word-of-mouth phenomenon that made them famous, the xx shared their album stream Coexist with a single fan just outside London last week – days before its official US release.
It was a risky marketing move that set out to test whether the band could replicate their initial viral success with a map that tracked shares with a visualization on the Coexist stream’s host site.
Twenty-four hours after the stream was shared with a fan on Facebook, the site crashed from the millions of streams, with the average user spending 2.1 hours on the site.
“From a statistical perspective, it’s one of the most significant album premieres we’ve ever done,” said Adam Farrell, vice-president of marketing at Beggars Group. Coexist is being released worldwide on the Young Turks label, a joint venture with XL Recordings which is part of the Beggars Group.
Farrell said the xx were instantly able to determine the superfan who would first receive word of the stream due to their frequent postings on xx-related social media.
“The fan was the only one listening to it for an hour or so. It seems like they were hogging it for a bit,” Farrell said.
Once the superfan finally released the stream, it spread quickly among the xx’s online community, avoiding the eyes of music blogs until the next day, when media outlets finally got hold of it.
“What we saw on the first album was a real word-of-mouth phenomenon we had never seen before,” said Farrell.
To promote the xx’s second album Coexist, the label had to find a way to inspire the same sort of virality that greeted the band’s eponymous debut. XL then entered talks with tech companies, and Microsoft agreed to create the visualization, which was inspired byAaron Koblin’s visualization of flight patterns in the US.
The stream’s visualization prompts a burst of lines as the album is distributed across the globe, cascading from its origin to the opposite ends of oceans, where it then radiates to another point on the map.
Music downloading and social media have made the pre-release album stream an integral part of the modern music marketing scheme, and XL hoped the visualization would draw attention to the physical release date.
“It’s really hard to focus people on a release date – it’s almost like the release date has become something that’s become an adjunct to the whole campaign,” said Farrell. “Even though for most bands and from the label perspective, it’s the most important date because the record’s available for sale everywhere.”
Coexist’s release was one of XL’s biggest album premieres. The group – which owns and distributes several other labels – counts Vampire Weekend and Jack White among their clientele.
A day before the album’s official US release, the viral move made it to thehomepage of Reddit, where fans motivated by the visualization initiated a campaign to get the album spread in each country of the globe.
Despite its success, Farrell doesn’t plan on replicating this visualization site for other bands: he says he finds it especially suited to the sensibilities of the xx.
~ curated from: guardian.co.uk, Tue 11 Sep 2012

Measuring Marketing’s Worth

You can’t spend wisely unless you understand marketing’s full impact. Here are five questions executives should ask to help maximize the bang for their bucks.

It’s 8 AM, and the chief marketing officer is wading through his inbox. A board member has e-mailed him about an opportunity to invest in an emerging digital platform. It looks cool, but it’s speculative and not cheap. Minutes later, the chief financial officer appears in the doorway: “The boss wants to sign a big sponsorship deal. Can we drop out of TV for a couple of months to pay for it?” The CMO has barely started to explain what happened the last time the company went dark on TV—an aggressive rival grabbed market share—when his assistant interrupts. The CEO is calling. “What’s going on with our brand image?” she asks. “The latest monitor report looks bad.” The CMO promises a full debriefing later in the day, but he’s not looking forward to the conversation. Brand scores are down, and the reasons are tough to manage: factors such as bad experiences with intermediary retailers and mediocre word of mouth.

The number and strength of such competing pressures has been growing. Seven years ago, when digital advertising was still in its infancy and long before social media had become a marketing force, we described in a McKinsey Quarterly article how many traditional mass-marketing advertising models were under attack and suggested some approaches to make marketing investments count in an increasingly complex environment.1 Since then, we have been fortunate enough to see more than 200 organizations tackle the difficult issue of how to improve marketing’s return on investment (ROI). Over that period, as new kinds of media have grown in importance and mobile communications have created new opportunities to reach consumers, the ROI challenge has become more intense.

In the face of growing complexity, relentless financial pressure, and a still-challenging economic environment, marketers are striving to exploit new-media vehicles and to measure their impact through new analytic approaches and tools. Most are making progress. Yet we are consistently struck by the power of asking five seemingly basic questions. These questions, detailed in this article, cut to the heart of the quest to drive returns on marketing spending. Coming to grips with them, and gaining alignment across the C-suite, is critical for making real progress rather than becoming bogged down by excessive firefighting and ultimately futile debates about the precision and certainty of measurement.

1. What exactly influences our consumers today?

The digital revolution and the explosion of social media have profoundly changed what influences consumers as they undertake their purchasing decision journey.2 When considering products, they read online reviews and compare prices. Once in stores, they search for deals with mobile devices and drive hard bargains. And after the purchase, they become reviewers themselves and demand ongoing relationships with products and brands. Although companies have access to terabytes of data about these behavioral changes, many still can’t answer the fundamental question: how exactly are our customers influenced?

One global consumer products company, for example, had for years relied heavily on traditional marketing, such as television and print ads. Concerned about the growth of new media, the company decided to research just what was influencing the choices of consumers—and found that only 30 percent of them cited traditional advertising. In fact, in-store interactions with consumers were more important in communicating the company’s message and driving potential buyers to consider its products. Yet salespeople, once critical to actually closing deals, had declined in importance because consumers regarded Internet reviews as more objective. In addition, these trends were not universal. While the influence of advertising had declined for existing products, the impact of TV remained strong for some new products, especially in emerging markets. Armed with insights such as these, the company was able to construct a marketing allocation model that factored in both the consumer importance and cost-effectiveness of different points of interaction. This enabled much sharper decisions about its marketing mix, both by geography and in relation to specific product situations.

Time and time again, we find that companies are aware of the growing importance of touch points such as earned media but don’t understand the true magnitude of their effects or how to influence them. The solution is usually to commission research that gets at the heart of understanding the consumer’s decision journey. Such foundational work must shine a light on the touch points and messages that actually influence consumer behavior. Marketers must be ready to use the findings to debunk accepted wisdom and legacy rules of thumb. In today’s fragmented media world, only by knowing how the way consumers interact with your company has evolved can you begin to make more cost-effective marketing investments that truly influence purchase decisions.3

2. How well informed (really) is our marketing judgment?

Marketing has always combined facts and judgment: after all, there’s no analytic approach that can single-handedly tell you when you have a great piece of creative work. A decade ago, when traditional advertising was all that mattered, most senior marketers justifiably had great confidence in their judgment on spending and messaging. Today, many privately confess to being less certain. That’s hardly surprising: marketers have been perfecting the TV playbook for decades, while some of the newest marketing platforms have been around for months or even weeks. But it can be tough to admit publicly that your judgment is incomplete or out-of-date. And given the money required, it’s hard both to make a rational investment case for additional marketing spending and—in the same breath—to admit that you are really making a passionate guess.

Marketers often hear that the answer to improving their judgment in this rapidly changing environment is data, and some companies have sophisticated analytical tools. Yet it’s difficult to integrate all of this information in a way that not only provides answers that you trust but can also inform smart marketing changes. We counsel a return to what creates great marketing judgment: start by formulating hypotheses about the impact of changes to your marketing mix and then seek analytical evidence.

One insurance company, for example, spent a year working on a complex demand model to try to understand the impact of its growing marketing spending in light of declining sales. Yet output from the model “felt wrong,” and the analytics were too complicated for business leaders to understand. It was only when the company articulated specific questions it was trying to answer, and designed targeted modeling exercises to prove or disprove them, that it was able to eliminate a lot of “noise” in the data and uncover a clear relationship between marketing spending and business results. That’s when the internal dialogue shifted from “should we be spending on marketing at all?” to “what’s the optimum marketing spending needed to hit our targets?”

We are excited by the possibilities that “big data” and advanced analytics create—no question. But data remain only as useful as the expertise you bring to bear, and good judgment will remain a hallmark of the best marketers.

3. How are we managing financial risk in our marketing plans?

Successful communication requires hitting the right audience with the right message at the right time: a small, moving target. With traditional media, marketers have mitigated the risk of failure through years of trial and error about what makes great advertising. That’s not the case with today’s new media. Influence can shift rapidly, and there is little accumulated experience about which messages work, when marketers should apply them, how they can be scaled, or even whom they influence. Looking to external agencies is little help; they’re in the same boat. At a basic level, the degree of ROI risk—getting the sales results you want from a given amount of marketing spending—has increased.

Yet while spending on new media is a risky bet, it’s a bet companies feel compelled to make. So the question becomes how much risk is too much—or, for that matter, too little. We’ve seen efforts that result in short-term sales dips: a retailer moving too quickly away from circulars and a consumer-goods player reducing TV spending too fast. We’ve also seen companies feel the heat from investors for rapidly ramping up spending on digital channels without cutting it elsewhere.

The global consumer products company we mentioned earlier offers an alternative approach. While its customer research suggested that significant changes were required in the way it allocated marketing spending, executives didn’t want to choose an excessively risky path. They therefore set risk parameters that enabled some changes in the marketing mix but limited the total shift in any given year. There was a maximum percentage for spending on unproven vehicles, for example, as well as limits on annual spending reductions in some channels or increases in others. This simple allocation model ensured a gradual move to emerging media, mitigating risk while providing breathing room for piloting, testing, and learning.

That approach also can help with scenario planning: one media provider developed a straightforward decision support tool for precisely that purpose. Geared to brand managers, not postdoctoral researchers, the tool used simple response curves that allowed the marketer to simulate different scenarios of marketing spending. The tool was embedded in an easily used PowerPoint slide and proved invaluable for settling on marketing approaches that hit the sweet spot for a number of variables, from cost to effectiveness to risk.

Such decision tools do more than provide marketers with valuable information. They stimulate dialogue about real trade-offs and help to manage expectations across business units and functions whose cooperation is often critical when companies change the broader commercial mix. Managing risk is critical, and marketers shouldn’t be shy about putting this issue squarely on the table. With thoughtful scenario planning and cross-functional participation, such discussions can be extremely rich and rewarding.

4. How are we coping with added complexity in the marketing organization?

As the external marketing environment becomes more complex, so must the internal environment. Marketers historically had only a handful of communication vehicles; now they have dozens of them, and the number is growing rapidly. This proliferation has led to the emergence of both external and internal specialists, with accumulated experience not only in media channels (such as social media) but even in individual vehicles (such as Facebook). The exponential growth in marketing complexity seems unending and needs to be managed.

We’ve found three things that are always true in managing complexity within the marketing organization. First, you’ll require a number of specialists. You just will. You can’t get the skills and knowledge you need in just one person, and you’re not likely to get everything you need internally. Second, you’ll need somebody who both integrates marketing efforts across channels and communications vehicles and focuses on the bottom line. In packaged-goods companies, this was—and may still be—the role of brand managers, but the basic requirement is that it must be done bysomeone. Finally, you’ll need absolute clarity in processes, roles, and responsibilities not only within the marketing organization but also throughout your company (across functions and business units) and externally (with agencies and external vendors). The trust-based relationship between companies and agencies isn’t at risk, but everyone will have to accept that roles are changing. (For more on organizational moves companies should make in a world of more pervasive marketing, see “Five ‘no regrets’ moves for superior customer engagement.”)

Addressing complexity in a comprehensive way requires a dedicated effort. Senior executives at one North American consumer-packaged-goods company, for example, tried to sketch out their own “future of marketing” with an eye to how they would need to work differently over the coming five years, given the company’s growth priorities. No one pretended to have a crystal ball, but examining the implications of several generally accepted trends in consumer behavior and media consumption habits made some bold forecasting possible. The company then debated the future of brand managers and specialist centers of excellence and what that future implied for resources required centrally and in business units. Finally, it asked what should be stopped or dramatically deprioritized. By undertaking this exercise, the consumer-packaged-goods company saw how it could keep its marketing headcount and budget relatively flat, while massively shifting senior leadership’s role, the culture of marketing, and the capabilities of specialist and generalist resources.

5. What metrics should we track given our (imperfect) options?

In an ideal world, the financial returns and the ability of all forms of communication to influence consumers would be precisely calculated, and deciding the marketing mix would be simple. In reality, there are multiple, and usually imperfect, ways to measure most established forms of marketing. Nothing approaches a definitive metric for social media and other emerging communication channels, and no single metric can evaluate the effectiveness of all spending. Yet you must have a way to track progress and hold marketers accountable. That’s nonnegotiable. How do you do it?

Even in the absence of a single way of measuring ROI for different channels, marketers should move toward an apples-to-apples way of comparing returns across a range of media. One international logistics company, for example, faced this necessity after committing more than $200 million to rebrand itself following a series of acquisitions. Senior executives wanted proof that the effort was working—and in a form they could readily understand, not marketing jargon.

So the company adopted a simple three-step approach: measuring the impact of advertising on consumer recall, on the public’s perceptions of the business, and on sales leads and revenue. With these data in hand—and proof that the rebranding effort was ultimately improving performance—members of the C-suite had the assurance they needed to reaffirm the investment and to commit themselves to more complex measurements, such as marketing-mix modeling. Because the metrics were developed internally, members of the company’s board were similarly reassured.

Likewise, one consumer-packaged-goods company uses econometric analysis and frequent brand tracking to assemble a scorecard of returns in the short term (average and marginal marketing ROIs within 12 months) and the longer term (progress on brand equity and brand loyalty for periods of more than 12 months). The company is tantalizingly close to its ultimate goal of truly being able to make decisions about short- versus long-term trade-offs and to deliver complete answers to “show me the money” requests.

Metrics are rarely perfect. Yet the volume of data available today should make it possible to find metrics and analytic opportunities that take advantage of your unique insights, are understood and trusted by your top team, provide proof of progress, and lay a foundation for more sophisticated approaches to tracking marketing ROI in the future.

The marketing environment continues to change rapidly and often feels like a moving target that’s impossible to hit. It’s genuinely difficult to overemphasize the magnitude of the change or the challenge. Yet time and time again, we find that marketers who have good answers to the five basic questions are better equipped to do battle for the effectiveness of marketing and to win the war for growth.

About the Authors

David Court is a director in McKinsey’s Dallas office, Jonathan Gordon is a principal in the New York office, and Jesko Perrey is a director in the Düsseldorf office.

 

The end of marketing as usual? The rise of peer influence-based marketing.

Marketing Is Dead

Traditional marketing — including advertising, public relations, branding and corporate communications — is dead. Many people in traditional marketing roles and organizations may not realize they’re operating within a dead paradigm. But they are. The evidence is clear.

First, buyers are no longer paying much attention. Several studies have confirmed that in the “buyer’s decision journey,” traditional marketing communications just aren’t relevant. Buyers arechecking out product and service information in their own way, often through the Internet, and often from sources outside the firm such as word-of-mouth or customer reviews.

Second, CEOs have lost all patience. In a devastating 2011 study of 600 CEOs and decision makers by the London-based Fournaise Marketing Group, 73% of them said that CMOs lack business credibility and the ability to generate sufficient business growth, 72% are tired of being asked for money without explaining how it will generate increased business, and 77% have had it with all the talk about brand equity that can’t be linked to actual firm equity or any other recognized financial metric. 

Third, in today’s increasingly social media-infused environment, traditional marketing and sales not only doesn’t work so well, it doesn’t make sense. Think about it: an organization hires people — employees, agencies, consultants, partners — who don’t come from the buyer’s world and whose interests aren’t necessarily aligned with his, and expects them to persuade the buyer to spend his hard-earned money on something. Huh? When you try to extend traditional marketing logic into the world of social media, it simply doesn’t work. Just ask Facebook, which finds itself mired in anongoing debate about whether marketing on Facebook is effective.

In fact, this last is a bit of a red herring, because traditional marketing isn’t really working anywhere.

There’s a lot of speculation about what will replace this broken model — a sense that we’re only getting a few glimpses of the future of marketing on the margins. Actually, we already know in great detail what the new model of marketing will look like. It’s already in place in a number of organizations. Here are its critical pieces:

Restore community marketing. Used properly, social media is accelerating a trend in which buyers can increasingly approximate the experience of buying in their local, physical communities. For instance, when you contemplate a major purchase, such as a new roof, a flat screen TV, or a good surgeon, you’re not likely to go looking for a salesperson to talk to, or to read through a bunch of corporate website content. Instead, you’ll probably ask neighbors or friends — your peer network — what or whom they’re using.

Companies should position their social media efforts to replicate as much as possible this community-oriented buying experience. In turn, social media firms, such as Facebook, should become expert at enabling this. They can do this by expanding the buyer’s network of peers who can provide trustworthy information and advice based on their own experience with the product or service.

For example, a new firm, Zuberance, makes it easy and enjoyable for a firm’s loyal customers to advocate for the firm on their social media platform of choice. At the moment one of these customers identifies himself as a “promoter” on a survey, they immediately see a form inviting them to write a review or recommendation on any of several social media sites. Once they do, the Zuberance platform populates it to the designated sites, and the promoter’s network instantly knows about his experience with the firm.

Find your customer influencers. Many firms spend lots of resources pursuing outside influencers who’ve gained following on the Web and through social media. A better approach is to find and cultivate customer influencers and give them something great to talk about. This requires a new concept of customer value that goes way beyond customer lifetime value (CLV), which is based only on purchases. There are many other measures of a customer’s potential value, beyond the money they pay you. For example, how large and strategic to your firm is the customer’s network? How respected is she? 

One of Microsoft’s “MVP” (Most Valuable Professional) customers is known as Mr. Excel to his followers. On some days, his website gets more visits than Microsoft’s Excel page — representing an audience of obvious importance to Microsoft, which supports Mr. Excel’s efforts with “insider knowledge” and previews of new releases. In return, Mr. Excel and other MVPs like him are helping Microsoft penetrate new markets affordably.

Help them build social capital. Practitioners of this new, community-oriented marketing are also rethinking their customer value proposition for such MVP (or “Customer Champion” or “Rockstar”) customer advocates and influencers. Traditional marketing often tries to encourage customer advocacy with cash rewards, discounts or other untoward inducements. The new marketing helps its advocates and influencers create social capital: it helps them build their affiliation networks, increase their reputation and gives them access to new knowledge — all of which your customer influencers crave.

National Instruments used an especially creative approach with its customer influencers, who were mid-level IT managers at the companies they did business with. NI engaged with them by providing powerful research and financial proof points they could take to senior management, showing that NI solutions were creating strategic benefits. That got NI into the C-suite. It also increased the reputation of the mid-level advocates, who were seen as strategic thinkers bringing new ideas to senior management.

Get your customer advocates involved in the solution you provide. Perhaps the most spectacular example of this comes from the non-profit world. Some years ago, with the number of teen smokers nation-wide rising to alarming levels, the State of Florida thought anew about its decades-long effort to reduce the problem. What could be more difficult than convincing teen smokers to quit — a problem that Malcolm Gladwell had said couldn’t be solved. Using the techniques for building a community of peer influence, Florida solved it. They sought influential teen “customers” such as student leaders, athletes, and “cool kids,” who weren’t smoking or who wanted to quit — and instead of pushing a message at them, they asked for the students’ help and input. 

Approached in this new way, some 600 teens attended a summit on teen smoking, where they told officials why anti-smoking efforts in the past hadn’t worked — dire warnings about the health consequences of smoking, or describing the habit as “being gross,” left them unimpressed. On the spot, the teens brainstormed a new approach: they were outraged by documents showing that tobacco company executives were specifically targeting teens to replace older customers who’d died (often from lung cancer). And so the teens formed a group called SWAT (Students Working Against Tobacco) who organized train tours and workshops, sold T-shirts and other appealing activities to take their message into local communities. The result: despite a vicious counterattack by Big Tobacco lobbying firms, teen smoking in Florida dropped by nearly half between 1998 and 2007 — by far the biggest success in anti-teen-smoking in history. 

Put another way, Florida won half of the “non-buyers” of its anti-teen-smoking “product” away from its much bigger, much better funded competitor. They did so by tapping the best source of buyer motivation: peer influence.

So can you. Traditional marketing may be dead, but the new possibilities of peer influence-based, community-oriented marketing, hold much greater promise for creating sustained growth through authentic customer relationships.

Bill Lee

BILL LEE

Bill Lee is president of the Lee Consulting Group, Executive Director of the Summit on Customer Engagement, and author of The Hidden Wealth of Customers: Realizing the Untapped Value of Your Most Important Asset (HBR Press, June 2012).

 

~ HBR Blog, Bill Lee, Harvard Business Review