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Presentations from Facebook and MySpace at the Marketing 2.0 conference caused something of a stir – first of all for getting both on stage at the same time, and second as Damien Vincent from Facebook, having only just joined them from MySpace, seemed to momentarily forget who he was working for.

But the content of their presentations was interesting, if only to see how both organisations approach selling their marketing potential to brands. Of particular interest was a set of statistics shown by Olivier Hascot from MySpace, based on surveys in the UK. They found that:

• 40% of Brand Friends remembered the advertiser when shopping either online or on the high street
• 22% of Brand Friends said that they spend more money with the advertiser

These could be impressive statistics for MySpace and would no doubt interest any advertise looking to raise both brand awareness and customer spend in the current economic climate. But I’d like to understand a little bit more about them. I’d like to know if the suggested cause and effect (that being a Brand Friend on MySpace led to greater brand awareness and higher customer spend) is actually the case, or if something else is at play.

As acquisition statistics, these do look impressive. If, as a brand, I could get 40% higher brand awareness among non-customers, and 22% higher spend from new customers by being friends with them on MySpace, there would be no question that this would be a good idea. However, I suspect this is not what’s happening.

Consider a brand advocate or even just a regular purchaser of your brand’s products. I imagine that it is these people who are likely to befriend you on MySpace. It is also these people who are likely to both have your brand at the forefront of their mind when out shopping, and spend more with you as a result. So rather than these two outcomes being a result of a consumer being your Brand Friend on MySpace, it could be that all three outcomes (higher brand awareness, higher spend and being a friend) are a result of them being a regular customer or even a brand advocate.

If this is the case, then it could be that social networks, at least the Fans and Pages bits of them, are strategies for retention of existing customers rather than acquisition of new ones. Would you become a Friend or a Fan of Nutella if you didn’t like that particular chocolate spread? Probably not. You are much more likely to join them in this way if you are already a customer, and probably one that is willing to attach themselves (and their social network profile) to your brand.

So from this perspective, activities in social networks are probably best focused on customer retention. Letting your most loyal or enthusiastic customers become your friend so that you keep your brand at the forefront of their mind and they ultimately spend more with you.

Of course, there may be some brands where social networks are a perfect hunting ground for acquisition targets, but I would expect this to be restricted to more aspirational brands or products. Whilst I might not become a fan of Nutella if I wasn’t already a customer, there is a high chance I might become one of the new Peugeot 308 before I have actually bought one. But this is because I am willing to attach the aspiration towards this brand to my profile. This is probably unlikely with most products.

Read all of our posts based on the Marketing 2.0 Conference here.

Some more reading

• Social network advertising wasted on millennials (thisisherd.com)
• Managing Your Social Networking Efficiently in 2009 (revenews.com)
• ‘Unmarketing’ and giving your community control (thisisherd.com)
• How to Choose the Right Social Networks for your Business (pajamaprofessional.com)
• Chinese Social Networks ‘Virtually’ Out-Earn Facebook And MySpace: A Market Analysis (tsurch.com)

It’s been a busy week at FreshNetworks, with Charlie on Web Mission 09 in San Francisco and me in Paris for the Marketing 2.0 Conference. A great chance to meet people and also to learn, and this week’s Required Reading for the team is one of the presentations given in Paris.

Wolfgang Lünenbürger-Reidenbach from Edelman presented about word-of-mouth and why it is important to brands. What I like most about this presentation is the emphasis that it places on word-of-mouth not being about technology. Too often, discussions on word-of-mouth revert to the mechanisms by which people hope this will be transmitted – by widgets, social networks or online communities.

Technology is, of course, important, but word-of-mouth is actually a social function. It’s about people trusting and respecting your brand so much that they are willing to put their reputation in line with it – recommending it to friends and peers. It’s about people doing your advertising for you and about helping you gain penetration in markets you could never reach effectively with traditional advertising. And perhaps most importantly, it’s about the outcome, not the process. Word-of-mouth is only useful when people act on what they hear.

Some more reading

• Branding in the age of social media (freshnetworks.com)
• Engage different consumers in different ways – why segmentation is key (freshnetworks.com)

Online communities are about engagement, between consumers and between them and the brand. They bring huge benefits for and brand or organisation, from rich insights through innovation and ideas to word of mouth and advocacy. The question we are often asked is why the consumers would take part. Why would they take part in your online community.

My presentation at the Marketing 2.0 conference in Paris earlier this week addressed this very issue and discussed different ways in which you can incentivise people to take part and which of these we have found to be most successful at FreshNetworks.

1. Pay people to take part

We’ve discussed incentives in online communities before and the simple truth is that if you are building an online community that is about long-term engagement and real dialogue then they don’t necessarily have the impact you want. Online communities are about social interactions and social dynamics. Once you pay people or incentivise them to take part (by giving them, for example, vouchers or entry into a prize draw for completing a minimum number of actions each month) you shift the member’s mindset from this social one into a market one. They make a judgement on what you are giving them and how much effort they are willing to expend for this. And the end result is typically that you don’t get the kind of involvement that you want. Some people may do slightly more, but these will be fairly transactional contributions. And you may even dissuade some people from doing as much as they would otherwise.

2. Feedback from the brand

There is a definite benefit in online communities to real feedback from the brand. You are not leading the online community but taking part in it alongside all of the other members. With this in mind you should take part and respond to people in your online community. Feedback is essential and an online community won’t work, won’t grow and won’t meet your objectives if you don’t take part. It should be seen as a normal part of community management, and the way that you reward people for their comments and contributions. They want to know you’re listening and responding so do this.

3. Using your brand’s expertise

Over and above the importance of listening and responding, there is a real power of using the expertise that is inside every organisation to give something back to your community members. All organisations are experts in something – you may be an insurance company that has a lot of information to help home-owners, or you may be a travel firm that has expertise in travel and making the most of your holiday. Whatever your brand and whatever your product you will have expertise that your customers can use. And there is real power in this. By putting yourself forward as experts you are giving people an insight into your brand and an opportunity to engage directly with you. By answering questions from community members, you are incentivising them within a social dynamic rather than giving them money and making their behaviours more transactional. And video brings all of this to life a lot more.

At the conference, I presented a video we have made to showcase how you can use expertise in a community, and you can see this here:

Social media in action – Using expertise in online communities

So our advice is simple. Don’t incentivise people with money or anything equivalent to this. Rather involve yourself in the community – give them feedback and leverage your internal expertise. It’s the best way to launch, grow and build a real online community.

Read all of our posts based on the Marketing 2.0 Conference here.

Some more reading

• What Socrates Can Teach You About Social Media (jessenewhart.com)
• The Business of Community Networking Conference (blogstring.com)
• The Community Golden Hammer (troysabin.com)

A number of speakers at the Marketing 2.0 conference (including myself) made analogies (explicitly or implicitly) to games or gaming when talking about their social media strategies. I think that this is a good analogy and very relevant to understanding what we do when we are building and managing online communities at FreshNetworks, and how to motivate people to take part in them.

Most social media strategies, and indeed most online communities that we build, hope to increase a consumer’s engagement with (and exposure to) the brand. This can often mean trying to increase the amount of time spend on site, or increasing the frequency and recency of visit. We see all three of these increase in our online communities (often quite substantially) when compared with other territories that the brand controls online. But to achieve this we need to offer the consumer something compelling, and to some extent enter into a game with them.

This may be in a very traditional sense, and some of the best online support communities that I know of are powered using a similar techniques to those you find in games. Rewarding those who give valuable answers to lots of questions with access to special parts of the site, new challenges to take part in and special avatars so that others can see their position. But in most other online communities this very overt application of gaming techniques would not be as successful. However, there is still much we can learn.

We want to engage people, increase the amount of time they spend with us and the benefits they receive. They want to be entertained, to share their thoughts, to learn and to be heard. To satisfy both sides we can take an influence from games and gaming:

• Provide people with new activities to do – Games are based on levels, when you complete one set of activities another opens up, keeping people involved and engaged. The same should be true in an online community. When somebody completes a task we should be providing them with something else to do. If they have uploaded a photo we should be showing them a forum discussion to tell us more, or a set of photos they might be interested in commenting on. We can show them something they might want to do and a new challenge to take part in.

• Reveal the community slowly – In a game, as people progress through levels the features available to them increase. In an online community, this approach is also successful; we don’t want people to see all that the community has to offer at once. They may be overwhelmed by the variety of things to do and it can be easier to release content and features more slowly to new members. But it is also good for members to feel a sense of discovery, to find new features the longer they spend on the site and to feel to some extent rewarded each time they come back.

• Allow people to play at their own level – Some of the best games are so successful because people can play at their own level. If they are expert gamers or just amateurs, they can enjoy and feel rewarded by spending time with the game. The same is true in an online community. Some people are never going to start a new conversation or propose a new idea. But they may want to vote for a video they like or answer a poll. Allow people to engage with the brand on whatever level is appropriate to them and allow them to benefit from this engagement, at whatever level it is.

• Make it fun – Games are fun and online communities should be too. They should be diverting and provide stimulation and excitement for those participating. When you’re building and managing you online community always ask yourself: how are we making this a fun place to be?

Read all of our posts based on the Marketing 2.0 Conference here.

Some more reading

• Digital Habitats: Stewarding Technology for Communities (beth.typepad.com)
• Social media and B2B marketing (nevillehobson.com)

Image via Wikipedia

There are many examples of big brands in social media (in fact you can find a whole range across different industries in our online community examples), but at the Marketing 2.0 conference in Paris it was great to hear some real case studies from the people behind these strategies and campaigns.

Two presentations that particularly stood out were from Scott Monty at Ford and Paula Berg from Southwest Airlines. Both have a strong history of customer engagement and have been, to some extent, pioneers in their use of social media and online communities. And both of their presentations were refreshing in terms of the information they shared. For me, four core themes came from what they said:

1. It’s about people not firms – social media is about people engaging with people, and firms that want to engage with them all also need a personal touch. You should put faces on the individual people who make up your brand and let people see and engage with them. Of course, from the brand’s perspective it is best to do this is a way that is sustainable even when the individuals leave the firm.
2. Make things public – social media is a about sharing and it provides a real platform for firms to share their knowledge and information. In fact, Scott Monty told us that Ford, as part of its social media strategy, shared with the public anything that used to appear on its intranet that was not commercially sensitive. This seems to be a great approach – social media and online communities are about openness and honesty. Brands who are open and honest will be most successful.
3. Connect with people where they are already – don’t make it difficult for people to find and connect with your brand. Rather provide them a route, a way to connect with you. As Scott Monty said “every obstacle we put in the way closes a distribution channel”. The best examples of social media marketing, and the best online communities also engage people where they are – be that on Facebook, YouTube, Twitter or blogs. They engage them and then provide an easy route for them to engagement.
4. Provide a place for people to go to – whilst engaging people where they are is important, you need to provide something for them to do once you have engaged them and the best examples of big brands in social media provide a place for these people to go to. An online community, web site or other activity that you drive people to where they can really engage with you on a site that you provide and where you benefit from the engagement as much as the consumer does.

Read all of our posts based on the Marketing 2.0 Conference here.

Some more reading

• Social Media Marketing: Time Trap or Opportunity Magnet? New Study Reveals the Answers (buildabetterblog.com)
• Big brands on Twitter (wheelontheweb.wordpress.com)
• Innovators in Social Media (businessweek.com)

Whether you use the Net Promoter Score or not yourself, you will undoubtedly have come across this ‘single number everybody needs to know’. On one level it is a calculation that takes into account how strongly people would be likely to promote your brand and returns a single score, expressed as a percentage. On another level, it is an entire approach to business and interacting with your customers that leads to the calculation of this score.

The score itself is what most people are interested in – the difference, expressed in a percentage, between those people who are very likely to recommend your brand and those people  and the beauty of it is that it can reflect the different levels of engagement and loyalty that customers feel to different types of brand. A luxury hotel chain, for example, should be expecting a Net Promoter Score of about +70%, an airline shouldn’t expect one higher than +10%, and a cable TV company needs to prepare for a score below -5% (yes, scores can be negative).

At the Marketing 2.0 conference we were lucky to hear from both Richard Owen of Satmetrix (the people behind the NPS) and Conny Kelcher from LEGO (a fervent user of the NPS). Both were able to highlight exactly what the benefit of Promoters is, in hard cash.

Conny’s example looked purely at revenue generated by the individual themselves, and clearly showed that Promoters spend more than Detractors and so it makes good business sense to improve your NPS. Looking at expenditure on LEGO, over the same time period customer spend was as follows:

• Promoters spent 208 Euros
• Fence Sitters spent 165 Euros
• Detractors spent 136 Euros

So, for LEGO, a Promoter will spend 53% more on their product than a Detractor.

Richard, quoting a study of network providers in the US, looked at this in more detail. He considered not just direct spend that the individual makes on the product, but the total contribution they make to the brand – including from recommending others (or indeed otherwise). When looked at like this, the average lifetime value for the network providers was as follows:

• Each Promoter brings an additional $693 in revenue
• Each Detractor is responsible for $1,495 in lost revenue

So the difference between a Promoter and a Detractor was almost $2,200. For Richard this showed that sometimes it can make business sense to buy your Detractors out of their contract with you. Overall it shows that Promoters are a category worth keeping and worth growing.

Read all of our posts based on the Marketing 2.0 Conference here.

Some more reading

• NPS is Growing Up (adaptivepath.com)
• Net Promoter Score: an operational tool to measure customer satisfaction (startuplessonslearned.blogspot.com)

Image via Wikipedia

One of the first speakers at the Marketing 2.0 conference in Paris was Conny Kalcher from LEGO, and if anything her presentation was an example of how good segmentation and really understanding your different consumer persona types can make a real difference to a successful social media strategy.

At LEGO, the core target is a young boy, and they group their customers into six groups

1. Lead Users – people LEGO actively engage with on product design
2. 1:1 Community – people whose names and addresses they know
3. Connected Community – people who have bought LEGO and also been to either a LEGO shop or LEGO park
4. Active Households – people who have bought LEGO in last 12 months
5. Covered Households – people who have bought LEGO once
6. All Households – those who have never bought LEGO

These six types of customers are defined based on the strength and depth of their relationship with the brand – from having no experience with the brand to being actively involved in it not just as a product but as a business. There are fewer Lead Users than there are Covered Households and when volume and closeness to the brand are combined like this it lends itself to neat segmentation of the marketing (and indeed the social media strategy).

Indeed LEGO uses a different approach for the top three segments than for the bottom three. This is the cut-off point at which customers become truly engaged. They are not just entering into a transactional relationship, but they actually care about the brand. LEGO uses social media to work with these three segments – from co-creating online with the Lead Users to engaging the Connected Community and 1:1 Community in online communities and social networks. These are, perhaps, the easiest and best people to engage and empower online and so the most efficient use of social media. They are the people LEGO wants to feel special, and the people they want to test new ideas and products with. They are also the people to keep engaged and close to the brand – the people who will spend most and be your biggest advocates.

Proper customer segmentation and persona profiling helps you to understand how your customers differ and how their needs differ. Social media and online communities let you treat different people in different ways and also to engage with them in the way they want to be engaged with.

Read all of our posts based on the Marketing 2.0 Conference here.

Some more reading

• Community Marketing: three things to do differently (thecustomercollective.com)
• Some brands will love the new Facebook (sharemarketing.wordpress.com)

Next week I’m speaking at the Marketing 2.0 Conference in Paris. A great two-day conference discussing and learning about the successful use of social media tools for marketing. From social networks to mobile marketing, online video to online communities, we’ll be hearing from some of the most experienced practitioners (both from agencies and clients) across Europe and beyond.

Last year, I attended and particularly enjoyed the sessions about building a blogging culture at Nokia, why word of mouth is an outcome and not a strategy and best practice ideas in word of  mouth marketing. This year, the agenda is again packed with some great speakers and sessions. With the exception of my own, the ones I’m most looking forward to are:

• Conny Kalcher from Lego talking about why social media is important for brands – in particular understanding more about how Lego use customer segmentation to enhance the insight and innovation they get from their online communities
• Rolf Skyberg from eBay talking about the lessons learnt from running their disruptive innovation team – and how social media impacts on and inputs into product development
• Simone Brunozzi from Amazon on cloud computing and marketing 2.0
• Nicolas Beauchesne from YouTube and Frederic Bellier from DailyMotion on how to market and position brands in online video
• Rashmi Sinha from Slideshare presenting a case study on sharing content in a B2B environment
• Tony Pham from Slide and Stefan Lechere from Netvibes on using widgets and personalisation to help empower brand advocates

I’ll be blogging next Monday and Tuesday from the event and you can find all our posts at Marketing 2.0 2009,

Last year we reported on the 2008 Marketing 2.0 conference in Paris, this year we’re returning to Paris for the 2009 conference and this year we’re speaking. The Marketing 2.0 conference is a high-paced two days discussing the latest developments, case studies and thinking in social media and word of mouth marketing.

I will be speaking about using online communities specifically as engagement tools. Presenting some examples of how we have helped brands to engage their customers (or their target customers) and concentrating on ways in which you can leverage the expertise and knowledge that sits inside any brand to build this type of engagement. Sharing this expertise with your customers and using it to

1. engage them in a way you haven’t before and make them feel part of the company
2. position the brand as thought-leaders in their space
3. reward customers for their loyalty

Online communities are a great way to engage customers, and they let you extend the brand experience that they have. You may just manufacture an FMCG product, but by leveraging the expertise inside your firm and offering this to your customers using online communities you are offering them a real service. It’s not about marketing to them it’s about engaging them.

More on this in Paris later this month.

Marketing 2.0 Conference, Paris, March 30-31

Alongside FreshNetworks, a wealth of great speakers are on the agenda for the conference,  including:

• International brands with great stories to tell, including Lego, Virgin, Nokia, Ford, Nike and L’Oréal
• Social media players, including Facebook, YouTube, Amazon, Ebay, MySpace, Netvibes, SlideShare, Dailymotion, JustinTV, SixAppart and Slide
• And analysts from firms, including Forrester, Crispin Porter + Bogusky, Critical Mass, Edelman and pourquoitucours

For more information about the conference click here.

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Some more reading

• The Most Innovative Companies in Advertising & Marketing (scotttesta.com)
• Une conférence sur le Marketing 2.0 le 30 mars prochain à Paris
• Marketing 2.0
• Marketing 2.0 et réseaux sociaux