5 Do’s and 5 Don’ts of Effective Word of Mouth Marketing  - Cara Fuggetta 
An article for the SocialTimes summarizing key takeaways from our New York Brand Advocacy Series panel discussion.

Social Media Revolution: 2011 Edition
Another Erik Qualman video that’s chock full of social media stats, 2011 edition.

Social Media Becoming Social Business - HBR- David Armano 
Social Media is turning into Social Business to most organizations.  Harvard Business Review suggests that there are areas of Social Business that are poised to explode: Organizational Design, Social Business Intelligence, and Cultures of Collaboration, Co-Creation & Shared Value.  Social Media and Social Business must be linked – the expectation for real-time responses is only increasing.

13 Startups that Wowed Us
Catalyst S+F’s Jim Nichols offers a list of companies that appear to have the stuff to move the needle for marketers.

Small Businesses That Understand Social Media
At this point, it is almost irresponsible to not have a social media presence as part of your marketing mix.  However, many businesses continue to be behind the trend.  This NY Times article highlights two small businesses who are successfully harnessing their social media.  Their approaches are interesting, inexpensive, effective, and easy to reproduce.

-Lucy Arnold, Marketing Intern, Zuberance

By leveraging Zuberance…

• Chili’s identified a brand army of nearly 1 million strong who published 50,000 reviews on Yelp and shared 320,000 offers on Facebook, Twitter, and email.
• Each Advocate of Blurb (a print-on-demand publishing service) that created a social recommendation, brought in 1.6 new customers.
• 30% of Intuit’s Advocates have written reviews and shared offers with their social networks.

When I tell people what Zuberance is all about and the results we’ve seen from companies energizing their Advocates, here’s most common response I get (from marketers and non-marketers alike): “So how exactly do you incentivize people to make these recommendations?”

The answer is simple: We don’t! (As explained by Zuberance Founder/CEO, Rob Fuggetta, here)

The last time you went to an exceptional restaurant, you probably went to work on Monday and raved about the best steak you’d ever had to your colleagues. What did that restaurant give you for the recommendation? What about the smart phone you suggested to your cousin or the bottle of wine you recommended for your sister-in-law? How much did those companies pay you?

So what motivates a recommendation? Take a look:

Recommending brands and products is not a selfish action. However, if you encourage your customers to talk about you by leveraging a selfish motive (such as referral programs), it taints the recommendation. This makes your customer look bad because he’s trying to score some cash or reward points at their friend’s expense; and it makes you, as a brand, look bad because it’s basically telling your customers, “Look, since our product isn’t worth talking about genuinely, how about I give you some rewards points to do it and we’ll call it even.”

Keep recommendations for your brand authentic by going above and beyond to please your customers (becoming “customer-obsessed” as Josh Bernoff put it in a recent Forrester report.) Then, you won’t have to worry about paying or incentivizing your customers to talk about you. Because let’s be real, that’s just lame anyway.

-Cara Fuggetta, Marketing Manager, Zuberance

In an effort to juice conversations, Intuit gives grants to small businesses to get people talking about small business, explained Laura Messerschmitt of Intuit.

This is not a “pay-for-play” solution which is a major “no-no” when seeking out recommendations for Advocates. Intuit is just trying to show general support for a community, especially at the local level.

-David Spark, Social Media Journalist, Spark Media Solutions

It is true that Brand Advocates have value in part due to the reach of their relationships within and across their social networks.  When they encourage their friends and colleagues to buy our products, our brand’s buying power increases exponentially, and it simply makes good business sense to leverage those opportunities.

The risk here is that we can become so focused on our Brand Advocates’ social reach that we see them only as a means to an end (sales) and stop seeing them as people.  We might get greedy and start looking right past them to market directly to their networks, ignoring our Advocates themselves.  While that marketing method can still be somewhat effective, it costs more, it is more difficult to implement and maintain, and it is dangerous to our brand.  We cannot de-value our Advocates and expect our brands to thrive!

No matter how great a buying power their networks provide us, we still need to value our direct 1-1 relationships with our Advocates.

Research shows that Brand Advocates are more likely to repurchase after recommending brands and products:

76% percent of Brand Advocates said they were more likely to repurchase after recommending a brand or product to someone else, and 79% said they would be more likely to repurchase in the future. (source: the Harris Poll, June 2009).

In other words, with our Brand Advocates, the ROR (Return on Relationship) is high.  A strong relationship with a Brand Advocate is likely to not only increase the Word of Mouth impact, but also to increase their own likelihood of repeat purchase.   And if we continue to delight our Advocates with each of their own purchase experiences, they have even more reason to recommend our products and services to others.

Don’t get greedy and interact with your Brand Advocates just to “mobilize” them for the buying power of their networks.   They are valuable in and of themselves. Treat them that way!

I’m an Advocate of Tommy Bahama, the fashion retailer. I enthusiastically recommend Tommy Bahama to my friends. I love their relaxed, Island style of clothing. In fact, I could probably buy an island with the money I’ve spent at Tommy Bahama.

The problem is this: nearly every day in December, Tommy Bahama’s marketing department has been sending me emails urging me to buy more now. This annoying, non-stop email blasts is exactly the wrong way to treat Advocates.

What should Tommy Bahama do?

Well, first they should ask me whether I’m a Tommy Bahama Advocate. They should then engage me in ways that feels like Tommy Bahama understands that I’m a highly valuable customer, not a “target” in an email database.

Maybe they could give me an exclusive promotional offer for me and my friends. Or maybe they could invite me to a gathering at one of their stores, where I’d be delighted to give them some feedback about their clothing. They should definitely ask me about my favorite Tommy Bahama story or my favorite Tommy Bahama shirt.

Meanwhile Tommy, please live up your brand mantra, especially when it comes to your Brand Advocates like me.

Relax

In “The Ultimate Answer,” author Richard Owens, the CEO of customer satisfaction company Satmetrix, says a single Advocate of an enterprise software company is worth $565,000, based primarily on the Advocate’s lifetime referral value.

So how much are your Advocates worth?

Here’s an easy way to calculate this. Many companies track the Average Customer Lifetime Value or CLV. To simplify this, this is often calculated as follows:

There is now a growing body of evidence (Yahoo!, Comscore, others) that Advocates are a minimum two to three times more valuable than average customers based on referral value. We believe these estimates do not reflect the true value of Advocates because many of these studies were conducted before the rise of social media (Facebook, Twitter, etc.) and therefore don’t reflect the ability of Advocates to reach and influence thousands or even millions of prospects.

So a simple way to calculate Advocate Lifetime Value is by multiplying CLV by 3X. Via Zuberance’s real-time analytics, you can get more precise measurements of Advocate Lifetime Value.

Advocates are 2X to 3X more valuable than average customers, according to studies by Yahoo!, Comscore, Zuberance than others.

Why?

• •  Advocates drive sales. Advocates not only are about twice as likely to recommend their purchases to friends than non-Advocates, but their friends also buy the recommended products two to three times more often. (see chart below from Yahoo! and Comscore)
• •  Advocates are lead gen engines. In many companies, Advocates generate 80 to 90 percent of the referral leads (source: loyalty guru Fred Reichheld.) Ask your salespeople where their best leads come from. No doubt, the best leads come from existing customers.
• •  Advocates are Word of Mouth machines.

Fire your salespeople. Energize your Advocates.

That sounds extreme. But consider these three points.

1. Prospects trust your Advocates more than your salespeople. 53% of business executives say colleagues’/friends’ Word of Mouth is the #1 influencer of their purchase decisions compared to 39% of sales representatives, according to a study for events management firm Jack Morton by Keller Fay, a leading Word of Mouth research firm.
2. Advocates actually get their friends and colleagues to buy. According to Comscore and Yahoo!, Advocates actually convert prospects two to three times more often than non-Advocates.
3. Unlike paid salespeople, Advocates evangelize you for free. They go out of their way to recommend you because they’ve had a great experience with your product or service and want to tell others.

Why are Brand Advocates so influential? It boils down to two words: trust and reach. According to Forrester Research, 94% of consumers trust Word of Mouth recommendations. Only 14% trust online ads. (See below.)

Empowered by social technologies, Brand Advocates have massive reach. As we pointed out in WOM Rule #5, on average each Brand Advocate reaches a minimum of 150 people. A company with 100,000 Advocates can thus reach 15 million prospects with highly relevant, trusted messages.

Each Advocate reaches approximately 150 people in his or her social and/or business network. We reached that conclusion by analyzing publicly-available data from social networking sites like Facebook, Twitter, LinkedIn, plus email marketing trade associations, and other sources. First, we added the total number average number of contacts that people have. We then discounted by 60% to account for duplication. Depending on your point of view, you may consider our estimate low, high, or about right. A quick poll of our employees showed that the average number of contacts each person has on Linked In alone is 167. (We’re reproducing the chart here since we have been asked often about this data.)

One other point here: Advocates actually reach many more than 150 people because their friends and colleagues often forward Advocates’ recommendation others. The ability for recipients to re-Tweet content makes this easy.