Your social customers can and should be some of your most valuable corporate assets. Find out why and how - download the Science of Social 2 eBook preview from Lithium Principal Scientist, Dr. Michael Wu

1. the science
of social 2social strategies for long-term business advantage—
and the science behind how they work.
based on research, strategies and insights from the desk
of Lithium Chief Scientist, Michael Wu, Ph.D.
foreword by Geoffrey Moore
fullrelease
summer2013

3. foreword i
foreword
As we look out at the world in 2013, it is hard to overstate the impact digital
devices and services have had on human culture over the past two decades.
Three waves stand out in particular. The first is the wave of Access. Largely
enabled by the World Wide Web, all citizens everywhere effectively became
connected to all information anywhere. One might quibble about this at the
margins, but compared to any other time in history, more people have access
to more information—by a lot. The second wave is Media. Massive growth in
network bandwidth coupled with deeply compelling end user devices brought
us a digital experience with an emotional dimension equal to its intellectual
counterpart. No more was computing just for the mind—now it was for
the heart and soul. The third wave was Mobile. An explosion of wireless
connectivity combined with dramatic reductions in device manufacturing
costs made digital truly anytime, anywhere, and as this decade unfolds, for
anyone. It is an amazing time to be alive.
But not for the faint of heart. Disruptive innovation of this scale wreaks havoc
on established industries. Banking, publishing, travel, hospitality, media and
entertainment, retail, and advertising are all being re-engineered even as
we speak, and we can only hope that government, health care, education,
and public safety are not far behind. In particular, the consumer economy
has been upended entirely by virtue of one simple fact: consumers are
packing digital hardware 24/7, and they expect to be able to use it wherever
and whenever it’s convenient for them. This is an expectation set largely by
megabrands like Apple, Google, Facebook, and Amazon, but it’s one which
must be met by everyone else—despite the fact that they haven’t a fraction of
the technology or engineering resources.

4. ii The Science of Social 2
The good news here is that a fourth wave of change, Cloud Computing, is
democratizing access to these capabilities. The bad news is, most executive
teams haven’t the foggiest idea how to use them. Simply put, we haven’t as
yet had enough time to transition from pre-digital strategies, tactics, and
systems, to post-digital. It’s a mad scramble, and while it’s exhilarating for
the innovators, it’s frustrating for the pragmatists, and downright scary for
the conservatives. We need some ordering frameworks here, and we need
them now.
At my end, I have been working on one such framework, called the Four
Gears. It deconstructs digital consumer marketing into four core activities:
acquisition, engagement, enlistment, and monetization. The first and the
last of these are driving an enormous amount of direct response marketing
online, with substantial short-term success, but potentially with a negative
impact long-term on the consumer experience. That is, if all we do is acquire,
monetize, acquire, monetize, eventually we wear out our welcome.
This is where the other two gears come in—engage and enlist. Engaging is
all about creating user experiences that make people want to come back.
Enlisting is all about them going out of their way to tell their friends. Wherever
we can authentically engage and enlist, we add to our credit with consumers,
gain permission to monetize in the future, and gain invaluable allies in our
efforts to acquire the next cohort of end users.
In sum, acquisition and monetization are the performance gears. They reap
the rewards sown by engagement and enlistment which are the power gears.
At any given time, if one of these gears is turning more slowly than the others,
and turning one’s attention to gears that underperform is the key to achieving
the next stage of growth. That brings us to the fifth and final wave of change to
consider here, the impact of Social on each of these gears and the consumer
relationships they drive.
In this context, it has been my privilege to engage with the team at Lithium,
to join their board of directors, to work with their Chief Scientist, Dr. Michael
Wu, and to watch and participate in the evolution of what he and they call the
Science of Social. For social does indeed need a science. We need to be able
to map the dynamics of human behavior to the programs and systems of

5. foreword iii
digital consumer marketing, commerce, and support. This is the path out of
the forest, the one that lets us leverage the extraordinary reach and frequency
of digital access while building equity with our target customers instead of
consuming it. The Science of Social 2 provides a very good roadmap for this
journey. It uses the Four Gears to frame a set of marketing challenges and
then applies the science of social to solve for them. How do you leverage
social to acquire new prospects? How do you leverage it to engage and enlist
them? How does this interface with how you monetize your business model?
What are the best practices to follow? What are the pitfalls to avoid?
These are the questions I hear every day. If these are your questions too, then
you will definitely want to read on.
—Geoffrey Moore

6. 4 The Science of Social 2

7. introduction 5
introduction
Social isn’t new. We’ve been social since the Stone Age. Commerce isn’t new
either. We’ve been trading since we made the first hand axe. But layer a new
and powerful technology (social media) on top of these age-old behaviors,
and it gets complicated.
Today, we can easily socialize with mind boggling numbers of people
on Facebook. We can jump on eBay and sell our first edition Tom Sawyer
to a collector in Buenos Aires or buy an eBike from a family cycling shop
in Hamburg. Social media has turned our age-old goods and services
distribution infrastructure on its head and it’s put an enormous ultimatum to
businesses: adapt or die.
That we are social isn’t new, but because of the Internet, how we behave as
consumers is radically new. Social media has transformed how we consume,
assess and share our reactions to brand experiences—and what we expect
from brands in return for our loyalty. Because our praise and complaints
stand on public record, forever, we’re more empowered to make real demands
on the brands we do business with. And so we do—in spades.
Social media technologies haven’t altered the social principles behind
human behavior. But they’ve utterly transformed our habits and powers of

8. 6 The Science of Social 2
communication—and, as a matter of course, revolutionized what we expect as
consumers. Today’s social customers have changed business-as-usual, forever.
How well your company answers its social customers’ demands will define
your bottom line. Consumers today expect nearly instantaneous service from
whatever channel they happen to be using—an enormous challenge to
companies who can’t possibly scale their internal teams to meet these
growing demands. Meanwhile, most companies are still using traditional
two-gear methods in a new world: acquire customers and monetize them,
just as they’ve always done offline.
In the social era, when a simple acquisition-
to-monetization strategy works at all, it’s just
not sustainable. The reason is that a simple
acquire-monetize model commoditizes the
product. That leads to an offer-based business
model of constant discounting. While this
might work short-term, it’s ultimately not
profitable in the long run.
The pressure is on to find sustainable answers to the social media revolution.
After all, it’s not exactly news. We’ve lived with social media for some time now.
Yet the paradigm shift social media has brought on is truly unprecedented and
the ground has far from settled.
social: as disruptive
as it gets
You might not feel it yet
(though it’s likely that you do).
If you’re reading this book,
odds are your company is at
an inflection point. You’ve heard the famous quote from Erik Qualman, author
of Socialnomics, “The ultimate ROI of Social is whether your business will
a
cquire
mon
etize
source: Forrester Research, Inc.
‘ok’, ‘poor’ or ‘very poor’ on
the experience they delivered
64%of companies
ranked

9. introduction 7
still exist in five years.” You need a response to social disruption and you’re
searching for adaptive insights and guidance on the very best way forward.
Though we might have grown weary of constant adaptation and secretly
wish it would all settle down, it’s important to remember that revolutionary
times are fleeting times. Revolutionary times offer a small window of
opportunity for grabbing a competitive position in the emerging order. Those
who figure it out first and best are poised to take the lead in the new social
era and keep it for a long time. Unlocking the codes to winning tactics and
best practices in the new era is what
this book is about. The Science of
Social is for those who intend to
survive this period of disruption, adapt
and gain a lasting competitive edge.
Starting now.
science: as strategic as it gets
The social marketplace is hugely complex and our very survival depends on
how well we navigate it. To many, the task feels insurmountable. It’s easy to
slap up a Facebook page, call your business social and call it a day (i.e. bury
your head in the sand). But if that approach hasn’t held you back with this
era’s social customers yet, it will. Count on it.
The good news is that even across the vast complexity of social media, the way
people behave socially and commercially is, in fact, highly predictable—with a
little help from science. That’s great news for brands trying to finesse a social
strategy. It’s also the discussion we began in The Science of Social: influence,
superfans, gamification—how to build and strengthen relationships.
Technology has changed, but humans haven’t. That’s a very useful insight for
business. Because while new technologies make adaptation necessary, the
social and psychological principals at work with your audience make effective
adaptation possible—if you know the science behind how it works.
leaders in customer
experience outperform
their peers
by 22.6%
source: Forrester Research, Inc.

10. 8 The Science of Social 2
A social strategy—a real one—is an adaptation to the new social customer,
plain and simple. Doing business in the new paradigm requires a new
paradigm for your business as well. That shift begins with building strategies
for deeper engagement and enlistment of your customers.
This book is about adapting your business to survive, and thrive, through
a permanent disruption of the traditional business model. Success today
is more complex and more sophisticated. Lasting competitive advantage
is no longer possible with the old two-gear acquire/monetize paradigm.
In the age of social media, businesses must build a viral loop where
social customers are fully engaged and happily enlisted to make
brand experiences better for everyone. Successfully engaged customers
play new and vital roles in the business, enlisted to help solve problems
for other customers and
share their passion for
the brand. No less than
four gears are needed
for long-term competitive
success today—acquisition,
engagement, enlistment and
monetization.
Before we expand upon the
Four Gears Model, let’s take
a moment to look back at The
Science of Social and talk a bit
more about the impetus behind The
Science of Social 2.
customers who engage with companies over social
media are more loyal and spend 20% to 40% more
with those companies than other customers
source: Bain and Company
interest
awareness
desire
action
a
cquire
en
gage
enl
ist
mon
etize

11. introduction 9
the science of social
The Science of Social unpacked strategies for how to scale, lower costs
and improve your customer experience by cultivating superfans—that most
influential, knowledgeable and prolific 1% of your customer base who make
going social so hugely worthwhile. Along the way, we dug into the basics
of forming and strengthening relationships, and we considered some
key behavioral theories of what shapes human motivation, influence and
engagement. Finally, we introduced some general strategies for gamification,
in which all those insights and theories get put into action.
The Science of Social 2 connects the discussions of The Science of Social
to the bigger economic picture in order to drive more holistic business
strategies. Here, we bring you the latest insights and research from
Lithium’s chief scientist, Dr. Michael Wu, laid out on the structure of the
Four Gears business model devised by business and technology strategist,
Geoffrey Moore. This social strategy not only addresses the acquisition
and monetization of customers through social media, but also the critical
engagement and enlistment tactics that result in that all important viral
loop—when customers acquire more customers for you. As complex as
social media is today, it’s crucial that businesses keep their eye on the real
prize—using social to create a reliable, predictable and sustainable engine
for economic success.
The Science of Social 2 considers the business implications of exactly how
social media has changed customer communication, the customer journey
and customer relationship management (CRM). Most notably:
1. Customer relationships—peer-to-peer and customer-to-company—
are crucial.
2. The only way to win on loyalty is to understand the science behind
relationships and think long term.
3. Business advantage will go to companies willing to adapt to the call
of social with fundamental changes in technology, strategy, internal
structure and cultural philosophy.

12. 10 The Science of Social 2
4. It takes the healthy motion of all four gears in the Four Gears model—
acquire, engage, enlist, monetize—to get a viral loop spinning that will
persist and keep you in it for the long run.
The Science of Social 2 is the deep exploration of that final point above. We’ll
devote a full chapter to each gear and examine each up close. We’ll look
at the science behind how they work and along the way talk about how to
develop sustainable strategies for keeping all four gears in motion.
First, let’s dig a little deeper into those business implications—of just
exactly how the rise of social media creates that need to re-think our
communications strategies, how we motivate customer behavior and how
we manage the customer relationship.
communication in the social era
In The Science of Social, we talked a lot about social customers and how
they differ from traditional customers. Social customers are impatient,
empowered, connected and sophisticated. They always do their homework
and they do it socially.
We know social customers trust one
another more than they trust company
spokesmen. They go to customer
communities to learn the real deal about
your products, and they validate your
marketing messages through peer-to-
peer interactions over social channels
like Twitter and Facebook. There are
huge and important differences in the
way communication works in a traditional
marketplace (print, TV, radio), and the one
described above. Social communication
is born, lives, breathes and dies in a manner quite different from the way
traditional communication does. Here’s how.
63%
of consumers search
online for others with
similar problems
when they need help—
only 19% of brands
think that’s the case
source: CMO Council

13. introduction 11
Traditional communications are:
transient. Communications between a company and a customer are
usually not recorded.
opaque. Even if they are tracked, they are not easily retrievable, and
therefore not visible to other customers. Opaque communications are
much easier for businesses to manage and control.
unidirectional. Traditional communication is not two-way. Also, it’s
typically handled by siloed departments. For example, customer-to-
company communication is usually handled via the support/service
department. Company-to-customer communication generally goes
through the marketing/PR department.
one-to-one or one-to-many. Traditional communication is seldom
(if ever) many-to-many. Because customers don’t know who or where
other customers are (owing to the transience and opacity of traditional
communication channels), coordination between customers is difficult.
Now let’s look at the characteristics—and consequences—of communication
changes in the social era.
Social media communication is:
persistent.Socialcustomershavemegaphonesforpraiseandcomplaints
alike. Once they use them, the record of those statements on your brand
is permanent. Customers can say absolutely anything about you and you
can’t erase it.
transparent. What customers say about a brand is public, searchable
and visible to all, enabling communication and coordination between
customers. This gives customers much greater control of their
conversations with brands. And that empowers customers.
bi-directional. Unlike traditional channels, social media inherently allows
communication to go both ways—i.e. customer-to-company and
company-to-customer. With everyone in the company talking to any one

14. 12 The Science of Social 2
of your customers, the siloed model becomes an enormous obstacle. The
new problem of “who owns social?” now arises with different departments
vying for control.
almost always many-to-many. This
means the sheer number of potential
conversations grows really big, really
fast. Specifically, with N customers, the
number of potential conversations is
~ N(N-1)/2 ~ ½N2.
It’s easy to see how the volume of social
media conversation quickly becomes
colossal. Companies can’t possibly scale internal teams enough to respond
to the tsunami of social customer conversations out there. Here’s how the
math works:
If you have one superstar agent who can handle 1,000 social conversations on
average, 10 such agents would be able to handle 10,000, 100 would be able to
handle 100,000. As we can see, that’s not nearly enough.
If you have one superstar agent who can handle 1,000 social conversations on
average, 10 such agents would be able to handle 10,000, 100 would be able
to handle 100,000. As you can see, that’s not nearly enough to keep up with
customer increases.
source: Forrester Research, Inc.
of those who have
a dissatisfying sevice
experience share it
on social channels
29%
10k
customers
~50M potential
conversations
100
customers
~5k potential
conversations
1k
customers
~½M potential
conversations
only social can scale social

15. introduction 13
If you have 1000 customers, you’ll have only 1000 customer-to-company
communications, but there will potentially be 499,500 customer-to-customer
communications. That difference gets to be even more dramatic as your
customer base grows. You can see that it can all get very out of control very fast.
Because you have many more customers than employees, the only way to
build the infrastructure to meet that level of demand for interaction is to
enlist the help of your customers. Only social can scale social.
Because social media communication is many-to-many, the relationship
between the customer and the brand has fundamentally changed. This can
be a death knell or a game-changer. Those brands slow to adapt to the new
order are doomed. Those determined to figure out social first and best are
already reaping enormous benefit and gaining huge competitive advantage.
This is the sort of adaptive paradigm shift we’re talking about: scaling
social with social. It means inviting customers to play an entirely new and
active role in the business. We’ll discuss how to do exactly that, and more,
in Chapter 4: Enlistment. First, let’s look at the second biggest implication
of social media—it’s impact on consumer behavior, and in turn, the
customer journey.
the new, non-linear customer journey
In a product-centric, sales-based economy, the traditional customer journey
is linear: Marketing → Sales → Support.
As businesses scramble to both scale for the global consumer and gain
operational efficiency, a goods-dominant logic must give way to a service-
dominant logic. That means, the traditional product-centric, sales-based
economic model must become a service-centric, subscription-based
economic model. As more businesses move to this service-dominant logic,
we find that more of the products we buy are really services to which we’re
subscribed (e.g. mobile services, app stores, Zipcar, software as a service,
infrastructure as a service, etc).

16. 14 The Science of Social 2
support
company
advocates
END OF
PROFITABLE
RELATIONSHIP
linear vs. non-linear
customer journey
leads
prospects
potential customers
linear non-linear
sales
marketing
customers

17. introduction 15
In a subscription-based economy, social consumers expect this operational
efficiency from brands. So the personal service expectation is service near
real-time, at any time—the business hour is meaningless. They know their
purchase comes with no obligation. They can discontinue service at anytime,
defect to whatever is cheaper and pay only for what they consume.
Moreover, they trust their peers more than they trust brands—so when they
need that personal service right now, they turn to their fellow customers.
Social media makes that very easy.
Today’s social customers have exponentially more connectivity and influence.
It’s easy for us to find a dinner recommendation on Yelp! from a fellow foodie,
or tap our Facebook friends to help decide which movie to see this weekend.
The subscription-based economy has fundamentally changed our customer
expectations, resulting in a non-linear customer journey that is quite different.
Non-linear doesn’t mean there’s no more purchase funnel. What’s not
linear about the new customer journey is that the point of sale is now only
the beginning of a long-term customer relationship. There’s no limit to how
many times loyal customers—and those they influence—might pass through
the purchase funnel.
Here’s what it means for business:
1. In non-linear customer lifecycles, customer lifetime value has
the potential to be far more profitable than the initial point of sale.
That’s why customer relationships become critically important,
because relationships are what keep them loyal and continuing
their subscription.
2. Because of the transparency of social media, service experiences
influence future purchase events more than ever.
3. Because social media allows for many-to-many communication,
an organization’s relationship with its customers—and between its
customers—can be a game-changer.
Lastly, let’s take a look at how social media has changed the relationship
between your brand and your customers.

18. 16 The Science of Social 2
the social customer relationship
It’s easy to bolt social media onto your traditional channels and continue
managing your customer relationships as usual. But, as we discussed in
The Science of Social, social is not just another channel. Simply being there
is not enough.
The changes brought about by social media are infrastructural, cultural,
pervasive, profound and permanent. The smartest business response is in
kind. Successful management of today’s social customer relationships means:
1. addressing what social media has done to revolutionize patterns
of communication,
2. adapting to the new non-linear customer journey, and
3. using open, transparent, peer-to-peer experiences to develop
an entirely new kind of relationship with the customer.
And that means programmatic changes to strategy, technology, structure
and culture.

19. introduction 17
support/service
marketing/PR
support/service
marketing/PR
traditional channelstraditional channels
traditional channelstraditional channels
social channelssocial channels
social channelssocial channels
social as just
another channel
pre-social
the full
power of social
bidirectional/social
company
company
company
strategy
You’ll need to develop strategies for
working with advocates and influencers,
and for cultivating superfans (that 1%
of customers who create most of your
content). The goal is to get to a point
where you are co-creating value with all
ofthem.Whetherit’sansweringtechnical
questions about your product, helping
to spread your marketing message
or defending your brand, these non-
corporate affiliates are not only crucial
for scaling, they are far more effective
than any company voice. We’ll talk more
about inviting customers to play these
new roles in the business when we talk
about the Four Gears model.
technology
Obviously your technology has to be
up to the challenge of today’s social
marketplace.Oneofyourchiefchallenges
will be to deal with the sheer scale of
social media conversations. Instead
of just managing single conversations
with N number of customers, your CRM
systems must track and manage roughly
½N2 conversations among those
customers. Since these conversations
are unstructured, these systems also
have to be intelligent enough to interpret
and understand the conversations,
prioritize them, route them to the proper
responder and integrate with existing
workflows.

20. 18 The Science of Social 2
structure
Social customers see your company as a single corporate entity—one
Twitter account, one Facebook fan page, just like any other user. They
don’t see you as a conglomerate of different departments.
Your company’s internal structure must reflect how the new social
customer sees you. When setting social strategy, facilitate interactions
between support, marketing, sales and product development. Breaking
down some of the organizational walls not only provides a more seamless
customer experience, it will also increase satisfaction and loyalty in the
long run.
culture
Lastly, it’s essential to rally the organization around becoming more
customer-centric. As conversations become more transparent, companies
must engage social customers with authenticity, transparency, honesty and
humanity. You may have scores of employees watching the social stream
from the inside, but from the outside, the entire world is watching.
putting it all together: the Four Gears model
So far we’ve looked at how social media changes communication in ways
that challenge the traditional business model. We’ve looked at how social
customers, their expectations and their behavior demand new reactions from
every department in your company. The problem is that brands scrambling
to respond to these pressures often try to herd customers straight from
acquisition to monetization.
Focusing on just the acquisition and monetization gears may work in the
short term—in fact it’s so tempting that most companies are doing just that. It
is, after all, the traditional model most of us are used to, where the profitable
relationship with the customer ends at the point of sale. But it’s also hugely
inefficient in the new subscription economy. It ignores the enormous power
and benefit of re-casting social customers as agents of acquisition. Not to

21. introduction 19
mention what a two-gear models does to margin compression (we’ll get to
that—how to avoid the Box of Death—in the monetization gear).
The overarching message is that a focus on the acquisition and monetization
gears alone won’t justify your investment in social because it isn’t sustainable.
The traditional model simply misses everything that social offers and
demands. You need four gears to win on customer experience in the long run.
the Four Gears: acquire, engage, enlist, monetize
The Four Gears model was devised by leading market development and
technology strategist, Geoffrey Moore. Moore is a Lithium board member,
founder of the Chasm Group and author of several best-selling books on
revolutionary business strategy including Crossing the Chasm and Escape
Velocity: Free Your Company’s Future from the Pull of the Past.
Moore’s Four Gears model reflects his decades of experience advising
disruptive technology companies on innovative market strategies. It’s a
simple, but visionary model for what it takes to achieve lasting business
success in today’s marketplace. It also serves as a fitting framework for the
deeper exploration of The Science of Social—Dr. Wu’s strategic and tactical
insights on influence, relationships and gamification.
The basic idea behind Moore’s Four Gears is that in order to drive a viral
following online—that is, a lasting influx of increasingly loyal customers that
keep you in business for the long run—your social strategy needs four “gears”
moving together as follows:
acquire
This is your starter gear, the mechanism that enables you to attract and
capture new consumers. The key challenge for the acquisition gear is
that the social web is huge, complex and getting more so every day.

22. 20 The Science of Social 2
engage
This is your power gear, the gear that nurtures prospects and customers,
and cultivates long term loyalty. The key challenge with the engagement
gear is the problem of sustaining interest and attention in a crowded,
noisy, competitive social marketplace.
enlist
This is your turbo gear, the gear that invites your customers to participate
in the business in a whole new way—helping you to acquire new
customers, support other customers and generate new product ideas.
The enlistment gear is the loop of the viral loop, the drive-train of the
Four Gears engine. The key challenge with the enlistment gear is the
problem of securing, motivating and sustaining participation.
monetize
This is your performance gear, the part of the machine that helps you
convert, deliver, satisfy and up-sell. They key challenge with monetization
in social media is that it’s easy in the short-term, but impossible in the
long term without all the other gears.
Which gear is most important? A common question. But that’s like asking
which wheel of your car is most important. If you’re missing one (or more)
you won’t get far. Some gears may spin faster than others or require different
commitments,butnoonegearismoreimportantthananyother.Asustainable
social strategy needs all four gears moving in concert to get a viral loop that
can persist in the long-term.
Done right, you get social customers who buy more, are willing to pay a
premiumforyourproducts,stayloyallongerandrecruitother customers. That
means increased sales, higher margins and lasting competitive advantage.
Over the next four chapters, we’ll explore each of the Four Gears and, in turn,
lay out the science behind why and how they work. As you dig into each, think
about your own company and which gear is performing best—and worst—for
your own business objectives.

23. introduction 21
acquire
starter gear
drive awareness
and interest
enlist
turbo gear
build advocacy
engage
power gear
build relationships
monetize
performance gear
generate revenue

24. coming early summer 2013
get serious results from social
what
are
you
waiting
for?
see what we mean about serious results
in our customer success book
lithium.com/successbook