emergencemarketing.com

In this social media age, everyone in your company should become a marketer. Like many companies before you, you should empower all your employees to interact with friends, customers, prospects and detractors. Going above and beyond that, let them set up communities within and outside your company’s firewall, about any topic and with whomever they want to hang out with. Many very large (and successful) companies like IBM, Best Buy and Cisco have done it before you – with real success and with very little downside.

Now, as you are harnessing the power of communities, realize that you may have a new asset on your hands – one that some companies have become pretty successful at harnessing, and one which is similar to that of media companies. You now have an audience that others might want to have access to – and that is worth something. Think of Virgin America, which was able to fund the launch of a new hub city through a paid media partnership with HBO. Or think of American Express, with its Open Forum, a community for small businesses, where they are now selling sponsorships on specific sections of their community to partners.

It goes without saying that you should first and foremost think about the value that you will provide to your community members through a partnership. Break the trust they have in you by spamming them and they will leave in droves – leaving you with no asset nor the value that the community was bringing you in the first place.

Ok, so you have a vibrant community. People are submitting ideas for your next generation products, they seem to be having fun, they are engaged and keep referring new members. Your community is growing at a healthy clip and you are happy.

Be careful – your chances of failure are still fairly high.

Let’s look at a couple of reasons why vibrant communities may not achieve the goals they were set up to deliver.

1. You are getting the wrong ideas from your community

There are all sorts of reasons why you could get the wrong ideas from your community. One of them is the use of wrong incentives. If you pay people $10 for 10 ideas you will get 10 ideas – but are those really the ideas that will make a difference in your new product innovation?

Dan Ariely, the author of Predictably Irrational would argue that by tapping into people’s social framework instead of their market framework, which is what you do when when you pay them, would deliver better results. The Economist argues a similar point as it relates to customer reviews (h/t Matt Rhodes).

2. You are getting too close to your community members

There is such a thing are listening too closely to your customers. First off, your customers may not know how to express their needs in a way that would let you help them. They may complain about group scheduling issues, but that does not tell you whether they need a group calendaring or a group task management solution. In new product innovation, there is a huge difference between what is being said and what is being meant.

Second, it is a known fact that innovations based on direct customer feedback leads to incremental innovations at best, not the breakthrough innovations that allow you to steal marketshare from your competitors.

Lastly, and as the late Peter Drucker once said, for most companies a majority of their future revenue stream has to come from people who are not yet customers (Drucker estimates that to be 70% across all industries). If that is the case, then listening too closely to your existing customers may result in products that will stand in the way of acquiring first time users.

So yes, communities are a must in today’s economy. And getting communities to work is hard – really hard. But once you have it working, it may still not deliver what you are looking for. Communities have to be fully integrated with the business processes they are intended to support and need to be driven by the same common sense principles (not that all real world processes are driven by common sense).

Most marketers have been trained to use market segments as part of their strategy to approach certain groups of people. Unfortunately when you try to leverage communities as part of your business that no longer works.

Marketers need to move away from market segments, which are based on characteristics, and instead embrace consumer tribes, which are based on behavior.

To understand the difference, let’s use a hypothetical example. Imagine a large health club chain which decides to leverage communities as part of their business. They could target health conscious people, who want a good quality of life and  believe in balance between mind and body, as a basis from which to build a community – that would be using market segmentation. Alternatively, they could look at the tribes that typically hang out at health clubs – such as weightlifters or stay-at-home moms. Weightlifters like to show off and enjoy an audience, they are competitive, they like talking about how much they can lift and what their goals are. Stay-at-home moms prefer fewer people at the gym when they go, preferable women, and like to talk about children issues and community issues.

Now which communities will be more successful in this case? Those designed around the market segment or those designed around the behaviors of tribes?

Reminder: If you leverage communities as part of your business and have not yet taken the survey for the 2009 Tribalization of Business, please do so now, or visit the new Tribalization of Business Site.

You would think that with the ability to measure everything when you do online marketing, many companies would do so.

Not so say McKinsey consultants – while 91% of the marketing executives who participated in the McKinsey digital-advertising survey (06/08) reported that their companies were advertising online, 80% said that their companies allocate their media budgets by using subjective judgments or by repeating whatever they did the year before.

Heck, only 50% were using click-through rates to measure effectiveness of their online direct response ads. And only 30% considered the offline impact of online marketing.

Surprisingly (not), those who were measuring the impact of online marketing were more satisfied with digital marketing than those who did not, and 55% of them (compared to 43%) were cutting their spending in traditional media in order to increase their spending online.

It is amazing how many marketing departments are still not accountable for results…sigh…

A recent survey from Anderson Analytics conducted for the Marketing Executives Networking Group found that most marketing executives are sick of hearing about web 2.0 and are going back to basics this year – putting renewed focus on satisfying and retaining customers and investing in research and insights.

Duh…what were they doing with their web 2.0 stuff in the first place? Were they trying web 2.0 programs in a way that was not connected to satisfying and retaining customers?

Unfortunately I think that is the case. Many web 2.0 programs are not connected to core marketing business processes and are not measured the same way as you would measure the impact of any other program on those processes. And when the economy hits the skids, the first things to go are those with soft returns or those that fall outside of the core business needs.

It is unfortunate that companies feel that way, because those that integrated their web 2.0 efforts within their core marketing processes, and measured the impact on those processes the same way as you would measure the impact of any other program, derived great results from it and are now doubling down on those social media initiatives. In the long run, they are the ones that will steal marketshare from their competitors.

So how did this happen?

Two reasons: bad advice and low risk tolerance for risk on the part of many marketers.

Let’s look at the bad advice first. The market is littered with companies and individuals who are claiming to be social media/web 2.0 experts. Some claim to understand social media and web 2.0 but in fact they do not, and build pretty websites masquerading as communities or corporate blogs with no or poorly designed and administered commenting capabilities. They stick to their legacy business, whether advertising or PR, and put social media lipstick on their offering. Unfortunately that does not work. Then you have a slew of social media/web 2.0 pundits – many of whom have never been responsible for any marketing process. They think that all marketers are evil and that you cannot put an ROI on any social media program. Unfortunately, their advice does not deliver results either. Now, don’t take me wrong, there are some great agencies and individuals that really grok social media and web 2.0 and how it can be used to improve and transform your marketing results.

Then there is the fear of the unknown that is plaguing many marketers. They knew they had to try something in social media and web 2.0 – often times getting pressure from top executives to do so. But when they did it, they did it in a very timid fashion – starting small underfunded pilots that never delivered results. So now that it is time for cutting, it’s easy to make decisions on canning those.

The other unfortunate aspect of this attitude is that we are dealing with programs that engage people to help us or help one another. When people do engage, they expect someone to engage back with them and they spend or build some of their social capital in the process. When you have programs like that, even in pilot, you cannot just shut them down without angering people. It’s not like an ad or a direct mail campaign, where you can test it and then shut it down if it does not work without getting people upset.

The good news is that those who do it right will gain game-changing results – forcing others to follow suit. So while we may have suffered a temporary setback in terms of adoption, it is only a setback.

This will not prove to be another fad.

Say you are a really honest used car dealer, a truly compassionate personal injury lawyer, or a lobbyist fighting for a real noble cause…how do you create an image for yourself that is believable and disconnected from the bad connotations that characterize your industry?

Can you overcome the perceptions?

And how do people make buying decisions when they need a product or service from an industry that is tainted like that? Sure, they can ask for recommendations…but in a lot of cases you do not need that product or service too often, and many of your friends may have never needed it either.

It’s a tough one…and one that many small businesses are facing.

Thoughts? Good case studies? Let me know…

Last week I had the opportunity to interview Paula Drum, the VP of Marketing at H&R Block, at the Social Media Strategies Conference. Just like the last time I interviewed Paula, the conversation was rich and informative.

One topic that I found especially interesting was when Paula made recommendations on what to do in the face of reduced marketing budgets in an economic downturn. Based on her experience that traditional marketing program are more capital intensive, and social media marketing programs are more labor intensive – she recommends that you move some of the people resources which are going to free up because of the budget reductions to social media marketing programs. Now that they do not need to manage as many lead generation or brand building campaigns, have them engage in the social media world.

Of course, you could take this a step further and voluntarilly move some more budgets from traditional marketing programs to social media marketing programs. Your returns may very well justify that…

Many companies seem to have legal departments that put up huge barriers to adopting communities and other social media programs that include employees, customers, prospects and even detractors. In fact some put up barriers so high that nobody can do anything in the space. Now, if your competitors cannot find a way to overcome those objections either, you may be ok, but if they do and manage to extend their business processes to leverage the power of the internal and external crowds, it may be “game over.”

Typical legal objections include the issues related to brand protection, engaging hourly workers as part of internal communities, the threat of liability for what employees say in public, having employees socialize online instead of doing work, meeting regulatory compliance requirements, and more. While most legal departments will claim that their situation is very unique, at the end of the day the issues are fairly common among many companies.

I do not think that there is one best practice on how to overcome those objections. Some companies find it easier to get legal involved upfront in the process, while others are asking legal to quantify the risks and then balancing those with the benefits or the risks of doing nothing. One good bit of common sense (as recommended in this BT case study) is to make sure that you do not overhype what you are trying to do and position it as something radically different from other programs. Many companies already have policies in place that cover things like email communications and acceptable behavior in public forums – which could possibly be extended to virtual environments without too much change.

What have you found to be working?

When we conducted the 2008 Tribalization of Business Study, we discovered that those companies that were most satisfied with their community efforts were those that measured the impact of their community programs on their business processes the same way they would measure the impact of any other program on those same business processes.

So if you measure the impact of a certain program by increased store sales, or by improved customer satisfaction – then measure the impact of social media programs on those business processes the same way. Even if you think the current measurements are wrong. If you do not like how customer service is being measured by the average time people spend on the phone – it does not matter. Don’t try to change it when you roll out a social media program. The fact that the current measurements are well understood and often hardwired within the company culture will ensure that people will understand and embrace your social media programs rather than marginalize them as exotic new hype-driven non-mainstream programs.

Taking this a step further – the faster you can get the various departments that benefit from your programs to co-fund them, the faster your programs will become mainstream.

All that being said – how do you measure the impact of your social media programs? What works? What doesn’t work? As we are gearing up for the next iteration of the Tribalization of Business Study, what would you like to find out?

PS – If you prefer discussing the topic instead of just commenting on it, join the Marketing 2.0 community where I started a discussion on the topic.

Yesterday we participated in an online conversation with many of the Society for New Communications Research Fellows (of which I am one) on the Tribalization of Business Study.

We created a slidecast from the experience, which you can view/listen to here:

Note that next week Thursday at 2pm ET , Ed and I will be at it again during a webinar hosted by Awareness. We hope you can join us there and that perhaps we can address your questions directly as well.