The way consumers spend is changing – they are more knowledgeable, demanding and have more choices. It stands to reason, therefore, that marketers need also to adapt. However, the reality is that the way most companies market themselves and their offerings simply does not connect with the way most people learn about new products and make decisions to buy. Consumers are increasingly ignoring corporate communications and relying instead on the experiences and recommendations of friends, family, co-workers, and online peers. This is corroborated by a Nielsen Global Online Consumer Survey which found that recommendations from personal acquaintances and online consumer reviews topped the trust list for more than 25,000 consumers from 50 countries. In fact, ninety percent of consumers surveyed said they’d trust recommendations from people they know.
It stands to reason, therefore, that a customer who consistently influences the purchases of 5 to 10 friends and co-workers has a higher value than one who spends more individually but has little or no influence on others [see box out B for an example of influencers in action].
Who Are Your Influencers?
Marketers, understandably, put a lot of energy into identifying their most influential customers. It seems obvious that the “hyperactive” customers—those with the largest online following and friends networks—would sit at the top of the list. The reality, however, is that these customers are not necessarily any more influential in swaying the purchase behaviour of their networks than those with smaller networks and softer voices. Pursway’s work with a large European mobile operator showed that only about 20% of so-called “Alpha” users (a highly connected person that acts as a hub for their social network) were truly influential in driving purchase behaviour. At the same time, the customers who were actually the most influential in driving purchase behaviour by other customers rarely showed up among the most connected.
In fact, it is a different subset of customers that truly serves as the “everyday influencers,” with much greater impact on peer purchase behaviour. These influencers are already in your customer base – you just need to pinpoint them and start nurturing your relationship with them.
For all the talk about influence networks, viral marketing, and word of mouth, the reality is that it’s not easy to identify the true influencers for specific customers, never mind figuring out how to connect with these influencers once you’ve identified them. Typical market segmentation tools are irrelevant as influencers don’t conform to standard behavioural characteristics or demographics. They’re not predominantly male or female, young or old; in fact, for each purchasing decision people will often be influenced by different influencers
A Needle In A Haystack
Firstly, no one said it was going to be easy but even needles can be found if you use the right tool. When looking for influencers, rocket science is particularly useful!
Traditional CRM programs typically view each consumer in isolation, failing to capture the social sphere that affects their behaviour. A new approach, Influencer Marketing Management (IMM), is beginning to emerge :
Step One – Focus on the Influencer :
Accurately identifying purchase influencers in the first place is the foundation of the approach. Within your customer base is a group of some 7–15% that serve as opinion leaders for each product or service type. Each of these opinion leaders typically influences actual purchase behaviour of 3-10 followers—which means that identifying and succeeding with the influencers can ultimately affect your entire business.
Step Two – Focus on Transactions :
Focus on actual transaction data since that is where real influence happens (and this is where the rocket science comes in…). Analysing millions of transactions to uncover patterns of influence is not easy, but it is possible with the right approach and the right algorithms. For example, analysing purchase histories can uncover patterns that reveal meaningful social connections. For instance, two people shopping at the same time in the same store could be a coincidence, but if the same two people also shop at the same time in a different town, you start accumulating evidence for a social connection between them. Once you find enough similar patterns, you can be confident that there is a real social connection between the two shoppers. The next step is identifying which is the influencer and which is the follower, which can be determined by overlaying behavioural data on top of the social connections. Crunch enough data with this approach and you can determine influence patterns with extremely high conviction (>99.95%).
Step Three – Focus on the Story, not the payoff :
When marketing to the influencers, it is important to remember that the more meaningful payoff is in their ability to cause others to follow, not the amount they shell out of their own pockets. What motivates influencers to tell a good story is related to their emotional connection to the brand, so things such as a price break or free product aren’t effective and in fact, may backfire, as the followers will expect similar incentives. Programs that create positive emotional experiences—such as ”be the first to know”, high touch personal contact, and early access to new products and services—are far more effective in turning influencers into advocates.
Step Four – Measure what counts :
Turning Influencer Marketing from a soft and fuzzy aspiration into a measurable marketing discipline requires a focus on the metrics that the CMO can take to the boardroom. Counting tweets and “followers” may be an interesting exercise, but what really matters is whether targeting the influencers moves the needle when it comes to top line and bottom line business results.
Once you have this insight focusing on the right customers with the right marketing activities and tracking the right metrics will achieve game-changing results far beyond the incremental improvements possible with the best of CRM. Particular issues can be identified and targeted, for example churn rates, as was the case for Cellcom Networks, “We were able to use Pursway’s social network technology to increase churn prediction and consequently prevention by a factor of 10.” Explains Adi Cohen, VP marketing, Cellcom Networks.
When done right, rather than simply sway the behaviour of those targeted by a given marketing campaign, IMM can leverage the viral power of opinion leaders to generate multi-fold increases in marketing impact over their entire social sphere. Companies typically realise anything between 5x to 10x improvement in marketing ROI as they’re able to magnify the reach and effectiveness of customer acquisition, cross-sell, and retention efforts following investment in IMM.
And that’s it, that’s the secret. By identifying, understanding, and cultivating the energy of its advocates, companies can harness the power of viral marketing, reach customers and prospects that might not otherwise be reached, and strengthen long-term customer loyalty.
Box Out : A
“A single influential customer has the ability to reach almost as many impressions as traditional marketing outlets, but with greater trust and targeted relevancy. Marketers not tapping into this resource are missing a chance to add to their tool boxes, expand their reach, and improve relevance.” Source : Defining Influence as a Strategic Marketing Metric, Forrester Research, Inc., December 2009.
Box Out : B How Influence Networks Work : Ran’s Experience
I used to select an airline based on where I wanted to go and which airline could take me there. Then, several years ago, I needed to visit Germany with my colleague, Yvonne, who insisted we flew Lufthansa, widely respected as one of the world’s great airlines, and known in the CRM world as a leading edge example. Having enjoyed the experience, it became my airline of choice too.
Nothing much happened for about a year while I racked up the miles, but Lufthansa was carefully watching my behaviour. Then, stumbling into the gate late one night, I received a great surprise: I checked in with my boarding pass and received back a brief note explaining that I had been upgraded to business class. I hadn’t made any request; the airline just decided to reward an apparently loyal and lucrative customer.
Since then, I’ve had the same experience several more times. Does this make me more loyal to Lufthansa? Of course! Who wouldn’t respond positively to a great customer experience and a thoughtful, caring provider.
My Lufthansa experience is nothing new for great CRM practitioners. Many sophisticated consumer brands have taken to heart the idea of rewarding their big spending customers.
But what makes me so deserving of special treatment? The reality is Yvonne would be a more deserving recipient of my special treatment however, because she rarely travels she is yet to receive a thank you. Let’s hope it doesn’t come too late for Lufthansa.
Ran Shaul discusses this topic further in his ebook, “The Influencer Marketing Revolution”
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