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2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
2011 04-06 sugar con physics of influence-v03p
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2011 04-06 sugar con physics of influence-v03p

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  • 1. The Physics of InfluenceBuilding, Nurturing, and Leveraging Your Best Kept Marketing Secret Michael Wu Ph.D. Principal Scientist of Analytics Lithium Technologies Inc. SugarCon: April 6th, 2011 ‐1‐ | 16:14 @mich8elwu
  • 2. Session Agenda Influence basics – What is influence? Who are the influencers? – What does influence mean to your business Influence mechanics – Do influencers matter? How? How much? – How to find influencers? Advance topics on influence – How to work with influencers without working with them? ‐2‐ | 16:14 @mich8elwu
  • 3. What is influence? Webster definitions: – The act or power of producing an effect without apparent  exertion of force or direct exercise of command. – The power or capacity of causing an effect in indirect or  intangible ways : sway ‐3‐ | 16:14 @mich8elwu
  • 4. What is influence? Webster definitions: – The act or power of producing an effect without apparent  exertion of force or direct exercise of command. – The power or capacity of causing an effect in indirect or  intangible ways : sway Must have some effects – Effect on some target audience (target) – Effects don’t always have to have actions ‐4‐ | 16:14 @mich8elwu
  • 5. What is influence? Webster definitions: – The act or power of producing an effect without apparent  exertion of force or direct exercise of command. – The power or capacity of causing an effect in indirect or  intangible ways : sway It matters how you produce the effects – No carrot: no money – No stick: no force/coercion – No annoyance: no spam/frustration – No trick: no deception/hidden agenda ‐5‐ | 16:14 @mich8elwu
  • 6. What is influence? Webster definitions: – The act or power of producing an effect without apparent  exertion of force or direct exercise of command. – The power or capacity of causing an effect in indirect or  intangible ways : sway Definition for businesses:  – The ability to cause a change in thought (sentiment,  opinion, etc.) OR behavior (purchase, referral, etc.)  through non‐coercive and transparent means where the  targets want the changes even with no monetary  compensation ‐6‐ | 16:14 @mich8elwu
  • 7. Who are the influencers?Kevin Smith (2010): Dave Carroll (2009): Jeff Jarvis (2005):Too fat to fly Southwest United Breaks Guitar Dell Lies, Dell SucksChannel=Twitter Channel=YouTube Channel=Blog They were mistreated by some companies – Their influence on social media  cause a major PR crisis – Bad PR + significant financial damage (in some cases) ‐7‐ | 16:14 @mich8elwu
  • 8. Who are the influencers? But influencers ≠ celebrities – Because influence ≠ popularity Other confounding facts about influencers: – Everyone can influence someone, so anyone can be an  influencer. – Influencers do not fall into any standard demographics  and/or technographic segmentations. – There are no universal influencers. ‐8‐ | 16:14 @mich8elwu
  • 9. Who are the influencers? Influencers = – Superusers and product experts – Advocates who will speak on your behalf – Evangelist of your brand Influencers for marketers = – People with significantly greater ability to influence —cause a change in thought OR behavior through non‐ coercive and transparent means where the targets want  the changes even with no monetary compensation ‐9‐ | 16:14 @mich8elwu
  • 10. What does this mean to your business? engage/  empower mass public consumers awareness purchase interest desire brand X potential (+) influence = promoters potential (−) influence = detractors competitors’  your superusers your brand  your  unawared competitors’  brand advocates (product experts) advocates customers consumers customers (your brand  (evangelist) detractors) ‐ 10 ‐ | 16:14 @mich8elwu
  • 11. What does this mean to your business? Influencers help you: – Drive effective WOM marketing/sales • Move consumers through your purchase funnel  increase sales – Acquire customers from your competitors – Cut cost • Influence other customers to self‐help + help each other ‐ 11 ‐ | 16:14 @mich8elwu
  • 12. Session Agenda Influence basics – What is influence? Who are the influencers? – What does influence mean to your business Influence mechanics – Do influencers matter? How? How much? – How to find influencers? Advance topics on influence – How to work with influencers without working with them? ‐ 12 ‐ | 16:14 @mich8elwu
  • 13. Do influencers matter? vs. Malcolm Gladwell Duncan Watts(best‐selling author) (sociologist) Influencers matter Influencers don’t matter – If they say/do something  – Seeding a message from  thousands and millions  any random person  will hear and follow eventually reaches the  same number of people  as seeding from an  influencer ‐ 13 ‐ | 16:14 @mich8elwu
  • 14. Do influencers matter? The effect of influencers is not the number of target they can  reach. It is the speed at which they can reach those targets. Number of targets reached is a very bad way to measure  influence. What is a better way? Quantifying the value of WOM. Join work with – Prof. Barak Libai MIT Sloan School of Management Recanati B‐School, Tel Aviv Univ – Prof. Eitan Muller  NYU Stern School of Business  Recanati B‐School, Tel Aviv Univ – Prof. Renana Peres The Wharton School, U Penn Hebrew University of Jerusalem ‐ 14 ‐ | 16:14 @mich8elwu
  • 15. How does WOM turn into value? W O M ? Agent‐based CLV model based on real network structure  from 12 social graphs (6 from Lithium) CLV model: Takes into account of – Network value of referral (V. Kumar) – Discount rate of money, b/c lifetime of customers can be very  long. ‐ 15 ‐ | 16:14 @mich8elwu
  • 16. How does WOM turn into value? W O M ? Agent‐based CLV model based on real network structure  from 12 social graphs (6 from Lithium) Simulation parameters for investigating the effect of: – Influencers: Influencer seeding vs. random seeding – Brand equity: Brand monopoly vs. competing brand – Seeding program size: 0.5% to 5% ‐ 16 ‐ | 16:14 @mich8elwu
  • 17. Summary of Lithium‐only data Seeding Program Competing Random 10.3% brands Gain via acceleration Influencer 17.4% Gain via acquisition Brand Random 86.8% monopoly Influencer 113% 0 20 40 80 100 120 Result 1: Two mechanisms combine to create  WOM values Acquisition of customers Acceleration of adoption ‐ 17 ‐ | 16:14 @mich8elwu
  • 18. Summary of Lithium‐only data Seeding Program Competing Random 10.3% brands Gain via acceleration Influencer 17.4% Gain via acquisition Brand Random 86.8% monopoly Influencer 113% 0 20 40 80 100 120 Result 2: Influencer seeding increases gain 49.4% ‐ 18 ‐ | 16:14 @mich8elwu
  • 19. Summary of Lithium‐only data Seeding Program Competing Random 10.3% brands Gain via acceleration Influencer 17.4% Gain via acquisition Brand Random 86.8% monopoly Influencer 113% 0 20 40 80 100 120 Result 3: First mover advantage is huge 7.5x ‐ 19 ‐ | 16:14 @mich8elwu
  • 20. What does this mean to your business? engage/  empower mass public consumers awareness purchase interest desire brand X potential (+) influence = promoters potential (−) influence = detractors competitors’  your superusers your brand  your  unawared competitors’  brand advocates (product experts) advocates customers consumers customers (your brand  (evangelist) detractors) ‐ 20 ‐ | 16:14 @mich8elwu
  • 21. Finding influencers involves 2 parties Influencer Domain Credibility: The influencers expertise in a specific domain  of knowledge. High Bandwidth: The influencers ability to transmit his expert  knowledge through a social media channel. Content Relevance: How closely the targets information needs  coincide with the influencers expertise. Timing: The ability of the influencer to deliver his expert knowledge to  the target at the time when the target needed it. Channel Alignment: The amount of channel overlap between the  target and the influencer. Target Confidence: How much the target trusts the influencer with  respect to his information needs Target ‐ 21 ‐ | 16:14 @mich8elwu
  • 22. Finding the potential influencers High Potential Credible Bandwidth influencer users users ‐ 22 ‐ | 16:14 @mich8elwu
  • 23. Importance of relevance & timing Friendship Relevant relationship FanGirl w/in 1 month WizKid 1 month ago 3 month ago 6 month ago PopGuy ‐ 23 ‐ | 16:14 @mich8elwu
  • 24. Finding influencers: intelligent filteringDomain credibilityHigh bandwidthContent relevanceTiming relevanceChannel alignmentConfidence (trust) ‐ 24 ‐ | 16:14 @mich8elwu
  • 25. Session Agenda Influence basics – What is influence? Who are the influencers? – What does influence mean to your business Influence mechanics – Do influencers matter? How? How much? – How to find influencers? Advance topics on influence – How to work with influencers without working with them? ‐ 25 ‐ | 16:14 @mich8elwu
  • 26. Now you have influencers, so what? You shouldn’t: – Pay them, or blatantly promote them • People will find out  Not authentic  They will lose credibility – Work them like your employees • They will hate you and turn against you How to influence the influencers? – Remember: No carrot, no stick, no annoyance, no tricks! How do we work with them without actually working  with them? – Do you just leave them be and let WOM propagate? ‐ 26 ‐ | 16:14 @mich8elwu
  • 27. Now you have influencers, so what? What about WOM? ‐ 27 ‐ | 16:14 @mich8elwu
  • 28. Uncoordinated WOM has low efficacy WOM do not propagate vary far. What’s wrong? – Passionate influencers are too far apart. – WOM decays before reaching another influencer who will  pass it on. – Over time, even the passionate influencers lose their  enthusiasm. The problem is distance and time. How can we fix it? – Shorten the distance between the passionate influencers. • In‐Real‐Life (IRL) meet‐up • Community ‐ 28 ‐ | 16:14 @mich8elwu
  • 29. Community WOM
  • 30. Community WOM is effective Community can overcome the decaying effect of  distance and time. – Key: High concentration of passionate consumers – Many of them + close proximity to each other Result: – Ongoing conversation heightens enthusiasm – Persistent content prolonged message lifetime – Ideation and innovation increase relevance and adoption ‐ 30 ‐ | 16:14 @mich8elwu
  • 31. Community WOM ‐ 31 ‐ | 16:14 @mich8elwu
  • 32. Community WOM ‐ 32 ‐ | 16:14 @mich8elwu
  • 33. A repeatable influencer strategy Co‐create value with them using a community Community – Provide audience for the influencers – Amplify their influence – Cultivates influencers: Allow ordinary customers to gain  status/recognition  build their influence Community members + sponsors – Benefit from influencers’ domain expertise – Effective WOM + cut support cost ‐ 33 ‐ | 16:14 @mich8elwu
  • 34. Customers Advocates
  • 35. Evolution of a customer community ‐ 35 ‐ | 16:14 @mich8elwu
  • 36. Evolution of a customer community Identify rising superusers as their  influence growsInfluence ≠ number  of connections ‐ 36 ‐ | 16:14 @mich8elwu
  • 37. Community WOM What about the  greater social web? ‐ 37 ‐ | 16:14 @mich8elwu
  • 38. Community WOM ‐ 38 ‐ | 16:14 @mich8elwu
  • 39. WOM BeyondCommunity
  • 40. Thank you Resources: blog+case study+whitepaper http://lithosphere.lithium.com/t5/a/bg-p/MikeW http://pages.lithium.com/word-of-mouth-marketing.html ‐ 40 ‐ | 16:14 @mich8elwu

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