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New Research on the impact of Word of Mouth and Observational Learning on buying decisions

March 22nd, 2011 francois Posted in buying behaviour, Interesting Links, word of mouth 2 Comments »

Everyone knows what word of mouth means (WOM) – it means a positive or negative recommendation about a product by another user, a friend, a trusted resource, or a stranger. Observational learning (OL) is another phenomenon that influences our buying behavior and relates to observing others use a product or service. Observational learning works on us because we are a herding species that tend to copy others. So if you have a lot of information about a restaurant and you go there, only to find a line at another restaurant across the street, you are likely to go stand in that line and use the observation of others preferring that place instead of your own data.

This new research, Online Social Interactions: A Natural Experiment of Word of Mouth Versus Observational Learning, published in the April 2011 Journal of Marketing Research, has some interesting findings and quotes, including:

  • 71% of US adults who purchase online use consumer product reviews for their purchases (according to a recent Wall Street Journal Survey)
  • Negative WOM  information is more diagnostic, and researchers have found it to have a greater impact on consumers’ adoption decisions than positive WOM information
  • Both WOM and OL  have a larger impact on buying decisions early on in a product lifecycle
  • There is an asymmetrical impact of OL on sales - meaning that a lot of OL will drive a lot of sales while a lack of OL for niche products does not hurt sales of those niche products – so while negative WOM is more influential than positive WOM, positive OL is more influential than negative OL
  • The amount of WOM strengthens the impact of OL information (i.e., they are complementary)

So what does that mean for your business? Try to encourage as much WOM as you can and if you can show potential buyers OL from others, do it in conjunction with your WOM efforts.



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Hyper-Social Innovation

February 7th, 2011 francois Posted in Interesting Links 1 Comment »

This post is a follow up to last week’s Innochat with the Innocat tribe. The chat was so fast and furious that I had a hard time keeping up – so this is an attempt to continue the conversation asynchronously.

The first unanswered question came from @bpluskowski where he asked to define what “successfully” meant when I said that Hyper-Social organizations are those organizations that have successfully baked the social as part of their DNA. When we talk about “successfully” baking the social as part of their DNA we mean companies that have embedded the social as part of everything they do: customer engagement, employee engagement, new product innovation, etc. , as opposed to companies that have discreet programs (often times marketing programs) that somehow leverage “social” media. To succeed with social it must become part of the fabric of your company culture – like Erin Nelson, ex CMO at Dell said when I interviewed her “Compared to other CMO’s I consider myself lucky. Dell Hell put our brand under pressure and  so to engage in social media  was actually a question of survival….you cannot get into social media by just putting a toe in the water – you are either all in and it becomes part of your culture, or you’re not.”

Some people had questions regarding the Human 1.0 principles – reciprocity, fairness, need for status and power, wanting to be with others that are just like us, being a herding species, etc. Those are not learned behaviors, they are reflexes and hardwired behaviors that have been explained by evolutionary biologists. We developed reciprocity as a reflex because if we can get strangers to care for our offspring as if it were their own, when we go hunting and gathering, there is a higher likelihood that our gene-line will survive. If we are not willing to pay a personal toll to punish someone who treats us unfairly, then freeloaders could bring down our reciprocal society. We love power and status because it used to get us access to better mates and more food. We like to hoard status and power because it ensures better mates and more food for our offspring. We are herding and self-herding because we are driven by a need to preserve energy, and if we can safe energy by not making decisions and instead take those of our tribe members as a proxy we will do so.

There were lot’s of questions and comments about the tribe concept. Tribes are different from psychographics because understanding tribes requires you to understand the tribe’s culture. Psychographics touch on behavioral characteristics, but they only focus on individual behavioral characteristics, not cultural/group behavioral characteristics.

Tribes and communities are the same – tribes is a term that anthropologist use and communities one that sociologists use to mean the same thing.

During the conversations some people started talking about fans and ambassadors. Fans are a tribe, but with sometimes very different characteristics that other consumer tribes. Ambassadors are what I sometimes refer to as the leaders of your tribes. Besides understanding the culture of your tribes, it is very important to understand their leaders and find ways to engage them. And yes, you do self-select to be in modern tribes, and you can voluntary leave them, making it tricky to exert too much top-down control in tribal environments.

As to how many tribes we can belong to, I think the answer is different depending on the person. But it is safe to say that most people will only belong to one tribe per interest. That points to the fact that there is a true first mover advantage for those companies that can tap into their tribes. As long as Fiskars does not screw up the Fiskateers, it will be very hard for others to create another vibrant scrap-booker community.

@dscofield made the point that many companies seem to find their external tribes but few find enable their internal tribes. That is so true, and the power that you can get from matching your internal tribes with your external tribes (put people from within your company with a shared interest, shared passion or pain in touch with people on the outside) is tremendous.

We found examples of companies turning business processes into social processes for every imaginable process, except finance and legal. I think that we may never find them, but would love to document them if they exist. The reason why I think we won’t find them is because successful Hyper-Social organizations stop being company or product centric. They instead become 100% customer, employee or human-centric, like Fiskars, Jeep or Mini (see this blog post). @bpluskowski disagreed with that point and listed microfinancing and venture funding as examples of social financial processes. I do not disagree with that point, but the point I was trying to make is that we have not found internal finance processes to be social. So the internal financial department within a microfinancing organization or venture fund is unlikely to be social.

There were some comments and questions around the differences between B2B and B2C. Our research has found no difference between the success criteria of B2B or B2C companies that turned themselves into Hyper-Social organizations. The reason for that is that when it works, it’s not B’s talking to B’s or C’s – it’s people talking to people.

We talked about Netnography being a good methodology to understand/study online tribes. The founder of Netnography, @kozinets, was kind enough to post a white paper about netnography after our chat – thanks Rob!

Thank you all for the great chat – I did learn a few things as usual - @Renee_Hopkins@AndreaMeyer, @bpluskowski, @dscofield@MWCemily, @lindanaiman, @ken_rosen, @stevemassi, @greggfraley, @adhansen, @bo, @CreativeSage, @SteveKoss, @gnosisarts, @bikespoke, @innovKelli, @sourcepov, @DrewCM, @blogbrevity, @DavidWLocke, @Note_to_CMO, @futurescape, @MaxMckeown, @thehealthmaven, @adivik2000, @thebrandbuilder, @YKabakibo, @pprothe, @johntodor, @thotstr, @tomasacker, @webby2001, @LadyZhere, @mambomedia, @marydpadilla, @pavanvoice, @TomOB, @4byoung, @TheB2BModel, @Adrianaology, @Chris_Eh_Young, @megheuer, @T_C_P, @quality1



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How Trend Micro Internet security software can be more harmful to your business than viruses

December 21st, 2010 francois Posted in Interesting Links, worst practices 2 Comments »

[update 12/21/2010] @fearlessweb tweeted me the following message: “@fgossieaux Your URL has been unblocked due to a false positive and should be accessible to your customers. Apologies for the inconvenience.” – hopefully done for now…

Original message:

Trend Micro is an Internet Security software company that claims to be protecting your business from viruses and spyware. They do that, and they also prevent small businesses like mine from conducting  business.

Our site, www.human1.com, which is built 100% on WordPress, and designed by some of the best people in the industry is categorized as ‘malicious’. Human 1.0 prospects and customers have alerted us of that fact for well over a month. We tried to submit for reclassification of our site, but you need to be a customer to do that. Obviously that is not something we would ever consider.

They also claim to be listening on twitter and so I engaged them there – again with limited success.

So how is it having an immediate impact on our business?

We are running two very high end workshops in January. We invested thousands of $$ to promote the events, only to find Trend Micro clients not being able to access our site. Not only can they not access our site and register, the fact that Trend Micro calls us malicious does not make for a good impression –  let’s face it, the fact that “the security system” calls us malicious is not good for our reputation. We even had a sponsor for the event pull out because of this issue…

So Trend Micro – what is it going to be? Do we need to spend more money to have our lawyer contact you? Who is the ‘malicious’ party in this case?

You are hurting business…and you should be ashamed of your business practices. Maybe you should be regulated.



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Humanizing your brand starts with your employees

December 7th, 2010 francois Posted in Interesting Links 1 Comment »

Seriously…have you ever thought of that? Is your brand powered by people?

Because if it isn’t, you are missing out.

JetBlue is bringing humanity back to the airline industry, IBM got rid of its firewall and encourages every one of their 400,000 employees to start a community with outsiders about whatever they want, Xerox and Humana are enlisting their active social networkers and bloggers to participate in their product launches, even though 80% of them talk about things that have nothing to do with the company.

What are those companies doing that you are not? They are humanizing their brand – in effect powering their brand with people. And they realize that in order to do that you need to start by empowering and trusting your employees.

Check out the attached presentation to find out how they really do it.

Is your brand powered by people?

View more presentations from Human 1.0.


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Is your business powered by people?

November 23rd, 2010 francois Posted in adoption of innovation, best practices, business model innovation, cmo2.0, Interesting Links, social innovation, social media 3 Comments »

Seriously — is it?

I have finally had a chance to catch up with some blog reading and have been struck by the number of people who focus on building social media programs to reach customers and prospects in new ways. And they use advertising metrics like engagement to decide how successful their programs are.

That is not what this current wave of innovation is all about!

While using traditional marketing programs in social media environments may yield some results, they do not leverage the social…they are plain old marketing programs that are driven by incentives, coupons, or other traditional marketing drivers. They die the minute you stop fueling them.

As some people have called it, social media a platform for participation. It’s actually a massive platform of participation that allows the social for which humans have been hardwired, to scale to the point where it makes a difference in business again – both as employees or customers/prospects.

Those companies that are successful in leveraging social media do not use it as a channel to reach audiences. They use it to turn their business processes into social processes – they power their business with people. They get all their employees and customers participate in product innovation processes, customer support processes, knowledge management processes, marketing and sales processes and others. They don’t care about engagement, because in many cases, as is the case when you try glean insights from the marketplace, engagement with the company is not even required – its the engagement among the people that counts.

If you are interested in the topic, you may want to join us for our Hyper-Social Mini Summits coming up in January, where we will be joined by companies who have done it before and brainstorm with executives on how to make that work.



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Let’s “de-friend” all self-proclaimed social media experts!

November 20th, 2010 francois Posted in Interesting Links, social media 10 Comments »

Call me jaded or cranky – I don’t care – but I have had it with self-proclaimed social media experts. And not because they are one of the most ego-driven bunch of (un)innovators that I have seen in my entire career. After all, I have been able to live through the age of A-listers and following exclusionary eras of social media without getting too caught up in it. I’ve had it because they are hurting the reputation of people who truly understand this wave of innovation by giving their clients and customers bad advice.

The only thing I used to do was to follow a simple rule to help me decide whether or not to friend someone on social networking sites. Besides some other rules that I use for various sites I would not accept people who called themselves social media experts of gurus. Maybe it’s time to step that up.

So what got me so riled up? A post by Chris Kieff (who I normally enjoy reading), about what makes a social media expert. In it he describes how you cannot call yourself a social media expert unless you have a set number of followers on facebook, twitter and LinkedIn, and how you need to have a certain level of Facebook fans to qualify. In other words, another piece of bad advice for companies who are trying to recruit people to help them make sense of this current wave of innovation.

On Chris’ Facebook posting about the blog post I said “You can be all that and when a CMO comes along and asks how to leverage the social as part of lead gen or product innovation be at a total loss…or when a CIO comes along and asks how all this impacts his infrastructure (CRM, PLM, etc.) be completely clueless. Social media is about “the social” and humans know what that means…they have been hardwired to behave that way for eons. What is hard is how to embrace all this social activity into a business environment – and to do that you need a deep understanding of business processes and how business people measure success…they do not want to measure the impact of social media in customer service by the number of followers – they want to measure the impact the same way as you measure the impact of a call center…” I then added “…the metrics you use may in fact not be a good indicator to evaluate an expert…I agree that you learn by doing, we are aligned there…but in this case that is not enough. In fact there are people with huge followings that are a) business clueless and b) socially awkward – neither one of those profiles would be a good hire if you are trying to leverage the social as part of your business…”

Others, including Danny Brown weren’t quite as delicate in telling Chris that this was bad advice – and I really cannot blame them. Chris came back with a lame rebuttal, typical of self-proclaimed social media experts’ discourse with the pot calling the kettle black – calling the feedback he got coming from the “social media echo chamber.”

It is not good for our industry to tolerate people putting out bad advice – it hurts us all. Customers who listen to  that advice end up disappointed, hurt or confused. In writing our book, The Hyper-Social Organization, I talked to a well known and social-media savvy CMO who asked for my opinion about popular social media experts. Not knowing where he was going with that I played it safe and said “I know a lot of those people and I am friend with some of them, but there are many people out there who lack real business experience,” to which he responded “EXACTLY – most do not understand my business, and much less what my role is.”

That of course, is not good for the reputation of the industry as a whole.

How many dead corporate blogs have you seen out there? How many company-centric corporate-speak spewing twitter feeds? How many corporate Facebook pages with fans that come only because the company distributes coupons on its page? Those are some of the best examples of what bad advice can lead to. At least they are not hurting the companies that deploy them. But even those best case scenarios hurt those organizations and consultants that can truly help companies leverage social media as part of their business – those that understand that social media is not about the media but about the social, and those that realize that to succeed you need to power your business processes with people – not enable your marketing processes with a new social media channel.

Sorry Chris for using your posts as examples – they are the posts that made me reach my tipping point.

What do you say?



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10 rules for successful communities from Scott Wilder

October 29th, 2010 francois Posted in communities, Interesting Links 1 Comment »

scottwilderSpeaking with Scott Wilder is always fun, and it was so again when I spoke with him a few weeks ago about his online community experiences. For those of you who don’t know Scott, he used to run all small business communities at Intuit. I am also fortunate to be working with Scott on various Human 1.0 projects at the moment.

In our conversation, Scott gave 10 pieces of advice for those of you who are thinking about starting communities. Based on our experiences and research, we’d say they are dead-on:

  • Think about the size of your potential user universe
    According to Scott, only 5-10% of your users will join your communities – that is if you set them up right. So, if you only have 5,000 customers you cannot expect more than a few hundred people to show up. Think carefully whether you have enough value to offer the group so that it becomes a vibrant community. And before starting a community on your own platform, evaluate whether it may be better to engage with them on other platforms like YouTube or Facebook.
  • Have a clear purpose for your community
    What problem is it going to solve? How is it going to help people’s life? If you cannot articulate the purpose of your community clearly, chances are that your community members will come once, be confused about what’s going on, and never come back.
  • Understand the kind of technology that your audience uses
    If they don’t use wiki’s, then don’t deploy wiki-like features as part of your community. If they don’t give credibility to blogging, then don’t ask them to blog – let them have discussion threads. Not only should you deploy the type of tools that they are used to, you also need to use their language.
  • Start Simple
    Don’t add too much functionality as you start your community- start simple with a few features. Scott used to make the point that if your community would not survive in a plain old discussion group, it would not survive anywhere.
  • Add a  ”heartbeat” to your community
    Communities need a “Heartbeat.” You can provide that by having periodic webinars or online roundtables. Some companies also do it by having offline events and activities, while others do it by having time bound activities (e.g., this week we are looking for ideas about power supplies).
  • Pay attention to moderation
    You do not need an army of them, but you need to get the right people, and realize that in the beginning of your online community you build trust through moderation. Keep the community in good shape and the conversations civil to avoid the “broken window theory” – if people will see that others can trash the place, they will do so as well. Have domain experts and make sure you don’t have explicit selling within your community.
  • Make sure you capture all the value
    Even though your community may be set up in support of one business process, most communities deliver cross-functional benefits over time. So a customer support community will deliver marketing and innovation benefits. You need to capture that value and report it back to the groups that can use it in a way they understand. At Intuit they set up the community group as a cross-functional center for excellence which reported back to the various groups using their own KPI’s.
  • Let the community decide what they want
    Don’t decide for them what it is you will be building. Show them your budgets and let them vote or have discussions about what they want you to do. Co-create with them and make sure that the various departments pay attention to the real voice of the customer – in the end it will help your Net Promoter Score or other metrics you use to measure customer satisfaction.
  • Don’t start if you don’t have a customer-centric DNA
    If you don’t have a customer-centric culture, chances are that your online community efforts will fail. Scott believe that Intuit’s customer-centric culture is what allowed communities to be successful (e.g., the “follow me home” program, where they encourage employees to go to retail stores and follow customers who purchased Intuit products to their home to see how they use it).
  • Don’t be a control freak – be transparent
    Do you trust your employees to do what’s right for the customer? Do you trust that your customers will behave themselves and help one another in your online communities? Not only that, but provide transparency in the data with both your employees and customers.

Great pieces of advice…let me know if you have others.



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