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Don Peppers

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How Do You Mobilise Your Brand Advocates And Build Empowered Networks For Your Brand

How Do You Mobilise Your Brand Advocates And Build Empowered Networks For Your Brand

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  • Bees also have eye sight that can detect polarized light – and this allows them to tell the position of the sun even when it is very cloudy
  • Sacha Baron Cohen’s new movie Bruno had 40% lower box office take THE DAY AFTER IT WAS RELEASED – this is unprecedented I wonder if box office sales actually declined during the evening on its first day? Would be interesting to look at Pacific Time Zone attendance compared to Eastern Time
  • Grant Robertson - http://grantrobertson.com Grant Robertson is a born geek. Having worked in nearly every facet of the IT and software industry at one point or another, Grant has served as Lead Blogger for Download Squad since the departure of Jordan Running in February 2007. He has appeared on several NPR radio talk programs, been quoted in several national publications, and he still gets a tiny thrill every time he sees software he wrote in action. Source: Groundswell, by Charlene Li and Josh Bernoff
  • This is the question two Canadian marketing professors asked more than 2000 senior executives from around the world, in interviews and group discussions that stretched over more than four years. The industries represented in their study cover an extremely wide range, including consumer packaged goods, utilities, construction, e-commerce, software, telecom, financial services, automobiles, chemicals, packaging, airlines, and retailing. But according to their study, the answers to this question were remarkably similar, and tended to focus on the company’s interactions and relationships with its customers. The executives said they thought the most important drivers of customer choice were things like “trust, confidence and strength of relationships, as well as…convenience, ease of doing business and support...”[i] However, despite the fact that customer relationships and interactions are clearly the most powerful competitive tools in management’s hands, these executives spend much more time and energy trying to improve and perfect their products and technologies, rather than their customer relationships. Customer-based innovations, the professors claim, would be a better subject of executive attention because they “are less easily replicated by competitors, and thus offer a more certain basis of sustainable competitive advantage.” [i] The Canadian professors are Mark Vandenbosch. See “Deriving Value from Customer Relations,” Financial Times supplement, Mastering Innovation, Oct 1, 2004 (UK edition), by Mark Vandenbosch and Niraj Dawar, pp. 6-8. See also “Beyond Better Products: Capturing Value in Customer Interactions,” by Mark Vandenbosch and Niraj Dawar, MIT Sloan Management Review , Summer 2002, Vol. 43, No. 4, pp. 35-42.
  • This is the question two Canadian marketing professors asked more than 2000 senior executives from around the world, in interviews and group discussions that stretched over more than four years. The industries represented in their study cover an extremely wide range, including consumer packaged goods, utilities, construction, e-commerce, software, telecom, financial services, automobiles, chemicals, packaging, airlines, and retailing. But according to their study, the answers to this question were remarkably similar, and tended to focus on the company’s interactions and relationships with its customers. The executives said they thought the most important drivers of customer choice were things like “trust, confidence and strength of relationships, as well as…convenience, ease of doing business and support...”[i] However, despite the fact that customer relationships and interactions are clearly the most powerful competitive tools in management’s hands, these executives spend much more time and energy trying to improve and perfect their products and technologies, rather than their customer relationships. Customer-based innovations, the professors claim, would be a better subject of executive attention because they “are less easily replicated by competitors, and thus offer a more certain basis of sustainable competitive advantage.” [i] The Canadian professors are Mark Vandenbosch. See “Deriving Value from Customer Relations,” Financial Times supplement, Mastering Innovation, Oct 1, 2004 (UK edition), by Mark Vandenbosch and Niraj Dawar, pp. 6-8. See also “Beyond Better Products: Capturing Value in Customer Interactions,” by Mark Vandenbosch and Niraj Dawar, MIT Sloan Management Review , Summer 2002, Vol. 43, No. 4, pp. 35-42.
  • In 2007, for example, the Wall Street Journal analyzed more than 25,000 user submissions across six of the largest sharing and collaboration Web sites: Netscape, Digg, Del.icio.us, Reddit, Newsvine, and Stumbleupon. What they found was “an obsessive subculture of ordinary but surprisingly influential people who, usually without pay and purely for the thrill of it, are trolling cyberspace for news and ideas to share with their network.” [1] Some examples: At Digg, which has 900,000 registered users, fully a third of the postings popular enough to make it to the home page come from just 30 users. On TimeWarner’s Netscape site, 13% of the postings rated “most popular” were put there by a single user – a 27-year-old computer programmer from Dayton, Ohio, who goes by the screen name STONERS. One of the most influential and widely read users at Reddit, who specializes in newsworthy items about criminal justice and software releases, attracted the interest and favorable reviews of a large number of other Reddit users for his appraisals of the security flaws and the price tag of Microsoft’s new Vista operating system, for instance. His name is Adam Fuhrer, he lives in Toronto, and he is 12 years old. (Remember the old cartoon? On the internet, nobody knows you’re a dog.) [1] The Wizards of Buzz: A new kind of Web site is turning ordinary people into hidden influencers, shaping what we read, watch and buy. By JAMIN WARREN and JOHN JURGENSEN, February 10, 2007; Page P1
  • By V. Kuman, J. Andrew Petersen, and Robert P. Leone The technology for managing customer relationships has gotten fairly sophisticated. Companies can draw on databases that tell them how much each customer has purchased and how often, which they may supplement with detailed demographic profiles. By applying statistical models, they can predict not only when each customer is likely to make a future purchase but also what he or she will buy and through which channel. Managers can use these data to estimate a potential lifetime value for every customer and to determine whether, when, and how to contact each one to maximize the chances of realizing (and even increasing) his or her value. Working with managers from a telecommunications firm and a financial services firm, we polled a set of their customers (9,900 at the telecom firm and 6,700 at the financial services firm)
  • It turns out that viral marketing isn’t that infectious after all. At least that’s the conclusion of Bringing the Message to the Masses, a new JupiterResearch report that reveals only 15 percent of viral marketing efforts of the past year actually succeeded in getting consumers to spread positive word of mouth. The low percentage effectiveness in the Jupiter study belies one of the report’s other main findings, that 70 percent of viral marketers claim their efforts succeeded in increasing brand awareness. The disconnect, says Emily Riley, the report’s author and lead analyst at JupiterResearch, comes from the fact that so few marketers succeeded with relatively concrete indications of increased viral activity (including increasing engagement and getting consumers to promote products and services). From 1to1 Weekly, Oct 15, 2007
  • In 2007 the office-supplies chain Staples launched a word-of-mouth marketing initiative it called “Speak Easy,” trying to encourage its most loyal customers to talk up the benefits of various products. The company began sending a monthly supply of free product samples to a select group of its frequent-shopper club members who signed up for the program. The company includes in its shipment a write-up of talking points touting the benefits of each product. Other than the free samples, no additional compensation or benefit is given, and members of the program aren’t monitored for whether they actually do talk the products up or not. But this program, along with other, similar ones, has nevertheless become the subject of some controversy in the press, and on various customer blog sites. [1] Different people will see “manufactured word of mouth” programs in different ways, but many consumers are likely to see them as something vaguely manipulative or seedy. You might be able to dispel part of this feeling by encouraging your brand advocates to disclose to their friends upfront their relationship to your company, but even then, we think it will always be risky to be seen tainting friends’ relationships with other friends with the somewhat unpleasant odor of crass commercialism. It bears repeating that some of the most valuable word-of-mouth you can generate will come simply from having a reputation for being completely open, fair, and trustworthy. So it would be deeply ironic if you tried to design a “manufactured” word-of-mouth program to stimulate referrals in the most ethical manner possible, only to have it negatively affect your reputation for trustworthiness. [1] “Friendly Advice or Secret Ad?” by Alana Semuels, Los Angeles Times, August 17, 2007, cited at http://www.latimes.com/business/la-fi-wordmouth17aug17,1,3006736.story?page=1&coll=la-headlines-business . See also various blog comments and discussion strings, including “Staples Speak Easy is Hard to Swallow,” by Jeremy Nedelka, at http://www.1to1media.com/weblog/2007/08/staples_speak_easy_is_hard_to.html#more and “Manufactured Word-of-Mouth Marketing,” by Susan Gunelius, at http://www.marketingblurb.com/2007/08/manufactured_wordofmouth_marke.html , and “Speak Easy and Other Clever Marketing Acts a Conversation Makes,” by Valeria Maltoni, at http://www.conversationagent.com/2007/08/speak-easy-and-.html ALSO cite our own blogs and bloggers
  • Increasingly, when consumers want to know something about a potential product purchase or service, they go online to any number of review and evaluation sites, from Tripadvisor to Angieslist to epinions. At most of these sites, other customers have posted their reviews of various products, and the most sophisticated of the review sites allow a consumer to search not just by product category but by reviewer type – that is, to find reviews that are done by people with similar tastes as the consumer. Epinions.com, for instance, asks readers to rate the reviews they read, which allows the service to get better over time, in two ways. First, overall reviewer quality is tracked, so a user can tell immediately whether a particular review has been posted by someone others have found credible. But second, epinions also tracks the reviewers that an individual consumer has found most useful in the past, so over time it learns who each user’s most trusted reviewers are, and is able to connect them more quickly to those particular users. [1] As this trend has developed, Web sites are springing up to allow individual consumers to share their evaluations, rants, and ratings of their employers (vault.com), health care establishments and individual medical doctors (healthgrades.com and healthcarecommission.org.uk), colleges and individual university professors (ratemyprofessors.com), and others. Entrepreneurs can now even share their opinions of the venture capitalists who invest money in them (thefunded.com). [2] [1] The Anatomy of Buzz, by Emanuel Rosen (Currency/Doubleday, 2000), pp. 18-19 [2] “Web Sites Put the ‘Vent’ Into ‘Venture Capital’,” by Rebecca Buckman, Wall Street Journal, August 7, 2007, p. B1, cited at http://online.wsj.com/article/SB118644800916989977.html?mod=hps_us_editors_picks
  • By V. Kuman, J. Andrew Petersen, and Robert P. Leone The technology for managing customer relationships has gotten fairly sophisticated. Companies can draw on databases that tell them how much each customer has purchased and how often, which they may supplement with detailed demographic profiles. By applying statistical models, they can predict not only when each customer is likely to make a future purchase but also what he or she will buy and through which channel. Managers can use these data to estimate a potential lifetime value for every customer and to determine whether, when, and how to contact each one to maximize the chances of realizing (and even increasing) his or her value. Working with managers from a telecommunications firm and a financial services firm, we polled a set of their customers (9,900 at the telecom firm and 6,700 at the financial services firm)
  • DoubleClick, the dominant player in Web advertising, did a quantitative study of influencers within networks of online customers in 2006, finding that there are indeed some identifiable traits and characteristics setting them apart. From an initial survey of 6,000 respondents, the company identified just over 1,000 influencers, distinguishing them by how they rated such statements as “ I am an expert in certain areas…” and “People often ask my advice about…” The study revealed that influencers tend to use the Web more than twice as much as noninfluencers when researching a new product prior to buying. Importantly, while influencers were more likely than noninfluencers to pay attention to Web advertising and to want more personally relevant ads, they were also more likely to delete or clear their cookies regularly and to fast forward through the commercials on their digital video recorders. In essence, the picture painted by DoubleClick’s study of connectors and influencers is one of proactive information seekers—curious, inquisitive people who want to know but don’t want to be sold to. Influencers—the key nodes in your network of customers who have the most links with other nodes—are less likely to be swayed by sales pitches but more likely to want to find out for themselves what’s what.
  • DoubleClick, the dominant player in Web advertising, did a quantitative study of influencers within networks of online customers in 2006, finding that there are indeed some identifiable traits and characteristics setting them apart. From an initial survey of 6,000 respondents, the company identified just over 1,000 influencers, distinguishing them by how they rated such statements as “ I am an expert in certain areas…” and “People often ask my advice about…” The study revealed that influencers tend to use the Web more than twice as much as noninfluencers when researching a new product prior to buying. Importantly, while influencers were more likely than noninfluencers to pay attention to Web advertising and to want more personally relevant ads, they were also more likely to delete or clear their cookies regularly and to fast forward through the commercials on their digital video recorders. In essence, the picture painted by DoubleClick’s study of connectors and influencers is one of proactive information seekers—curious, inquisitive people who want to know but don’t want to be sold to. Influencers—the key nodes in your network of customers who have the most links with other nodes—are less likely to be swayed by sales pitches but more likely to want to find out for themselves what’s what.
  • By V. Kuman, J. Andrew Petersen, and Robert P. Leone The technology for managing customer relationships has gotten fairly sophisticated. Companies can draw on databases that tell them how much each customer has purchased and how often, which they may supplement with detailed demographic profiles. By applying statistical models, they can predict not only when each customer is likely to make a future purchase but also what he or she will buy and through which channel. Managers can use these data to estimate a potential lifetime value for every customer and to determine whether, when, and how to contact each one to maximize the chances of realizing (and even increasing) his or her value. Working with managers from a telecommunications firm and a financial services firm, we polled a set of their customers (9,900 at the telecom firm and 6,700 at the financial services firm)
  • Source for “architecture of participation” - Tim O'Reilly, of O'Reilly Media At Rite-Solutions, fifty-five stocks are listed on the company's internal market, which is called Mutual Fun. Each stock comes with a detailed description -- called an expect-us, as opposed to a prospectus -- and begins trading at a price of $10. Every employee gets $10,000 in ''opinion money'' to allocate among the offerings, and employees signal their enthusiasm by investing in a stock and, better yet, volunteering to work on the project. Volunteers share in the proceeds, in the form of real money, if the stock becomes a product or delivers savings. The market, which began in January 2005, has already paid big dividends. One of the earliest stocks (ticker symbol: VIEW) was a proposal to apply three-dimensional visualization technology, akin to video games, to help sailors and domestic-security personnel practice making decisions in emergency situations. Initially, Mr. Marino was unenthusiastic about the idea -- ''I'm not a joystick jockey'' -- but support among employees was overwhelming. Today, that product line, called Rite-View, accounts for 30 percent of total sales.
  • Source “The Wisdom of Crowds” by James Surowiecki, p.12
  • Source “The Wisdom of Crowds” by James Surowiecki, pp. 7-9 There were no hints on the day of the disaster as to how it had happened. New York Times cited two rumors that had gone around, but neither one involved Morton Thiokol.
  • Source “The Wisdom of Crowds” by James Surowiecki, pp. 7-9 There were no hints on the day of the disaster as to how it had happened. New York Times cited two rumors that had gone around, but neither one involved Morton Thiokol.
  • Source for the “crossing boundaries” and androgynous items: Mihalyi Csikszentmihalyi, a Hungarian researcher “ Perspective is more important than IQ” – Negroponte says this is why so many engineering problems are solved by non-engineers – from p. 132 of Pink’s book
  • Combining instructions with resources is like assembling building blocks. The more blocks you have, the more combinations are possible, in an exponential form. A sequence of just 20 steps or instructions can be combined 10 19 ways – that’s a number larger than the number of seconds that have elapsed since the Big Bang. See Mauboussin’s book, pp. 99-101
  • Combining instructions with resources is like assembling building blocks. The more blocks you have, the more combinations are possible, in an exponential form. A sequence of just 20 steps or instructions can be combined 10 19 ways – that’s a number larger than the number of seconds that have elapsed since the Big Bang. See Mauboussin’s book, pp. 99-101
  • Combining instructions with resources is like assembling building blocks. The more blocks you have, the more combinations are possible, in an exponential form. A sequence of just 20 steps or instructions can be combined 10 19 ways – that’s a number larger than the number of seconds that have elapsed since the Big Bang. See Mauboussin’s book, pp. 99-101
  • Combining instructions with resources is like assembling building blocks. The more blocks you have, the more combinations are possible, in an exponential form. A sequence of just 20 steps or instructions can be combined 10 19 ways – that’s a number larger than the number of seconds that have elapsed since the Big Bang. See Mauboussin’s book, pp. 99-101
  • Combining instructions with resources is like assembling building blocks. The more blocks you have, the more combinations are possible, in an exponential form. A sequence of just 20 steps or instructions can be combined 10 19 ways – that’s a number larger than the number of seconds that have elapsed since the Big Bang. See Mauboussin’s book, pp. 99-101
  • Combining instructions with resources is like assembling building blocks. The more blocks you have, the more combinations are possible, in an exponential form. A sequence of just 20 steps or instructions can be combined 10 19 ways – that’s a number larger than the number of seconds that have elapsed since the Big Bang. See Mauboussin’s book, pp. 99-101
  • Source for “long tails” – Chris Anderson, “The Long Tail” in Wired Magazine, Oct 2004 See his blog http://longtail.typepad.com/the_long_tail/
  • Source for “long tails” – Chris Anderson, “The Long Tail” in Wired Magazine, Oct 2004 See his blog http://longtail.typepad.com/the_long_tail/
  • Source for “long tails” – Chris Anderson, “The Long Tail” in Wired Magazine, Oct 2004 See his blog http://longtail.typepad.com/the_long_tail/
  • Combining instructions with resources is like assembling building blocks. The more blocks you have, the more combinations are possible, in an exponential form. A sequence of just 20 steps or instructions can be combined 10 19 ways – that’s a number larger than the number of seconds that have elapsed since the Big Bang. See Mauboussin’s book, pp. 99-101
  • Shake it all about Sep 25th 2008 From The Economist print edition How to use your laptop to locate an earthquake IF YOU drop your laptop computer, a chip built into it will sense the acceleration and protect the delicate moving parts of its hard disk before it hits the ground. A group of researchers led by Jesse Lawrence of Stanford University are putting the same accelerometer chip to an intriguing new use: detecting earthquakes. They plan to create a network of volunteer laptops that can map out future quakes in far greater detail than traditional seismometers manage. Seismometers are large, expensive beasts, costing $10,000 or more apiece. They are designed to be exquisitely sensitive to the sort of vibrations an earthquake produces, which means they can pick up tremors that began halfway around the world. By contrast, the accelerometer chips in laptops, which have evolved from those used to detect when a car is in a collision and thus trigger the release of the airbags, are rather crude devices. They are, however, ubiquitous. Almost all modern laptops have them and they are even finding their way into mobile phones. The iPhone, for example, uses such a chip to detect its orientation so that it can rotate its display and thus make it easily readable. On its own, an accelerometer chip in a laptop is not very useful for earthquake-detection, as it cannot distinguish between a quake and all sorts of other vibrations—the user tapping away at the keyboard, for example. But if lots of these chips are connected to a central server via the internet, their responses can be compared. And if a large number in a particular place register a vibration at almost the same time, it is more likely to be an earthquake than a bunch of users all hitting their space bars. To exploit this group effect, Dr Lawrence’s Quake-Catcher Network (QCN) employs the same software that is used by the [email_address] project, which aggregates computing power from hundreds of thousands of volunteer computers around the world to analyse radio-telescope signals for signs of extraterrestrial intelligence. Dr Lawrence and his colleagues have already demonstrated that the QCN works. It detected a quake near Reno, Nevada, in April, and one near Los Angeles in July. Merely detecting a quake, however, is not the point. Seismometers can do that. To be useful, the QCN needs to be able to do things that seismometers cannot. One of those things is to measure the maximum amount of ground shaking. The sensitivity of seismometers means that strong signals would damage them if they were not designed to “clip” such signals when they exceed a certain threshold. The price paid is that information about strong, nearby earthquakes is lost. Laptop accelerometers are more robust. Though they cannot, if in America, tell you anything about an earthquake in China, they can sometimes do better than conventional kit when measuring local quakes.
  • Combining instructions with resources is like assembling building blocks. The more blocks you have, the more combinations are possible, in an exponential form. A sequence of just 20 steps or instructions can be combined 10 19 ways – that’s a number larger than the number of seconds that have elapsed since the Big Bang. See Mauboussin’s book, pp. 99-101
  • Source for “long tails” – Chris Anderson, “The Long Tail” in Wired Magazine, Oct 2004 See his blog http://longtail.typepad.com/the_long_tail/
  • In the late 1700’s, Wolfgang von Kempelen, a Hungarian civil servant, constructed an extraordinary machine: a mechanical man, dressed in an oriental costume like a Turk, seated behind a wooden cabinet, and capable of playing chess. This chess automaton is the reason for the German word "getürkt" – which means to deceive by appearances, roughly the same as “fakery” Abraham Lincoln told the story of how one chess expert, having been beaten by the machine, forced open the cabinet door to peer inside, and then exclaimed “There’s a man in there!” That’s also the secret of great CRM systems. Only people who know the rules of customer relationships can operate a good CRM system correctly.
  • Source for jobs info: McKinsey Quarterly No. 4, 2005, “The Next Revolution in Interactions”
  • Source for “architecture of participation” - Tim O'Reilly, of O'Reilly Media
  • Source for “architecture of participation” - Tim O'Reilly, of O'Reilly Media
  • Transcript

    • 1. Dancing Shoes for Honeybees Customer Networks and Empowered Brand Advocates Don Peppers
    • 2. Customers are social animals <ul><li>Bees and ants share information about new discoveries for the benefit of the group </li></ul><ul><ul><li>Ants leave chemical trails, and honey bees do a complex kind of dance </li></ul></ul>
    • 3. The Honeybee “Waggle Dance” Source: Bienentanz, Gesellschaft fur Kommunikation, Berlin, 2002
    • 4. Now suppose you were a food source for bees… <ul><li>But a bee will only do his dance to tell the other bees about you if he was satisfied with the nectar </li></ul><ul><li>Moral: In the absence of communication among your customers, advertising rules </li></ul><ul><li>Once your customers communicate with each other, it’s the customer experience that counts </li></ul>Bright colors and a sweet fragrance can get any exploring bee to take a look
    • 5. Death by Word of Mouth… <ul><li>The movie “Bruno” died quickly </li></ul>&quot;Even if they had a turkey, [studios] used to get two weeks of business before the stink really caught up to the film,&quot; according to LA Times critic John Horn. &quot;Now they have 12 hours.&quot; “ People came out of that movie and started texting or Twittering their friends and telling them not to go see it.” Source: NPR All Things Considered, July 17, 2009 Box office receipts down 40% the first day !
    • 6. Screw up, and the “news” will be permanent <ul><li>You can’t un-Google yourself. </li></ul><ul><li>Linda Kaplan Thaler, CEO, Kaplan Thaler Group </li></ul>“ You can't take something off the Internet. That's like trying to take pee out of a swimming pool.” - Grant Robertson, blog post, May 1, 2007
    • 7. Competing in the customer-centric dimension Maximize the value created by each customer Maximize the value created by each product Share of customer Market share Customer Needs Satisfied Customers Reached Product-Centric Marketing Customer-Centric Marketing
    • 8. Succeeding against your competitors… <ul><li>Why does a customer choose you instead of one of your competitors? </li></ul><ul><li>Two marketing professors asked thousands of business executives this question… </li></ul><ul><li>Answers in all industries are remarkably similar: </li></ul><ul><li>“ ...trust, confidence, strength of customer relationships...” </li></ul>
    • 9. Now consider your customer value proposition <ul><li>A customer creates the most value for you when you create the most value for him </li></ul><ul><li>But when does this happen? </li></ul><ul><li>Maximizing the value customers create requires you to earn their trust </li></ul>
    • 10. Two requirements for earning customer trust Intention to act in the customer’s interest Competence to carry out this intention
    • 11. Acting in the customer’s interest How Amazon helps you avoid making mistakes
    • 12. <ul><li>Acting in the customer’s interest requires understanding what the customer needs </li></ul><ul><li>What is the customer’s perspective? How does the customer see things? </li></ul><ul><li>Can you speak the customer’s language? </li></ul>Taking the customer’s point of view
    • 13. Can you speak the customer’s language?
    • 14. Incompetence also demolishes trust <ul><li>Customer thinks: No matter how good their intentions, how trustworthy can an incompetent business really be? </li></ul>
    • 15. Trust requires “competence with customers” “ You can destroy customer trust all at once with a major problem, or you can undermine it one day at a time, with a thousand small demonstrations of incompetence. Either way is effective.”
    • 16. The need for more trust has boosted business <ul><li>Lack of trust slows transactions down and imposes frictional costs </li></ul><ul><li>When more trust is required , business thrives, as obstacles are reduced </li></ul>Case in point:
    • 17. Networks and “preferential attachment” <ul><li>Networks don’t pop into existence fully formed, but evolve on a gradual basis </li></ul><ul><ul><li>New people join a network one at a time, randomly, and new connections between members are made one at a time </li></ul></ul><ul><ul><li>Snowflakes are random networks of ice crystals. They all look similar, but in fact they are each individually unique </li></ul></ul><ul><li>The “rule of preferential attachment” means: </li></ul><ul><ul><li>Even though each new connection is random… </li></ul></ul><ul><ul><li>… each is more likely to occur with those network members who already have more connections </li></ul></ul><ul><li>This can create a “cascading” effect in a network </li></ul>
    • 18. The cascading effect in a network explains why… <ul><li>… water buffaloes, geese, and investors all stampede at the same time </li></ul><ul><li>… some Web sites or products become highly popular while similar ones languish </li></ul><ul><li>… people who are already rich tend to get richer at an even faster rate than others </li></ul><ul><ul><li>Income inequality will always increase as an economy becomes more interconnected </li></ul></ul>
    • 19. Cascading is inherently unpredictable <ul><li>In 2007 the Wall Street Journal examined 25,000 user posts on six “sharing and collaboration” Web sites </li></ul><ul><li>Netscape has a million collaborating members </li></ul><ul><ul><li>But 13% of Netscape’s “most popular” postings were done by a single user </li></ul></ul><ul><li>900,000 registered users on Digg, but one third of all home-page postings come from just 30 users </li></ul><ul><li>Reddit’s most widely read user, Adam Fuhrer, has millions of page views, including MS Vista reviews </li></ul><ul><ul><li>Adam Fuhrer is 12 years old, lives in Toronto with his parents, and attends elementary school </li></ul></ul>
    • 20. <ul><li>Effects of customer word-of-mouth are therefore inherently unpredictable </li></ul><ul><ul><li>Even if we could know what was in the heart of each individual customer… </li></ul></ul><ul><ul><li>… it is still impossible to predict in advance the cascading effects of a social network </li></ul></ul>Customer word-of-mouth can also cascade
    • 21. Because networks are unpredictable… <ul><li>… it is impossible to “manage” word-of-mouth marketing </li></ul><ul><li>Jupiter Research: </li></ul><ul><ul><li>Only 15% of viral marketing efforts actually generate positive word-of-mouth! </li></ul></ul><ul><li>No matter how delicious your nectar is… </li></ul><ul><ul><li>… you have to prepare for that one irrationally cranky bee with a million close friends </li></ul></ul>
    • 22. So be careful when you try to generate “WOM” <ul><li>A cautionary tale: Staples’ word-of-mouth marketing campaign, called Speak Easy </li></ul><ul><li>Despite its careful architecture, the press portrayed it as sneaky and manipulative </li></ul><ul><li>You can’t manufacture “authentic” word of mouth </li></ul><ul><li>If it isn’t spontaneous, then it isn’t authentic! </li></ul>
    • 23. The only way to succeed in a networked world: <ul><li>Build and maintain a reputation for trustworthiness </li></ul>
    • 24. <ul><li>One academic study of customers separated each one’s “referral” value from “spending” value </li></ul><ul><ul><li>LTV = CRV + CLV (i.e., referrals plus spending) </li></ul></ul><ul><li>What the study found: </li></ul><ul><ul><li>Highest spending customers are not always the most valuable in terms of referring others </li></ul></ul>Analyzing the value of your brand advocates Source: “How Valuable is Word of Mouth?” Harvard Business Review, October 2007
    • 25. At one telecom company Source: “How Valuable is Word of Mouth?” Harvard Business Review, October 2007 Most valuable spenders Most valuable referrers
    • 26. DoubleClick identified network “influencers” <ul><li>Quantitative survey of 6000 Web users found 1000 influencers with certain traits </li></ul><ul><ul><li>“ People often ask my advice about…” </li></ul></ul><ul><ul><li>“ I am an expert in certain areas…” </li></ul></ul><ul><li>Influencers </li></ul><ul><ul><li>Use the Web more than twice as much </li></ul></ul><ul><ul><li>Pay more attention to online ads, and want more relevant messages </li></ul></ul><ul><ul><li>But also more likely to clear their cookies regularly, as well as fast forwarding through video commercials </li></ul></ul>
    • 27. Within social networks… <ul><li>… influencers and connectors are curious and inquisitive people. </li></ul><ul><li>They want to know, but they don’t want to be sold to. </li></ul>
    • 28. <ul><li>In 2005, one influential blogger wrote about his bad service experience with Dell Computer </li></ul><ul><ul><li>This “Dell Hell” story cascaded online as more people commented about their own bad experiences </li></ul></ul><ul><ul><li>Then Businessweek and The New York Times picked it up </li></ul></ul><ul><ul><li>Dell’s reputation suffered terribly, and its financial results declined, as well </li></ul></ul><ul><li>One year later, a UK consulting firm analyzed the incident and concluded it was not really Dell’s fault at all </li></ul><ul><ul><li>Most of the controversy was generated by errors and misinformation, passed along by a few key influencers </li></ul></ul>And sometimes influencers are just wrong! Source: Paul Gillin, The New Influencers, 2007
    • 29. The human brain is a “prediction engine” <ul><li>Complex tasks are managed easily, until something violates our expectations… </li></ul>“ Our brain is structured for constant forecasting.”
    • 30. Networks can be intelligent prediction engines, too <ul><li>Networks of people make collective decisions much better than even expert individuals do </li></ul><ul><ul><li>As long as a group includes a diverse set of people making independent decisions </li></ul></ul><ul><ul><li>It isn’t the number of experts in the network, but the diversity of perspectives that counts </li></ul></ul><ul><li>“ Decision markets” predict sporting events and election results with great accuracy </li></ul><ul><li>The market for orange futures predicts Florida weather more accurately than meteorologists do </li></ul>
    • 31. Where were you at 11:39 am, January 28, 1986? <ul><li>Four key space shuttle contractors </li></ul><ul><ul><li>Rockwell built the Challenger and its engines </li></ul></ul><ul><ul><li>Lockheed managed ground support </li></ul></ul><ul><ul><li>Martin Marietta manufactured the external fuel tank </li></ul></ul><ul><ul><li>Morton Thiokol built the solid fuel boosters </li></ul></ul><ul><li>“ No clues” on the day of the event, and the actual investigation required six months to complete </li></ul><ul><li>But by 11:50 am, Thiokol’s stock was down the most and remained lowest throughout the investigation </li></ul>
    • 32. Where were you at 11:39 am, January 28, 1986? <ul><li>How did the market know ? </li></ul>
    • 33. Moore’s Law and Metcalfe’s Law Gordon Moore Bob Metcalfe
    • 34. Networking and computation: Implications <ul><li>100 million+ Google searches every day </li></ul><ul><ul><li>How were these questions answered before Google? </li></ul></ul><ul><li>Last year 3000 new books were published… </li></ul><ul><ul><li>… every day! </li></ul></ul><ul><li>In 2009, more new and unique information will be generated than in the previous 5,000 years </li></ul><ul><li>The amount of new technical information is roughly doubling every two years </li></ul><ul><ul><li>By 2015, it will be doubling every 72 hours! </li></ul></ul>
    • 35. In the words of William Gibson: <ul><li>“ The future is already here. It’s just not evenly distributed yet.” </li></ul>
    • 36. What we can expect in a PMT-enabled future: <ul><li>Personal mobile technology (PMT) will dramatically change our lives in three ways: </li></ul><ul><ul><li>Transacting and doing </li></ul></ul><ul><ul><li>Connecting and networking </li></ul></ul><ul><ul><li>Sensing and understanding </li></ul></ul>
    • 37. 1. Transacting and doing <ul><li>“ A mobile phone is just a credit card with an antenna…” </li></ul><ul><li>Richard Fairbank </li></ul><ul><li>Founder and CEO, Capital One </li></ul>
    • 38. 1. Transacting and doing <ul><li>Commerce will drive connectivity further </li></ul><ul><li>Free SIM card, just apply </li></ul><ul><li>43 minutes a month, free </li></ul><ul><li>216 texts a month, free </li></ul><ul><li>Earn more by clicking ads or buying products </li></ul><ul><li>You must be 16 to 24! </li></ul>How Blyk uses its customers’ social networks
    • 39. 1. Transacting and doing <ul><li>Entertainment, fun, amusement, games </li></ul><ul><li>Portable multimedia players </li></ul><ul><li>Mobile gaming </li></ul><ul><li>Automotive infotainment </li></ul><ul><li>Voice-verification purchases and payments </li></ul><ul><li>Real-time reality shows </li></ul><ul><li>Sports events viewed from others’ seats </li></ul>Coming soon with PMT?
    • 40. 2. Connecting and networking <ul><li>Location-based services </li></ul>
    • 41. 2. Connecting and networking <ul><li>Location-based networking </li></ul><ul><li>Traffic reports based on actual real-time traffic </li></ul>
    • 42. 2. Connecting and networking <ul><li>Location-based presence </li></ul><ul><li>When you access Facebook or Twitter, don’t you want to know who else is “present”? </li></ul><ul><li>PMT allows “presence” and “location” to be combined </li></ul><ul><li>Show up at the stadium, or the mall, or the concert, and see which of your friends are there, too </li></ul><ul><li>Games involving physical location </li></ul><ul><li>Real-time traffic and weather reports, with local comments and details from other users </li></ul>Coming soon with PMT?
    • 43. 3. Sensing and understanding Technology will get better and better at enhancing our bodies
    • 44. 3. Sensing and understanding But sensory enhancements will be first
    • 45. 3. Sensing and understanding And sensory enhancements will get better <ul><li>Looks like a Bluetooth earphone </li></ul><ul><li>Actually, a directional microphone </li></ul><ul><li>Headcam </li></ul><ul><li>Always-on streaming video </li></ul>
    • 46. 3. Sensing and understanding <ul><li>Collective power of sensory inputs </li></ul><ul><li>What would “the news” be today without on-the-scene people videoing crimes and disasters? </li></ul><ul><li>Now imagine millions of mobile, networked cameras uploading their images, 24/7 </li></ul><ul><ul><li>How “real” will real-time news actually be? </li></ul></ul><ul><ul><li>And soon these images will be sorted and tagged by software that recognizes locations and faces! </li></ul></ul>
    • 47. 3. Sensing and understanding <ul><li>“ Cloud sensing” using collective inputs </li></ul>Source: Economist, Sept 25, 2008 <ul><li>Earthquakes can be detected using a few thousand individual laptops </li></ul>Jesse Lawrence Asst Prof of Deep Earth Seismology Stanford
    • 48. 3. Sensing and understanding <ul><li>Network-enhanced understanding </li></ul><ul><li>Sensory inputs drive our brains – our “prediction engines” </li></ul><ul><li>As a network with linked senses, the collective human race is destined to become more intelligent on its own </li></ul><ul><li>Ad hoc “smart networks” of connected users anticipating events, collectively </li></ul><ul><li>Voice-analysis lie detectors and emotion sensors </li></ul><ul><li>Molecular “sniffers” and pheromone detectors </li></ul>Coming soon with PMT?
    • 49. We are already merging with our technology
    • 50. But computers will never be able to do everything
    • 51. The real secret to a great brand… The “ Mechanical Turk” (1769)
    • 52. There has to be a person in there… <ul><li>Your employees need to be </li></ul><ul><ul><li>Engaged in their work and </li></ul></ul><ul><ul><li>Enabled to accomplish their mission </li></ul></ul><ul><li>Your employees are networked together, now </li></ul><ul><ul><li>Like customers and honey bees, they communicate with each other </li></ul></ul><ul><li>What you want from your employee network: </li></ul><ul><ul><li>Self-organization </li></ul></ul>
    • 53. So give your honeybees dancing shoes <ul><li>HP has 40,000 unpaid retiree volunteers! </li></ul><ul><li>National Semiconductor provides an online platform for customers to design their own product improvements </li></ul><ul><ul><li>Customers generate 20,000 new ideas each month! </li></ul></ul><ul><li>3M relies on “lead user” customers to experiment with home-made improvements and upgrades </li></ul><ul><li>In B2B: Help your advocates within prospect companies by providing ready-to-use PPT decks </li></ul>Source: “Under New Management,” New York Times, 26 March 2006
    • 54. So give your honeybees dancing shoes <ul><li>Facilitate networked, moderated reviews of products and services, including your own </li></ul><ul><li>Let customers sign up “buddy lists” for checking their friends’ opinions, or just checking in </li></ul><ul><li>Provide useful, location-based information to accommodate personal mobile technologies </li></ul><ul><li>Above all, have fun, and let your bees have fun! </li></ul><ul><ul><li>People like to connect with other people – your corporate mission should be to help them do this! </li></ul></ul>
    • 55. And remember: People are just big honeybees!
    • 56. <ul><li>Peppers & Rogers Group </li></ul><ul><li>Management consultants in customer strategy issues </li></ul><ul><li>Magazines, newsletters, research white papers </li></ul><ul><li>Offices around the world Norwalk, London, Brussels, Istanbul, Dubai, Sao Paulo, Singapore, Sydney </li></ul>To subscribe to the “1to1 Weekly” email newsletter: [email_address] On Twitter: @DonPeppers

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