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A new research study by the Society of New Communications Research (disclosure - I am a senior fellow in the society and have been peripherally involved with the study), “Exploring the Link Between Customer Care and Brand Reputation in the Age of Social Media,” found that affluent consumers are using social media to share their customer service experience and learn about other’s care experiences when making purchase decisions.

Some of the top findings include:

• 59.1% of respondents use social media to “vent” about a customer care experience (ed. note: glad to see I am in the majority…)
• 72.2% of respondents research companies’ customer care online prior to purchasing products and services at least sometimes
• 74% choose companies/brands based on others’ customer care experiences shared online

Again - proof that while positive word of mouth may outweigh negative word of mouth, and that off-line word of mouth may outweigh online word of mouth, the online negative word of mouth may have much more impact on purchasing decisions as they are found while the buyer is in active buying mode.

Based on research in the field of virtual communities, most business thinkers will agree that there are 4 fundamental pillars to successful communities - content, members, member profiles and transactions. If managed properly, these 4 dynamics can lead to economics of increasing returns that characterize most successful communities. The more members you have, the more content they will create. That in turn will increase the value to the community members and attract more members. If you capture information about your members and you make it easier for them to find stuff in the community based on their profile, the higher the value of the community to the members and the more members you will attract. It’s easy to understand the workings and to get the benefits of the dynamics of increasing returns that happen in successful virtual communities. Many of those were first described by business thinker and management consultant John Hagel in Net Gain more than a decade ago.

There are other aspects that drive and define communities, such as the social and technology infrastructures of communities as well as the business processes that they support. But none of those characteristics have the power to create the positive value creation loops that the original four can.

While most successful communities will have a mix of all of the ingredients - we can characterize communities by their dominant dynamic.

First there are content-based communities, where members interact with one another primarily in the context of content - either consumer generated or licensed/acquired. News sites or blogs are communities that would fall in this category.

Then there are communities that are primarily member-based. Member-driven communities can take on many different forms. Brand communities like the Harley or the Ducati communities are clearly member-centric communities, even though some companies mistakenly think that the brand is at the center of those communities, and not the members. Networking communities like LinkedIn and Facebook are clearly communities that have members at their core. Many developer communities in the tech world also fall within this category.

Lastly there are transaction-centric communities. eBay and Amazon.com come to mind when talking about those communities.

Of course, all of those communities have content, and all have members, and most have transactions - it’s just that they are more heavily tilted towards one of the community ingredients than another. And in some cases communities with the same end-goal can take on very different forms. Brand communities could also be set up as content-centric communities or as transaction-centric communities. Customer support communities or developer communities could also be started as content-centric communities - and perhaps evolve into transaction-centric communities.

The reason it’s important to understand the different types of communities is because of the requirements to get them started. You cannot start a member-centric or a transaction-based community without a critical mass of members or offerings - something most companies do not have. Without a critical mass of members or offerings, there will not be enough content generated (i.e., customer reviews, etc.) in order to make the interaction for the community members valuable. So if you have a total potential number of users ranging in the hundreds, you will never be able to set up a vibrant customer support community as Intuit. Microsoft or Apple can. That does not mean that you cannot leverage customer support communities, it means that you have to start them up as content-driven communities. Instead of relying on the community members to re-write your manuals and to create meaningful FAQs, you may have to hire a few people to kick-start the process on a for-hire basis.

While the economics of increasing returns may be somewhat diminished with a smaller number of members and some hired guns, they are still very much present. Most likely they will handily beat the economics of diminishing returns that most business practitioners face when trying to interact with customers and prospects in the old-fashioned interrupt-driven way.

Some of these thoughts have been triggered by the many conversations I have had the pleasure to have as part of the Community Effectiveness Study that we are conducting with Deloitte and the Society of New Communications Research. Some of the preliminary results of this study will be discussed at the Society for New Communications Research Forum in two weeks and more detailed results will be unveiled at the Community 2.0 Conference in May.

As a senior research fellow with the Society for New Communications Research I can extend a special discount to some of my friends who want to attend the forum. Email me if you want to attend at a special rate (francois [at] emergencemarketing [dot] com). Note that there are also 1/2 day flex passes available for those who can’t attend the full event.

The Online Publisher Association announced that it added Community as a category to its Internet Activity Index (IAI). So they will now measure how much time consumers spend online with Content, Communications, Commerce, Search and Community.

The OPA defines community as:

“Web sites and applications that combine user-generated content with communications in order to foster relationships between individual members and groups of members. Many Community sites are content driven, and they were previously accounted for in the Content category. However Community’s content is largely user-generated, and when merged with communication, creates a specific category of online activity.”

The IAI numbers for January show that consumers spent 42.7% of their online time interacting with content, 28.7% with communications, 16.1% with commerce, 7.5% with community and 5.0% with search.

AdAge picked up on the story, declaring “When It Comes to Time Spent Online, Content Trumps Community.”

But wait a minute here, adding community as a category at the same level as content, communications, search and commerce, is like comparing apples and oranges. Or better yet, comparing apples and oranges with air or water. Communities are combinations of content, commerce, communications and search. And communities affect the usage pattern of all the above categories and vice versa. So if I am spending time on Amazon.com, am I spending time with commerce, content, search or community? Obviously the end result is commerce if I buy something, but it could also be searching without buying or interacting with content (both user generated reviews and published content) without commerce. The fact that Amazon is a community which leverages my personal profile very well (another component of communities) is determining my interactions and time consumption on that site. The same can be said for many other sites that combine content with community. If I am spending time on the WSJ Health blog, I am spending time with content or community? If as a car buff I spend time on Carspace.com, I am spending time with commerce, content or community? Would I spend as much time conducting commerce, searching for stuff or interacting with the content on those sites if there were no community component to them?

Probably not…

Besides the fact something does not sit right with the categories, many conclusions drawn from the new numbers by AdAge and the IPA are equally flawed. Jim Nail at the Cymphony’s Influence 2.0 blog captures those flaws in detail in his post today (well worth the read). A couple of highlights include:

• The fact that page views per person in content dropped 225 pages suggests that a number of content sites were just moved to community.
• Content sites show 480 pages per month per user vs. 380 pages for community sites. So from an ad perspective, the reach may be just the same.
• Another factor not reflected in the new numbers is influence. If a third of people below 30 don’t make buying decisions before checking with their social networks, the impact of communities on the commerce is obviously not reflected in those numbers.

We should of course remember the agendas that both organizations are representing - those of advertisers and publishers.

A new survey from Bazaarvoice and the Keller Fay Group found that a vast majority of online reviewers are motivated by goodwill and positive sentiment (summary of the survey can be found at Marketing Charts).

Other findings of the survey include:

• Positive reviews outweigh negative ones 8 to 1
•  79% of online reviewers do it to give back to the review community
• Reviewers buy products online (85%), and engage in social networks (25%)
• 20% of reviewers post messages on other people’s blogs or chat rooms; 19% post on independent product-review sites such as ePinions or CNET; and significantly more post directly on a retailer’s own website.

This is great news, but it does not negate the fact that even though they are outweighed by positive reviews, negative online reviews remain “findable” for a very long time and can hurt a product or company way more than off-line negative reviews. So vendors should still do whatever they can to avoid negative online reviews.

Both Target and Wal-Mart have sponsored groups on Facebook - both of which are targeted at college kids.

Target has over 7,000 members and mostly positive comments in a vibrant set of discussions. The Wal-Mart group on the other hand has a little over 1,200 members, no discussions are allowed, and the wall postings are mostly negative.

What is the difference do you think, except for the fact that a large portion of the population believes that one of the two companies is truly evil?

The Wal-Mart home page looks like another interactive ad.. The Target home page is more inviting and enlists the help of users to co-create the experience. Any other differences that you can think of that would result in such a difference in membership and tone of conversation?

We can take the discussion to Facebook - in fact I started a thread on the subject in the Marketing 2.0 group, where we now have more members than the Wal-Mart Facebook group.

[Tags: marketing social networking facebook wal-mart target]

Reveries.com conducted a survey on the potential of social networking sites like Facebook, LinkedIn and Myspace as media for marketing activities (pdf download of survey summary results and analysis are here). The main finding seems to be that marketers are in the very early stages of truly understanding the potential of these new networks - with only 18% of the respondents calling the potential of online social networks as a medium for marketing “huge”.

Other interesting tidbits from the survey include the fact that marketers see “word of mouth” as the most promising aspect of social networking sites, and that many pointed out that marketers should participate in the conversations that take place on those sites without interrupting them.

Unfortunately, the reality is that many spammers have already invaded Facebook, Myspace and other similar sites. Go check the walls of the most popular interest groups in Facebook to see for yourself - many are littered with posts that are total sales pitches or with information that is totally irrelevant to the group’s conversation.

[Tags: marketing social networking conversational marketing social media facebook myspace linkedin]

Pete Blackshaw has a great post on the value of a FaceBook group which has 53,395 members who are self-proclaimed Starbucks “addicts.” Taking into consideration the Word of Mouth effect, he estimates the value of this advocacy group at $100M.

Debi Jones from Mobilejones.com has a great article on attention and the mobile web 2.0. With mobile phone operators knowing exactly who you are, and increasingly knowing where you are, the mobile user click stream is rapidly becoming much more valuable than regular web user click streams. Look for powerful datamining capabilities coming to mobile operators to help marketers take advantage of this goldmine - and for bad marketers to pester you with spam on your mobile phone…

What do you think happens when a geek decides that he spent too much time in the office, and quits to go travel around the world with his son?

(here is a link to the video for the RSS subscribers)

6,500,000 million views on YouTube, a sponsor paying him to do it again…fame!

Very cool.

Here is another great example of consumers making the ads for large companies - in this case McDonald.

Notice - almost 5,000,000 viewers so far!
(link to video here for RSS subscribers)

Right on the heels of learning that the influentials may in fact not be all that influential in causing trends and other social “epidemics”, here comes more research (pdf) confirming the limited role of the influentials and heeding marketers that some viral marketing techniques could easily backfire on them.

Jure Leskoved from Carnegie Mellon, Lada Adamic from the University of Michigan and Bernardo Huberman from HP Labs collaborated on this research project where they looked at the dynamics of viral marketing.

Here are some of their findings:

• We find that most recommendation chains do not grow very large, often terminating with the initial purchase of a product.
• Marketers should take heed that providing excessive incentives for customers to recommend
• product purchases are not far from usual 80-20 rule (the top twenty percent of the products account for 20 percent of the sales), with the top 20% of the products contributing to about half the sales
• individuals’ likelihood of purchasing a product initially increases as they receive additional recommendations for it, but a saturation point is quickly reached. Interestingly, as more recommendations are sent between the same two individuals, the likelihood that they will be heeded decreases
• Marketers should take heed that providing excessive incentives for customers to recommend products could backfire by weakening the credibility of the very same links they are trying to take advantage of.
• …we find that the probability of purchasing a product increases with the number of recommendations received, but quickly saturates to a constant and relatively low probability. This means individuals are often impervious to the recommendations of their friends, and resist buying items that they do not want.
• we find that there are limits to how influential high degree nodes are in the recommendation network. As a person sends out more and more recommendations past a certain number for a product, the success per recommendation declines. This would seem to indicate that individuals have influence over a few of their friends, but not everybody they know.
• Finally, we presented a model which shows that smaller and more tightly knit groups tend to be more conducive to viral marketing.

This paper also exposes the potential long term negative effects of commercializing relationships on the value of personal recommendations and word of mouth in general - a practice used aggressively by some well known marketers.

[Tags: influentials viral marketing trends social networks word-of-mouth WOM]