How Your Customers' Social Circles Influence What They Buy, What They Do and Where They Go

How your customers’social circles inﬂuencewhat they dowhere they gowhat they buy.

@paddayHi, my name is Paul Adams. You can ﬁnd me on Twitter.I work at Facebook, in the Ads team. Iʼm the Product Manager for Ads user experience, basically helping to ﬁgure out what advertising should be on Facebook in the future.WHAT IʼM TAKING YOU THROUGH TODAY ARE MY OWN THOUGHTS, NOT NECESSARILY THOSE OF FACEBOOK.

The web is being rebuilt around people. People live in networks. Networks determine how people inﬂuence each other.I want to talk to you about three things today, and here they are.Almost anyone working in the online commerce, advertising or marketing space will need to become familiar with these three things in the foreseeable future.

The webis being rebuiltaround people.

1 2 3 BOLTED ON FROM THE G ROUND UPLetʼs look at what has happened in the past 10 years. The web was originally built to link static documents together (left), but evolved to incorporate social media (center), and weʼre nowseeing a web built around people, where their proﬁles and content are moving with them as they visit different websites (right).

Letʼs look at some examples. Up until recently, most of us chose hotels by going online and looking at aggregated reviews. But these reviews are appended to hotels. Bolted on.

Look what is happening now.

We can see which of my friends has been to Tokyo. The experience of looking for a Tokyo hotel is now oriented around my friends. A web rebuilt around people.

Here is another example. The New York Times. There is a bar along the top showing which of my friends have read or recommended articles.

Sites that we give permission to will know who we are, and who are friends are.

So youʼre going to appear as your Facebook identity on this Government website. Your proﬁle follows you, and your network of connections follows you.

Tweet ReviewThis is also starting to happen in search results. Weʼre starting to see results from people we know.

Hereʼs another example from Yelp.

My identity and friends from Facebook are here on Yelp.

Weʼre also seeing the world of commerce starting to reorient itself around people. This is Living Social, a Groupon competitor.

With Living Social, you get your deal for free if you get three friends to also buy the deal. The product is oriented around people and their interactions.

The web is being rebuilt around people.This is an undeniable fact. Businesses are going to have to understand this and adapt, or other more disruptive companies will take their place.

So, why is the web being rebuilt around people?Itʼs pretty obvious why this is happening.

In a nutshell, the internet is catching up with ofﬂine life.Social networks are not new. For thousands of years, people have formed into groups, built strong and weak relationships with others, formed allegiances, and spread rumor and gossip. Theemergence of the social web is simply our online world catching up with our ofﬂine world.

http://lucasgalo.ﬁles.wordpress.com/2009/01/h-and-g-lg.jpgWhat is critical to understand is that as technology changes the tools we use to communicate, we still use the same behavior patterns that we evolved over those thousands of years.

social is a way of thinkingThe social web, and all social media that operate within it, is a way of thinking as opposed to a new channel. Itʼs not about sales, or ads, or click-through rates. Itʼs about pursuingrelationships and fostering communities of consumers. Itʼs about rethinking how you make plans when your business is built around your customers, with them in control.

Whatʼs our social strategy?I often hear people say things like this. This is wrong. You canʼt bolt it on.

social Itʼs like electricity.Itʼs better to think of social in the same way as designers of electronic appliances think of electricity. Itʼs just there, its the hub, powering other things.

The web is being rebuilt around people.OK. So the web is being rebuilt around people.

So, why is thisimportant to me?

Buy this? No.People are increasingly using the web to get the information they need from each other, rather than from businesses.People always sourced information from each other ofﬂine. But up until now, online information retrieval tending to be from a business to a person.

?People are increasingly likely to ﬁnd out about products and brands from their friends rather than from your business. It means that it is much harder to control how people ﬁrst come toexperience your messages.

This is already happening. Timbuk2 are an awesome local bag company in San Francisco.

Here we can see a review on their homepage. We donʼt know who this person is, but in the future weʼll know things like who out of our friends has bought this bag, who has bought thisbrand, who bought competitor brands, what do our friends think of this brand, and weʼll have ways to communicate with them to ask their opinion.

You need to reorient your business around people.if you dont, someone else will

There is only one way to do this.And itʼs not easy.

Understand what motivatespeople to act in the waythat they do.

Understand behavior. Not technology.The worst thing you can do is focus on technology. Technology changes fast. It comes and goes. Human behavior changes slowly. Itʼs more predictable.

The web is being rebuiltaround people.Understand what motivatespeople to act in the waythat they do.

People live in networks.If we want to understand what motivates people to act in the way that they do, we need to understand that people live in networks. When we think of our customers, itʼs easier to think aboutpeople in isolation. People as independent actors. But that doesnʼt exist. People live in networks.Peopleʼs networks inﬂuence almost every aspect of their lives. What they do. Where they go. What brands they prefer. What products they buy.

ﬂickr.com/photos/nguyentrung/140844453/There are people all around us almost all the time.This is increasing as more people move to and dwell in urban environments.

ﬂickr.com/photos/superciliousness/37622331/On our way to work.

ﬂickr.com/photos/ikhlasulamal/2466065770/On our smoke break.

ﬂickr.com/photos/bouldair/5434725720/When we try on clothes.

ﬂickr.com/photos/rocketboom/1054630311/When we eat dinner.

ﬂickr.com/photos/armandolobos/3782717711/When we play sports.

ﬂickr.com/photos/dominicspics/176971797/When we go for a drink.

People livein networks.

So, what do these networks look like?To build businesses oriented around social behavior, we need to understand what peopleʼs networks look like.

People have multiple independent groups of friends.The ﬁrst thing to know, is that people have multiple independent groups of friends.

They look like this. Multiple, independent groups, usually made up of less than 10 people.

Shared experience Lifestage HobbyThese groups form around life stages, hobbies or shared experiences.

People have different types of relationships.The second thing to know about peopleʼs networks is that we have different relationships with different people, and are closer to some people than others. Each relationship between twopeople is unique.

Letʼs look at one of these groups.

Although our groups of friends are small, usually containing less than 10 people, not all members of the group are equal.

We are closer to some than others.

We trust some people in a group on one set of topics, and others on a different set. We trust on of our friends more on good places to eat, another on good places to go on vacation. Thinkabout how this is true in your own life.

Although every single relationship is unique...

Temporary ties Weak ties Strong ties...we have a framework for thinking about the different types of relationships people have with others. Strong ties. Weak ties. Temporary Ties.

Strong tiesStrong ties are the people you care about most. The people you trust deeply.

10Most people have less than 10 strong ties.

Weak tiesLets look at weak ties. Weak ties are people you know, but dont care much about. Your friends friends. Some people you met recently. Typically, we communicate with weak ties infrequently.

150So we can only stay up-to-date with up to 150 weak ties.

http://lucasgalo.ﬁles.wordpress.com/2009/01/h-and-g-lg.jpgRemember our friend in the neolithic village? Villages were 150 people. Same is true for Roman army, online games, wikipedia.

Temporary tiesTemporary ties are people that you have no recognized relationship with, but that you temporarily interact with.

flickr.com/photos/jamesjin/58723031/A store assistant,

flickr.com/photos/truckpr/3788915432/sizes/l/a call center employee,

the person who wrote the online hotel review,

the person who answered your forum question,

the person who commented on your YouTube video,

the person who you bought from on eBay.

Temporary tiesOnce the task has been completed, temporary ties are unlikely to interact again. You dont know these people beyond the one conversation you had, or the words they typed and whateveronline proﬁle they have. Your interaction with them is temporary. With the rise of user generated content online, temporary ties are becoming more important.

Temporary ties 150 Weak ties 10 Strong tiesThat was a lot of information - lets recap.

The independentgroups areconnected byindividuals.

The person in the centre is connecting these four independent groups. And each person here is connected in turn to other groups.

So just thinking about 10 strong ties.

Letʼs remove the other people. So just 10 strong ties.

Letʼs spread it out a bit so we can see better.

Now letʼs assume that each of those people is connected to 4 groups. So, heʼs connected to 4 groups...

Heʼs connected to 4 groups...

Sheʼs connected to 4 groups...

All 10 strong ties are connected to 4 groups - then that is 40 groups. Look at how many people are connected together! Many hundreds. Itʼs already impossible to see the wood from thetrees.

The people who connect groups are not special.Which basically means this.

10 strong ties 100 strong ties 1,000 strong ties 10,000 strong tiesSo letʼs look at this another way. If each person has 10 strong ties, and they pass a message onto each of their strong ties - buy this brand, vote for this candidate, go here on vacation, thenthat message only has to be passed on 3 times to reach 10,000 people. Remember, this is 10,000 people who have been told something by someone they are very close to, someone theytrust deeply.

People live in networks.Their networks are made ofsmall connected groups.The people who connectgroups are not special.

Networks determine how people influence each other.So that leads me to the third thing I want to talk about today - the topic of influence. Weve learned that people live in networks. These networks influence where they go, what they do, andwhat they buy.

What their social network looks like What they have experienced beforeThere are two primary factors in understanding whether someone can be inﬂuenced: - What their social network looks like- What they have experienced beforeIʼm only going to focus on the top one today.

We often look to others when making decisions.This may sound obvious but letʼs look into some detail around this.

People try to behave rationally, they try to make objective decisions, but other factors mean that they cant. The problem is that we all have limited access to information, and limited memory.Because of this, we have learned to rely on others to help us make decisions. We assume that other people know things we dont. In fact, we do this so often, that we automatically look tothe actions of others, even when the answer is obvious.

Our network structure impacts who we ask.When it comes to deciding who to look to to help make a decision, the structure of their social network is a major factor.

How many connections we have. Who knows whom. The strength of our relationships. The proportion using different brands.This includes how big the network is, and who is connected to whom. For example, more connections within our groups can reinforce a behavior. If one of our friends recommendssomething, we may consider it. If three of our friends recommend something, weʼre almost certainly going to consider it. Before ideas can reinforce themselves within groups, they need toenter the group from somewhere else. Some group members need to know people in other groups.

A B BLOGGERConsider these two social networks: In social network A, ideas canʼt spread between the groups because no one is a member of more than one group. Even though one person is aprominent blogger, that community just talks to one another and ideas canʼt cascade to the other groups.In social network B, two people are in two groups. Both of these people can pass ideas from one of their groups to the other. When it comes to creating cascades and trends, looking fornetworks with connected groups is more important than looking for one highly connected person. To maximize the spreading of ideas, it is important that ideas are seeded in social networksthat have connected groups, and have groups where most of the members know each other.

BLOGGER FRIENDSHereʼs a simple example. Letʼs imagine an “inﬂuencer” was telling me to buy Adidas. But two of my other friends are telling me to buy Puma. Who do you think is more inﬂuential?

Understanding how people influence each other is not simple. Its certainly not as simple as many people believe - that there are a small number of very influential people in society, and ifyou reach and influence them, they will influence hundreds, thousands and even millions of others. Many research studies have shown that other factors play a much bigger part in howpeople are influenced.

For starters, weʼve seen that peopleʼs networks donʼt look like the diagram at the top.

We saw earlier that they look more like this.

Weʼre heavily inﬂuenced by the people around us.So letʼs break this down.

flickr.com/photos/joanna8555/4041537710/Studies into buying behavior and decision making have consistently found that we are disproportionally inﬂuenced by the opinions and actions of the people around us. These can be thepeople around us in a physical space. Studies have shown that students with studious roommates become more studious themselves, and diners sitting next to heavy eaters tend to eatmore.

Voting studies from the 1940s showed that when it came to deciding who to vote for, people were less inﬂuenced by the media, and much more heavily inﬂuenced by members of their familyand close friends. This is also true with buying behavior today. This study might be 60-70 years old, but remember that these behaviors are hard wired into all of us.

Whethersomeone can beinﬂuenced is asimportant as thestrength of theinﬂuencer.

Influential? Influenceable?There may be some individuals who have great influence, but it is without doubt that how people influence each other has many other factors. A key insight is that when we study how peopleinfluence each other, its important to focus on the person being influenced as well as the person doing the influencing.

People have varying thresholds for adopting new ideas. Our threshold is inﬂuenced by experience, such as good or bad past experiences with a brand. Itʼs also inﬂuenced by whether wehave a risk-averse personality and deep-set habits.

Our strong ties inﬂuence us the most.Research on buying behavior and decision making have consistently found that we are disproportionately inﬂuenced by the opinions and actions of the people we are closest to emotionally—our family, our best friends, and sometimes some of our co-workers.

Buy this OKStrong ties often wield the most inﬂuence over peopleʼs decisions. For example, they are often the biggest factor in purchase decisions. Think about the last time you consulted a friend onwhether to buy something. Chances are, it was quite recently.

Youʼre unlikely to buy this Mercedes because Roger Federer is sitting on the bonnet. People canʼt relate to celebrities. If celebrity endorsement worked as a way to change peopleʼs behavior,weʼd all be skinny.

So the best way to think about this is that the “influentials”, the highly connected people, the domain experts, the celebrities, they can only make us aware. They are not going to influence bigchanges in behavior. If we want to influence how people decide, we need to focus on strong ties.

We’re inﬂuenced by thepeople around us.Mostly by our strong ties.

The web is being rebuilt around people.Social behavior is tens of thousands of years old.Understand what motivates people to act in the way that they do.People live in networks.Their networks are made of small connected groups.The people who connect the groups are not special.Weʼre inﬂuenced by the people around us.Mostly by our strong ties.

Weʼre increasing our reliance on our social networks to make decisions.[The web will increase our reliance on our social network to make decisions]

Information MemoryThe web is increasing the volume of information available to us, but our capacity for memory isnt changing. So its likely that well increasingly turn to others to make decisions. There wasonce a time when we picked what restaurant to eat in by looking in the window. But now, we often cant decide without pulling out our phones and searching the web for reviews from peoplewho have eaten there before.

Weʼre not going to turn to strangers, weʼre going to turn to the people closest to. Just as we have always done.

And it looks like this.

Awareness Consideration Preference Action LoyaltyThe ﬁrst thing. Stop using this funnel to think about consumer behavior. It doesnʼt exist. People donʼt act in a rational way. Nothing could be further from the truth. People live in networks.They are constantly inﬂuenced by the many things going on around them.

Iʼm not the ﬁrst person to tell you this. There has been a lot of talk in the past couple of years about the funnel, and how it doesnʼt reﬂect how people behave anymore. For example,McKinsey did some research and mapped out this consumer journey - but this also considers people as independent actors. It doesnʼt take fully into account the fact that people live innetworks. It treats people as being isolated from other people.

Forrester also published a new type of funnel. Here is their diagram. They do talk about other people, including recommendations from friends, but I donʼt think this diagram will help you sellideas to your manager.

Show people this diagram instead of the funnel. The second thing. Get really good at targeting and focus on strong ties. People are most inﬂuenced by their strong ties. Find the right peoplefor you - people whose attributes match that of your brand, your product - people whose lifestyles mean that they are likely to want and love your brand. Find these people and make it easyfor them to tell their friends who may be interested.

The main argument to this is that you canʼt get reach. But you can. Think about this person in the middle. She has 6 strong ties.

Now imagine each of her friends have 6 strong ties. That is 36 people who have been told by their close friends.

Now imagine each of those people told 6 strong ties. Thatʼs 216. This scales fast.

1000 passionate fans. They each told 10 friends. Who each told 10 friends.Imagine you had 1000 passionate fans. Almost every brand has at least 1000 people who love what they do, even if it ﬂies in the face of popular opinion. Imagine they each told 10 friends,and those friends each told 10 friends about how great you are, or your new product, or how you make them feel.

Thatʼs 100,000 people who have been told by someone they care about and trust.This approach scales. Donʼt be afraid to focus on highly targeted small connected groups of strong ties.

Thank you!

The web is being rebuilt around people.Social behavior is tens of thousands of years old.Understand what motivates people to act in the way that they do.People live in networks.Their networks are made of small connected groups.The people who connect the groups are not special.Weʼre inﬂuenced by the people around us.Mostly by our strong ties.Find out more:www.thinkoutsidein.com/blog/2010/07/data-behind-real-life-social-network/ @padday

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How Your Customers' Social Circles Influence What They Buy, What They Do and Where They Go

by Paul Adams

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