Pretzel Logic – Social and Collaborative Business

Wrote a post about what today’s customer expects in terms of “relationships” on SAP’s Customer Edge Blog. Here is a snippet:

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Transactional CRM, the system of record technology that lets you manage a sales cycle, a customer service request and marketing activity, is critical to make official records of who did what.

But here’s what striking to me: Traditional CRM, which stands for customer relationship management is a transactional and operational technology that never really touched the customer.

That may have been OK in the past, but today’s customer who is extremely well connected and networked thanks to the social web has radically different expectations of the companies that they do business with.  Beyond socializing, the social web is where we seek to research and engage with both, like-minded buyers and with purveyors with whom we want to do business. In a 2011 IBM study on Social CRM⁽¹⁾, 42% of those polled use the social web to share opinions about products they use, 39% use it to access product reviews, 23% said they outright rely on the “social web to interact with brands”.  Yet another supporting point to CRM pundit Paul Greenberg’s assertion that “the customer is in control of the conversation.”

Let’s dispel three misconceptions about the social web first:

1. This isn’t about bleeding edge industries anymore. A 2009 business.com study⁽²⁾ showed Real Estate and Construction, Healthcare, Media and Entertainment as top contenders for social media.
2. Access to social and traditional web content is now equalized. Even if you believe that a majority of your customers don’t use social media, traditional web properties such as Google and LinkedIn index even the few conversations that might exist and make positive or negative opinions about our wares visible to everyone.
3. No, the social web isn’t just about Twitter and Facebook where you may argue that your prospects don’t really hang out. Amazon Reviews (Retail), Trip Advisor (Travel), FlyerTalk (Airlines), Yelp (Restaurants), AngiesList (Services) and literally a hundred other topical forums are all part of the social web or what Mike Fauscettecharacterized as “systems of relationships” that are dis-intermediating your controlled marketing every single day.

Five Design Considerations

So how do we prepare for this changing interaction dynamic? The needs of this new breed of customers centers on the following 5 design considerations:

I’ve broken down each of these Design Considerations on the Customer Edge Blog, here.

Facebook announced Graph Search yesterday. From Meghan Kelly at VentureBeat:

When you start typing your questions, Facebook will suggest search queries and clean up your question. You might ask, “Which of my friends like The White House?” and it will simplify and suggest “My friends who like The White House.”

The search could be most useful for situations like finding friends in a specific city you plan on visiting or finding people who like a band you’ve got an extra ticket to see. You can also use it to search for things “nearby.” If you’re looking for friends who live near your current location, you can look for “friends nearby.” If you need a hospital, you should call 911, but you could also search on Facebook, and it shows you the hospitals in your area  (while you’re bleeding out, of course).

There’s plenty of other analysis. See this by Danny Sullivan on how it works and just so you’re not getting too carried away, Om Malik does what he does best by digging into practical feasibility of getting this right  But lets assume that Facebook does pull it off for a min. In that case….

This is massive for Facebook and Google’s never seen any competition like this. Simply put, being able to choose people as filters to your search is extremely powerful.

That said, two things come to mind as I read this:

First, this is far from a Google killer.

Google still has a lot of runway to get this right. Ultimately we are talking about the war on owning Purchasing Intent. Facebook might have a stronger hold on consumer or B2C products (e.g. “I like this new Viking Stove”), but it’s far from perfect. Personally, I’m really suspect about any search algorithm that puts too much emphasis on “Like”. It has to be the most abused social metaphor of all time – first, we barely think twice before “liking” something. Second, given all the marketing gimmicks to get you to Like stuff, it’s hardly an objective filter. And third, even it they manage to get it right, the whole world of B2B just isn’t part of the conversation on Facebook in any meaningful way. Those conversations are still happening outside Facebook’s walled garden on branded communities. This game is far from over.

The real winner is vertical social networking.

Most significant in my mind though is that the real winner here is vertical social networking. Facebook just bifurcated search forever. They now propose to own the “Here’s what my friends think” segment. The other major segment is “What do the experts think?” And that data is neatly indexed on vertical and topical social networks. Think Yelp, think ChowHound, think WebMD, thin TripAdvisor and the biggest, Amazon Recommendations. The reality is that our friends can often be terrible references. If I’m looking for a great kitchen knife, I want advice from a chef or a seasoned cook. Not just my best pals. And that’s still the work of other topical sites. I use experts lightly but when it comes to serious purchases, you will want to rely as much on unknown strangers who are qualified on a subject as much as you will your friends. And those “unknown experts” passionately opine not on Facebook but on these vertical social networks. Their relevance just went up 100 fold.

As the social web confuses most of us on where to find what and the sources increase by the day, Facebook just added an intense level of clarity by letting you toggle between people you know and people you trust on a topic. And this level of clarity is THE single most risky thing to happen to established web search. Feeding on the ambiguity of sources is what search engines thrive on. If Facebook gets this right, this ambiguity has now been seriously eroded and between what our friends think and what the experts say, we might just have all the information we need to make the purchase.

Chalk this up to another example of why Marketing STILL doesn’t get social.

Social Times reports that the way to get more “Likes” on Facebook is to offer coupons to satiate the what’s-in-it-for-me hunger of an increasingly discriminating social networker.

This might well be that moment in social media marketing history when we look back and say – “what were we thinking??”

I quote:

A recent survey conducted by Ad Age/Ipsos Observer finds that coupons are the number one reason consumers “like” brands on Facebook.

We’ve all seen the popularity of daily deal sites like Groupon, but it turns out that good ol’ retail coupons are a great incentive for Faebook users to “like” a business page. The findings of the survey make sense: Facebook users are not typically willing to share their information and their network with just anyone, but it seems they’re more willing to do so if they get something in return

Basically, entice your visitors to ‘Like’ your business page by throwing them a discount coupon.

Look, I’m a big believer in in-bound marketing on the social web, done right. I’ve gained tremendously from it in my own work. It’s opened gigantic doors for me to communicate and sell the promise of social and collaborative business as a way to accelerate performance. But increasingly there’s data emerging about the hype that is social media marketing from a lead generation standpoint. And this kind of stuff just adds to the exuberance.

I never thought I would do a whole post on a single social networking gesture but this is about the larger issue of not getting sucked into the social vortex without careful thought and resource implications.

A ‘Like’, simply, is designed to imply that I like your product. In marketing lingo, that is supposed to mean that I’m at minimum an unqualified interested party, and sends a message back that I might be a candidate to move up the engagement funnel or spiral or what have you. And ultimately towards a pre-defined call-to-action.

Throw in a coupon and you’re playing with allegiances now. Sure, your ‘Likes’ will go up but does that really translate to likes? Or was it just for the coupon? Seems like nothing’s lost but is it worth the time of your marketing and sales teams to deal with the scores of follow-ups? This looks like a knock off of trade show marketing where we are duped into believing that 1000 interested prospects came to our booth where in reality 700 just wanted to drop their business card in the till for a chance to win an iPad2.

In traditional marketing this may fly as the cost and effort to send out a 1000 follow up emails is minimal. To do in-bound marketing right, you need to engage and the manual nature of this gets really expensive when you do more enticing to attract unqualified buyers. That ends up in your organization topping off marketing with even more marketing.

Get off the treadmill. Make sure you’re not marketing your marketing.

Heads Up: Being the weekend and all, I’ve taken the liberty of straying from enterprise-y stuff in this post.

There’s some excellent analysis on Google Plus out there. Even Twitter investor, Fred Wilson is rooting for a successful outcome and Chris Brogan has done a really good job summarizing every conceivable benefit. For me personally, Google Plus is a combination of Friendfeed, group messaging such as Beluga or Groupin, and Delicious. All absolutely indispensable social interaction metaphors for me. So I’m thrilled its here.

There’s also a lot of good commentary on the value of  Google Plus for the Enterprise from folks whose reasoning I respect. Personally, I don’t see Google doing this in any intentional way. Google really needs to get it’s act together on the consumer social web to protect it’s advertising turf and adapt it to the social web. Employee collaboration is far more nuanced and purpose driven for Circles to be all the rage, as is. Instead, expect existing Social Software companies to clone Plus features as they have done with Quora, Facebook Like and Activity Streams, etc. That said, small businesses will adapt Google Plus ad hoc.

On to what the consumer web and marketing departments expect….

Does Circles represent win/win/win here?

Chris Carfi lists solid customer touch point value propositions for Circles including Demand and Lead Gen, Marketing, Co Creation, etc., and I see Google paying attention to these way before thinking about enterprise collaboration. And Developers are starting to think this through as well.

Three constituencies need to be satisfied to make Google Plus a success:

• A unique value proposition to participants such as you and me
• Marketers trying to reach and engage with you and me
• A scalable social advertising model for Google and its Shareholders.

There’s no question that the monetization opportunity for Google is huge. What’s simple +Circles to you and me can be the gift that keeps on giving to Google Adsense. They have us by the tender parts when it comes to monitoring our search. Now they get a shot at showing ads based on our self declared social and professional interests and unlike search, for as long as the conversation continues. Add that to the existing interest profile that Google already has on us based on our private emails, calendars, searches and maps and you get a sense of the larger picture.

But I really do wonder how Google+ will mushroom in the way it needs to, in order to attain critical mass. To do that it needs to understand the certain level of good and bad narcissism that exists on the social web. Whether we like it or not, the I/Me/Myself web plays a big role in the social web. Many abuse it by incessantly talking about themselves. But many also use it wisely by providing great information.

Thwarting Broadcast

The most successful use case for Twitter has actually been broadcast, not social. And it seems to be working. Whilst we might complain that Oprah, with her 6 million+ followers, breaks the spirit of social networking by following back only 33 people, its also important to note that 5.99999 million people happily follow here without any expectation that she will follow back. The question is, will Oprah or Proctor and Gamble, or Joe Biden get the same level of reach if conversations get fragmented inside Circles? What came in via one giant stream exposed to everyone (Twitter or Facebook Fan pages), now gets partitioned inside folders. To a large degree the network effect of creating engagement is significantly harder. Google Plus can do a lot to address this (Make Circles sharable for instance) but theres no question that those very blabber mouths that keep the majority of eye balls on social content are going to need some level of loud speaking capability to move the conversation over to Google Plus.

The In-bound Marketing Battleground

Some brands have done an excellent job of embracing inbound marketing to build trust – the kind where meaningful content is offered to generate discussion instead of spray and pray advertising and email marketing. Analytics company Kiss Metrics’ use of Twitter is a cornerstone example of how to do in-bound marketing.

The social web has been characterized by the 90-9-1 rule thus far where 90% are lurkers who are a large and extremely important constituency that gain information from source content as well as the conversations created by the remaining 10%. While they may not speak up, marketers can hardly afford to ignore them. With conversations fragmented, on one hand you can argue that the net volume of conversations each lurker sees will get reduced. On the other hand, they may see fewer conversations but more meaningful ones that matter to them. Better for them, better for brands looking for qualified leads from social conversations, and of course, better for Google’s targeting. But the question still remains: in-bound marketing relies on a large volume base to start with before honing in on qualified conversations; can Circles offer this facility? Of course Google can, but I don’t think the design today considers this strongly enough.

Dirty Interest Graphs

The first iteration of the social web was based around Places (think Geo Cities). The recent incarnation of the social web progressed from Places to People and saw exponential scale almost instantly (Facebook and MySpace). Circles on the other hand is less about places and people – its segmentation by our interests. But is it really?

Circles are messy in practical terms My first reaction when I signed on was "Great – I can break out my wider contact base into meaningful chunks”. Then I tried and failed for the most part. The thing is we have multiple conversations with each person. Take R ‘Ray’ Wang for instance: An insightful fellow enterprise tinkerer but also one of my most trusted sources when it comes to restaurant recommendations. I can’t really segment what Ray says and so the idea that my circles represent my segmented interests is not really accurate. Google needs to use its algorithmic magic to let me separate Ray’s discussions so my stream quality is preserved. Hard to do of course but really, price of entry for any social network that wants my mindshare for yet another tsumani of use generated content. Not  much of a concern for Google as it knows behavioral targeting, but as participants, we might lose patience if our circles can’t keep conversations separate.

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One thing is for sure: For most users, there ‘s little to no room left for yet another general purpose social network and so Google needs to displace an existing property for many users by providing (as Hutch Carpenter describes) exponential value beyond easy and clever design which it has accomplished in my opinion.

Can Google Plus pass the good/bad narcissism litmus test? It can but I think the first iteration of design hasn’t really worked out all the kinks when it comes to balancing our niche interests (currently drowned out by fire hose social design)  with a sometimes terrible but important reality of the social web – successful federation of loud mouths, good or bad. The sooner they have this sorted out, the better their chances of realizing large scale participant and marketer transition.

As I said above, the early adopter in me is sold on the promise and I’m hooked. I think Google Plus can re-cast the definition of Social Networking all together. Now Google Plus needs to really deliver.

Update: Some comments popping up on where else but Google Plus, here. Blog comment syncing is another P1 feature Google needs to take on.

On Dec 2nd, distinguished faculty members from Babson College (my Alma Mater) – MBA Dean Raghu Tadepalli and Dr. P.J. Guinan, professor of technology, operations, and information management will present research on the use of Social Media in the Enterprise in San Francisco.

Ragu is someone I’ve come to know recently and I keep in touch with some of my professors there and speak with them about research in the areas of Social Media, Knowledge Networks and Ecosystem Collaboration. So I’m thrilled to see an event of this caliber taking place here in the Bay Area.

Included in this research presentation is a detailed study of Cisco’s collaborative and social media efforts (embedded below) .

I’m really looking forward to the event and hope to see you there. More info here and registration details here.

Guinan Cisco (1)

From the ReadWriteWeb article by Sarah Perez:

“Kevin Thau, Twitter’s VP for business and corporate development, announced during a presentation at Nokia World 2010 today that everyone’s favorite micro-blogging network is not actually a social network.

It’s not, you say? No, says Thau: Twitter is for news. Twitter is for content. Twitter is for information.“

Say what? 

Here’s my take on why:

• Twitter is having issues growing as a mainstream social network compared to other platforms such as Facebook. Significant changes to its basic interface can fix this but that would mean it looses its stronghold on remaining the globes premier digital water cooler.
• Lets face it, 99% of Twitter is already broadcast content and if its a business tweeting, its mostly one way Marketing. I guess Twitter believes that as well.
• It limits its exposure to a potentially dwindling market valuation as it stays associated for too long with general purpose networks. The track record for those in second place (Bebo, MySpace etc) is pretty shabby. And most of us are happy doing general purpose networking inside Facebook, Location based networking on Foursquare etc, Food based networking on Chowhound and my new favorite app, Foodspotting (HT, Dion Hinchcliffe). And on and on. There may just not be room for two general purpose social networks but certainly for a real time news pipeline.
• Monetizing cryptic, abbreviated, 140 characters via ads is hard and may have limited potential. Straight line syndication, promoted tweets, and large b2b biz dev deals (such as the one with Nokia and with Google) bring wholesale, but forecast-able sources of revenue. Thereby establishing a baseline market value to build a multiple off of. Facebook is on a tear from a revenue standpoint and either you have to show you are catching up or, re-frame the markets perception of the category in which you play.
• Publishing (the industry), has been ripe for disruption for a long time and is looking for scalable ways to distribute content. RSS had potential for distribution but sucked for high end monetization in addition to being gobbledygook for most mainstream users. Twitter on the other hand keeps you coming back to high end website impressions. And so the broadcast model via twitter is a lucrative and cost effective ‘paper boy’ model for the digital era.
• I know from personal experience that many people sign up but don’t really do much or even return for fear of not having friends or having something to say. As stated in the article, this brand shift removes the perception that you HAVE to sign up and use twitter. Rather, come to the site and just read. In short, more eyeballs without a registration barrier. Biz Dev just got a lot more interesting.

I’m as interested in the message this sends about its future plans and roadmap to developers as well as to those of us that have spent time using it as a social network.

That’s all the time I have. Any other ideas on why they would publicly put a stake in the ground about this?

It’s fascinating how we consider New Product Development /Research to be investments (by implication, a return can be had on these) on one hand, but we allocate marketing and customer acquisition as an expense. In plain English that translates to: We’re ok with considering what we design, build and sell, an asset that will yield returns. But not the effort it takes to serve prospects and customers that may be interested in what we purvey. Baffling, no?

Marketing has this almost comical, inverted model of inputs and outputs that defies Economics 101. A business typically buys inputs at wholesale and sells products at higher margin retail thereby seeking to make a profit. In contrast, marketing uses big picture estimates such as ‘customer lifetime value’ to estimate how much you can make from the average customer (output). But excluding branding, cost inputs to acquire prospects and sell more to customers are at hefty, mind boggling, retail costs – point advertising spots to sell a product, product launch emails, webinars, promotions, and recently, SEO/SEM campaigns. Hell, we financed Google’s insane success thanks to this model, if you think about it! 

Moving from Transactive vs Relationship Elasticity

I see customer acquisition model as a mindset of ‘transactive’ elasticity. In other words your spend goes only as far as supporting each transaction. So, your spending over and over again to sell new products to the same target customer. And that tactical design can’t be treated as anything but an expense. Conversely, investments are nurtured over time, are less susceptible to cuts in a down market, and yield results at intervals or in perpetuity. 

Contrast this with a model where you invest in relationships with your customers by engaging authentically with them in communities. These communities give the money you allocate to customer acquisition far more elasticity by spreading the wealth across the life of the relationship with relatively smaller spikes in expense that correlate with new product awareness. They center on investing in fostering and facilitating a dialogue with your customers, your partners and your prospects. Dialogues that far outlast single transactions. And via a platform to engage with them between transactions. Sounds like an investment and not an expense to me now.

This is articulated really well in, “CRM at the Speed of Light”, a must read by the terrific Paul Greenberg:

“Transaction is not the paramount artifact of the interaction. Instead a transaction becomes the side effect of rich relationships that are built on conversation. This notion is fundamental, and is a radical switch in priorities for the interaction between customer and vendor”

Edge Relationships Don’t Scale

Creating true relationship networks, whether on third party participatory networks (such as Facebook or Twitter) or on your own branded communities require a clearly defined approach, mindset and interaction design.

Umair Haque, Director of Havas Media Labs and blogger at Harvard Business Review wrote a superb post “The Efficient Community Hypothesis”  (that I recommend you read in full):

“People, truth, identity, reputation, values are the five elements of an efficient community”

I agree with that and they apply to communities that foster these relationships.

That said, community building often gets limited to efforts managed by the “social media expert” or the community manager. Its no doubt a first, extremely important step and herculean at that, (just ask Rachel Happe) but edge efforts don’t scale easily. And if the effort is superficial, they quickly start reeking of old school spam marketing (just see many of the groups on LinkedIn, for example, that sport the same old marketing pitches).

To be truly valuable, customers want to bypass marketers and get to those that have the highest quality information. The best information, void of spin or marketing speak, are in the minds of your other customers, your channel partners who may interact with customers more than you do, and your suppliers who know more about individual components that make up your product.

To enable such a design you need a collaborative design and enabling technology infrastructure that allows for the right minds to wrap around the customers needs. Marketing needs to broker and facilitate that, and then get out of the way. That’s the new customer acquisition design for the 21st century enterprise.

For a more in-depth overview of how to respond to this new customer dynamic and to move from a transactive model to a relationship model, take a look at a recent piece I published with Oliver Marks and TechWeb (email required).

Getting There

I’m not suggesting we stop advertising products when they launch. But do we have to buy marketing, over and over again at retail prices to sell that same customer time and again? Instead, why not invest (not expense) in more elastic relationships that defrays a good chunk of that retail cost?

Customer Acquisition seriously needs a new name to affect any institutional change in how organizations consider the actions and investment behind customer engagement. Customers never gave us permission to acquire them and it’s a bloody expensive to acquire them at retail, anyway. Tomorrows winning CMOs and Marketing leaders will be making a case for this to their CFOs and CEOs, today. I’ve been fortunate to work with some of these forward thinking folks. It’s not about big bang, it’s about etching away at it piece by piece and having it emerge, organically.