by Julie Atherton
It shouldn’t come as any surprise to learn that word of mouth (WOM) is the most powerful influence between individuals. Our research has shown that almost 50% (1) of consumers have bought a product or used a service as a direct result of a recommendation. However with social media and digital channels providing consumers with the perfect platform to share opinions and information, it’s more important than ever to truly understand how customers are shaping opinion and impacting on sales.
The challenge facing retailers today is: how do you engender positive WOM and how can marketing strategies be adapted to harness customers’ innate ability to connect and influence?
Of course before digital ever existed, people simply talked to each other face to face, over the phone or even physically handed their friend, colleague or relative a press ad, catalogue or mail pack. Retailers responded by introducing member-get-member (MGM) programs, rewarding customers who introduced their friends through a measurable process. This provided a snapshot into the direct effect of WOM with a key performance indicator (KPI) to delivering hard numbers to the business.
The arrival of digital has had a profound effect. Consumers are now able to choose from a plethora of channels to communicate and be communicated with. Increasing the speed and ease of communications, there is no doubt that digital has fuelled consumers’ ability and desire to comment on brands, products and retailers. Consequently, this has grown the size, and voice, of both brand advocates and detractors alike.
Identifying the influencers
In any audience you’ll find influencers – individuals who willingly spread ideas and spark conversations with their friends, family and colleagues. For any retailer, they are an immensely valuable resource for they acquire new customers. The average Facebook (2) user, for example, has an average of 150 friends and between 30-150 contacts within email address books (3). Combine this with the all-important element of trust and the power of influence within your database becomes phenomenal. But in order to successfully engage this segment of the customer base you must first know who your influencers are, otherwise how can you target them?
A customer’s influence is based on four important variables:
Reach: How many friends they have on Facebook, the number of people in their household, how many friends they forward the email to?
Channel: – Whether they’re posting a link on Facebook or passing a catalogue to their neighbour or using other channels.
Motivation: Some are driven by looking cool (social status), others to make a fast buck (self-reward) or others by helping their friends and family.
Total value: How many friends have converted to customers and how much they have spent?
Using these four factors to analyse your database will forever change how you define your best customers. Under normal segmentation rules, the best customers are often defined as those who spend the most. We then focus more on these customers at the expense of customer who have spent little or nothing.
However, using only this rule you’re in danger of ignoring some of your strongest influencers. Rather than evaluating a customer based on their individual spend, retailers instead need to quantify an individual’s net-worth and sphere of influence. A customer may not necessarily spend the most themselves, but if they’re passing on branded communications and offers to their friends, family and colleagues who then in turn purchase something, their value to the organisation could be considerably more.
By adding your customers’ influence value (ie the total value of sales generated by that one customer) into their current individual value, you can understand the overall value of each customer. With total value included, best customers are those who have driven the most business for you, whether buying themselves, or encouraging their friends. Focus on these customers and you can amplify marketing messages and increase value, all at the same time.
Type of influencers
Within the broad definition of ‘influencers’ there are essentially five different types:
Evangelists: This group are powerful brand advocates. When they care they are passionate about your brand and share their opinions with others. They typically have more followers than they follow and have the highest effective reach of all the segments.
Soap Box: This group makes a lot of noise but no one really listens. It will be easy to get them to share your message, but their level of influence is limited.
Softly Spoken: An important group because they really think about who they share with and why. This group speak less, choosing to share information when they feel it’s right. Those they influence are more likely to convert, but there are fewer of them.
Just Out the Box: Just starting out, this group are trying lots of different social media but only in a limited way. They believe they ought to have a Facebook account but they don’t really know what to do with it.
Lonesome Doves: This group have few friends and do not share. It is important to understand the proportion of these in your customer base.
Although there are five different segments, not all segments are pure. Realistically, there are parts of all of us in most, if not all, segments. However, we show a leaning to one type: where we feel most comfortable; the way we tend to behave.
Adapting your marketing strategies
Knowing who the most influential individuals are within your customer base is one thing, but the question still remains, how do you encourage them to share branded communications and offers? Different consumers will of course be motivated by different factors, therefore it’s important to track and measure what type of communications are commonly forwarded and then tailor future campaigns accordingly. For example, are consumers more likely to share ‘exclusive’ deals and content or are they incentivised more by rewards? Segmentation by motivation enables you to employ targeted communications that offer your influencers the tools to propagate your marketing messages.
By identifying current influencers for your brand, who have driven new customers and additional sales revenue for your business, you are in a position to realise the potential of your current non-influencers. Propensity modelling, using the characteristics and behaviours of your strongest influencers, will identify those most likely to influence. Then, overlaying your strongest influencers motivations and channels, you are ready to being an influencer Evangelist recruitment drive.
Some customers have a greater propensity to share opinions, offers and information than others. However until now, it hasn’t always been obvious who these people are, how they operate and why they feel the need to share. By identifying your influencer community -those customers who coax and cajole interaction with your brand – you can develop marketing strategies that will make influencers one of your brand’s most valuable assets.
1. Indicia Social Influence Research 2010. All rights reserved. Unauthorised reproduction is strictly prohibited. Information reflects interpretation at the time and is subject to change.
2. Source: Facebook.com, September 2010
3. Source: getmycontacts.com
Julie Atherton is planning director at Indicia