As mentioned in our influencer re-think post, the rebooting our site coincided with some analysis of the results of a series of product trials we’ve run in Australia for major brands on our Yooster panel that challenges conventional wisdom about customer loyalty and the effective spread of word of mouth, particularly for FMCG/CPG brands. We’ve written a companion piece for iMedia Connection that uses the findings from Dr Alain Samson at the London School of Economics to ask whether ideas on marketing best practice are that robust in general. The suggestion being that brands invest a greater percentage of their innovation budget on actually testing and refining their marketing process, rather than simply accepting the status quo or blindly following the mob from campaign-to-campaign. It would be interesting to hear your thoughts, but in the meantime here’s the full article:
‘Brands should be striving for disloyal customers’
There seems to have been a somewhat surprising boost in advertising expenditure lately, at least in certain sections of the media, particularly given the general acceptance by major brands that much advertising no longer works:
‘We’re not in the business of keeping the media companies alive. We’re in the business of connecting with consumers.’ (Trevor Edwards, global brand and category management VP, Nike)
‘The traditional marketing model we all grew up with is obsolete.’ (Jim Stengel, former-GMO P&G)
Is the unexpected increase in traditional ad spend a case of old habits dying hard, or a matter of expediency given client confusion surrounding the variety of non-traditional marketing alternatives touted by all and sundry? Perhaps it’s just a case of risk aversion in these difficult economic times, mixed with the belief in safety in numbers — numbers meaning both the old reach model of ‘proving success’ and the number of people deciding that the most established marketing techniques are the least risky.
But how robust are the underlying assumptions about why a particular marketing approach is more valuable or a safer bet for your business than any other?
Background
Joining forces with Dr. Alain Samson from the London School of Economics and Political Science, we stepped back from business as usual to examine what the underlying assumptions might be behind marketers embracing — in some cases wholeheartedly — a particular marketing technique or approach. Over the course of two reports and a study from 2008 to 2010, we’ve discovered that the latest and greatest marketing silver bullets rarely stand up to much critical scrutiny.
The first investigation looked beyond the inter-research consultancy spat about whether or not the Net Promoter Score (NPS) was the holy grail of marketing metrics. After interviewing more than 50 major brands in the U.K. about if and how they used the NPS, we soon found out that it was just one number (of many) that was useful to know, which eventually is how it has been more realistically repositioned by those who had originally claimed that it was the ‘one number you need to grow’.
The same is true when we examined the industry critique of what Dr. Duncan Watts (of Columbia University and Principal Research Scientist at Yahoo!) calls the influencer hypothesis. Obviously, Malcom Gladwell’s book The Tipping Point helped propel the idea that the connected few consumers could influence the many. However, as Watts points out, much of the theory surrounding the power of influencers has relied on anecdotal evidence and post-rationalisation of a biased selection of events.
This hasn’t stopped social media marketers making great claims about online influencers as they map a model from traditional media PR onto the web. This is not too surprising; much of what is taken as common wisdom in social media spheres is nothing more than a vortex of self-affirming opinion fuelled by the ‘groupthink’ of commentators commenting on commentary — as we found out during a study we conducted for the Nesta Innovation Fund in the U.K. into collaborative innovation.
Whenever we’ve scratched the surface in our specialist area of connected marketing approaches, such as those noted above, we’ve quickly found that many marketers accept what they read or hear on the industry grapevine without much question, assuming that others have assessed its validity, then they continue this mob mentality by embracing new techniques and passing anecdotal information on as received ‘wisdom’. Surely this is a dangerous process on which to base your marketing, and therefore to large extent your business, success.
This is as true of traditional marketing as it is of alternative approaches and techniques such as the influencer theory. Marketers tend to only crow about their successes. They try to bury their mistakes, from which there’s usually a lot more to be learned. So the marketing industry has been built for the most part on looking at one side of the coin.
Latest marketing belief in question
Our most recent research exercise, about customer loyalty and the spread of word of mouth, practices what we preach, examining our own marketing activities. It also supports the idea that accepted wisdom in marketing as whole is in need of greater examination.
The premise of the research once again calls into question a common marketing belief — this time that your most loyal customers are your greatest allies when it comes to converting other people into customers.
In the pursuit of market share, engaging your loyal customers in word of mouth (Wom) marketing campaigns to recommend products to their peers on a more trusted, personal level than you can achieve as a marketer seems like a no-brainer. It’s generally accepted that greater levels of consumer involvement and product usage lead to higher levels of recommendation, fullstop. However, it turns out that not all consumers are equal in that scenario.
Samson analysed secondary data from our company Yooster.com, covering three years of Wom marketing and research campaigns with our independent Australian consumer panel for major brands, including Nestle and Nivea. The campaigns invite members of the Yooster panel to try product samples, influence some aspect of the product, feed back their product experience, and share their views and experience with relevant people they know.
Samson’s analysis discovered that it’s actually non-loyal customers — people who have been using a rival product more often — who will serve you best, generating approximately 10 per cent higher interest in purchasing your product among other people, as well as a greater absolute number of converts than loyal customers.
One likely reason for this unexpected clout from non-loyal customers is that, while loyal customers may generally be more motivated to talk about a brand, non-loyal ones may have a contact network that is less saturated with people who already use that brand, so there’s more room for conversion. This means that even people who have never used a trialled product before can be better than loyal customers at generating effective Wom. In addition, non-loyal customers who use multiple brands’ products within a specific category are also more experienced in that category and as a result may be more credible to their contacts. Finally, if non-loyal customers are ex-users wooed back as a result of a privileged product trial, they may also have a heightened sense of goodwill for your brand and therefore a motivation to be evangelistic.
The surprise revelation that non-loyal customers are the key drivers of product recommendations has a knock-on effect about other marketing activities that are being wholeheartedly adopted. For example, it causes serious pause for thought about the trend for businesses to develop communities of loyal customers. These communities appear to restrict positive Wom and goodwill within themselves, rather than spreading it far and wide. They may, possibly, be useful for retention purposes (but only if you can justify the cost of engagement, particularly when every marketer in the land is actively encouraging disloyalty by wooing rivals’ customers). However, they are less likely to provide a successful way of acquiring new customers or clawing back ex-customers.
The analysis also throws up other questions about accepted marketing beliefs and practices that are worth examining in the future.
Conclusion
Far too much content in the marketing press is simply case studies about successful campaigns from major brands, and chatter about new ‘must-do’ marketing techniques, perpetuating accepted ‘wisdom’ with little in the way of informed, robust, evidential analysis.
If major brands really do believe, as they say, that ‘much advertising no longer works’, in this day and age of (supposedly) open communications and consumer-driven businesses, everyone should be rigorously examining and debating the other side of the marketing coin: what doesn’t work and why, what’s not as it seems, what can be refined and how, and what to try instead.
Sharing what may still be regarded as confidential corporate information that helps provide a competitive edge may be a problem, as well as not wanting to admit failures for fear of damaging the brand. But isn’t that the point of learning — finding out what does and doesn’t work, then pointing out the best path from your experience to others? (And wouldn’t a closer alignment with robust academic insight of what we do and how it works help move the marketing industry closer towards becoming a valid profession? But that’s another story.)
It may take a sea change for major brands to be comfortable airing their dirty linen with their clean, but a slight adjustment in course is a good start, and that adjustment is with their innovation activity.
Brands always need to innovate, however the innovation process should include not only the research and development of new products and services, but also the way brands carry out their marketing.
Part of the marketing innovation process should look harder and deeper at what brands already do traditionally and why, as much as at which new techniques and approaches should be embraced and why. If you invest a greater percentage of your innovation budget on actually testing and refining your marketing process, rather than simply accepting the status quo or blindly following the mob from campaign-to-campaign, I think you’ll be very surprised by the outcome and its implications for your business.
Justin Kirby is DMC’s founder and CEO at Yooster.
Dr. Samson’s paper Product usage and firm-generated word of mouth: some results from FMCG product trials is available online to subscribers of the International Journal of Market Research.
