Using Networks to Harness the Flow of Marketing, Customer Feedback, and Employee Knowledge
Today, your company's success depends on how well it builds its network presence in three key domains:
Marketing, which is now mainly about influencing the flow of messages through consumer networks
Customer feedback loops, which tightly link a company and its customers, enabling them together to constantly create more value
Work processes and knowledge, which flow through the networks of workers within and beyond the firm
J.R.R. Tolkien's epic saga of Middle Earth, The Lord of the Rings, was first published in 1954, accumulating tens of millions of copies in sales during the coming decades. As the foundation for a vast subculture, and an entire associated industry of fantasy books and games, the book still plays an important role in many people's lives. When New Line Cinema, a division of AOL Time Warner, began work on The Lord of the Rings film trilogy, which would be the first to use digital technologies to bring the books to life, it recognized the value of tapping the existing communities of die-hard fans. Other film studios have closed down fan Web sites so they can control marketing, including a different division of AOL in the case of the Harry Potter films, but New Line decided to work actively with the more than 400 existing fan sites.
The keys were maintaining an official film Web site so exciting that other sites would publicize its activities and providing fan sites with their own material to keep their audience returning and interested in the films. When New Line's LordoftheRings.net was launched almost three years before the first film's launch, sporting not much more than early notes and sketches, it attracted several hundred thousand hits on the first day. Since then, the Web site has been consistently updated and will continue to be until the last film of the trilogy is released on video in 2004. The wide network of fan sites ensures that any major releases on the site, such as short clips on the film's making, are quickly accessed. The first movie trailer was downloaded 1.7 million times in its first day on the site. This successful film promotion drew on how deeply people are connected today, how they spread news through their personal networks, and how communities of like-minded people gather to share information.
Just for a moment, think of how you fit into the global networks. You are at the center of a vast network of connections with other people, consisting of everyone you have ever known and communicated with. As a consumer, most of the messages that contribute to your buying decisions come from this network, from the people that are in some way part of your life. As a worker, your ability to connect usefully with people inside and outside your firm is increasingly the foundation of your ability to create value. Everyone you touch in your life is at the center of their own rich set of connections, together weaving the immense web of humanity.
Within the networks that constitute society, communities emerge that feel they have something in common, something that draws them together. These communities can be based around an interest like The Lord of the Rings, values such as ecological activism, or professional expertise like wastewater engineering. Whatever it is that brings people together, the result is that each member knows what others find interesting and will actively pass on and exchange information. There is a sense of affiliation that leads to sharing, and even from self-interest, people know that those who add value to communities tend to get back a lot more in return as others provide them with useful information and insights. John Hagel and Arthur Armstrong first brought home the business implications of Internet-enabled customer communities in their book Net Gain. Communities have become even more important today because they are so central to global information-sharing activities, but it is also essential to understand that they are just a subset of the personal connections that constitute the global networks. Nurturing communities of workers and customers are invaluable management practices, as you will see. However, this is just part of the picture.
In an economy based on the flow of information and ideas through networks, a company is its presence in these networks. There are three primary aspects to a company's network presence. Marketing is now primarily concerned with the flow of messages between networks of consumers. Companies must build customer feedback loops that connect them closely with their customers and allow them to enhance the value they offer. Within companies, work processes and knowledge flow through the networks that connect workers. These three key domains to companies' network presence are illustrated in Figure 61.
Figure 6-1 A firm's network presence covers three key domains.
These three domains are deeply related. Marketing is oriented to both existing and potential customers, while customer feedback is focused on creating more value for current customers. The connection of useful knowledge with its application within organizations is how this value is created. In order to achieve a more powerful presence in the networks, companies must address all three issues. The three related sets of action points companies must implement to build their network presence are shown in Table 61.
Marketing in the Networks
You may have once opened your email to find a movie depicting a bear fishing in a pristine mountain river. After the bear catches a large salmon, a man comes up and in unarmed combat demolishes the bear, running off with the fish, leaving the logo of British canned food maker John West. Leo Burnett in London had created the humorous ad for television, and apparently simply posted a compressed video of the ad on an industry Web site for feedback. Viewers immediately emailed it to their friends, sparking a flurry of distribution that was estimated to reach 15 million people within 24 hours. The award-winning commercial had a far bigger impact through its free email distribution than its expensive television screening.
One of the most useful tools to understand the new world of marketing is the idea of the meme. A meme is the cultural equivalent of a gene: an idea, belief, or behavior that has a life of its own and spreads from one person to another by how it influences its carriers. A catchy jingle that people hum, virus hoaxes that ask to be sent on, and flared trousers coming back in style are all memes. Perhaps the best example is the idea of the meme itself. Coined in 1976 by evolutionary biologist Richard Dawkins to help explain his ideas, it rapidly took on a life of its own, spawning millions of conversations, a small library of books, scholarly journals, and now many hundreds of Web sites. All ideas that flow through the networks, including marketing messages, are memes. Their breeding grounds are people's minds, and they spread from one mind to another by speech, behavior, and, increasingly, digital communication. Just like genes or anything living, some are more successful than others.
Table 6-1 Action Steps to Building Network
Building Network Presence
Customer feedback loops
Work processes and knowledge
We know that the propagation of ideas has become immensely easier. Memes have never before had the potential to spread so fast to so many people. It's as if rabbits could suddenly breed with any other rabbit around the world and produce offspring in seconds. This certainly is a great leap forward for rabbitkind. However, to continue the analogy, rabbits are not the only animals that can now breed prolifically. Suddenly, every animal has the ability to create a massive population overnight. All of these animals may be able to procreate almost infinitely, but in a world of limited resources, only a few will survive. In the case of memes, their common living territory is people's minds. This, fortunately or unfortunately, is a limited space. With a million memesand more every daytrying to come to roost in our minds each day, only a few will succeed, let alone motivate us to pass the meme on to others. Certainly, memes have the potential to propagate incredibly fast and wide, but the competition is remorseless. Today only the very fittest memes thrive, though if they do they can almost literally conquer the world. The rest die ignominiously.
This is the world in which marketers live today. Their ideas have the potential to be immensely successful, accessing tens of millions across the globe, yet it is far harder for them to be heard at all, usually stifled before infancy by the vast population of competing messages. Designing memes for marketing success requires paying attention to four key success factors.
1. Design for propagation.
The Wall Street Journal, no less, expressed its admiration for the smooth disco dancing moves of President George Bush, as shown in the popular interactive software "Dancing Bush." The clip's designer, Miniclip.com, makes interactive games using Flash software, which are around a tenth of the size of short video files. This makes it easy for the majority of Internet users that still use dial-up access to access the clip or forward it to friends.
Now almost any interesting information, video, music, or game can be passed on to others with minimal effort. It is by now standard practice to put "Email this to a friend" buttons on Web sites, allowing people to spread the word at the click of a button. Recommend-It's free referral service is used on more than 140,000 Web sites, enabling Webmasters to incorporate the feature easily. Visitors can spread the word about the site and enter promotions, and all the while the Web site earns revenue for each person who uses Recommend-It's services from its referral.
Because it has become so easy to forward messages, the primary issue has become how to motivate people to pass something on. Movies, as in the John West example, have successfully spread because they can be very entertaining, but attention spans are short, especially in the demographics usually targeted by this kind of marketing. Zeitgeista word neatly stolen from Germanmeans "the spirit of the times." As the pace of cultural change accelerates, the job of marketers is precisely to tap the zeitgeist and to create messages that people feel represent the cutting-edge of society and culture.
Flat Eric was a marketing phenomenon unleashed by Levi's Europe. Three brief television advertisements showed an outsized yellow sock puppet dancing to techno music in a car. The Internet version of the movies spread like wildfire, a cult movement was created, the Flat Eric single reached number one in the UK and Germany, and Flat Eric went on to take Japan by storm, despite the advertisements not being screened there. Levi's UK advertising agency Bartle Bogle Hegarty, in its regular trawling of underground art, had seen a short movie created for $2,000 by French director Quentin Dupieux, decided it had street credibility, re-created it as an advertisement that barely referred to Levi's, and saw it spread like wildfire.
Marketers are now engaged in a battle to create more virulent memes than anyone else. This is far more art than science because the cultural environment is changing so quickly. Something that excites people one day may seem boring a month later. Creativity in marketingand an associated ability to be on the edge of trendsis becoming more, rather than less, important in the networks. In Chapter 11, I look at the future of the propagation and filtering of marketing messages.
2. Foster network effects.
Let's say you receive an email that says "You've Got Cash!" All you need to do is open a free no-obligation account, and you can claim the payment. It's a pretty easy decision to make. Paypal, a company that enables anyone with an email address to send money electronically, has designed a business model that has acquired more than 16 million users with almost no traditional marketing or advertising.
Paypalwhich was acquired in mid 2002 by eBay is trying to create the dominant network for Internet payments. It's a classic example of network effects. People will tend to use whichever system is used by most other people. Paypal has to make it easy and worthwhile for users to sign up for its payment system and spread the word. It got started with a straightforward proposition for potential users: Sign up for an account, and we'll pay you $10. Initial subscriptions were healthy, but not earth-shattering. Then, participants in online auction site eBay came across Paypal, realized it was the easiest way to make payments online, and by using it introduced it to others who were regularly sending money to many people. In early 2000, Paypal's user base grew by 7 percent to 10 percent every day.
Since then, Paypal has reduced the payment for user registration to $5 and introduced conditions that help ensure that the user will be profitable. It also runs a user-referral scheme, whereby whoever introduces someone who is eligible for the $5 bonus also receives $5. Certainly one perspective on Paypal's initiatives is that it is implementing aggressive pricing models to build the network, but the whole structure of its business model is based on exploiting network effects to their fullest. eBay's acquisition of Paypal shortly after the payments company went public shows its intent to build further on its own network-based business model.
Any information-based product or service has potential network effects, and marketers need to take full advantage of these. Companies need to assess precisely how their customers may benefit as the network grows larger. Out of this can emerge a multitude of potential strategies to engage customers in promotion on your behalf. . . and their own. You must communicate effectively to users the benefits of building the network and also make it easy for them to do so. A simple example is how cell phone providers offer extremely low rates for calls to subscribers on the same network. Customers will actively want to get their friends to use the same mobile provider because it means they will have to pay less for their calls. The users of Apple computers have always understood the importance of spreading the word, and Apple has done what it can to help them. Guy Kawasaki's job as Chief Evangelist at Apple was largely to assist the missionary efforts of its customers. One user designed a "Made With Macintosh" logo to be placed on Web sites, clearly explaining to Mac users why they should want to promote the platform proactively in this way.
3. Create interaction.
If you watch MTV, how often do you wish you could put on your own choice of music? If you live in Europe, you can. Viewers do the programming on MTV's VideoClash. The audience uses voice telephone, mobile text messaging, or the MTV Web site to vote on what music video should be played next, so even the producers don't know which video will be broadcast until 15 seconds before it goes on screen. The great success of the initial program in the United Kingdom has resulted in VideoClash being rolled out in local language versions across Europe.
The new game is creating interaction. Increased interaction between you and consumers results in a stronger brand presence, additional marketing opportunities, and more information about your current and potential customers. At the same time, the more interaction that there is between your customers, especially if it's related to your offerings, the more likely positive messages will spread. The more that your target market is connected, the better for you.
Instant messaging and text messaging are at the vanguard of how the flow of messages is changing. In early 2002, there were already well over 75 million users of instant messaging in the United States alone, and the number looks set to soar as the technology becomes integrated into Web sites. Instant messaging "buddy lists" that show people's chat friends are now starting to include automated conversationalists. Activebuddy is helping companies like eBay and Ellegirl magazine to create instant messaging buddies that interact with their customers by answering questions and chatting. Another firm, Facetime, is helping companies like Dell and FAO Schwartz to use instant messaging to communicate with their customers.
In Europe, text messaging is now part of everyday life for many people. A few marketers are trying to send advertising messages to consumers' mobile phones, but this is more likely to turn people off than attract them. However, it creates a new medium for interaction. A UK campaign for Cadbury's chocolates put a code number on the wrapper of 65 million chocolate bars. Customers sent a text message of the code for a chance of winning major prizes, bringing a wide-ranging response of people who not only provided their mobile phone number, but also yielded extremely detailed information on distribution and consumption previously unavailable to manufacturers.
4. Choose fertile territory.
Research in Motion (RIM) was a relatively unknown Canadian company in early 1999, when it launched what it believed had the potential to be a hot producta mobile pager and email device called the BlackBerry. It didn't have the budget for a massive advertising campaign, as many of its peers were undertaking at the time, so it sought to tap the opinion makers in its target community. RIM recruited around 50 "wireless email evangelists," whose job was to visit Fortune 500 companies and set up BlackBerry pilot programs that offered free trial pagers. These evangelists focused on accessing mobile professionals, such as salespeople, consultants, and staff in the companies' IT departments, because they knew that these were the ones likely both to take to the device and spread the word to their peers.
Because messages increasingly spread by word of mouth, marketing campaigns need to be designed to tap those groups that are most likely to spread the word and be influential in the target market. Sometimes the relevant communities will be obvious, for example, in marketing baby products. In other cases, it may be necessary to tap related groups. Wherever possible, you want to gear your promotions to the people who are the most connected, both technologically and socially. Absolut Vodka initially focused on the San Francisco gay community in its U.S. promotions because it is a well-connected trend-setting scene, not because it was the target market.
Marketing is increasingly about spreading messages within broad communities of consumers, who may or may not be customers. It is designed to generate positive impressions, attract interest, and hopefully create customers. After they are customers, the critical network is the one that connects them with the company. Here I explore how to create customer feedback loops.