Bloghound

Today my firm, Beeline Labs, Deloitte, and the Society for New Communications Research released highlights of an online communities study among 140 organizations which create and maintain communities. Some of the highlights, more of which can be found here:

Greatest value of communities:

• increasing word of mouth (35%)
• increasing brand awareness (28%)
• bringing new ideas into the organization faster (24%)
• increasing customer loyalty (24%)

Greatest obstacles

• getting people involved in the community (51%)
• finding enough time to manage the community (45%)
• attracting people to the community (34%)

What contributes most to effectiveness:

• ability for community members to connect with other like-minded people: 54%
• ability for members to help others: 43%
• focusing community  around a hot topic or issue: 41%
• quality of the community manager/community management team: 33%

Advice for others

When asked what their most important piece of advice is for others creating communities, survey participants’ advice focused around these eight areas:

1.    Start with the end in mind: “Start with a business strategy, defining carefully what you want to accomplish through the community.”

2.    Focus on the value to the members:  “Make sure you deliver real, special, unique, obvious value to the core group you’re hoping to attract.”

3.    Don’t start with the technology: “Too often people get drunk with Web 2.0 tool excitement and then try to push their business and customer goals into the wrong tool.”

4.    Keep it simple and intuitive:  “Focus on the least common denominator first. Keep it easy to navigate with simple tools to use.”

5.    Keep it fresh and active:  “Keep activity levels up, constantly add new content.”

6.    Have dynamic community leaders: “Make sure you devote enough time to managing the community; letting it fester is worse than not having it in the first place.”

7.    Think through who to involve – or not. “Get Legal and PR to buy-in and help on design, but keep them out of active management.”

8.    Get a passionate core of participants active before launching:  “Make sure you have a committed core of passionate users before you launch.”
Many thanks to everyone who took the time to take the survey and talk to us as part of the qualitative surveys. The complete results are on their way to you this morning.

Forget conventional wisdom when it comes to managing corporate reputation. In fact, transparency matters the least in building stakeholder trust (employees, customers, suppliers, investors) and can actually erode trust, according to a fascinating new study by Harvard University’s Michael Pirson and Deepak Malhotra, published in the summer issue of MIT Sloan Management Review. (”Unconventional Insights for Managing Stakeholder Trust.”)

The authors studied four different organizations to find out what matters and to whom. Highlights:

• Transparency is over-rated. In fact, transparency can diminish trust depending on what is disclosed. Also, it has little relevance in terms of building trust.
• Integrity is important, but. Stakeholders close to a company (employees and customers) need to feel that the company genuinely cares for their personal well-being. Integrity alone doesn’t cut it if people feel the company is being fair but “callous.”
• Trust is built on different types of competencies. Employees and investors look for management competency. Customers and suppliers more concerned about technical and quality competency.
• Shared values is hugely important to all stakeholders: All stakeholders want to associate with organizations with values they identify with.

“We have found that that although value congruence matters most to employees, it is also an important factor for every other stakeholder group we studies. In other words, stakeholders of all types are interested in associated with organizations with whom they can identify — and with whom they perceive a match in values.”

This study has interesting implications for marketers and corporate communications professionals.

• Trust means different things to different stakeholders.
• Marketing needs to focus more on two key trust-building factors: the company’s genuine interest in their customers’ success and well being, and the company’s technical ability to deliver quality products and services.
• What beliefs? It’s essential to clearly articulate the company’s values and beliefs. (Maybe even help uncover them. ) In my experience few organizations — especially marketers — focus on these beliefs, or even know what they are. But as this study shows they are critically important to building affinity and trust with customers.

A big part of SOCIAL media is being more social as companies — online and in the real world. But many executives have asked me, “how do you measure sociability and friendliness?”

In a 48-hour experiment with blackjack dealers at Ameristar Casino J.D. Power & Associates found that a highly social, outgoing blackjack dealer collected 13 percent more money at his table than at the serious table where the blackjack dealer held to the standard, “don’t talk unless spoken to” rule.

In explaining the experiment Chris Denove of J.D. Power and author of “How Every Great Company Listens to the Voice of the Customer,” told a group this week that there’s no reason to believe that the same relationship doesn’t hold true in other business environments. Why? People like spending time with people who are likeable.

Getting management to buy into innovative marketing approaches can be tough.

Here are six facts to support change, based on performance data that Copernicus Marketing Consulting has collected from more than 500 marketing programs (consumer and B2B products and services.)

1. 84% of programs are resulting in declining brand equity and market share.
2. Customer satisfaction averages just 74%.
3. Most acquisition efforts fail to reach break even.
4. No more than 10% of new products succeed.
5. Most sales promotions are unprofitable.
6. Advertising ROI is below 4%.

For more, see the Harvard Business Review article, “Don’t Blame the Metrics” by Kevin Clancy and Randy Stone.

I feel both exhausted and encouraged from this week’s Conference Board conference on Measuring Marketing Effectiveness. Exhausted because the data shows that despite so much talk for so many years about the need for measures and ROI , we marketers have made very little progress over the past 10 years.

A 2007 ANA study found that just 11 percent surveyed said they are very satisfied or satisfied with their ability to determine marketing ROI. A soon-to-be released Conference Board study found that none of the companies surveyed feel as though they’ve “arrived” at figuring out a good way to measure marketing.

Exhausting, too, because creating approaches that provide insights and guide planning - vs. simply measuring tactics — is hard, scientific work. Companies with successful measurement systems, like Eli Lilly, Unilever, MetLife, said it takes at least three to four years to begin making real progress.

The only measure that may matter?

What was encouraging, however, is that marketing measurement innovators believe one approach is particularly valuable: measuring customer preference or perceived value, which are leading indicators of revenue, profits, and cash flow. (In other words, a measure that helps you manage and satisfy the CEO and CFO AND see glean insights to help manage vs. simply measure marketing.)

Don Sexton, professor of marketing at Columbia University believes that this is the most effective measure, yet is missing from nearly every list of marketing measures. (FYI: Don is releasing a book on the topic this fall.)

Other takeaways:

Relationship preference matters as much as product preference

Mark Kershisnik of Eli Lilly believes (and has the data to back it up) that equity can provide a measurement of both investment and performance, and the way to measure equity is by assessing product brand preference AND relationship preference.

I found this especially interesting as so many marketers focus exclusively on product preference, yet customers make decisions, particularly in the B2B landscape, on relationship factors like trust, likability, innovation.

Most common measures are meaningless: lagging indicators vs. leading indicators

Most of the common marketing metrics are, well, useless. Awareness, mind share, perception, recognition, recall, share of market, loyalty, purchase intention, cost per click, etc. may be easy to measure, but they don’t connect to business value nor do they provide indicators of what to do differently to improve performance. They are lagging indicators measuring past performance rather than leading indicators that can help diagnose where to improve brand and relationship preferences and how to monitor progress of achieving marketing objectives.

Focus on just a few things

Many marketers try to measure too many things - 30 or 40 factors. It’s impossible to properly assess that many factors - or have the resources to work on improving that many factors. Many of the speakers recommended focusing on just 3 - 4 product preference factors and 1 -2 relationship preference factors.

Getting on the same page crucial to success

All of those firms with successful measurement strategies have educated their entire leadership team so that everyone has a shared definition of marketing, marketing value, measures and metrics.

The CFO’s mantra

Kamal Sen, director of business analytics and strategic planning for Unilever in Asia, Africa, Middle East and Turkey, offered what the CFO really cares about:

• Sales is vanity.
• Profits are sanity.
• Cash is reality.

I’ll be blogging The Conference Board’s “Marketing Effectiveness Conference” next Tuesday and Wednesday in New York. There’s a great line up of speakers from companies like Citibank, Eli Lilly, Pepsi, Disney and Met Life. The conference leader is Don Sexton, professor of business and director of the Jerome A. Chazen Institute of International Business at Columbia University.

Some of the things I’m interested in learning:

• How are leading organizations assessing the effectiveness of social media and digital strategies? Advertising Age’s Jack Neff wrote a great piece last month, “Why Mix Models Don’t Mesh with Digital,” about how many companies aren’t investing in these new areas because the budgets aren’t big enough to be factored into the marketing mix models. So because innovative approaches can’t be measured with the old tools, that’s reason not to invest? Yikes!
• How are companies taking a holistic view of what is influencing customer decisions? It seems that most companies measure silos — search, broadcast, direct, online advertising, PR, promotions. These discrete views often cloud real issues and opportunities.
• Are there different approaches for measuring B2B vs B2C? Could a B2b software company, for example, use the same strategy as Pepsi?
• If a company could only do one thing when it comes to assessing effectiveness, what should that be?

If anyone has other questions, please post them here and I’ll be sure to raise them at the conference and post the replies next week.

While many organizations are beginning to use online communities for a range of purposes — from market research and customer support to thought leadership and product innovation, there’s a lot of frustration about how to measure communities. The Society of New Communications Research, Deloitte, and my new firm, Beeline Labs, is conducting a study to learn how organizations are measuring the success and progress of their online communities.

If you or someone you know is involved in managing a community, we’d very much appreciate your input. This survey takes about three minutes to complete and results will be shared with all who participate.

Thanks!

You can’t jump start a trend by trying to influence highly social people, aka “the influentials,” according to Duncan Watts, a Columbia University network theory scientist currently working for Yahoo Labs. Nor can anyone predict or engineer trends, he says. The complex network effects on society mean that trends occur randomly.

In an article in this month’s Fast Company (”is the Tipping Point Toast?”) Watts also says,” If society is ready to embrace a trend, almost anyone can start one — and if it isn’t then almost no one can.”

Talk about challenging word of mouth and influencer marketing assumptions with scientific data

If Watts’ research is right, what does it mean to marketers? A few thoughts…

1. How do we become better at quickly yet deeply understanding our markets and the head set of customers to see if our ideas and products fit within their context and their “readiness” to embrace a trend, a new way of doing business, a message? I’ve seen so many companies try to push a “transformational” product to a customer base that wasn’t interested or ready to be transformed. It reminds me something the late producer Louis Mayer once allegedly said, ” If people don’t want to come, there’s nothing we can do to stop them.” By the time traditional market research identifies a trend, the trend may be waning or over. Maybe online communities are the best way to spot changes. Or new unstructured data analysis of online conversations.

2. What are the best way to understand the life cycle of trends and tap into them to help our brands and businesses? How can we use new tools to spot trends early? At what point in the trend cycle does it make sense to invest money and ride the trend? At what point is the trend waning and we’d be better off not riding the final wave of a trend?

3. How do we redefine success? The goal of leading the next blockbuster trend, as Watts points out, is unrealistic; the world is too complex to even be able to predict how trends occur never mind think our company can consciously lead the wave. Having the biggest social network doesn’t mean your social network is meaningful and successful. Having a gazillion hits to your blog doesn’t mean the blog is achieving your goals.

And so aiming to be a big part of the next big thing may just be foolish,

One big reason CMOs last an average of only 21 months may be that few view customers as especially important. In a new study by Forrester Research and Heidrick & Struggles CMOs rated customer-oriented competences far down their priority lists.

When asked about which five competencies are most important to personal success:

• Less than 40% included being the voice of the customer.
• Just over 20% included listening to/interacting with customers.
• Less than 10% included personal knowledge of customers.

Yet 60% of these same marketing execs said that acquiring new customers was their top marketing objective. And more than 70% said visioning and strategic thinking were top competencies for personal success. How do you accomplish either without really understanding customers?

Also interesting: Web 2.0 trends like customer communities and social computing have the most potential to help marketers efficiently and effectively understand customers and prospects, yet marketers rated these as the least important tools for their marketing organization’s future success. A glimmer of hope — they expressed more interest in learning about these approaches than in most of the tools rated highly-important, like customer trends and Web analytics.

Remember James Carville’s famous line back in the first Bill Clinton presidential campaign, “It’s the economy, stupid.” Adapted to marketing: “It’s the customers, stupid.”

Why is social networking a really big deal? It fulfills six fundamental human social needs, says a new Communispace study, “Meeting Business Needs by Meeting Social Needs.”

1. Expressing personal identity

2. Status and self-esteem

3. Giving and getting help

4. Affiliation and belonging

5. Sense of community

6. Reassurance of value and worth

When developing social networking strategies as part of our marketing plans, it behooves us to make sure that we meet these social needs. Doing so, say the authors, helps companies gain customer trust and insight.

Fulfilling the sixth need is especially valuable. When companies listen to what people tell them in social networks and act on those ideas, companies validate people’s sense of value and self-worth. The result? “ A deeper emotional bond than usually exists between companies and customers, which in turn results in greater advocacy and customer loyalty,” say the authors.