Forest, Trees and MIT

July 14, 2009

Over dinner last week my father-in-law reported that statisticians at MIT had discovered, through crunching thousands of lines of data, that consumers trust people they have relationship with more than corporate communication when it comes to purchasing decisions. MIT are now trying to define a formula and metrics which can be followed to ensure that this can be tracked.

As too their “discovery” my response was to cast dispersions on how often they got out. As to the formula and metrics, I hope they fail miserably.

Relationships, the anti-metric

What’s funny is they could have saved themselves hours of computing time by going to any car dealership. In every dealership there are a handful of sales guys who have been there the longest that do the bulk of the business. Why is this? Relationships. The guys who have been in a market and industry the longest are normally the most successful. It’s always struck me as odd that even knowing this, sales guys tend to move companies every couple of years.

Alright, I concede that although the MIT crunchers would have discovered that relationships drive sales they wouldn’t have been able to distill the evidence into a definable, trackable, enforceable metric. You can’t track the power or reach of relationships, there are too many variables. The more subjective variables you add the further the model drifts from reality. The only fact that is attributable to relationships in the sales cycle is the fundamental one that those with lots of them tend to sell more.

I’m really not against metrics.

Don’t get me wrong, metrics are very useful. They help you define what type of forest you are in, what season it is and the position of the sun. My concern is when companies and managers focus solely on the metric at the expense of the forest.

I have worked for many companies who focus solely on one tree and didn’t understand how that tree related to the forest. The presumption is that if a defined metric has distilled the forest to a tree then the reverse must be true. It isn’t. I can cite multiple examples where 15 phone calls in a day sold as much as the required 20, where 1 visit to an account a quarter was appropriate even though their quarterly revenues, according to the metric, called for 3 visits.

One company I know was astonished when a particular campaign failed to achieve it’s goal. They were astonished because all the preeminent business school theories on the subject they subscribed to implied that if (a) was executed then (b) would happen. What the theory had not communicated, or possibly left out, was the impact of the relationship the company had with the consumer.

Relationships and metrics, together in perfect harmony.

There are tools and techniques that can be used to build relationships and then leverage them to generate revenue. However they can only be used if the relationship is built first. It’s like learning how to swim by watching Michael Phelps. You can learn all the advanced techniques you like but until you get in the water they’re useless.

I was talking to a friend who is a retail store manager. This particular chain sells extended warranties with their product and they require a minimum closing ratio from the sales associates. They have training workshops, role playing guides and bullet points all designed to have a their associates at an equal level of competence. Their pitch to the associates is that if you follow the plan outlined you will sell extended warranties. If this is true then why is there variance in the closing ratios of different associates in the same store. Simple, relationships.

Here’s the line used by the sales associate with the highest closing ratio for extended warranties in the region.

“Do you want an extended warranty?”

Why does that work for him? Relationship.

Relationships first, cleverness second

Without a basic relationship all the metric improving, funnel filling, sales tracking procedures will not drive more sales or users. Once you have that relationsip, once the consumer is engaged with you in some way beyond stumbling into the store or site, then the metric driven side of sales growth becomes applicable. Not before, after.

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I’ve taken the past few weeks to digest all the Social Marketing information that I normally follow. There’s a lot. There’s a lot of opinions, there’s a lot of following an idea because (please insert SM guru of the day) said it. However there’s also a lot of really well thought out, well stated and written theses on how to corral this exploding market and harness it.

Is the SM world flat or round?

A lot of who I read to gain insight on how this market is evolving, stems from my own feelings towards it. I gravitate towards a particular viewpoint that supports how I feel and how I have seen SM work the best. I tend to steer clear of, apart from the occasional glimpse, any conflicting opinions. I’m always open to giving a well rationalized argument it’s due but I tend to avoid the overt sales pitch.

I don’t see this as a problem. The SM world has yet to be defined as flat or round. For all I know it may be both, depending on your community and message. It may be that all viewpoints are valid in the context of their creators, communities and messages.

It may be many things, but it’s not a strategy.

Although I don’t see a polylogue on SM as a bad thing I know it annoys those who wish to include an SM strategy in their business. So, here’s my big idea for the day.

Don’t.

Don’t include it as a strategy, it’s not. SM is far too young to have defined paths of implementation beyond the fundamentals. It has not had time to evolve and coalesce into a 4 hour seminar. This is both fantastic and annoying. It’s fantastic because now is the time to experiment to explore and determine, to quote Mr Rumsfeld, what you know, what you don’t know and what you don’t know you don’t know. It’s annoying because, especially in this climate, getting the leeway for this experimentation is tricky.

It’s fundamental

I read an article last week  quoting the CMO of  Unilever on their decision not to implement an SM strategy. Good for him. A lot of comments were berating this statement as yet another big business not moving with the times. I don’t believe Unilever should implement SM as a strategy I think they should implement it as a new, fundamental avenue to interact with their customers.

Just as you learn any hobby you realize that there are fundamentals to success that if not adhered to will cause failure far before you actually step up to take the shot, climb the hill, swim the lake. SM, at this stage is the same.

The one current theme that flows through all the conversations on this topic is that of building and engaging community. Without community with whom are you going to socially network? Without a social network who are you going to socially market too?

Fundamental step one.

Know your community. Know your customers. Read what they write. Understand how and where they communicate. Without this any attempt at SM  is doomed before it begins. Thankfully knowing your customers better is an easier sell to those who pay the bills. Who wouldn’t want to know their customers better?

What do you think? Is it a strategy or is concentraing on the fundamentals a good first step to implement?

Building relationships takes time, are you willing to put in the effort?

Chris Brogan had a great post today. That’s not a surprise, Chris has pretty good posts everyday. Today’s post was about “promoting-without being that guy“. The basic tenet of his post was that the most effective communication happens after relationship has been built.

After reading the post my nagging thought was, who has the time? Or, probably more accurately, whose boss will give them the time? Social media is all about the relationship which is fine because people buy from people but it takes the time to build the relationship.

Are our expectations skewed?

I think marketers approach business relationships with a different set of expectations than personal ones. The expectation with personal relationships is that they are long term, will take time to develop and require work and effort. The expectation of most business relationships is that they are short term and disposable.

Business is just not set up for nurturing long term growth.

Yeah I know everyone will say it is, but it isn’t. They will argue that focused short term growth leads to continued long term growth and it does but at what cost in finding new business? If you look at the most successful sales guys you know. I bet most of them have been in the same industry or geography for a long time. They have built the relationships that keep rewarding them.

My experience

I was a territory manager for over 3 years selling AV product for Techrep Marketing. When I started I didn’t know the dealer base, I had no relationship. I spent the first year getting to know my dealers and how they operated. I didn’t try to sell them anything. I made sure that they knew that they could depend on me to show up when I said I would, know the answer or get the answer and sort out their problems.

1 Year, 365 days, of not trying to sell them anything. The way in which Techrep is set up in terms of philosophy and leadership from the owners, compensation and autonomy allowed me the time to build the relationship. I know I would not have had that environment at other companies in my industry and I know my sales would not have increased as much as they did.

Most businesses do not have the patience

Most businesses, due to the myopic quarter by quarter time frames they operate under, do not have the patience or the leeway to allow a social media strategy to grow and evolve. Techrep did and I nearly tripled annual revenues in 3 years.

Social media is a vital and fundamental movement in helping businesses relate to consumers. Those looking to build a succesful relationship with their customers need to take the time to build it. Businesses looking for a quick fix will be sorely disappointed.

How to hear the song in the noise.

So, social media is officially buzzy. All kinds of people will throw all kinds of acronyms, synonyms, analogies and stuff they heard someone say that sounded right at you. In all this noise how do hear your consumers singing?

Identify and follow

An established organization should have a pretty good idea who their customer is. If so, you’ve got a great start point in integrating social media into your marketing outreach. If not then you have a deeper issue and I recommend you go find out. Now.

Identify

Define a set of key search words which can be used as a benchmark for research on your industry. Do the same for your organization and how you wish to classify the results. Plug these search terms into Google, Perspctv, Technorati and see what comes up. To re-hash Lord Leverhulme, do it often and never neglect to do it.

Every day would be a minimum until you get an idea of the pulse of how your industry interacts with social media. A quick glance over the sites that pop up will be enough to decide whether they’re a legitimate result or not. As these sites, blogs and outlets are identified use Delicious to archive them. Rinse and repeat.

After a short period of time and reinforced by your stack of Delicious tags you will begin to notice patterns. The same blogger names will keep popping up, or the same sites, or the same quotes from the same source.

Follow

As a clearer picture is beginning to emerge of how your target interacts in this world, follow them. Make time to follow the bloggers you have identified, read their work, understand their perspective. Remember social media is all about them and not about you. The definition of your brand is where your message meets your customers perception.

How your message is being perceived is probably the most useful side effect of engaging in social media. It provides perspective on how your message is doing, for better or worse. As you get to know those who are commentating on what it is that your company does entry points for interaction will appear (more on that later).

Identify and follow. To quote Radiohead “Karma police, arrest this man. He buzzes like a fridge. He’s like a detuned radio”. Trying to find your consumers singing in the noise of social media is like listening to a detunes radio, hopefully you now know where the tuner dial is.

You are not in control, get over it.

My first post in this series focused on looking past social media as a one stop solution for deeper engagement with consumers. This post focuses on why social networking requires constant engagement.

It’s all still so fluid.

All social networking sites are constantly adding and removing features attempting to do the same as you, engage better with their audience. As well as the networks changing, users reactions to the networks are changing. In the same way as you engage your target audience the tools they use and react to will change over time and message.

This is a huge shift from web 1.0 where a website was published and updated by the publisher when there was new product or announcements. Compared to web 2.o web 1.0 is very static and is controlled by the the publisher. The joy and frustration of using web 2.0 to engage consumers is that it’s always changing. What worked for a message last week will probably, but not necessarily work this week. In other words it’s not static and you don’t control it.

Social media requires a total shift in perspective of how marketers should view their target market. In the past most of your target market read a few select publications and attended a few select events. They were easy to find, define and track. They were also easy to engage. Now they are spread and not where you left them. Like toddlers they are off exploring the new world (there’s an analogy that’s going to get me into trouble).

Successful adoption of social media requires keeping your finger on the pulse of the media itself and your target at all times. Thankfully this is not difficult, just time consuming. There are many, useful tools and avenues for obtaining and cataloging this information.

Remember, with social media you are not in control, get over it.

You can’t get there from here.

I read an interesting post over the weekend entitled “2009 Social Media Optimization: Back to Basics?” on aimclearblog.com. It was a synopsis of the key points presented at Search Engine Strategies New York 09 by the various speakers.

Part of what Dave Snyder talked about grabbed my attention.

“The biggest problem … in social media is that it’s mostly approached from a high level. “Cookie cutter process people” are delving into social media in the wrong way. Don’t keep using the same social media tactics client to client, platform to platform, expecting similar results.”

The use of social media is not a one stop process for reaching customers. Many business procedures from time and motion studies a hundred years ago to Motorola’s Six Sigma methodology in the 80’s have all followed the same principles. If you measure ABC you will gain a result X that will inform you how to improve ABC so you achieve X+. To put it another way there is a defined path from current to improved efficiencies.

Most shifts in marketing have also followed this path. If you increase the eyeballs then a CTR  of A will lead to B new potential customers who will convert at C rate to capture X new customers. Change any one of these and you affect the output of the equation. Simple math.

Social media is a lot more fluid, what works for one producer-consumer relationship does not mean it will work for all producer-consumer relationships. At Knetwit we discovered that there were very few student forums and blogs but lots of Facebook traffic. However most of the commentary about students was blog based. So, to reach students we concentrated on Facebook, to interact with those commentating about students we identified pertinent blogs to commentate on.

One of the frustrations of convincing an organization to adopt a social media presence is the lack of a defined path from A to B. It’s hard to define what that presence wil look like. Part of the fun of using social media is the discovery of where your customers hang out and what they talk about behind your back.

Thankfully there is no huge cost barrier to involvement in social media, just a time and discipline barrier. It takes time to discover the best paths to interact with your customers. It takes time to create the message that resonates with them most and discipline to keep doing it regularly.

I’ve said before, my favorite quote about social media comes from Lord Leverhulme of Unilever fame. In 1922 he said to the graduating class at Liverpool University.

““The conduct of successful business…merely consists in doing things in a very simple way, doing them regularly and never neglecting to do them.”

This is social media, do it simply, do it often and never neglect to do it.

I’ve just finished reading “Enlightened Entrepreneurs” about business ethics in Victorian Britain. It details the lives of 10 pillars of Victorian industry and their effect on the social fabric of their workers’ lives. George Cadbury (of chocolate fame) and Sir Titus Salt both ended up building model villages (Bournville and Saltaire respectively) for their workers and instigated health and education care for them and their families decades before the British government did.

Of all of these “enlightened” business moguls, I have a soft spot for William Hesketh Lever or Lord Leverhulme as he became. His company, Lever Brothers is still a powerhouse in the modern world economy. You’ll know it as Unilever. A soft spot because my grandfather worked for them his entire career and Lord Leverhulme, when asked what his occupation was, always answered “Grocer”.

In 1922 Lord Leverhulme was speaking at the graduation of Liverpool University students on the secrets of success in business.

“The conduct of successful business…merely consists in doing things in a very simple way, doing them regularly and never neglecting to do them.”

Ian Bradley, Enlightened Entrepreneurs, Lion Publishing 2007.

It strikes me that this is as relevent today as it was 80 years ago and that it’s a great description of how to adopt social networking into business.