I followed up a post written by Brian Solis yesterday, and shame on me, I am doing it again. But, today’s post was not really written by Brian, it was written by Paul Greenberg, not sure that makes it much better. Is this cheating? You know, writing a blog based on a blog, then following up that blog with other one. I happen to know Paul is in Europe for a couple weeks, so, I figured I would put my thoughts here. Brian is asking us to look beyond folks that we have a direct transactional history with, beyond just prospects.
I said yesterday that I believed SRM (Social Relationship Management) felt more like PR 2.0. Brian responded to my post, saying that we were not really talking about different things, but that he does not see SRM as PR 2.0. I am not yet convinced that it is a lot more, BUT I am willing to hold off pushing it too hard until I have a chance to talk with Brian (In real life, phone or some other traditional means like face to face even). I have and will maintain an open mind, willing to bend a bit, if needed. I am looking forward to the conversation
In today’s post Paul bridges the gap between SRM and Social CRM (potay-to v potah-to ) via the work of Dr. V. Kumar, Chairman of Georgia State University’s Marketing Department and the Executive Director of the Center for Excellence in Brand and Customer Management (CEBCM), what he calls CRV (Customer Referral Value). The idea is that you should maintain these relationships, as there is value in the referral, and we can measure it.
“CRV is a measure of advocacy and positive business value that an influencer brings. It fundamentally acknowledges the existence of the social customer that Social CRM deals with.”
To really build a well rounded picture of the impact of CRV, the introduction of one more TLA is required. I will be brief, but Paul does a more thorough job here, a post from August 2009. NPS (Net Promoter Score) is a large topic, which has issues all its own, and not something I am going to dive to deeply into today. Dr. Kumar, in his work actually expands/extends NPS to make it more meaningful and useful (ie, one question just is not going to cut it, sorry). Let me explain: NPS asks a customer one simple question “Do you intend to recommend this product or service to someone you know?”, while that question is interesting, the study shows little correlation with the really important question: “Did you actually recommend this product or service to someone you know”. For now, take my word for it, then feel free to read the article referenced.
They are still customers, or are they?
The studies done to date refer to customers, and struggle to put a stake in the ground on the actual value of influencers, who are not customers. That said, as Brian suggests, we need to look beyond the customers, or at least look within more closely. While Customer Lifetime Value is a more direct measure of what a customer spends and their direct value to the bottom line, we need to look beyond these people and understand better those who are engaged, advocates and otherwise bullish on your products and services. The extreme case here is that they are not actually a customer, but there is value to the organization to have a relationship with this person.
Do you know who those people are? If you have an idea, do you actively manage the relationships, or are the relationships managed externally? In a response to his first post Brian makes an interesting (valuable interesting) statement:
“..how do you move something beyond the literal interpretation when the infrastructure (technology, process, and methodologies) works again much of what you’re attempting to implement?”
Do your current processes or technology prevent you from reaching this goal, if it is a goal? If so, what are you going to do about it?
I think these are all great comments by Graham Hill. The weak ties, the network participation value, the trace back to ROI etc. are all good things to understand. I guess the question on my mind is whether Facebook already knows this is the long term value proposition and is going to make us all rent it on demand from them? 😉
Graham,
A while back, I was going to comment that we have missed your original content, but I am going to hold back on that for now – as your responses (here and elsewhere) often supersede the value of the original post 🙂
I did look through your references, and apologies for not catching your 2008 post, which articulated the CRV part of the story very well. I am not a marketer by trade, though my engineering background came in handy when I looked at the “Value of a Free Customer”. I did not really dig too much into the mathematics, to be fair, but I do not actually think that works fits with what I am trying to say, unless the work is extended a bit. That said, it is quite valuable, as it seems the influence is passive, not active. My meaning is that ‘I am influencing simply by being here’.
The example used in that study, Monster.com and jobseekers (who are not customers, but are crucial to the success of the company) suggests a matching buyers and sellers (like the Auction house example). Some might say that if I do put my resume on Monster, I am a customer. I am as much a customer there, as I am on Facebook (that will stir a hornets nest I am sure). Interesting rabbit hole I have entered here…
I will need to dig a little deeper, but there seems to be an interesting divide between active versus passive influence. Does that make sense? My original intent was to focus on the active influence of peers, advocates and others and what a “relationship” with these folks means.
Thanks – Graham, got me thinking.
-Mitch
Mitch Lieberman
CEO and Founder
Comity Technology Advisors
comityadvisors.com
Hi Mitch
There is nothing wrong with blogging about others’ blog posts. What do you think they do?
Paul did us all a great favour when he used Kumar’s work on Customer Referral Value to show that customers’ intention to refer a company does not automatically turn into actual referrals, let alone new customers and new profits. This is common-sense that alas was forgotten in the rush to implement the methodologically flawed NPS.
But Customer Referral Value is far from the end of the story. As I wrote about in a post on Take Three Bites at the Customer Value Cherry back in November 2008, the value of a customer is much more than just the sum of their individual and referral value. There is also the effect of being in the social network itself. This can have surprising and far-reaching effects.
Christakis & Fowler have carried out long-term research into the effects of social networks on people’s behaviour. In numerous studies, they found that the biggest influence on behaviour come from our friends and to a lesser extent, from family. The so-called first degree of separation. But that is far from the whole picture. Our friend’s’ friends and friends’ friends’ friends, many of which we probably do not know, also influence our behaviour. The second and third degrees of separation. As Mark Granovetter showed in the 70s in a paper on The Strength of Weak Ties, people connected to us through two or three desgres of separation can be an extraordnary source of valueable new ideas, contacts and even our next job. More recently, Gupta et all have quantified the value of just being in a social network. Their work on The Value of a Free Customer showed that even customers who did not buy anything, still had a quantifiable value, just for being part of a social network.
Paul is right that Customer Referral Value significantly extends the Customer Lifetime Value idea. But it does not stop there. Customers have a significant value just from being part of a social network. From influencing their friends’ friends’ friends. A value that we are starting to quantify. It’s not just about influentials and their personal influence. The social network we are part of may be every but as influential as our friends and family.
Graham Hill
Customer-centric Innovator
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Hi Graham/ Mitch,
With regards the passive influence study, if I remember correctly it did not propose any mechanism of influence? I think the mechanism is key to Social. Anyone have any leads on that?
Hi Mitch
Just like a blog post can be a synthesis of other themes, so a novel idea can be a synthesis of other knowledge.
Christakis & Fowler’s multi-faceted research, much of it carried out using the tens of thousands of people who have taken part in the Framingham Heart Study over the past 30 years has started to uncover how influence spreads through social networks. In their numerous studies looking at how social networks influence conditions such as health, marriage, happiness and politics, they found that the most influencial people are friends, followed closely by family. The first degree of separation. But people up to three degrees of separation were also highly influential.
For example, in a study of obesity, they found that if a friend became obese, the chance of you becoming obese increased by 45%. If a friends’ friend became obese, the chance of you becoming obese increased by 25%. And if a friends’ friends’ friend became obese – someone you probably don’t even know – the chance of you becoming obese increased by 10%. The same basic relationships were found in a number of other conditions. People we do not even know clearly influence our behaviour in many different ways.
Understanding the combination of passive and active influence is important if we are to understand how natural social networks operate. But it is absolutely critical if we are to understand how artificial social networks created for a specific purpose, such as communities of interest operate. As Christakis & Fowler point out in a short essay on Three Degrees of Connection, natural and artificial networks behave differently. In particular, their different organisation and the power of communications can significantly extend influence to higher degrees of separation. We are influenced by up to three degrees in natural networks, but we may be influenced by many more degrees in artificial ones.
Influence just entered an entirely new dimension. Customer referral value is just the introduction to the multi-chaptered value of social networks book.
Graham Hill
Customer-centric Innovator
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Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.
Hi Paul
I am busy reading through Christakis & Fowler’s excellent book ‘Connected’ and their research papers to see if they have any suggestions. I was hoping that Albert-Laszlo Barabasi’s new book ‘Bursts’ was going to be insightful, but sadly I was deeply disappointed by its lack of new insights.
Duncan Watts has also looked at the issue. In particular his work on Big Seed Marketing makes a strong case that the network dynamics and the nature of the meme to be transmitted itself is every bit as important as influential individuals. As he quite rightly points out, Malcolm Gladwell’s pop-science Tipping Point is Toast.
Graham Hill
Customer-centric Innovator
Follow me on Twitter
Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.