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In my update on the 2008 Tribalization of Business study on business communities that we are doing with Deloitte and The Society for New Communications Research last week - I pointed out how some companies are totally misaligning their measurements of community effectiveness with their goals.

As you will see from the slides, many companies measure effectiveness by looking at page views and time spent on the site. Yet not one company listed ad revenue as a goal for the community - which is what page views and time spent on the site would be good for. Let’s assume that your goal is to have a support community - one in which people can help one another or get help from some your employees. If you could deliver the support in a way that never required people to come to your site, you would still achieve your goals. In fact, if you build your community so that people do not have to come to it, chances are that you will have more people participating in it. There are only so many destinations that a person will visit on a regular basis, and chances that your business community becomes one of them are fairly slim.

Another interesting wrong-headed metric-related finding from the study is that a majority of respondents found that “getting people to engage” was one of the biggest obstacles to making a community work. Now if you have a small community, chances are that you could get a fairly high engagement rate. The larger your community becomes, however, the more its profile will resemble that of large public communities - 1% of hardcore contributors, 10% of active users and 80-90% of lurkers. Now does that mean that the lurkers do not get value from your community? In the case of the customer support community, lurkers who do not contribute could still find the help they need and feel better about you than if they had not found it and also save you the cost of a call into the call center. So measuring community effectiveness by measuring engagement is just not a representative metric of community success.

Now the real issue with all this is that if you have a community development team who is being measured by those wrong-headed metrics, they will invariably develop bad behaviors in order to maximize these metrics. They could in fact develop community features that will stand in the way of success for your communities, or close down communities that are in fact doing really well.

If you missed it, there is a dynamic conversation on managing communities going on right now…Chris Brogan kicked it off and Nancy White wrote some interesting musings and also kept track of many of the other interesting links.

In interviewing a person in charge of communities at a Fortune 100 company as part of our community effectiveness study that we are doing with Deloitte and the Society for New Communications Research, I learned about a real neat side effect of business communities - the ability to sell products in the long tail.

Large companies typically cannot afford to pay attention to relatively small business opportunities. If your company has billions of dollars in revenue, and a goal of growing that revenue by 5% a year, and you identified a $50M new market opportunity, chances are that you will not be able to justify a business plan to tackle this new opportunity. Some of the more innovative companies have found ways to monetize those opportunities by selling or licensing the IP or partnering with companies for whom a $50M market makes sense.

With large business communities surrounding your company, you could potentially do it yourself, and in a profitable way. Say that you developed a software application that only has a tiny market potential relative to your company’s size. You could make that application available in your community, and rely on the community to deliver support, refine the documentation, etc. So in effect you developed a channel to enable your company to serve the long tail in a cost effective manner and in a way that is not defocussing. In the long run, leveraging business communities to serve the long tail could also increase your share of customer wallet as well as increase your customer switching costs for the bigger applications - all benefits that deliver dollars to the bottom line.

Through a set of experiments desribed in his latest book “Predictably Irrational: The Hidden Forces That Shape Our Decisions“, MIT behavioral economist Dan Ariely shows how we live in two different worlds - one in which social norms prevail and one in which market norms prevail.

The social norms include friendly requests that people make, for example when a neighbor or friend asks you to move a couch or something. You do not expect to get anything in return right away, and they are usually warm and fuzzy. Most of the time they provide pleasure to both parties. Market norms on the other hand are cold and calculated, with exchanges being sharp-edged: wages, prices, rent, etc.

One of the experiments recounted by Ariely involves three groups of people who were asked to do a repeat task for 5 minutes - combining circles and squares on a computer screen. The first group was given $5 for the task, the second 50c and the third was asked to do it as a favor. The group that was paid $5 worked harder by about 50% compared to the group which was paid 50c. The group which was not paid, and which evaluated the request in their social framework instead of their market framework beat both other groups. He then repeated the test, but instead of giving money he gave the first group a gift of chocolates worth about $5, but without telling them that, the second group got a snicker bar and the third group was asked to do it as a favor again. This time all three groups achieved the same results, the same results as the original group which evaluated the request in their social framework. The last test was again with gifts, except that this time people were told the value of those gifts. The results? The same as if they would have paid people.

Another point he makes, supported by more experiments, is that once a person evaluates something within a market framework, they will continue to do so even after payments are no longer given. So it is a very bad idea to create situations in which both frameworks are mixed.

There are a ton of lessons to be learned by this, one related to giving customers incentives to help you. If you have customer support communities or innovation communities and people help you based on non-monetary incentives, like recognition, or a small gift every now and again, you could kill the dynamics of those community by introducing even tiny monetary incentives. Your customers will now switch their mindset to a market framework instead of a social framework. Now if people can be switched into a market framework and not return from that mindset, that also means that others can screw up the landscape for you. Say you have a tech support community and for some reason another vendor starts paying people for helping out - based on some of the experiments described in the book, this could actually change the perception of the value that you are giving your own community members back.

The fact that misplaced rewards and punitive actions can backfire has been a long documented fact. Many kids end up reading less than when they started when parents stop giving them monetary rewards for reading. Many more parents end up being later in day care centers that charge those parents by the minute for being tardy. Plus they no longer feel the guilt of being late because they now evaluate this transaction as a market transaction instead of as a social norms based transaction.

Take the case of the new Poland Spring Eco-Shape bottle. The first reaction to that name is “yeah right - here comes some more marketing speak. How can the shape of a bottle be anything Eco? Does it make it easier for animals to swallow without choking when they end up on the dump?”

In this case the bottle is truly Eco-friendly - it uses 30% less plastic and 30% less paper for the label - all good stuff. But you have to read the marketing blurb to figure that out, and how many people really go through that step when they are on the run drinking a small bottle of Poland Spring?

It would be interesting to see how many people get an initial negative or heavily skeptical reaction to the Poland Spring’s Eco marketing message. I bet you that is not an insignificant portion of the consumer base.

What marketers forget sometimes is that most people no longer trust their companies or the messages coming from them. If you do not run your cutesy marketing message, which may be full of good intentions, through the “I do not trust you” customer filter, you may end up hurting your cause more than helping it.

What would have been wrong with just telling me “Poland Spring - 30% less plastic, 30% less paper”? It is direct and it conveys the message without giving me much room for interpretation. And because it is a quantitative message, I am less inclined to doubt it.

You brand is defined by the consumer, not by you - I think everyone can agree with that. In the same breath, most marketing pundits will add the fact that you can no longer control your brand - an assertion I am not sure goes hand in hand with the first one.

You brand gets defined by the UI (User Interface) of your company, the interface through which your customers and prospects interact with your company. That interface gets determined by pre-sale activities - i.e., advertising, retail layout, retail personnel attitude, telemarketing, sales people’s knowledge of the industry, etc -, as well as immediate post-sale activities - i.e., packaging, ease of use to set up the products, available help options, etc. -, and the long term post sale activities - i.e., telephone support, return policies, warranty policies, on-site support, etc. That makes up a lot of links in the chain that determines your brand in the mind of the consumers which your company controls.

So in effect, you do control the brand in the mind of the consumer. If some link in the chain is broken, meaning not supporting the overall brand promise you are trying to establish for your company, that is when you lose control of your brand. That is when people will start talking with one another about the fact that what you promise and what you deliver is different. Once that starts, you should focus on fixing the overall UI of your company instead of getting into communication fire-fighting mode or crisis communication mode.

One of the most fascinating companies at the BRITE conference was Eli Lilly, represented by Marc Kershisnik, Executive Director of Market Research.

It is one thing to talk about putting the customer at the center of your offering instead of your product or your company – but how do you do that when you are a pharmaceutical giant?

Eli Lilly seems to have figured that out – they no longer look at the drug as a way to fix a discreet biological/physiological problem, but instead at how the drug will fit within a sick patient’s lifestyle – so in effect putting the patient at the center of the offering. And that is not just in marketing, it starts at the time of product conception and product/market requirements, continues throughout the drug development phase, into clinical trials, and all the way to market introduction.

A good example of that is how they started the oncology on canvas community, which enables cancer patients to express how they deal with their disease though stories and art. They did not start this community after launching a new oncology drug - they started it before having any oncology drug offering.

Another example is how they dealt with their osteoporosis offering in France. The drug is for people with severe bone loss – the type who cannot take a child on their lap without causing a fracture. The treatment regenerates the whole bone structure and cures the disease in 18 months. The only problem is that patients need a daily injection of the drug for 18 month – something that many patients would give up or skip frequently enough to bring the outcome of the treatment in jeopardy. So how did they solve the problem? They enlisted an army of paid nurses to help patients with their daily treatment. In doing so they did not disrupt the patient-doctor trust relationship by injecting themselves into the process (which probably would not have worked anyway). They also focused not on the biological problem that the drug was curing, but instead on the patient ‘s lifestyle during the disease treatment process. The success ratio of the treatment in France: 90%.

No wonder then that a company with this amount of foresight would also transform itself from the inside out. Most recently they conducted one of the largest Vision Jams within their company – 6 days of 24 hour online brainstorming among 40,000 employees on the future strategy for the company. The whole strategy for Eli Lilly’s 15 year plan was created from the bottom up and not from the top down.

Now who said that you cannot teach an old dog new tricks? Of course it helps that the company does not think of its main purpose as making money for shareholders, but instead of considering its primary purpose and duty in the marketplace as treating diseases.

Guess what – with a strategy and market attitude like that, long term profits and shareholder returns will probably never be the problem.

PS - also check out my partner Lois Kelly’s post on the same topic…

On Thursday 12/13 at 1pm EDT we will be conducting a public round table discussion with Lenovo’s VP of Online Marketing, David Churbuck, and SAP’s VP of Social Media Relations Michael Prosceno on what it takes to make all this social media and marketing 2.0 stuff to work in a large company. It should be a fun discussion and we hope you will be able to join us.

For more details and to register, visit the Facebook event’s page.

There is a new 5 “things” meme going around and I have just been tagged for it by Mary Schmidt. This time the idea is “thin-slice” a particular topic - a term coined by Malcolm Gladwell in his latest book Blink, and described as follows:

“Thin-slicing is a neat cognitive trick that involves taking a narrow slice of data, just what you can capture in the blink of an eye, and letting your intuition do the work for you.”

My task was to thin-slice a marketing plan - so here we go:

1) Do you really need a marketing “plan”?
Very often people just need to get out and engage with customers, prospects, influencers and connectors. There is no need for a marketing plan to do that. Often times marketing plans are just produced by marketing luddites as a CYA document. Granted, for some very large projects that involve large teams of people a plan can be useful - but more as a check-list than as a marketing roadmap.

2) Does the marketing plan show the addressable market being in the billions of dollars?
Any VC will scoff at these numbers - yet they won’t invest if it is not true. Don’t talk about the total addressable market, tell me how you will get your next 10 or 100 customers. Who are they, what do they do, where do they live, how will you reach them? Give me real life scenarios of potential customers and how you will help them solve their problem. Don’t give aggregate figures that have zero meaning.

3) Are you pretending or intending on being a leader in a category that nobody ever heard of?
Most companies I have worked with consider themselves the category leader in a category with one player - themselves. A category is recognized by others as a category and has other players in it. You can “create” a category, but you need help to create a new one - including help from competitors. Show me how you will create a new category, and who you will enlist to help with the creation? Show me how you will change the rules of the game in that category, how you will change the players or change their respective value as you enter the category - now that’s interesting!

4) Does your competitive review result in your company or product being in the upper right hand corner of some diagram?
Do I need to elaborate? You and everybody else lives there…it must be pretty tough to compete there. Show me where you are on the BS curve compared to others - that would be much more interesting…

5) What part of the plan deals with how you will deal with change?
The biggest danger with plans is that they become “bibles” - and once they are approved nobody can deviate from the chosen path. Yet most successful marketing programs are emergent in nature, they are like a jamming sessions…and so back to point 1) do you really need a marketing plan?

And now my turn to tag:

• Tara - how about engaging communities as part of your marketing plan?
• Pito - what about product plans?
• Jackie - how about word of mouth marketing plans?
• Chris - what about customer service strategies?
• Tom - what about brand strategies?
• [updated] I decided to add a 6th one as I care about PR and Europeans - Neville, what do you think?

[Tags: thin-slicing thin-slice marketing plan blink]

As many of you will have noticed, I have had my fair share of mishaps with my local Bruegger’s. The last time I wrote about my experiences, Scott Hughes, the VP of marketing posted a comment on my blog asking for more information so that they could address the problem.

We went back and forth on email a few times and then two weeks ago I noticed that they put a new general manager in charge of the store. Not only has the service improved considerably, the whole mood of the store has brightened somehow. And then yesterday I get an email from Scott to inform me that they had made some management changes at the store and asking for my business, saying: “I hope you give us another opportunity.”

WOW - Scott thank you for listening! You just turned me into a big Bruegger’s fan!

And btw - your new Ciabatta’s are great too!

[Tags: bruegger’s customer service bagels]

David Wolfe over at Ageless Marketing has started chronicling the stories of firms of endearment - in advance of his upcoming book, which should be published early next year (here and here).

Firms of endearment challenge Milton Friedman’s premise that companies only have one social responsibility - maximizing shareholder return. Firms of endearment do not favor any particular stakeholder, but rather treat all 5 stakeholders on the same footing - employees, customers, suppliers, society and shareholders. David believes that firms of endearment are forerunners of a new business model - one that could very well change capitalism at its core.

And how are the firms of endearment doing compared to the S&P 500 or good-to-great companies? Check for yourself…

[Technorati Tags: social responsibility capitalism business model]