Superfans: Building Trust and Commitment Through Online Reputation by LithiumTech

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									superfans: building trust
and commitment through
online reputation
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contents




        1         intro
        3         defining health factors for online communities
        5         after peak Facebook
        6         what is online community?
        8         organizational ownership
        10        conclusion




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we help companies unlock the passion of their customers.
The Lithium Social Customer Suite allows brands to build vibrant customer communities that:


  reduce service costs with              grow brand advocay with        drive sales with                   innovate faster with
  social support                         social marketing               social commerce                    social innovation


lithium.com | © 2012 Lithium Technologies, Inc. All Rights Reserved
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intro




   Communities thrive or fail based upon trust. Consumers
   must have some degree of trust in the hosting brand to make
   the community successful, but far more important is the trust
   that consumers have in their peers.

   There are two key benefits to peer-to-peer trust, each
   one required for a brand community to achieve its
   business objectives:                                                 Even a customer community with a million members depends
                                                                        upon a fairly small number of people, typically around 1%, to
   If consumers trust that their peers know what they are talking       generate much of the excitement and interest. Without the
   about, they are more likely to follow their advice, whether that’s   peer trust created by a reputation management system, this
   advice about which product to purchase or how to fix a problem       1%—the superfans—will not engage and the community will
   with a product they’ve encountered. The most prolific users          not achieve its business objectives. So it is vital to understand
   typically create 90% of the content in a brand community, so it      the dynamics of online reputation and use the best available
   is vital that visitors know who among them is trustworthy.           tools for managing it.

   If new community members see that the community rewards              Building this web of trust requires both the right technology
   engagement with higher levels of status and privilege, they          and an understanding of human behavior. Lithium’s approach
   are more likely to invest their time and effort in making the        to online reputation combines those. Our software and
   community successful. In other words, the community is               practices are based upon:
   something like a video game—the drive to move up to the next
   level compels members to higher levels of participation.             Ten years of social interaction data across several hundred
                                                                        communities, tens of millions of users, and 50,000
                                                                        superfans—consumers whose deep engagement with brand
                                                                        communities drives others to participate.

                                                                        Research conducted by Lithium’s Principal Scientist, Dr.
                                                                        Michael Wu, who was recently named (along with Marc
                                                                        Benioff and Mark Zuckerberg) as one of the most influential
                                                                        people in CRM. Lithium encourages Michael to share
                                                                        his research findings in a blog, which you can find on the
                                                                        Lithosphere, Lithium’s own community.

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Real-world interactions through the communities Lithium             One user on Logitech’s community has posted 45,000 times
hosts for its clients, including some of the largest, brand-        since May 2006, an average of almost 25 times per day! These
sponsored communities in the world at HP, AT&T, PlayStation         answers to technical and purchase questions have been
Europe, and Univision. Lithium’s customer success managers          viewed millions of times, giving him an effective reach larger
(CSMs) are actively engaged with our clients in designing           and more lasting than the company’s advertising campaigns.
reputation and reward programs in their communities.
                                                                    An effective rank and reputation system must
A well-executed reputation system delivers tremendous               do the following:
return on investment by empowering the smartest, most
committed members of the community to take on much                  Reward members for the full range of socially beneficial
of the responsibility of managing the site and driving its          behaviors. This sounds simple, but many systems do a poor
business objectives. A small minority of superfans makes the        job of it. For example, simple reputation systems confer
difference between success and failure in brand communities.        status upon users based purely on the number of posts they
For example:                                                        create, but this creates perverse incentives. Members post for
                                                                    the sake of posting in order to “game the system” rather than
Lenovo’s award-winning customer support site is staffed by a        focusing on quality posts. Moreover, some members visit the
moderation team composed entirely of customer volunteers            community every day, but only post when they have something
from all over the world—US, Australia, Canada, Germany,             very important to say. These members may actually be the
India, Pakistan, and Turkey. Initially, the collaboration focused   glue that holds the community together, but many reputation
on the operation of the community—the policies, the rules,          systems treat them poorly because they don’t post often.
and the content. But in just one year, 30 members who had
earned the trust of Lenovo and their peers helped grow              Motivate members continuously through their engagement
Lenovo’s knowledge base to 1200 articles.                           process by progressively making succeeding levels of
                                                                    achievement more difficult to attain. This concept is
English mobile telephony provider giffgaff’s remarkable             sometimes known as “game mechanics,” and it is critical to
customer community is both the customer service and                 keeping members engaged. Some of Lithium’s long-standing
marketing arm of the company, which has fewer than 20               communities have over 150 different levels because members
employees! The average time to receive a response in the            keep raising the standard.
giffgaff support forum is under three minutes, and 100% of
technical questions are answered by the community. Giffgaff         Confer meaningful privileges upon superfans. Many systems
members who answer others’ questions effectively and earn           display visible badges of status, and this is necessary but not
high status also receive free air-time, which they can then         sufficient. While superfans are motivated by public status
give as gifts to their friends. This makes these high-status        markers, long-standing members are motivated by having
users word-of-mouth marketing agents.                               authority, such as the ability to move or delete content, the
                                                                    ability to edit or write blog or knowledgebase articles, the
                                                                    ability to post comments without moderation, and the ability
                                                                    to discipline members of the community who cause trouble.



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defining health
factors for online
communities


   Offer multiple paths to success. A brand community is a
   complex ecosystem. Some people may be experts in one
   product but not in another. Some may be great at starting
   discussions, others may be great answerers of questions,
   and still others may be friendly and welcoming. The rules
   underlying the game must be flexible enough to enable all of
   these people to feel as though they are winning. If you make
   a domain small enough, every man can be a king. While this
   may not be entirely practical, it is an important maxim for
   creating participation among diverse audiences.                 Lithium’s reputation system allows an unlimited number
                                                                   of ranks, which are all programmable by business rules.
   Lithium’s reputation system has been honed over ten years of
                                                                   This means that first-time users can experience immediate
   iteration in diverse and demanding environments, from online
                                                                   gratification as they move up in rank after they make one or
   gaming communities to the world’s largest brand community
                                                                   two posts, while long-time users can be rewarded for a range
   dealing with beauty. Here are some of its key features:
                                                                   of behaviors.
   The Lithium platform tracks over 70 behavioral metrics that
                                                                   Lithium’s reputation system is linked to its role system, which
   can be factored into the reputation system, with more factors
                                                                   has over 100 different permissions. As a result, members who
   added as new features are built into the system. Moreover,
                                                                   have earned the trust of their peers can be empowered to
   Lithium can import factors from external user directories, so
                                                                   moderate the community, can have their content ratings count
   customers can be rewarded for loyalty or purchase behaviors
                                                                   more, and can even make badges displaying their status that
   in addition to their actions within the community. No similar
                                                                   carry over into other sites such as Twitter or Wordpress.
   system is as flexible or extensible.
                                                                   Lithium’s reputation system is granular within the
                                                                   community, so members can have an “overall” reputation in
                                                                   the community at large, but a particularly high status within a
                                                                   specific area of the community. This gives product specialists
                                                                   or people who are prone to submitting particularly valuable
                                                                   ideas a higher level of visibility than they might otherwise be
                                                                   able to achieve.



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Lithium’s Customer Intelligence Center uses algorithms to surface to community managers the most important members
in terms of the centrality of their connections with other members, the members who are emerging as extremely prolific posters,
and members whose participation is beginning to wane. The value of a superfan is so great that Lithium recommends that
companies proactively reach out to members whose participation is declining, and the Customer Intelligence Center gives them
the tools to do that.




                   our insights                         our gaming science                            our insights
             allow us to identify social                 uses a sophisticated                      allow us to counsel our
           influencers today and predict                 reputation engine to                        clients on engaging
             who will be one tomorrow.                 inspire influencers to get             influencers and bringing better
                                                            deeply involved                       results to their company


At Lithium, we have focused on the management of superfans              In the whole, respondents rated their communities as more
because all of our experience and data has shown us that if             successful than Facebook at activities that require trust:
you take care of the most important users, the rest will follow,        peer-to-peer engagement and providing pre-and-post sales
while the converse is not true. We work with each one of our            purchase support; Facebook was seen as more successful in
customers to understand their business objectives and create            disseminating marketing messages.
a reputation structure that works for them. This is a primary
                                                                        The two channels were seen as roughly equal in their ability
reason why Lithium communities are more vibrant and
                                                                        to create brand awareness. Clients who have initiated brand
successful than our competitors’.
                                                                        communities see awareness benefits as particularly salient
                                                                        in the first year, suggesting that “newness” of an engagement
                                                                        channel is in itself a big driver of awareness.

                                                                        The ability for customers to submit and discuss ideas for product
                                                                        or service improvement is the biggest downstream benefit of
                                                                        social customer engagement for clients who have developed
                                                                        brand communities. Clients who consider their Facebook efforts
                                                                        less successful are particularly interested in bringing this
                                                                        capability to Facebook in a more structured fashion.



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after peak
Facebook



   As Facebook itself approaches full penetration of its core       answer product questions
   markets and its members start to regularize their behavior,                                51.4%
   historic growth rates for participation in corporate Facebook                             50%
   pages will slow. Call it “peak Facebook.” Recent surveys
                                                                    display status or achievements
   have also shown that existing consumers’ engagement with
                                                                                          42.9%
   corporate Facebook pages may be tenuous and fading. For              8.3%
   example, 81% of those who have become fans of a brand
   have abandoned at least one such relationship because of         submit ideas for service/product improvements
   “irrelevant, voluminous, or boring” marketing messages.                                          62.9%
                                                                                             50%
   This suggests that marketers who are committed to using
   Facebook to foster relationships with social customers will      search our knowledge base
   need to invent or adopt sophisticated long-term strategies for                                 60%
   customer engagement. Fortunately, many of the techniques                                         66.7%
   learned in brand communities can carry over into Facebook.
                                                                    see the best/most useful content that others have submitted
                                                                                                   60%
                                                                                                  58.3%

                                                                    identify other customers with similar backgrounds or needs
                                                                                          42.9%
                                                                                             50%

                                                                    find products their friends or colleagues have recommended
                                                                                                60%
                                                                                             50%


                                                                        mentions by respondents who rate their Facebook pages as less successful

                                                                        mentions by respondents who rate their Facebook pages as successful




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what is online                                                       answer product questions
                                                                                             47.6%
community?                                                                                      56%

                                                                     display status or achievements
                                                                                                52.4%
                                                                               20%

                                                                     submit ideas for service/product improvements
   One of the first questions we see from brands developing
                                                                                                  57.1%
   a social customer strategy is, “Do I need both a brand                                            64%
   community and Facebook, and if so, what role does each
   one play?”                                                        search our knowledge base
                                                                                                  57.1%
   The answer to this question always depends on circumstances                                       64%
   and business requirements, but given that our audience has
   experience with both venues, we have a very good sense of the     see the best/most useful content that others have submitted
   role that each one plays.                                                                      57.1%
                                                                                                   60%
   Figure 1: Overall effectiveness of Facebook and brand
                                                                     identify other customers with similar backgrounds or needs
   community. Figure 1 compares the brand community’s
                                                                                        38.1%
   perceived effectiveness with the Facebook page’s perceived
                                                                                             52%
   effectiveness in 10 different areas.
                                                                     find products their friends or colleagues have recommended
   The first thing to note is that the one area where Facebook
                                                                                             47.6%
   shines is in outbound messaging. Because Facebook offers                                           64%
   outstanding reach and many brands use it as a publishing
   platform for periodic updates, its prowess as a vehicle for
                                                                         mentions by respondents who rate their communities as less successful
   disseminating marketing messages is not surprising. Social
   media marketing vendor Vitrue has computed that a fan                 mentions by respondents who rate their communities as successful

   base of 1 million translates into $3.6 million in equivalent
   media per year, and brands such as Coca-Cola already see
   more unique visitors to their Facebook page than they do          viral features, one might have expected higher scores for
   to their company web site. In these situations, Facebook          Facebook’s ability to increase brand awareness, but there are
   represents a means of message dissemination that compares         several reasons why the scores may be lower than expected:
   favorably to advertising on a cost-per-impression basis.
                                                                     Brand awareness is still largely campaign driven, and a
   Interestingly, however, Facebook was not cited as significantly
                                                                     Facebook page alone does not constitute a campaign.
   more effective than a brand community in creating brand
   awareness, or creating goodwill for the brand in social           Even when campaigns drive users to Facebook pages
   channels. Given the Facebook platform’s reach and                 and increase the brand’s fan base, there is no guarantee

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that these people were new to the brand. Most users who          As it turns out, brand communities annuitize exceptionally
associate with a brand page probably have a prior affinity for   well. Peer-to-peer engagement and an environment where
that brand.                                                      users answer one another’s questions emerge as a corps of
                                                                 devoted users forms and mobilizes. Indeed, scores rise in
Finally, as we have seen through social media monitoring
                                                                 these areas as communities move into their second and third
studies, “buzz” around brands spikes during successful
                                                                 years, suggesting that communities hold their users’ interest
campaigns, but typically returns to a steady state after
                                                                 over the long haul.
campaigns end.
                                                                 Figure 2: Anticipated benefits versus realized benefits.
One further explanation may be that our community clients
                                                                 Peer-to-peer buying advice and customer ideation were
report that brand awareness benefits peak during the first
                                                                 two benefits exceeding client expectations. The survey tells
year, even as other benefits increase over time. If this holds
                                                                 us that benefits clients anticipated when embarking upon a
true across other social channels, it is possible that the
                                                                 social customer program are not always the same benefits
fact of starting a new program in and of itself is responsible
                                                                 that emerge over time. This is particularly true in two areas:
for increased awareness—probably because that program
                                                                 idea development, and peer-to-peer pre-sales consulting.
involves an introductory campaign. When the shock of the
                                                                 Customer feedback/ideation was listed as an original purpose of
new wears off, what is left?
                                                                 a community 46% of the time, but a realized benefit 78% of the
                                                                 time. Peer-to-peer pre-sales consulting was an original purpose
                                                                 13.5% of the time but a realized benefit 27% of the time.

                                                                 Both of these “downstream” benefits are most likely to
                                                                 emerge as byproducts of trust among members of a
                                                                 community. Brands tend to be more willing to harvest and
                                                                 discuss rand communities.

                                                                 The ability to find products or services recommended by
                                                                 friends or colleagues is also seen as a potential area of
                                                                 improvement by those who are not particularly satisfied with
                                                                 their Facebook efforts.




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organizational
ownership



   If we see a coming convergence between the way people
   interact on Facebook and the way they interact in a
   brand community, it is worth asking who will lead that
   convergence and how it will take place. Enterprises vary
   in their determination of who owns social customer
   initiatives. In some organizations, social customer initiatives
   are owned by customer support or customer experience
                                                                     Figure 7: Largest challenge with social customer programs,
   teams. Increasingly, however, they fall under the purview of
                                                                     by program ownership Marketing-led organizations’ biggest
   marketing or corporate communications functions.
                                                                     concern with social customer programs is how to scale them.
   Figure 6: Additional requirements from Facebook by                Figure 7 shows the chief concern as scaling initiatives with
   social program ownership. As we can see from Figure 6,            (relatively) less concern about coordination across teams
   organizations where marketing owns social initiatives are         and departments. 44% of marketing-led organizations cited
   demanding less of Facebook in terms of new modes of               “resources to scale our efforts” as the biggest challenge, as
   customer engagement. In fact, ownership by marketing is           against 34.4% of everyone and (9/34 - 26%) of non-marketing
   more important than the perceived success of a company’s          led organizations. This suggests that one reason marketers
   Facebook page in determining whether a company is                 are less aggressively pursuing “deeper” engagement through
   interested in customers engaging through Facebook in more         Facebook is that, unlike support or customer experience
   involved ways. Customer support and customer experience           organizations, they lack human resources—like contact
   groups continue to be more interested in the exchange of          centers—that are perceived to be required to ensure that
   ideas and the answering of product questions.                     social customers get the satisfaction they require from
                                                                     engagement through Facebook. Better, perhaps, not to hold
                                                                     out the promise of a sustained dialog with customers if an
                                                                     organization cannot make good on that promise.

                                                                     The survey shows that marketers and customer experience
                                                                     are equally committed to responding to customers in brand
                                                                     communities and through Facebook and Twitter. However,
                                                                     it would not be surprising if Facebook’s reach threatens to
                                                                     become overwhelming if customer actions on Facebook



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called for a response. Indeed, perhaps one thing that
marketers have learned with online communities that they
have not (yet) learned with Facebook is that customers
themselves can be the solution—not just the cause—of the
scaling problem. Time and again, we have seen that larger
communities with a devoted core of superfans actually
require less intervention from companies than fledgling
communities. The “downstream” trust benefits pay dividends.
There is no reason why this shouldn’t be so on Facebook, but
many organizations are in earlier stages of their experience
with Facebook.

Figure 8: Requirement for ROI measurement by channel and
program ownership. A final area in which brand communities
differ from other channels for marketing-led organizations
is in the need to prove themselves through ROI metrics.
As we can see from Figure 8, marketing-led organizations
generally have higher demands for ROI, but this is particularly
true for brand communities. We suspect this is a function of
the perception that Facebook engagement is free because
a Facebook page is itself free, but also of the maturity level
of Facebook as a technology and a marketing venue. As we
see increasing convergence of social channels, we should
also expect to see demands for more sophisticated Facebook
measurement tools, and growing demands for Facebook to
prove its value.




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conclusion




   There are significant synergies between Facebook and brand                  The dividends of a well-developed Facebook presence will
   communities. Both offer unique marketing advantages, and                    ultimately depend on marketers inventing or adopting
   we’ve helped customers extend the reach of their brand                      sophisticated long-term strategies for customer engagement,
   communities on Facebook. For its sheer size and viral                       such that their Facebook presence derives its value from
   features, Facebook is generally considered more successful                  peer-to-peer relationships. But those relationships also have
   at disseminating marketing messages, and is roughly equal in                to be based in trust, both among customers and between
   its ability to create brand awareness. As we’ve seen in online              customers and the brand. Establishing this trust is a key,
   venues before, however, driving people to a social site without             long-term strategy. For instance, fostering productive
   providing an outlet for their needs invites a peak-and-trough               peer-to-peer relationships among customers and rewarding
   customer engagement, rather than a sustained, vital and                     positive behavior helps to create trust, as does identifying,
   profitable enthusiasm. A campaign-based wave of awareness                   motivating, and highlighting your brand’s superfans. The
   will eventually peak and subside, and may then create                       downstream annuities of trust and engagement only grow
   unrealistic expectations for customers. As these channels                   when brands cultivate true, multi-directional relationships
   evolve and the awareness benefits subside, marketers should                 with their social customers over the long term. The potential
   consider Facebook a useful platform for cultivating an online               ROI is tremendous.
   presence run more like a community than a campaign.




   Lithium social solutions helps the world’s most iconic brands to build brand nations—vibrant online communities of passionate social customers.
   Lithium helps top brands such as AT&T, Sephora, Univision, and PayPal build active online communities that turn customer passion into social
   media marketing ROI. For more information on how to create lasting competitive advantage with the social customer experience,
   visit lithium.com, or connect with us on Twitter, Facebook and our own brand nation – the Lithosphere.


   lithium.com | © 2012 Lithium Technologies, Inc. All Rights Reserved
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