You’re at a party. The music is great – just your vintage – and you’re catching up with friends you haven’t seen for ages. All in all, you’re having a great time.

A group of you are chattering away (in the kitchen, naturally) when someone you don’t know sidles over. He interrupts a fascinating line of discussion to introduce himself – Tom – and within 30 seconds you know that Tom works in real estate. Or maybe he sells used cars or insurance. Thirty seconds more and he’s telling everyone his personal views on the best deals he can get, just for you. You move away quickly, scarcely bothering to remain polite. “Who invited that jerk?” you mutter to anyone who will listen.

Now you know how Facebookers felt when founder Mark Zuckerberg suddenly opened the doors of his magic kingdom to hustlers, peddlers, gypsies, tramps, thieves and admen last November via Facebook Beacon, an ill-conceived application that trampled on users’ right to privacy in the quest for marketing revenues. Cue consumer revolt and hasty corporate backstep.

The Facebook example is noteworthy because the site is one of today’s Web 2.0 poster children, enabling consumers to connect with each other easily – and at no cost. The implicit tradeoff – free services, in return for permission to market to users – turned out to be a one-way transaction. Permission wasn’t to be presumed, after all – and that pretty much sums up the issue with which marketers need to wrestle in this 2.0 world.

The Web 2.0 term itself was coined in late 2004 by one Dale Dougherty, O’Reilly Media executive, to proclaim a fresh new life for the web, arising phoenix-like from the ashes of the dot-com flameout of 2001. That initial label made sense in the context of the times, but the concept was quickly co-opted to define a whole new breed of products and services – bigger, faster, stronger. If Web 1.0 was all about providing information (one to many), Web 2.0 has become defined by interaction (one to one and/or many to many). I am consumer, hear me roar, in numbers too big to ignore.

There are many different views today as to what constitutes Web 2.0. For the purposes of these musings, we’ll confine ourselves to talking about the topic as it pertains to (a) user-to-user connectivity through the likes of social networks, instant messaging and discussion forums; and (b) user-generated content such as blogs, wikis and rating & tagging services (eg product reviews, digg, del.icio.us).

User-To-User Connectivity: Here Be Dragons

Sorry to be the bearer of bad tidings, but when users are talking amongst themselves, they don’t particularly want to hear from you (or from any other marketers). Unfortunately, wherever people gather, the Toms of this world aren’t far behind, shamelessly flogging their wares and looking to make a quick buck. Such blatant opportunism – and appalling manners – has queered the pitch for all of us.

Bob Liodice, CEO of the US Association of National Advertisers, described as last year’s most important marketing transformation that “Marketers will abandon their historic ‘command and control’ model of brand building in favour of a truly interactive dialogue with consumers.”

It’s a good thought, but it’s not quite as easy as that. Consumers don’t often want to dialogue with us marketers, except on their own terms, at times of their own choosing. And they really, really don’t want to be interrupted or ambushed by intrusive advertising. Save it for the old media.

So how should marketers behave in social environments such as Facebook or its competitors?

Same party, different attitude. Tom joins your little group, but this time he listens to the war stories being told. He may venture a comment or two based on what’s just been said, but he stays on topic and doesn’t try to hijack the conversation or flog his particular hobby horse. Eventually someone will ask Tom what he does. Says he’s in real estate, doesn’t go overboard. Those of you who could use some specialist knowledge toss a few questions at Tom, to which he responds graciously, giving out free advice that’s useful and not self-serving. You ask Tom for his card. Whatever business may arise out of the chitchat can be transacted later, in a much more appropriate environment.

The required behaviour for marketers in online discussions is both straightforward and timeless, regardless of the fancy new technologies involved. In fact, it’s difficult to go past the advice offered by the legendary newspaper columnist Emily Post (the Oprah Winfrey of her day) in her 1922 “Etiquette” classic guidebook: “Ideal conversation should be a matter of equal give and take, but too often it is all ‘take’. Above all, stop and think what you are saying! This is really the first, last and only rule. If you ‘stop’ you can’t chatter or expound or flounder ceaselessly, and if you ‘think’, you will find a topic and a manner of presenting your topic so that your neighbour will be interested rather than long-suffering.”

Say no more.

User-Generated Content: Talking The Walk

If you’re a marketer, what’s worse than not being talked about? Being talked about in a less than flattering manner. And if there’s one thing that Web 2.0 technologies do supremely well, it’s enabling consumers to do as much talking as they want.

Until recently, disgruntled consumers had few outlets to express their grunt. Letters to newspaper editors would make it to the printed page only for truly significant issues. Perhaps chatshow radio would air the issues – until the host cut the discussion short for a commercial break or an upcoming news bulletin. Beyond such resource-limited possibilities, picketing outside the offending company’s premises was about all that was left for the grumpy and dissatisfied.

If your customers want to talk about you today, it’s dead easy. All they have to do is whip over to Wordpress.com and set up a blog. Or twitter mercilessly. Or post a rant on YouTube. Or flame you on your own product pages on Amazon. Or just tell all their friends by email, IM or via the social network du jour.

There’s an old saying that happy customers tell two people while unhappy customers tell ten about their woes. That mathematics just got blown out of the water by the exponential power of today’s tattletale-ing tools. Case in point: blogger Jeff Jarvis achieved fame far beyond the blogosphere as a result of a series of blogs (now collectively known as “Dell Hell”) which began on June 21 2005 thus:

“Dell lies. Dell sucks. I just got a new Dell laptop and paid a fortune for the four-year, in-home service. The machine is a lemon and the service is a lie.”

(Read the rest of the original post and prepare to cringe).

Google “Jeff Jarvis” and “Dell Hell” and you’ll note 5,660 results. Google “Dell Hell” on its own and watch the number of mentions climb to 42,500. A few more than ten.

What’s at stake? Not just bad publicity. A 2005 analysis by the London School of Economics and Political Science (LSE) and The Listening Company found that both word of mouth advocacy and negative word of mouth were statistically significant predictors of annual sales growth:

• Companies enjoying higher levels of word of mouth advocacy, such as HSBC, Asda, Honda and O2, grew faster than their competitors in the period 2003-04.
• Companies suffering from low levels of word of mouth advocacy and high levels of negative word of mouth, such as Lloyds-TSB, Sainsbury’s, Fiat and T-Mobile, grew more slowly than their competitors.

Overall, the LSE study concluded that companies with above average positive word of mouth and below average negative word of mouth grow four times as fast as those with below average positive word of mouth and above average negative word of mouth.

The LSE report identified eight distinct techniques for optimising word of mouth advocacy:

GROWTH BY ADVOCACY TOOL #1: REFERRAL PROGRAMS
The most elementary solution for optimizing customer advocacy levels is to put in place a referral program that rewards existing costumers for recommending new customers. Also known as customer-get-customer, introduce-a-friend or member-get-member schemes, referral programs offer cash or gift incentives to satisfied customers who become word of mouth advocates.

Whilst such initiatives are typically associated with subscription services, such as the original ‘Friends and Family’ referral scheme for US telephone operator MCI in 1991 that generated 10 million new subscribers in less than two years, referral programs can also work for consumer packaged goods. For example, Unilever ran an effective referral program in 1998 for its Dove soap brand. The scheme involved allowing existing Dove users to order a free Dove gift pack of soap and vouchers for a nominated friend, in return for which they too would receive a Dove gift pack.

Psychologically, rewarding both the referrer for referring and the ‘referree’ for being referred was powerful because it gave the referrer an excuse to refer not based on self-interest. In terms of stimulating growth, this ‘Share-a-Secret’ referral program as it was known was a success – contributing to a 10% increase in Dove’s market share.

GROWTH BY ADVOCACY TOOL #2: ‘TRYVERTISING’
A relatively new marketing term, ‘tryvertising’ (a combination of ‘try’ or ‘trial’ and ‘advertising’) is a twist on product sampling. The idea is that rather than provide free samples or trials to anyone in a target market, tryvertising involves sampling on a selective and exclusive basis to lead users – ideally with new products or services before they become widely available. The goal is to both remove the price barrier to trial, and to use exclusivity and scarcity to turn the ‘privileged’ trial participants into advocates who then showcase the innovation to others. In the technology sector, this is the hard-nosed commercial principle behind ‘beta-testing’, turning lead customers into advocates by giving them sneak peeks of new yet-to-belaunched products.

Fashion brands also use tryvertising initiatives to drive growth by inviting trendsetters to participate in exclusive trials. For example, the BCBG fashion brand recently ran a successful tryvertising campaign to launch their new fragrance BCBGirl. The campaign involved sending teen trendsetters a pre-launch bottle of the perfume, along with 100 samples each to share with their friends. In cities where this advocacy-by-tryvertising initiative was run, BCBGirl shot to the bestselling spot on the week of its launch.

GROWTH BY ADVOCACY TOOL #3: EMPOWERERED INVOLVEMENT
Empowering clients, customers and consumers to call the shots on new packaging, advertising, or even new products and services, is an advocacy generating tool that harnesses a powerful psychological phenomenon known as the Hawthorne Effect. The Hawthorne Effect, named after Western Electric’s production facility in Hawthorne, near Chicago, where the effect was first identified by researchers at Harvard in the 1930s, turns market research participants into advocates by making them feel they have had a say in how a product, service or initiative is rolled out. In plain English, the Hawthorne Effect is simply the “I did that” effect, the consequence of being asked one’s opinion and seeing it acted upon. Think Big Brother/American Idol where audience participation empowers viewers to vote participants off the show.

The Hollywood studio DreamworksSKG uses empowered involvement to create word of mouth advocates, and recently doubled teen attendance for a movie by allowing its target audience to vote on and choose the title of the movie in a web poll. Web polls, SMS votes and other innovations in personal communications technology mean that empowered involvement has become a fast, scalable and cost-effective solution for creating advocacy – and thereby stimulating growth. For example, Procter & Gamble use online voting to give consumers the final say in which new product variants should be launched, such as new flavours in the Crest toothpaste range.

The impact on growth of such advocacy-by-empowerment initiatives appears to be impressive: Crayola, the crayon brand, reported a jump in sales when they allowed consumers to vote on the name of new crayon colours, whilst Tremor, an online US-wide customer empowerment panel with some 250,000 members set up in 2001 and working with brands such as Sony, AOL, Toyota estimates the sales uplift effect of empowered involvement initiatives to be 10-30%.

GROWTH BY ADVOCACY TOOL #4: BRAND AMBASSADOR PROGRAMS
A fourth way of transforming customers into advocates is to invite highly valued and satisfied customers to become brand ambassadors. Brand Ambassador Programs work by giving chosen customers special privileges both for themselves and to share with their friends. These privileges may include exclusive offers, special invites, and sneak peeks of new products or inside scoops of brand news. The idea is to give the Brand Ambassador materials that help them promote the brand. For example, L’Oreal, O’Neill, Siemens and Unilever all run Brand Ambassador Programs that involve providing brand fans with their own sets of personal contact cards featuring brand artwork on one side and personal contact details on the other. As well as making Brand Ambassadors feel like privileged ‘insiders’, part of the brand family, the cards can contain a special privilege code – allowing them to share exclusive promotions with their friends and colleagues.

GROWTH BY ADVOCACY TOOL #5: CAUSAL CAMPAIGNS
A fifth tool for unlocking growth by customer advocacy is to adopt a good cause as a strategic positioning and marketing tool that appeals to existing and target buyers. Adopting a good cause not only increases sales directly by providing an additional ‘reason to choose’, such as Nike’s sponsorship in 2004 of the Lance Armstrong Foundation for cancer research and education, but also gives existing buyers a compelling ‘reason to recommend’. The impact on sales can be dramatic.

For example, when Persil paired with Comic Relief, sales increased by 13%, and when BT partnered ChildLine, signups for its new voicemail service increased 25%. In the US, when American Express pledged to donate a penny to the restoration of the Statue of Liberty for every transaction made by its cardholders, use of American Express cards in the US increased by 28% and new users increased by 17%. By sponsoring a good cause, businesses can mobilize their customers and create a volunteer sales force with a compelling motive to evangelize.

GROWTH BY ADVOCACY TOOL #6: INFLUENCER OUTREACH
Not so much a tool per se as a strategic approach to targeting, where instead of targeting the mass majority directly, the focus is on influencing the influencers – who then influence the majority by word of mouth.

Influencers, the preferred label today for ‘opinion leaders’, are the 10% of any target market who frequently offer and are elicited for category-related advice by friends and colleagues. They are the friends and colleagues we turn to for advice when choosing a new product or service.

As a group, influencers/opinion leaders were first identified in the 1940s in a landmark study by Columbia University on media influence. The study found that most people were relatively immune to direct mass media influence, but were influenced indirectly by people they knew and whose opinion they trusted. These influencers were dubbed ‘opinion leaders’ – and it was subsequently found that these opinion leaders, unlike the mass majority, were influenced by the mass media and other marketing initiatives. Thus was coined the term ‘two-step flow’ of influence – influence the influencers who then influence the masses by word of mouth.

Influencer outreach programs involve identifying influencers in a target market (using influencer screeners), and then engaging them with tools from the advocacy toolbox to transform them into word of mouth advocates. For example, 3M targeted influencers for its Post-It Notes brand; 3M invited secretaries to CEOs to have a say in how the product should be commercialized, and in doing so created an army of influential word of mouth advocates. After a failed mass market launch, 3M’s influencer outreach program turned around a doomed product with languishing sales, and through word of mouth advocacy made it America’s 5th largest selling office-supply product.

GROWTH BY ADVOCACY TOOL #7: ADVOCACY TRACKING
By monitoring advocacy levels through the Net Promoter Score [a measure of those who would recommend your product to their friends] for products, services and customer-facing departments, businesses can identify what they are doing right and where there is room for improvement.

For instance, Enterprise Rent-A-Car tracks net-promoter scores across its 5,000 plus branch network in the US. Using a simple customer feedback form, the business identifies high performing and high improvement outlets, learns from what they are doing right, and can focus resources on problem branches. To underline its commitment to customer advocacy, Enterprise Rent-A-Car links compensation and staff promotion to advocacy rates. Other brands, including the Siemens Mobile, run online advocacy trackers to track word of mouth, positive and negative, in forums, blogs, and consumer review sites, using the tracker as a diagnostic tool for product enhancement, innovation and as a planning tool for future marketing campaigns.

Apple, tracking early word of mouth for its iPod digital music player, picked up negative buzz around the product’s battery that was difficult and costly to replace. The problem was quickly amplified when a couple of disgruntled iPod owners made a video clip called ‘iPod’s Dirty Secret’ and posted it on the Internet where it was seen 1.4 million times. By listening to the bad buzz and by acting upon it – correcting the product weakness through innovation – Apple was able to avert a major PR disaster.

GROWTH BY ADVOCACY TOOL #8: INNOVATION
Ultimately, clients, customers and consumers will recommend a product or service when it is worth recommending. No amount of advertising hype or spin is likely to generate sustainable advocacy; Just as advertising works when you have something worth advertising, advocacy will drive growth when you have something worth advocating. This means that the key to driving growth through advocacy is innovation.

Using the psychology of word of mouth provides a useful handle on how to innovate advocacy-worthy products and services. The key here is to have a product or service that delivers an experience that exceeds expectations because we only tend talk about things that are at odds with our expectations. In other words, product-talk is triggered when the product either exceeds or falls short of expectations.

In practice, what this means is that driving growth through advocacy means identifying the expectation-priorities of a target market – as opposed to needs or satisfaction – and delivering experiences that exceed those expectations.

By identifying where customer expectations can be profitably exceeded, and then by focusing new product or service development in these areas, businesses have the opportunity to hardwire customer advocacy into innovation.

Making Web 2.0 Work For You

You can’t stop people talking. But you can listen. And you can respond thoughtfully, taking note of their concerns. And move to fix the problem, fast. Because if the situation has reached the point that people are blogging negatively about you, it’s not just your marketers who are behaving badly.

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