How brands and businesses         can prosper in a digitally         connected worldSOCIALCURRENCY  2012                  ...
Our cover design organizes people in a chain around the globe, illustratinghow social currency is a global concept. The va...
Letter from VPG’s Chief Executive OfficerErich Joachimsthaler, Ph.DVivaldi Partners Group Founder and CEOWhat a difference...
Letter from VPG’s Chief Executive OfficerIn the following pages, you will find a snapshot of our   In Section 5, we will s...
AcknowledgementsThere is no easy way to acknowledge everyone who has contributedto this report. We are lucky to be a part ...
Table of Contents      Introducing the Concept of Social Currency // 7      1 - The NEW Social Currency Paradigm of Buildi...
Introducing the Concept of Social CurrencyUnderstanding Social CurrencySix Dimensions of Social Behavior                  ...
“In the long history of humankind (...) thosewho learned to collaborate and improvisemost effectively have prevailed.”    ...
2009                                We first launched the Social Currency Study    2010                                   ...
→                                                                                                  →                      ...
Six Dimensions of Social Currency, the “Social Sixes“Through a study with thousands of customers, we identified six typeso...
Defining the Six Social Behaviors that Drive Social Currency       1           UTILITY                 Derive value from e...
Assessing the impact of Social Currency          At the customer relationship level, we look at the impact of Social Curre...
Assessing the Impact of Social CurrencyFrom a broader perspective, we look at the response and impact of Social Currencyon...
The Social Sixes are enabled through numerous socialtechnologies and applications deployed by brands and businesses:      ...
ADVOCACY      Illustrative Examples:              Audi A8 targeted design, luxury, technology, and automotive influencers,...
Underlying the Six Dimensions of Social Currency is a well-knownshift towards the new customer environment of today  OLD  ...
Vivaldi Partners Groupconducted three new studies over the course of the last six months  1                               ...
Results of the Global Consumer study across three countries          UNITED STATES                                        ...
The scope of the Global Consumer study covers 19 industries                                                  ADVOCACY     ...
There are huge differences across industries and categories          AUTOMOTIVE                                           ...
Impact of Social Currency on Brand EquityThe study shows that Social Currency has significant impact on brand equity      ...
Results from Analyzing the Social Currency Initiatives in the SC 100+ Our research into the best practices of brands and b...
Our Conclusions:The new social and digital technologies have changed and will continue to change customer behaviorprofound...
The NEW Social Currency Paradigm of Building Strong Brands and Businesses                                                 ...
“If you don’t like change, you’re going to like irrelevance even less.”                              GENERAL ERIC SHINSEKI...
Most firms today approach their business from one of two inside-out paradigmsOne is the Product-Benefit Perspective:  HOW ...
Another is the Consumer-Needs Perspective:                          CONSUMER-NEEDS PERSPECTIVE  HOW RELEVANT  THE OFFERING...
We believe these two traditional perspectives are limited in today’sdigitally connected world, because they are based on a...
We believe companies need to adopt a new perspective and mindset!What if companies see the world from the outside-in, from...
Case Study:What if we solve the problems, challenges, frustrations, and points of pain for customers?Deeply Understanding ...
A Social Currency Perspective changes the roleof businesses and brands in creating value to customers    INSIDE-OUT PARADI...
Social currency provides a new perspectiveon how to build brands and grow and evolve businesses   It views customers as in...
Impact of Social Currency: Different Across Industries and CategoriesHealth careSportswearMedia                           ...
“The greatest danger in times of turbulenceis not the turbulence; it is to act with yesterday’s logic.”                   ...
Social behaviors affect all industries with the new outside-in logicand the impact of new technologies. I.e., health care:...
SANOFI-AVENTIS aspires to become the world leader in diabetestreatment by helping to improve the lives of people living wi...
Or take the sportswear category as it evolves towards health and lifestyle  From                                         T...
NIKE+:Helping to achieve fitness/health goals by living by the numbersINSIGHT:•	 Helping people set daily goals and measur...
The evolving media environment illustrates howindustries are affected by the new social technologies    Adapted from Imran...
For additional examples of our research, consider:                       All examples can be found on vivaldipartners.com/...
Our Conclusions:1   The new social technologies have a profound impact on the                               SOCIAL IMPACT ...
Breaking Down the Traditional Value ChainBurberryGlaceau’s Vitamin WaterBombardierPebble                                  ...
“Insanity: doing the same thing overand over again and expecting different results.”                               ALBERT ...
While Zara has found retail successby optimizing the traditional value chain ...       Traditional Value Chain            ...
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
Vivaldi Partners Social Currency 2012 Brand
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Vivaldi Partners Social Currency 2012 Brand

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Brands in the digitally connected world, social media, social technologies, business strategy, and innovation

Update on Feb 2014: Check out our newest report on the "Always-On Consumer" 2014 here: http://www.slideshare.net/vivaldipartners/alwayson-consumer-2014-report-by-vivaldi-partners-group

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Vivaldi Partners Social Currency 2012 Brand

  1. 1. How brands and businesses can prosper in a digitally connected worldSOCIALCURRENCY 2012 Research Partner: 1
  2. 2. Our cover design organizes people in a chain around the globe, illustratinghow social currency is a global concept. The value of social currency liesin the connections between people, and people to brands and businesses.The changing tones of the colors symbolize the ebbs and flows of socialbehaviors and social processes that drive value for those businesses and brands.Learn in this report how to build and leverage social currency and profit from it. 2
  3. 3. Letter from VPG’s Chief Executive OfficerErich Joachimsthaler, Ph.DVivaldi Partners Group Founder and CEOWhat a difference two years can make! When we We believe we are entering a new era of developmentsfirst defined social currency as the degree to which in the evolution of the digital revolution that beganconsumers share a brand or information about more than 20 years ago. The proliferation of mobilea brand with others, little could we have imagined computing devices and the new social technologieshow important social technologies, social media, combine to unleash unimaginable opportunities forand social networks would become. people to improve their lives.The research we conducted with consumers in early This alters consumer behaviors forever. Customers2010 showed that social media can help to drive brand are evermore empowered, enabled, and know how toequity, realize price premium, and increase loyalty. make use of these technologies to engage or connectOver the past two years, there have been significant with brands and businesses.technology changes and widespread adoption of thesetechnologies by brands and businesses. Marketers In our opinion, an entirely new vision and plan ishave used these developments: required to harness and capitalize the power of these 1) to amplify advertising campaigns technologies. In order to provide senior executives with 2) to create conversations on social channels guidance in this evolving digitally-connected world, we 3) to build communities of influencers to connect conducted several new studies with customers in the with consumers or customers U.S., Germany, and the U.K. involving over 60 brands and businesses. We researched several hundred digitalSome successes of these efforts are shown in the and social initiatives.latest award ceremonies of major industry groupsand case studies of advertising agencies, as reportedby trade press.But today, it is also clear that using these newtechnologies merely for these three purposes moreoften underwhelms and disappoints. 3
  4. 4. Letter from VPG’s Chief Executive OfficerIn the following pages, you will find a snapshot of our In Section 5, we will show how the new socialconclusions organized around several major sections: behaviors drive a new model of building brand equity, sales, and loyalty.In Section 2, we will introduce a paradigm-shifting This section explores social processes alongnew Social Currency model to build brands and the new Social Currency Wheel, an alternative tobusinesses. This new model departs from traditional the traditional brand funnel or customer decisionperspectives of creating competitive advantage. journey. For the first time, to our knowledge, ourWe conclude in this section that there is a new way work evaluates the impact of social behaviorsof doing business and building strong brands. of customers on social currency and three outcomes: consideration, purchase, and loyalty.In Section 3, we will explore the implications of thisnew model on industries and categories. We show We hope this report contributes to a deeperhow companies can adopt these new technologies to understanding and better knowledge of thechallenge existing strategies and business models in opportunities for businesses and brands.their industries. Vivaldi Partners Group’s global organization isWe conclude in this section that social does not just ready to help you and work with you to jointlyimpact communications or marketing, it impacts entire navigate your way into the exciting future thatindustries and categories – each in a different way. lies ahead.In Section 4, we explore how social technologies We are still at the early stages of these significantimpact the value-generating activities of the firm, changes. As Mary Meeker, a Partner of Kleiner,also known as the traditional value chain. Perkins, Caufield and Byers, remarked in her recentWe evaluate specific functions, including “State of the Internet” report:innovation, finance, design, and marketing. “The magnitude of the upcoming change will beWe conclude in this section that there is breakdown stunning – we are still in Spring training”in the traditional value chain. Social technologiesnow put customers at the heart of every step in thechain. In the extreme, this leads to a reconfigurationof the entire value chain. Erich Joachimsthaler @ejoachimsthaler 4
  5. 5. AcknowledgementsThere is no easy way to acknowledge everyone who has contributedto this report. We are lucky to be a part of a community of over 80extremely talented and smart consultants, strategists, designers,digital and social media experts at Vivaldi Partners Group.So many have helped along the way, from conceptualizing ourcompany’s thinking about brands, business, and social media anddigital strategy, to executing the research and surveys, to designingand producing the final report.This report benefited from the experiences and insights of all thepartners and consulting staff at Vivaldi Partners. They helped drawout the insights in how to build brands in the digitally connected world,and how the new technologies shape industries and categories.Our digital teams at Fifth Season worked diligently in collecting andanalyzing hundreds of applications of social technologies and socialmedia for brands. Their efforts in building the SC100+ site(www.vivaldipartners.com/vpsocialcurrency) have produced a powerfulresource for understanding how brands are built today.We would also like to thank our research partner, Respondi, whohelped in designing and executing the surveys across three countries.Respondi has been an excellent partner in researching consumers’perceptions and social behaviors around brands.Thank you!The Vivaldi Partners Group Digital Team 5
  6. 6. Table of Contents Introducing the Concept of Social Currency // 7 1 - The NEW Social Currency Paradigm of Building Strong Brands & Businesses // 25 2 - Impact of Social Currency: Different Across Industries and Categories // 34 3 - Breaking Down the Traditional Value Chain // 43 4 - Social Currency Wheel: the New Model to Drive Consideration, Purchase and Loyalty // 53 What Now? // 71 Brands Studied in the Social Currency Survey 2012 // 74 SC100+ Social Currency Initiatives // 77 End Notes // 79 Appendix // 84 6
  7. 7. Introducing the Concept of Social CurrencyUnderstanding Social CurrencySix Dimensions of Social Behavior 7
  8. 8. “In the long history of humankind (...) thosewho learned to collaborate and improvisemost effectively have prevailed.” CHARLES DARWIN /1809-1882/
  9. 9. 2009 We first launched the Social Currency Study 2010 at Vivaldi Partners GroupOur interest was to understand how consumersand customers relate to (or in the words of CharlesDarwin: “collaborate and improvise” with) brandsin the new digital and social world.We felt that as social networks, social media,and technologies spread, the world of marketingand building of strong brands would change.Hence, the need for the study. 9
  10. 10. → → → → → We defined Social Currency as: → the degree to which customers share a brand → → or information about a brand with others→ → → → → “Nike+ connects me to other runners” → → → → “I use Nike+“ “I love Nike“ → →→ → “Nike improves 75% of all information online is generated by individuals, according to my health“ @ a 2011 study by researcher IDC. This source of information directly from consumers is one of the largest and important that brands and businesses → have available to them to achieve competitive advantage today. 10
  11. 11. Six Dimensions of Social Currency, the “Social Sixes“Through a study with thousands of customers, we identified six typesof social behaviors of customers that underlie Social Currency C O N V E R S A T I O N I N F O R M A T I O N A D V O C A C Y I D E N T I T Y A F F I L I A T I O N U T I L I T Y 11
  12. 12. Defining the Six Social Behaviors that Drive Social Currency 1 UTILITY Derive value from engaging with brands and other people 2 Receive from and share with other people INFORMATION valuable information about brands 3 CONVERSATION Talk about a brand or business to others 4 ADVOCACY Promote or defend a brand or business 5 Connect and become a member of a community AFFILIATION of people that is linked to a brand or business 6 Express me, the brand, and my relationship IDENTITY with others to others For illustrative measures of these behaviors, please see the Appendix section 12
  13. 13. Assessing the impact of Social Currency At the customer relationship level, we look at the impact of Social Currency on three contingencies: Consideration, Purchase, and Loyalty SOCIAL CURRENCY WHEEL The SC Wheel assumes that customers follow very different paths towards Consideration, Purchase and Loyalty. These paths are influenced by the six social behaviors. IDENTITY UTILITY AFFILIATION INFORMATION For example, a customer might convert from merely 79% 38% 41 AW AR knowing about a brand to considering the brand among % 85 % ADVOCACY LT Y EN CONVERSATION a set of alternatives because he or she hears others advocating for the brand (see Advocacy at 57%). YA ES % % 46 LO S 90 to The six social behaviors explain how customers convert from to CO % ASECONVERSATION ADVOCACY one spoke of the wheel to the next spoke (or contingency). NSI 56% 57 PURCH DERATION In order to facilitate the interpretation of the results across brands, categories, and industries, we scaled the Social BRAND X 10 0 % 4 4%INFORMATION AFFILIATION Currency dimensions and assigned the highest value to 100. This allows the evaluation of the impact of Social Currency on Consideration, Purchase, and Loyalty for a brand in a 98% 43% UTILITY IDENTITY given industry or category. In this illustration, Brand X’s social initiatives primarily drive % 28 32 % IDENTITY 19 UTILITY the third spoke, Purchase to Loyalty conversion. % 28 % CO 3% 23% SEINFORMATION The social behaviors that influence the conversions NS A RCH are Information (100%), Utility (98%), Advocacy (90%), AFFILIATION ID E RATION to PU ADVOCACY CONVERSATION and Affiliation (85%). We will further elaborate and explain the SC Wheel in Section 4, page 55. 13
  14. 14. Assessing the Impact of Social CurrencyFrom a broader perspective, we look at the response and impact of Social Currencyon Brands, Businesses, Industries & Categories, and Marketing & Communications ES EGORI D CAT IMP N AC E SA T ON I TR US IDENTITY UTILITY BR AFFILIATION INFORMATION ND 79% 38% AN AW % 41 AR ON I 85 DS % EN Y ADVOCACY LT CONVERSATION YA ES % % 46 LO S T 90 to IMPAC to CO % ASE CONVERSATION ADVOCACY NSI 56% 57 PURCH DERATION 10 0 % 4 4% INFORMATION AFFILIATION S ATION 98% 43% UTILITY IDENTITY UNIC % 28 32 % IMP IDENTITY UTILITY 19 MM % 28 % CO AC SEINFORMATION 3% 23% NS HA CO AFFILIATION ID E RATION to PURC TO ADVOCACY CONVERSATION G& N US IN ET B IN K ES A R S NM T O IM PA C 14
  15. 15. The Social Sixes are enabled through numerous socialtechnologies and applications deployed by brands and businesses: Illustrative Examples:UTILITY Burberry makes videos of runways shoppable, inviting fans to order items from the new collections even before the fashion shows finish. The Gap worked with Groupon on a deal: $25 for $50 off at Gap. Over 441,000 coupons sold, giving existing or potential customers the benefit of group purchasing. Nike FuelBand gives consumers a way to measure physical activity throughout the day. It motivates users by awarding points and helps people live by the numbers.INFORMATION Fab.com provides members with information from their social networks to help in making online purchases. Sanofi Aventis’ iBGStar mobile app provides diabetics with information to analyze their glucose patterns over time and track eating and other activities. Best Buy’s Twelpforce turned Best Buy employees into customer service agents over social channels.CONVERSATION Old Spice creates conversations with Isaiah Mustafa’s videos on YouTube. Coca-Cola changed from its emphasis on “Creative Excellence” to “Content Excellence.” It asks consumers to engage in “dynamic story telling” that is relevant to its business, brand, or customer interests. American Express Small Business Saturday launched an initiative and engaged 103 million Americans in receiving $25 dollars when spending $25 dollars at a small business. 15
  16. 16. ADVOCACY Illustrative Examples: Audi A8 targeted design, luxury, technology, and automotive influencers, identified through Klout, and invited them to test drive. The influencers spread word to their large audiences. Cree LED Lighting Revolution launched a YouTube campaign of short videos that show success stories of people converting to LED lighting and also leverages efforts on Twitter and Facebook. AON, a corporate risk and insurance company, uses net promoter scores (NPS) to identify (positive) influencers, engages them in providing testimonials and case studies, and uses this customer-generated content across a wide range of social channels.AFFILIATION Sermo is the largest online community exclusive to physicians. It facilitates collaboration among 125,000 licensed physicians. Philips Innovation in Light community on LinkedIn is one of the largest B2B networks delivering community benefits to members (chats, information, connection, etc). Bombardier crowd-sourced design ideas through the YouRail contest. It created over 60,000 visitors, countless page impressions, and over 5,000 ideas.IDENTITY Coach uses Instagram to communicate its core values of classy, trendy, and luxurious. Detailed images translate these values into product design. Levi’s Girl created identity-building hype by asking female consumers to create a video about themselves and advocate why they manifest the brand. Louis Vuitton invited consumers to check-in at their new store on Bond Street in London via Foursquare. 16
  17. 17. Underlying the Six Dimensions of Social Currency is a well-knownshift towards the new customer environment of today OLD NEW Uninvolved Smart Gullible Discernible Trusting Questioning Ignorant In control Passive Vocal Obedient Informed Uninformed Self-reliant Subservient Media savvy Targeted Empowered Connected 17
  18. 18. Vivaldi Partners Groupconducted three new studies over the course of the last six months 1 2 3 How do the new social technologies What are the best and most successful What motivates people to engage impact the behaviors of people applications of social, digital, and mobile and disengage with brands around brands and businesses? technologies that drive social currency? and businesses on social networks? Global Consumer Survey Social Currency Initiatives U.S. Social Split-Up Study Respondents for each country 1,000 Consumers (no limits on gender or age): SC 100+ 5,000 Consumers 60+ Brands for each countryNote: For the U.S. Social Split-Up Study, refer to our blog: http://vivaldipartners.com/blog/ 18
  19. 19. Results of the Global Consumer study across three countries UNITED STATES GERMANY UNITED KINGDOM ADVOCACY ADVOCACY ADVOCACY 100 100 100 80 80 80 IDENTITY CONVERSATION IDENTITY CONVERSATION IDENTITY CONVERSATION 100 60 100 100 60 100 100 60 100 80 80 80 80 80 80 40 40 40 60 60 60 60 60 60 40 20 40 40 20 40 40 20 40 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 40 40 40 40 40 40 60 60 60 60 60 60 40 40 40INFORMATION 80 80 INFORMATION 80 80 INFORMATION 80 80 100 100 100 100 100 100 60 60 60 AFFILIATION AFFILIATION AFFILIATION 80 80 80 100 100 100 UTILITY UTILITY UTILITY The survey shows that U.S. consumers engage in social behavior with brands more than U.K. or German consumers. Conversation, Advocacy, and Identity score over 60 percent on average. Information, Utility, and Affiliation are above 50%. In the U.K. and Germany, all values average below 60 percent. In the three countries, Conversation is the social behavior most frequently driving Social Currency, but it is striking how Social Currency has been generated through much more than just conversation: the other dimensions are also very important. Note: Values are percentages, averaged over the survey items that measure each of the six dimensions of Social Currency 19
  20. 20. The scope of the Global Consumer study covers 19 industries ADVOCACY INDUSTRIES COVERED Promote or defend IN THE SURVEY a brand or business OVERALL 100 1. Airlines 2. Telecommunications 80 3. Automotive IDENTITY 4. Retail Banking CONVERSATION 100 60 100 5. InsuranceExpress me, the brand, 80 40 80 Talk about a brand or 6. Beerand my relationship 60 60with others to others business to others 7. Online retailers 40 40 20 20 20 8. Utilities 9. Gaming Consoles 20 20 10. Fashion 40 20 40 11. Credit Cards 60 40 60 12. Coffee 80 80 13. Fast Food INFORMATION AFFILIATION 100 60 100 14. Consumer ITReceive from and share Connect and become 15. Retailers (diversified) 80with other people a member of a 16. Smart Phonesvaluable information community of people 17. Hotel Chains 100about brands that is linked to a brand or business 18. Beverages UTILITY 19. Consumer Electronics Derive value from engaging with brands and other people 20
  21. 21. There are huge differences across industries and categories AUTOMOTIVE COMMENT: FASHION COMMENT: ADVOCACY Unsurprisingly, automotive Fashion brands and 100 brands emphasize ADVOCACY businesses have generally 100 conversation and advocacy underleveraged the potential 80 to create social currency. 80 of creating social currency. CONVERSATION IDENTITY These typical top-of- IDENTITY CONVERSATION There are exceptions in this 100 60 100 60 80 80 funnel efforts are where 100 100 group (as discussed later 80 80 60 40 60 most of the social media 60 40 60 in this report). The general 40 20 40 investment have apparently 40 20 40 reluctance of fashion brands 20 20 been allocated. As a 20 20 is temporary, and new high-involvement category, technology developments 20 20 20 automotive brands could 20 20 20 will significantly increase the 40 40 40 60 60 potentially lead far stronger 60 40 opportunities for this group 60INFORMATION 80 40 80 leverage across social INFORMATION 80 40 in creating social currency. 80 100 60 100 currency dimensions. 100 60 100 AFFILIATION AFFILIATION 80 80 100 100 UTILITY UTILITY TELECOM COMMENT: INSURANCE COMMENT: ADVOCACY Across all categories, ADVOCACY Insurance brands and 100 this group of brands have 100 businesses are low on social leveraged social currency 80 currency, similar to fashion 80 IDENTITY CONVERSATION opportunities well. Consumers IDENTITY CONVERSATION brands, but for different 100 60 100 clearly understand Telecom 100 60 100 reasons. Insurance is generally 80 40 80 as not only services, but 80 40 80 a low-involvement category 60 60 also to include devices like 60 60 relative to fashion and hence 40 20 40 smartphones. Our results 40 20 40 are typically less engaging. 20 20 20 suggest that as a group, 20 However, we see significant 20 20 there is participation in 20 opportunity to increase Utility 20 40 20 40 social media and technology 40 20 40 and Information dimensions. 60 40 60 applications but no 60 40 60 For example, other customersINFORMATION 80 80 outstanding-performing brands INFORMATION 80 80 are trustworthy sources of 100 60 100 that lead the telco category 100 60 100 financial information and AFFILIATION in creating a new model of AFFILIATION hence there is contribution that 80 80 connecting with customers social media and technologies 100 or of building brand equity. 100 can make in insurance and UTILITY UTILITY similar categories as well. 21
  22. 22. Impact of Social Currency on Brand EquityThe study shows that Social Currency has significant impact on brand equity BRAND EQUITY 53% AWARENESS ASSOCIATIONS LOYALTY QUALITY Liking: 34% Not measured in the survey Trustworthiness: 35% Authenticity: 33% 28% 26% Brand Equity, as conceptualized by Vivaldi Partners’ brand model and as measured by the price premium consumers are willing to pay, is strongly influenced by Social Currency (53%). Social Currency also drives key brand associations, including liking, trustworthiness, authenticity, loyalty (28%) and quality perceptions (26%).Note: Values are squared correlations multiplied by 100, meaning that values describe the proportion of variance in common between twovariables. Read as follows: 53% of the variation in brand equity and Social Currency is common, or 53% of the variance in brand equity can beexplained by Social Currency. 22
  23. 23. Results from Analyzing the Social Currency Initiatives in the SC 100+ Our research into the best practices of brands and businesses in applying these new technologies that drive Social Currency shows primarily three applications:Social Currency Initiatives Example: 1 AMPLIFYING Encouraging people to “like” a brand or business ADVERTISING on Facebook or building a base of Twitter followers CAMPAIGNS 2 SC 100+ CREATING Motivating existing customers with product CONVERSATIONS expertise to support a firm’s customer service 3 Building and maintaining an influencer BUILDING COM- community for a brand or business to support MUNITIES amplification of conversations 23
  24. 24. Our Conclusions:The new social and digital technologies have changed and will continue to change customer behaviorprofoundly. Today, all customer behavior is social. The main changes are: 1 There is a new emerging paradigm of how to do business and how to build strong brands. We call this paradigm the Social Currency Paradigm and we explore its fundamental premises in the next section. 2 Our research shows that most social initiatives have initially focused on marketing, customer service, sales, and communication functions. While there are successes, we believe the impact of social technologies can be far greater by holistically and comprehensively looking at how a business’ value-generating activities are changing, how categories evolve, and how industries configure. Social technologies change entire industries and categories – each in a different way. 3 We find that there is a breakdown in the traditional value chain. Social technologies now allow businesses and brands to put customers at the heart of every step in the chain. In the extreme, this leads to a reconfiguration of the entire value chain. We discuss these changes in more detail in Section 4. 4 We believe that businesses and brands must well understand the social processes that make customers share a brand or information about a brand with others – that is creating social currency. Social Currency drives consideration, purchase, and loyalty. Section 5 will provide more detail on a brand by brand comparison. 24
  25. 25. The NEW Social Currency Paradigm of Building Strong Brands and Businesses 25
  26. 26. “If you don’t like change, you’re going to like irrelevance even less.” GENERAL ERIC SHINSEKI, U.S. ARMY, CHIEF OF STAFF
  27. 27. Most firms today approach their business from one of two inside-out paradigmsOne is the Product-Benefit Perspective: HOW PRODUCT - BENEFIT PERSPECTIVE DIFFERENTIATED THE OFFERING IS Technology Innovation New Products New Applications Disruptive Innovation New Technologies New Product Development Brand Extension Design Innovation Companies apply these approaches in search of differentiation 27
  28. 28. Another is the Consumer-Needs Perspective: CONSUMER-NEEDS PERSPECTIVE HOW RELEVANT THE OFFERING IS Consumer Orientation Segmentation Customer Delight Trading Up/ Trading Down Ethnography, Market Research Customer Satisfaction Customer Centricity Voice of the Customer Companies apply these approaches in search of relevance 28
  29. 29. We believe these two traditional perspectives are limited in today’sdigitally connected world, because they are based on assumptionsthat today are merely half-truths1 Executives view the customer from the inside-out, from the confines of a company’s existing capabilities and product offerings, ignoring the more important social processes among consumers or customers2 Customers are viewed as targets to be managed, controlled, and messaged to with communications that interrupt and seek customers’ attention3 Executives see the company as owning the customer and managing the relationship, assuming that the most important connection is between themselves and customers4 Marketing’s job is to get attention from customers, sales is in charge of getting or acquiring customers, and customer service is in charge of retaining customers5 Customers are the receivers of a product or service that comes out at the end of the company-optimized value chain and supply chain processes 29
  30. 30. We believe companies need to adopt a new perspective and mindset!What if companies see the world from the outside-in, from the perspective of thecustomers’ social context and goals, including social behaviors and processes? SIX BEHAVIORS SOCIAL CURRENCY PERSPECTIVE OF SOCIAL CURRENCY UTILITY INFORMATION What if companies focus not just on satisfying CONVERSATION ADVOCACY needs, but on improving people’s lives: AFFILIATION IDENTITY By helping achieve people’s goals By improving processes and activities Making it easier to make decisions Through products and services, or anything that really matters Goal - What a person strives for In the context of their daily lives Process - What a person must do to or work-flow processes achieve the goal Decision making - How a person prioritizes and makes trade offs Products and services - What a person prefers or buys Context - When and where the person takes actions 30
  31. 31. Case Study:What if we solve the problems, challenges, frustrations, and points of pain for customers?Deeply Understanding the Goals People Seek to Achieve - An Illustrative ExampleDAILY LIFE EPISODES: 8am - 8:45am Episode 1 AUGUST 9am - 10:15am Episode 2 7 8 1 2 9 3 10 4 11 5 12 6 13 10:15am - 11am Episode 3 Imagine we knew all episodes of goal achievement1421 15 22 16 23 17 24 18 25 19 26 20 27 11:30am - 12pm 12pm - 13:30pm Episode 4 Episode 5 from several hundreds of doctors like Dr. Rahim R.: how they treat patients and how they search for,28 29 30 31 learn, and use new medical knowledge. How Dr. Rahim R. Treats Patients and Seeks New Medical Knowledge We could then harness the power of social “I was seeing a patient of mine with a nephrotic syndrome • Prepare for networks, and the new social mobile and who, in addition to rheumatoid arthritis also had a new agent called Humira. I was planning to biopsy her and so an upcoming digital technologies to: wanted to find out more. I Googled Humira and nephrotic appointment syndrome and found out that Humira is known to cause • To be confident in • Define innovative solutions for doctors kidney problems and that there are a few case reports out my decisions there. I used Google because it’s quick, cheap, and dirty. • To make the best • Invent entirely new strategies and ways You can put in “nephrotic syndrome Humira” and you’ll get use of my time to help doctors a bunch of links and you say, “Okay, there’s stuff here. I’ll go to Medline” to read the articles. It might say in the link what journal it is or the authors, which makes you feel that • Reliability of • Build brands that truly differentiate information these are reliable papers. In fact, I recognized one of the authors of the papers. It was also useful because I • Known authors • Create entirely new businesses couldn’t remember the mechanism of Humira, which type of blocker it was, and so I found that it was a TNF blocker. When • Saving for later I went to Medline to look it up further, I could go straight to TNF blocker. And so that helped me discuss with the • Feel successful Tools to track episodes of customers’ daily lives rheumatologist that we needed a kidney biopsy, this could exist today using various mobile platforms. be toxicity from the medication that they were using. It turned • Feel knowledgeable Vivaldi Partners Group Lifetracker is one example. out it wasn’t from the medication, but still - it was very - learned something Others include Real-Time Experience Tracking (RET) interesting.” and the Day Reconstruction Method (DRM). BEHAVIORAL ACTIVITIES UNSPOKEN GOALS NEEDS 31
  32. 32. A Social Currency Perspective changes the roleof businesses and brands in creating value to customers INSIDE-OUT PARADIGMS OUTSIDE-IN PARADIGM PRODUCT- CUSTOMER- SOCIAL CURRENCY BENEFIT NEEDS PERSPECTIVE PERSPECTIVE PERSPECTIVE Role of Social Media and Social Technologies LIMITED ROLE: MAJOR ROLE: 1 6 Fit Into Their Lives AMPLIFYING ADVERTISING CAMPAIGNS 5 2 Help Manage Their Lives 1 CREATING CONVERSATIONS 4 Solve Something Give People Time Back 3 2 3 Enable People BUILDING COMMUNITIES Deliver Value 32
  33. 33. Social currency provides a new perspectiveon how to build brands and grow and evolve businesses It views customers as in control of their relationship with brands or businesses It views the customer from the outside-in, from the context of daily life or work life, and the goals, processes, and decisions that people make It views customers as enabled and empowered by the new social, digital, and mobile technologies It solves for “What Really Matters” to people and not just what matters to companies and brands In the following sections, we explore the challenges and issues in adopting this radically new mindset - the Social Currency perspective - to build strong brands and businesses 33
  34. 34. Impact of Social Currency: Different Across Industries and CategoriesHealth careSportswearMedia 34
  35. 35. “The greatest danger in times of turbulenceis not the turbulence; it is to act with yesterday’s logic.” PETER DRUCKER /1909-2005/
  36. 36. Social behaviors affect all industries with the new outside-in logicand the impact of new technologies. I.e., health care:From: INSIDE-OUT To: OUTSIDE-IN Selling as many drugs as you can, Improving health care outcomes as efficiently as possible (pharma), and changing how patients interact with or getting acute patients faster the system of providers, payers, and other through the hospital health care professionals SOCIAL BEHAVIORS INFORMATION AFFILIATION DRUGS, UTILITY DEVICES,Businesses IDENTITY or Patients HEALTH SERVICES ADVOCACY CONVERSATION An outside-in perspectiveAn inside-out perspective of patients as people innarrows the view of the context of their dailybusinesses and brands lives broadens the viewin the health care sector of businesses and brands 36
  37. 37. SANOFI-AVENTIS aspires to become the world leader in diabetestreatment by helping to improve the lives of people living with diabetesINSIGHT: • Expansion beyond the narrow cycle of care to encompass patients’ daily lives • Holistic approach to patient care and disease management • Collaboration and co-creation of innovation RESULTS: Facebook:SANOFI-AVENTIS enables the daily life activities & goals of patients: Sanofi US ≈ 2,000 likes Sanofi US Diabetes ≈ 4,000 likes Websites Twitter: Sanofi US ≈ 5,250 followers The DX - an information source about life with diabetes Diabetes Sanofi ≈ 4,300 followers Diabetapedia - an encyclopedia on diabetes Lantus Connection - a web portal with support, information, INFORMATION and advice; exclusively for Lantus users Go Meals DX Website Apps Diabetapedia DOC Friends iBG Star - an innovative blood glucose meter launched in May 2012 Go Meals - an iPhone nutritional guide, restaurant finder, UTILITY iBG Star CONVERSATION and intake tracker Products: Diabetes Amplification APIDRA & LANTUS Co-Stars Diabetes Hero DOC Friends - profiling blogs about diabetes-related connections Nominate a Volunteer - awards contest for outstanding volunteers IDENTITY ADVOCACY DiabetesMine™ Patient Voices - short video contest on biggest Nominate a challenges in diabetes care DiabetesMine™ Volunteer Lantus ConnectionOUR SOCIAL CURRENCY VERDICT: AFFILIATION 75% 100% 75% 50% 25% 50% util info conv adv affi iden 37
  38. 38. Or take the sportswear category as it evolves towards health and lifestyle From To Applying technology to enhance athletes’ Using new technologies to motivate performance through better materials, people to achieve their daily goals and cushioning or fabrics enable activities SPORTS HEALTH & LIFESTYLE TECHNOLOGY AGGRESSION EATING EXERCISE DOMINATION AUTHENTIC LIVING LIFE STRESS RELIEF ATTRIBUTES ACTIVITIESCOMPETITION ATHLETICS LOOKING GOOD STAYING FIT PERFORMANCE PHYSICAL HEALTH SOCIALIZING WINNING FEELING GREAT 38
  39. 39. NIKE+:Helping to achieve fitness/health goals by living by the numbersINSIGHT:• Helping people set daily goals and measure achievement, beyond enhancing sports performance• Offering socially-enabled services to motivate people to stick with the process• Leveraging a major consumer trend - The Quantified Self - to achieve people’s goals, RESULTS: enhance processes & decisions, and offer products & services Facebook: Nike ≈ 10,500,000 likes Nike Running ≈ 1,200,000 likes Nike+ Fuelband ≈ 30,000 likes NIKE+ Twitter: Nike ≈ 650,000 followers Description: Nike Running ≈ 107,000 followers shoes communicate with an iPod Nano through Nike Fuel ≈ 80,000 followers a small oval pod inserted under the shoe liner Instagram: Nike ≈ 425,000 followers Features: after the run, upload distance covered, pace, INFORMATION and calories burned to Nike+ website for review Nike+ app Nike+ Coach n d a NIKE+ FUELBAND Description: UTILITY l b CONVERSATION e wristband that tracks every move and translates it into NikeFuel, a count of all daily activities Product: RUNNING SHOES, Fu Features: APPAREL set daily “activity” goals and see progress on the band or compete/compare with others IDENTITY ADVOCACY Nike+ ChallengesOUR SOCIAL CURRENCY VERDICT: 90% 90% 80% 80% 90% 75% AFFILIATION util info conv adv affi iden 39
  40. 40. The evolving media environment illustrates howindustries are affected by the new social technologies Adapted from Imran Kahn’s Perspective on the Evolving Media Environment ERA Before the Web Early Web 2000s Web Social Web EXAMPLE Newspaper Portal Site Search Site Social Site Editor Editor Consumer’s CURATOR Consumer Social Graph FRAGMENTATION Minimal Limited Growing Multiplying Information Information Utility Utility SOCIAL Information Conversation Information Conversation CURRENCY Utility Advocacy Advocacy Identity Identity AffiliationEach evolution of the web has changed the way people find, discover, or learn about information such as, for example, news.This has created an increasingly fragmented web that gives control to consumers or customers. 40
  41. 41. For additional examples of our research, consider: All examples can be found on vivaldipartners.com/vpsocialcurrency iTunes U Fab.com Square Skype Dropbox Wikipedia 41
  42. 42. Our Conclusions:1 The new social technologies have a profound impact on the SOCIAL IMPACT evolution of industries and categories. Examples such as Sanofi- EVALUATION MATRIX Aventis or Nike show that the changes will be far more aligned along the delivery of customer needs or wants that are driven with the goals, processes, and decisions that matter to people. TELECOM2 Barriers to enter industries and categories blur. Nike can quite OIL & GAS HEALTHCARE possibly become a competitor in the health care space. Square CREDIT CARDS provides an alternative in the payments industry that is currently RETAIL FMCG dominated by the payment networks such as VISA and MasterCard CONSUMER UTILITIES or the credit card firm American Express. This illustrates how ELECTRONICS competition grows among incumbents, and between incumbents STRATEGIC CHALLENGES FASHION and non-traditional players. NEWSPAPER3 New clusters of competitors will emerge through collaboration LOGISTICS and partnership as businesses and brands align their strategies along customers’ goals, processes, and decision-making. Skype, for example, becomes an integrated desktop solution in use with Microsoft Office, and Nokia or Samsung smart phones are powered by Microsoft Windows mobile operating system. TECHNOLOGICAL ADVANCES This provides a competing solution cluster to the Apple ecosystem. There will be new enabled services, products, and innovations that will result in more comprehensive brand portfolios that are connected to provide seamless customer experiences across all possible touch points. 42
  43. 43. Breaking Down the Traditional Value ChainBurberryGlaceau’s Vitamin WaterBombardierPebble 43
  44. 44. “Insanity: doing the same thing overand over again and expecting different results.” ALBERT EINSTEIN / 1879-1955/
  45. 45. While Zara has found retail successby optimizing the traditional value chain ... Traditional Value Chain Zara: Success With Optimized Value Chain Zara has become one of the most successful fashion retailers with 2011 Firm Infrastructure revenues of Euro 13.8 billion by relentlessly optimizing the traditional value M A RG chain. Zara takes just four weeks to turn an idea into merchandise, andActivities Human Resource ManagementSupport Technology Development items spend two weeks on store shelves. Technically, this makes Zara one IN of the fastest retailers. Procurement The company relies on business intelligence and analytics to manage inventory and product distribution based on consumer preferences. Inbound Operations Outbound Marketing Service Zara has been the subject of numerous business school case studies M A RG Logistics Logistics & Sales on supply chain management. IN But there are limits to the optimization of anything, even Zara’s value chain. It is rather difficult for competitors to outperform Zara. However, history Primary Activities shows the difficulty of maintaining success. For example, DELL had enjoyed competitive advantage with its built-to-order model for many years. For a The value chain categorizes a firm into a linear, long time the PC industry was unable to copy it or improve on it. Today DELL faces major strategic challenges despite an optimized value chain because sequentially executed, logically aligned set consumer preferences lean toward new devices, like tablets. of value-generating activities with the objective We believe the fashion industry is undergoing similar consumer preference changes. Fashion is one of the most social products that exists and social of capturing superior value to customers technologies will have a significant contribution toward building the future industry model. Burberry, a fashion house with smaller 2011 revenues of GBP 3.5 billion, leads the way toward this future, as shown in the next case study. In the best case, the traditional value chain treats customers as bystanders of the set of value-generating activities. In the worst case scenario, it treats customers as recipients of its output and ignores the important social behaviors and processes among people. 45
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