Know Thy Customer

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Thornton MayIn his book, The New Know, Thornton May makes a case for data analysis becoming the next frontier of corporate evolution. Having spent the past 15 years getting their transaction systems in place, businesses will now turn their attention to making sense of the massive amounts of data they are collecting. The result will be a transformation of corporate productivity fueled by deep insights into customer needs. Business analysts will become the new rock stars of the organization.

This is one in a series of posts that explore people and technologies that are enabling small companies to innovate. The series is underwritten by IBM, but the content is entirely my own.

May is a futurist who is executive director and Dean of the IT Leadership Academy. A popular speaker, he is known for combining deep insights with a stand-up comic’s delivery and a gift for storytelling. His writing has appeared in the Harvard Business Review; Financial Times; The Wall Street Journal and many other academic and business journals.

I caught up with him to talk about The New Know. 

I was struck by how well researched your book was, with lots of real-life examples.

Not only am I talking about The New Know, the whole thing was a new know for me. It was ethnographic study of what people are doing in this space. Analytics is the business reengineering of the mid-90s. All of the major service firms are moving into this space in a big way, but not many people have a good definition of it.

I created a new acronym: FODDRS. That forecasting, operations research, data mining, data integration, reporting and statistics. Those have traditionally been six disparate disciplines, but you need the totality of them today.

Why did you set out to celebrate analysts?

We’ve come through the Bataan Death March, which is enterprise software. Everyone in the global 2000 has burned in through a painful process their enterprise transaction systems. So they have their systems of records in place and now and now people asking what do we do with all this data? Let’s analyze it. In 2010, the analyst is to the value creation dance what the CIO was in the 80s and 90s: unloved, misunderstood but poised to play a major role in the future.

Will new tools make analytics accessible to the common business person in the same way that spreadsheets made forecasting, accessible?

We are living in a much less tolerant society. You don’t need analytics if you’re always guessing right, but the minute you guess wrong, you’re going to be held accountable for how you made that decision and what you knew when you made that decision. We’ve created a whole class of people who are willing to forensically spank you if you’ve made decisions wrong.

Is this a generational issue?

I think the next generation of leaders is going to be not only aware of analytics but also masters of it. The next real social issue we deal with as a nation is executive compensation, and the only way you can justify the pay levels of these guys is to become more analytical. The people who simply guess are being found out.

Can you think of any recent examples where an executive has been pilloried for making bad examples based upon not analyzing data?

[Former BP CEO Tony Hayward] is a classic point. There is a presumption on the part of regulators and customers that senior executives understand what the key processes of the organization are and what their operational health is. At BP, that was not the case. We’re living in a complex society and the ticking bomb is not understanding how operations work.

But operations and organizations are getting more complex. Can one person know it all?

You can’t know it all but you can have processes for knowing. It’s OODA loops: observe, orient, decide and act. It’s not artificial intelligence but augmented intelligence. We’ll be delivering to the human actor the appropriate dashboard or operational reality at the right time.

We’re going to have to rethink and reinvest in our entire technology infrastructure. Our infrastructure was built to do transactions, not to manage information.

What will the new infrastructure look like?

For example, Partners Healthcare is looking at what outcomes they want to have happen at that point of care, then they design systems to deliver information to the front lines right when it’s needed.

We haven’t had to do this before. We used to be in the Soviet system where people were grateful for what we put on the shelf. It used to be product-centric vs. customer-centric. I will create this product and you will buy it.” Now the customer is saying “Here’s what I want and you build it for me.”

There are 360 million Americans today. Speaking analytically, that is a trivial database. You can actually know every one of those individuals.

At what point does this become creepy? Google CEO Eric Schmidt has said that Google has a lot more data than it ever uses because it would be creepy if they did use it.

Information management becomes a species survival trait. Where it doesn’t become creepy is where people extract utility and value from their information management ecosystem. Kaiser Permanente has shown that you will live longer if you have mastery of your health care data. It’s not creepy that way.

Historically, we’ve been living in California where nobody knows how to park a car, but they know how to do valet. We don’t know how to park our data and how to take care of it. In K-12 we’re going to be teaching kids how to manage their information. I see kids graduating from high school seven years from now getting the equivalent of the top information security credential of today.

Do you think hoarding information rather than sharing it is basic human trait?

I think that’s an acquired trait during the information age. Today, the more information you share, the more powerful you are. This is why Apple had trouble early on. They are a closed system and this is why RIM and Android are going to be able to catch up catch up. An open system will always outperform a closed system.

Another thing is that people now know who is hoarding information. It’s like being the Amish on steroids; If you’re not behaving appropriately in the group, you are shunned. And that is having some social consequences like teen suicides, because there aren’t a lot of places to hide. We are at the big bang of social, economic, political and evolutionary change.

The technology we now have in the portfolio today is so amazingly powerful and it works. People with technology imagination, who can dream of creating value with technology now have the tools to do that.

The old think was that information overload is a problem. We’ve got to change our thinking. Having all this information available to us is not a bug; it’s a feature. Speaking realistically, there is nothing we cannot know. So an organization can now say, “What do I want to know about my customer?” We can create that.

The other day [Intel CEO] Paul Otellini was being interviewed by Charlie Rose and was asked what is going to be obsolete next and he said “ignorance.” We have migrated to a point in our society where it is no longer socially acceptable to be ignorant.

At companies that do this well, how is the organization different?

One thing is they celebrate curiosity, they ask “What if?” and they tend to have more porous boundaries. And they realize there are different kinds of smart in the enterprise. They conduct experiments. We’re migrating into this scientific age of business where you can launch a product prototype and let people react to it and fix it almost instantaneously. Michael Schrage says we should all become the chief experiments officer.

But most companies don’t operate that way. The culture punishes failure.

We’re migrating away from that. Every company is trying to realize that it’s not really a failure; it’s learning. Even organizations that are traditionally viewed as hidebound, like the U.S. military, treat every mission As an analytical exercise. They analyze what they learned and what they have to change. And not only does a particular unit learn, but they all learn from that. Those learnings from the field work their ways into the curriculums at the service academies within two to three weeks. That’s unheard of in academia.

Doesn’t this challenge our hierarchies?

You’re coming closer to getting organizations and humans within them to almost be on the same metabolic rate. The industrial discipline of coming to work at a certain time is an unnatural act. We’re migrating to a world in which we can now learn together. The organizations that will succeed are those that have an unambiguous reason for being. Kaiser Permanente’s is to improve health, the U.S. military’s is to keep people alive. People who exist just to sell more in this quarter will be lost. People have to have a North Star to come back to. The criteria for experiments has to be to advance the mission.

You quote Clayton Christiansen at some length. He has demonstrated that companies that listen too closely to their customers and don’t realize that the business environment has changed can kill themselves. Is there a risk of listening too closely to your customers?

Tom Davenport has pointed out that airplanes today have amazing avionics, but the pilots will tell you it’s still a good idea to look out the window now and then.

The organizational question is: Can you create an organization that people are excited about engaging with? GM is a very switched-on organization now. They are very excited about analytics. If you look at the traditionally underperforming members of the New York Stock Exchange who are now bringing in the analytical firepower of an Accenture or a SAS, you should buy their stock because you’re going to see a material improvement in performance within six to nine months.

There is so much waste in the enterprise today.  People don’t know what’s going on in their enterprise. We reengineered in 1995 and then stopped. The whole term “process” has disappeared from the vocabulary.  You’re going to see process mining, where people are mining their processes and optimizing them. And you’re going to make some serious money.

Look at what Gary Loveman did at Harrah’s, what the Boston Red Sox did: data tied to real mission delivers value. This may be what really excites children to get sharper in math.

Will this bring us out of this economic malaise?

Oh, yes. We still have 90% employment. The economy is unbalanced, but there are parts of the economy that are red-hot. We have to redo the US infrastructure, migrate to clean fuels, improve the quality of healthcare; there will be enough work to go around, but people will have to be smart to do it. If I was a young individual coming out of school, I would be studying analytics right now. The Master of Statistical Analysis will be the new MBA. It will be the ticket to success over the next 20 years.

We’ve also got to change our approach to education. A lot of kids went to school to show how smart they were, so they stayed away from things that were hard. We may go back to the Greek concept of people becoming better and more well-rounded citizens.

People say we’re no longer manufacturing in America. We’re actually manufacturing more than you can believe, but we’re so good at it that there aren’t as many jobs anymore. Where we dropped the ball was not reinvesting in their human beings. Corporations used to have training and development programs and sadly, those disappeared. There’s a whole generation in corporate America who have never been to a corporate training program. Training not disappear in the U.S. military, which is why ex-military people make such great employees. People are now doing it themselves with online education courses. I believe that retraining will be a major part of our economy.

Direct Marketing Doesn’t Have to Suck

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Direct marketing promotionsIn the weeks leading up to the Direct Marketing Association annual conference in Boston this week, exhibitors were out strutting their best stuff. Last week I got two letters in the mail that appeared to be personally addressed to me in a feminine hand (right). Both turned out to be promotions for companies exhibiting at the conference. One employs people to hand-address envelopes so that they appear to come from a friend. The other has an automated signature device that does much same thing.

I opened both envelopes without realizing what was inside and had to chuckle at how I was taken in. They fooled me good. And then I thought about what that says about the state of direct marketing today. Have we sunk so low that we need to trick people into reading our messages? Is it any surprise that forecasters expect direct-mail marketing to decline nearly 40% over the next two years?

Dump the Junk

Like many people, I’m less interested in reading mass marketing material today than I’ve ever been. There’s far too much good stuff out there. More than 90% of the material that enters my mailbox goes straight to the recycling bin. I unsubscribe from any e-mails that don’t offer clear value to me. Unsolicited e-mail simply gets blocked. Fooling me doesn’t make me a prospect; it makes me mad.

There are some marketing messages, though, that are so valuable to me that I actually look forward to their arrival. Here are a few that I welcome into my inbox:

Bulldog Reporter’s Daily ‘Dog –  This e-mail arrives every morning packed with news and insight about the latest happenings in media and corporate communications. It’s so useful that I make it a point to read every issue, even if that means saving them for a few days until I have time.

Marketing Charts – This is an invaluable daily digest of the latest market research in media and consumer behavior. I bookmark many of its summaries for later use and frequently tweet two or three items out of an issue.

HubSpot reports – The maker of “inbound marketing” software regularly sends alerts about new white papers, tip sheets and e-books that highlight best practices in social marketing. I downloaded and read most of them. I tweet almost all of them.

Someecards – They make devilishly funny and marginally offensive greeting cards, and I love their stuff. The weekly newsletter is always good for a laugh. I’ve bought several branded items from their store.

Editor & Publisher Daily – This newsletter is little more than a curation of articles from other sources, but the fact that E&P puts it together in a compact, scannable format makes it one of my most useful daily reads. It’s a prime source for my Newspaper Death Watch blog.

Gizmo’s Freeware – Why pay for commercial software when products of equal or greater value are available for free? Each of these daily newsletters spotlights a different category of goodies I can get for nothing.

Other than a general media and marketing theme, these communiques have little in common other than the fact that they enlighten or entertain. With the exception of Gizmo, all the companies have something to sell. I may not buy from them, but I sure do help promote their wares. With 9,400 Twitter followers, 1,200 LinkedIn connections and regular columns in BtoB magazine and The CMO Site, I can extend their reach at very little cost to them. And I do, nearly every day.

Think Like the Customer

This is direct marketing that doesn’t suck because it delivers value that I can share to enhance my own value to others. When you think in terms of what your customer wants, rather than what you need to sell, you create new channels of word-of-mouth awareness.

Lots of direct marketers still haven’t bought into this idea. In the weeks leading up to DMA, vendors contacted me with offers of movie tickets, gift cards and a chance to win an iPad. These are the same corny come-ons I’ve heard from tradeshow exhibitors for nearly 30 years. Does this stuff really work anymore? Are serious buyers really willing to endure a half-hour sales pitch to get a crummy pair of movie tickets? And if so, were they serious buyers in the first place?

If you want access to my inbox and to my network, help me build my professional profile by making it easier for me to help my friends and contacts. Make me look smart, because I’ll return the favor.

But please, save the postage stamp.

My presentation to this week’s DMA conference is below.

10 Things Direct Marketers Can Do to Take Advantage of Social Media

View more presentations from Paul Gillin

Measuring the Immeasurable

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My post last week about the shortcomings of Klout got several thousand views and generated quite a bit of discussion. it also got me several e-mails from companies that claim to have built a better mousetrap than Klout. I haven’t reviewed these tools in detail just yet, but it appears that influence is a red-hot topic in PR and marketing circles right now.

Influence measurement is a natural evolution of conversation monitoring, a discipline that’s personified by Salesforce.com’s Radian6 tool and dozens of competitors. Monitoring is a solid practice that can keep you in touch with the topics and brands people are discussing online. Most tools now also provide some degree of sentiment analysis, which attempts to derive attitudes from comments. Sentiment analysis is devilishly difficult to get right, however. If a teenager calls something “sick,” it’s a compliment. Coming from a 50-year-old, it’s an insult. Most experts I’ve spoken to on this topic say that sentiment analysis tools are at best 70% accurate.

Circle of Influence

Topaz Partners has developed the "Circle of Influence" to depict the different factors that go into decision-making (Click to enlarge). TopazPartners.com

This isn’t stopping vendors from tackling the even more complex issue of Influence analysis. This goes beyond sentiment analysis to attempt to determine a person’s ability to drive action. The problem is that there are lots of variables and intangibles to influence that resist being boiled down to a single number. For example:

  • What is action? A “like” or retweet is a form of action, but not necessarily one that leads to a decision.
  • Online actions have different gravity depending upon the stakes and the effort involved. Writing a comment takes more effort than clicking a “like” button. Posting a blog entry referencing someone else’s words is more involved than writing a comment.
  • Which actions really matter? I have yet to see a tool that can correlate influence with purchases or donations with any degree of certainty. We assume that conversation about a topic influences decisions, but are they the decisions we want? A lot of people have been talking about Hewlett-Packard lately, but I doubt it’s driving profitable sales of HP products.
  • Influence is contextual. If I’m considering buying a Yamaha stereo and find a blog entry from someone who exhibits deep knowledge of the model I’m considering, that person may have a disproportionate influence on my decision, regardless of the number of followers or subscribers he has. The weakness of most influence analysis tools is that they abstract broadly, looking at things like reach and amplification. However, decisions are more likely to be influenced at a micro, rather than a macro level.

One of the most illuminating books I’ve read on this topic is Influencer Marketing by Duncan Brown and Nick Hayes. The authors argue that the influence of media in general, and social media in particular, is greatly overrated. They count no less than 50 kinds of influencers, ranging from resellers to academicians to government officials. Most of them have little or no online visibility, but their knowledge, leverage and/or connections make them enormously influential. What’s more, the larger the purchase, the greater their influence tends to be.

I don’t agree with everything Brown and Hayes say, but I commend them for resisting the urge to oversimplify. Their basic message is that influence and audience are two different things. Celebrities can have huge audiences but little power to affect decisions. Conversely, people with very deep knowledge can have small audiences and great influence. Seth Godin said it well: Small Is the New Big.

In the mainstream media world, audience was associated with influence because we had few tools to understand the true dynamics of decision-making. Our natural tendency is to apply this same metric to online conversations. The danger of this approach is that social media is more about quality than quantity. In the same way that early automobiles had steering mechanisms that mimicked reins, we are applying old assumptions to a new medium. I’m not saying that influence measurement tools are inherently unreliable, but they are attempting to measure what may be immeasurable. Just be skeptical.

The Trouble with Klout

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Estimating influence is a delicate balance of art and science. People are drawn to quantitative methods because scores are easy to understand. The downside of reducing influence to a number, though, is oversimplification.

Paul Gillin's Klout InfluenceLately, I’ve been looking at Klout, the popular new tool that bills itself as “The Standard” for influence measurement. The more I look at it, the less I like it. Klout’s weaknesses have not stopped it from amassing an impressive list of more than 3,000 business customers and from being incorporated into popular applications like HootSuite as a standard metric. It is “the emerging standard” for measuring influence online, said Klout Marketing Manager Megan Berry in a podcast interview with Eric Schwartzman last month. I just hope those clients aren’t taking this metric too seriously.

Beyond Followers

Klout attempts to determine influence metrics by looking at a person’s online activities and the actions of others that result from them. The thinking is that influence isn’t a matter of how much you say as much as the impact your words have on others.

Many people have a Klout index and don’t know it. The service crawls Twitter and ranks members automatically. If you want to grow your score, you can log in to the site and give it a bunch of information about your online activities. I spent 15 minutes on Klout registering my social networks and grew my score 10 points on the spot. This is a major flaw in Klout, but more on that later.

Klout uses a proprietary algorithm to estimate influence based upon comments, retweets, @replies and mentions, among other things. The company isn’t very transparent about how it calculates the score, and with good reason. The algorithm is a competitive asset and disclosure would inevitably invite people to manipulate the system.

The downside of opacity is confusion. By revealing so little about how its ratings are calculated, Klout essentially asks customers to put their faith in the service to do the right thing. This is dangerous, given Klout’s flaws. Nevertheless, the score is a public record that anyone can see, and its influence is growing to the point that Klout scores are now reportedly showing up on resumes.

The Shirky Effect

Clay ShirkyThe problem is that some of the ratings are nonsense. For example, my Klout score (66) is modestly higher than Clay Shirky‘s (60) and significantly higher than Marc Andreessen‘s (42). This is ludicrous. Shirky (right) is the author of two influential books about online sociology and has been a thought leader on the Internet since the mid-90s. Andreessen (below left) invented the browser, cofounded Netscape and is one of the fathers of the modern Internet. Both are sought-after speakers and the subject of extensive Wikipedia articles. Yet Klout says I have more influence.

Marc AndreessenThe problem is that neither of these brilliant innovators plays by Klout’s rules. They aren’t active on Twitter and they don’t have Klout accounts. The fact that a single post on Shirky’s blog can draw more than 1,200 comments or that Andreessen’s occasional writings appear in The Wall Street Journal is of no consequence. Klout doesn’t monitor either of those outlets.

Klout’s bigger flaw is that its scoring system is tied to membership. The more you tell Klout about you, the higher your score is likely to be. This linkage fundamentally undermines the quality of the service. In effect, Klout pays you to endorse its service by rewarding you with a higher rank. If Google did that, Congress would be holding hearings.

A Million and One Improvements

Klout admits that its methodology isn’t perfect. In the interview with Schwartzman, who is the co-author of my B2B social media marketing book, Megan Berry said the company has “a million and one” improvements it wants to make. Schwartzman pressed Berry hard on shortcomings in the Klout methodology, and her responses were a weak defense. In essence, Klout treats every social network the same and all interactions equally, she said. A retweet, which is a one-button operation, is just as good as a thoughtful commentary on a blog. Except that Klout doesn’t currently monitor blogs, other than those on Google’s Blogger service. That must be one of the million-and-one improvements in the pipeline.

Megan Berry on KloutA comparison of Berry’s and Schartzman’s Klout profiles showcases the service’s flaws.Berry’s Klout score as of this writing is 70, while Schwartzman’s is 60. Barry does have a couple of thousand more Twitter followers than Schwartzman, but she said Klout ignores follower metrics as meaningless. Berry is very active online, but not nearly as active as Schwartzman.  Her blog has been updated eight times this year while Schwartzman has posted 36 episodes of his popular On the Record…Online podcast and more than 30 entries on his Spinfluencer blog. Berry contributes occasionally to Huffington Post and Mashable, but Schwartzman is also active outside his own channels, contributing to Social Media Today and For Immediate Release. Schwartzman has 44 recommendations on LinkedIn, while Berry has three.

Eric Schwartzman on KloutAs far as I can tell, there are two principal reasons why Berry outscores Schwartzman on Klout. One is that she knows the system. She has at least a vestigial account on every social network that Klout cares about, whereas Schwartzman limits his activities to fewer outlets. Berry also tweets regularly on behalf of her employer, giving her Twitter account a Klout halo effect that attracts retweets and @replies.

My intention isn’t to pick on Megan Berry. She’s obviously a bright young woman who’s very savvy about social media. However, there’s nothing I can find that qualifies her as significantly more influential than the veteran Schwartzman, not to mention Marc Andreessen.

In her interview with Schwartzman, Berry described Klout as “[Google] PageRank for people.” In my opinion, it’s got a long way to go. Klout has some utility as a way to compare the online presence of active social media users, but measuring influence is much more complicated than counting retweets and Foursquare tips. Klout is betting that it can use its metrics to entice (coerce?) people to join its social network, which it can then monetize through advertising. The link between membership and Klout score is a disturbing weakness. Proceed with caution.

Disconnected

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Downed trees in Framingham

Downed trees in Framingham (Photo via Framingham Patch)

Today is my fifth day without Internet service. My connection dropped on Sunday during Tropical Storm Irene, when my cable provider, RCN, lost power. Five days later, my local RCN office remains one of the 3% of utility customers statewide who have yet to get power back.

I’ve accepted this inconvenience with quiet resignation. On the misery scale, my plight is about the same as a mild headache, or running out of milk. Being offline for so long has made me more keenly aware of how central the Internet has become to my work and life, however.

I live online. My work setup includes four monitors powered by two PCs, each running voice recognition software. I administer four different blogs and Websites on a regular basis and stay tethered to my clients and friends through e-mail, Facebook, Twitter and instant messaging. My e-mail, calendar and many of my documents live in the cloud. Even my phone calls often involve screen shares and file transfers. Without the Internet, I’m almost unable to work.

With no travel planned this week, I’ve had to find places with free or cheap Wi-Fi that would let me take up residence for hours. This turned out to be more difficult than I expected. The closest wired restaurants – a Panera Bread, McDonald’s and a coffee shop – have all been without either power or Internet all week. The three Starbucks in the area resemble press rooms: their tables are filled with other afflicted locals hammering away on laptops. Linger too long and you get dirty looks.

A client in the area kindly offered to give me a desk in its offices. Unfortunately, my laptop wasn’t set up to authenticate to its network, so I ended up piggybacking on the cafeteria Wi-Fi for an afternoon. I might as well just have camped out in the cafeteria.

That’s when I hit upon the local public library. Blessed with a fast, free and taxpayer-funded Wi-Fi connection, extended hours and a staff that’s happy to have you there, It’s become my temporary lifeline during this week of digital deprivation. The Framingham (MA) Public Library has private, closed study carrels where I can make phone calls and dictate to my laptop without bothering others. The librarians have even looked the other way when I bring the forbidden food and beverages into my closet.

Offline Challenges

Being disconnected has had some surprising challenges. I never figured out how to set up an FTP connection to my home file server, so transferring files from my laptop has been a tedious process of saving to the local disk and transferring manually or moving files around on flash drives. Version control is nonexistent.

My personal life is also been affected. My wife and I share each other’s calendars and schedule appointments like pediatrician visits through invitations. We’ve had a couple of miscommunications this week because one of the other wasn’t connected. We routinely chat via instant messaging during the day, and with Dana off-line, cell phone texting has been a poor substitute for AOL Instant Messenger. Printing documents from the Web has meant transferring files from the laptop to a desktop connect to the printer.

Lack of TV service has left me unable to watch my beloved Red Sox during a series with the Yankees this week. AM reception in my area is poor, so I usually listen to the game over a live audio stream. Not this week.. Some of our favorite TV programs are showing their final episodes of the season this week, but we’ll miss them because TiVo has nothing to record and Web video is unavailable.

Like I said, mild annoyances. They’ve dramatized to me, though, how vital networks have become to my way of life. Fifteen years ago I got along just fine without any of these tools. Today they’re part of nearly everything I do.

Social Marketing Wisdom from the Insurance Industry – Really

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I was privileged to be on a panel with some outstanding social media practitioners from the insurance industry at the 2011 Social Media Conference for Financial Services put on by LOMA LIMRA this morning. Financial services firms – and insurance companies in general – are often seen as boring, but what these companies are doing within the confines of a heavily regulated business is anything but that. Farmers Insurance for example, hasn’t accumulated 2.3 million Facebook likes by boring people. Another example is One Sure Insurance which is one of my favorite ones. Car insurance is very important, but if you need business insurance then go to RhinoSure.co.uk.

I actually think insurance is a fascinating business, I even have the best motor trade insurance available for my car. It involves taking calculated risks about the unexpected. Insurance companies need to know a lot about the world around us, because their business deals with so many variables, from accidents to earthquakes to the chance of being hit by a meteor. This morning’s audience of about 100 social media practitioners truly believe in the value of new platforms to reach their customers, although they have understandable concerns about the many regulations that govern what they can say.

Here are some notes I took away from the three speakers on my panel.

Gregg WeissGregg Weiss (@greggweiss) of New York Life says the company’s social media content strategy is driven by constantly asking, “What can we do that isn’t about life insurance?” This was a theme that was borne out in every presentation: It’s not about the company but about what motivates customers.

A sampling of what New York Life has done:

New York Life Protection Index on FacebookNew York Life has carefully cultivated more than 100,000 likes on Facebook. “We believe 60% of our Facebook fans are prospects,” Weiss said.

His best story actually had nothing to do with insurance but everything to do with using social marketing to build loyalty and word-of-mouth awareness.

He told of buying a coffee at Dunkin’ Donuts: milk, no sugar. But when he got to the office, he found the beverage was loaded with sugar. “I couldn’t drink it.” He tweeted his dissatisfaction. Within two minutes he had a reply tweet from the head of corporate communications at Dunkin’. She asked for a phone call, during which she apologized and offered a gift card, which arrived in the mail two days later. “I tweeted about Dunkin’ Donuts’ great response,” he said. “It was a huge win for them. “

His  advice to social media marketers: “Think big. Everyone in this room has the power to change things at your company. That’s incredibly empowering.”

Quotable: “The VP of Social Media at New York Life is the hundreds of thousands of people who have online relationships with us.”

And finally, “Seek a higher purpose. I hope someday to hear a story of a kid who got to go to college because a parent bought a life insurance policy from us.”

Kelly Thul (@kellythul), State Farm.

Kelly Thul, State FarmState Farm got started in social media when it set up a blog to find New Orleans-area employees and agents who couldn’t be located after Hurricane Katrina. “Within 24 hours, that blog was key to our locating ever agent and employee,” Thul said. Today, State Farm is all over Facebook, with pages for the corporation, careers, Latino customers, the Bayou Classic football event and an innovative youth-oriented forum called State Farm Nation (right), where people can “discuss life’s challenges and opportunities, connect with others facing life-shaping decisions [and] find helpful tips and information.” With 1.3 million likes, it’s doing pretty well.

State Farm Nation on Facebook

The insurance company’s YouTube channel has had more than five million views, many for its TV commercials. The ads have spawned parodies, but Thul says the company is pretty sanguine about them. “If people care enough to have a bit of fun with you, that’s OK, as long as it isn’t brutal,” he said.

State Farm evaluates social media opportunities using four criteria:

  • Relevance to business strategy;
  • Role clarity: who is responsible for talking and responding;
  • Measurement criteria;
  • Activating platforms.

These four criteria provide a framework for making a rapid and relevant decision about new platforms and opportunities like Google Plus.

Words of wisdom: “People want to be heard. If they believe you’re listening to them, they’ll like you a little more.”

Theresa Kaskey, John Hancock Financial ServicesTheresa Kaskey (@TheresaKaskey), Director of Brand Management and Strategy at the John Hancock Financial Network, joined the company without any plans to get involved in social media. John Hancock had no social media strategy at time. Today, it’s 80% of what she does. There’s been a long education and adoption process, but company management is buying in, she said. John Hancock recently launched its first blog, Build4Success, and it’s posted nearly 40 videos on YouTube. Unlike the other two speakers on the panel, who speak primarily to consumers, John Hancock Financial Network’s audience is financial advisers.

YouTube has been one of its early successes. “We created more than 80% of our launch content in one day,” Kaskey said. “We had a meeting of our advisers and brought them into a room one by one to talk about how they delight their customers.” It’s been a low-cost, high-return recruiting success.

Words of widom: A key element of successful social media programs is “It’s not about us.”

What a Hotel Manager Taught Me About the Future of Business

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Wyndham Wingate Erlanger, KYScott Wright is the general manager of the Wyndham Wingate Hotel in Erlanger, KY, and in a 15-minute ride to the airport yesterday morning he taught me something about the future of business.

The fact that the manager of the hotel was driving me to the airport was unusual in the first place, but Wright makes it part of his routine. “I try to get out of the office at least a couple of times a week and connect with the customers,” he said. “I don’t ever want to be stuck in a back room shuffling papers.”

Wright’s attitude is one of the reasons the Wyndham Wingate has a 91% positive rating on TripAdvisor. He ticks of the two factors that most influence customer loyalty: “Cleanliness is number one by far. Customer service is number two. But you’d be surprised how forgiving people can be about customer service if the room is clean,” he says.

Scott Wright has no choice but to know what makes customers happy. Ratings on TripAdvisor and dozens of other evaluation sites have transformed the hospitality industry. The impact of open, online customer feedback on his business “is huge,” Wright says over his shoulder. The hotel’s policy is to contact online critics directly within 72 hours to address their complaints.

Many times those problems are more a matter of misunderstanding than mistake. One traveler recently posted a scathing review of the Wyndham because charges had appeared on her credit card despite the fact that she paid cash for her stay. Wright patiently explained that the practice was standard operating procedure for cash customers in the hospitality industry and that the charges were routinely reversed within a few hours. Another complained that the hotel wouldn’t let him cancel a reservation. Wright had to explain that the discount deal the customer had booked was clearly marked as nonrefundable.

These outreach sessions don’t fix the damage done by a negative rating. Few consumer feedback sites permit bad reviews to be reversed by anyone, so hotel managers are limited to posting responses, which Wright dutifully does. More importantly, though, the constant feedback cycle is driving he and others like him to become laser-focused on the customer experience. The terms of competition in that already brutally competitive industry have come down to one factor: quality.

Cincinnati hotels - best & worstLook at the ratings of these two Cincinnati hotels on TripAdvisor. Scan the excerpted customer comments. If you’re the owner of the Howard Johnson Inn, how do you solve this problem? Certainly not with advertising. No, there are three options the owner of the Howard Johnson Inn has:

  • Cut prices and compete for low-margin budget travelers;
  • Invest what it takes to fix the problem;
  • Hang out a sign that says, “Under new management.”

None is very appealing, but a customer-driven market doesn’t permit the luxury of spending your way out of trouble.

Conversely, the owner of the Best Western Premier Marlemont can cut the advertising and direct mail budget because customers are doing a better job of promoting the hotel than any marketing could do. The owner can also raise prices because business travelers are less sensitive to cost than they are to a pleasant place to stay.

Fifteen years ago, America’s most-admired brands were those with the biggest marketing budgets: GE, Coca-Cola, General Motors, Microsoft. Today, the brands everyone wants to emulate are Apple, BMW, Southwest Airlines and Harley-Davidson. There are two things these brands all have in common: Neither has dominant market share and all are fanatically devoted to delivering delightful customer experiences. In the future, every successful brand will have to operate the same way.

For Scott Wright and others like him, the rules have changed, but his industry isn’t alone. It’s just a leading indicator of forces that will sweep through nearly every market as customers learn to organize and apply the new powers of influence. These forces will affect B2B and B2C businesses, nonprofits and government agencies. Businesses will have to serve customers better because there will be no choice. All our managers will drive the shuttle to the airport.

I’ve been telling audiences about how customer ratings are reshaping the hospitality industry for more than a year, but no one made that impact more real to me than Scott Wright. As I stepped out of the shuttle, I reached into my wallet and handed him a few dollars.

“Oh, not necessary,” he said, waving his hand.

“Take it,” I said. “It’s a consulting fee.”

Facebook Can Work for B2B Marketers, But You Gotta Know the Rules

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In my work with B2B organizations, the question of how to use Facebook is invariably front and center. This Is despite the fact that numerous surveys have shown that Facebook is one of the least effective social networks for B2B marketing.

In a survey of marketers conducted by BtoB magazine last year, Facebook was ranked last in usefulness among the top five social networks, trailing blogs, LinkedIn, YouTube and Twitter, in that order.

Nevertheless, some B2B companies have mined gold out of Facebook’s audience, particularly for recruiting young college graduates. Let’s look at some examples of what they do well.

Storage maker EMC makes particularlyEMC page on Facebook good use of Facebook’s “Welcome” page. This is an under-utilized tool that enables companies to present an HTML page as their default front door. It’s done with an application called Static FBML (Facebook Markup Language) but there is little difference between FBML and HTML.

The advantage of a Welcome page is that you can use all the tricks of an HTML page, including hotspots, embeds and even forms. Buddy Media uses it to capture leads, as does e-mail marketing provider Infusionsoft. SAP plays inline videos. Use welcome pages to present an attractive and exciting introduction to your company.

EMC has several FBML pages, including a list of its other social media accounts and a game you can play only after liking the page. EMC doesn’t use Facebook’s wall to much effect, but its purpose seems more promotional than interactive. On that front, it hits the mark.

Other B2B companies that use their welcome pages well include VMWare, Lenovo, UPS and Intel. Fedex uses a cool Flash animation to link to its sub-pages. SocialMediaB2B.com has a nice roundup of Eight B2B Facebook Landing Pages

Conversation Equation

LinkedIn is all about efficiency, but Facebook is about generating discussion, even if it’s around trivial things.

For interactivity, it’s hard to beat Intel’s page, which has racked up nearly 2.7 million likes*. Intel uses its wall to great effect. Its language is perfect for the young Facebook audience, and its questions and challenges are often offbeat and fun.

“It’s 2026…what are your devices able to do?” Intel asked last week. Nearly 1,100 people have responded. Wow. Earlier in the week it used an in-line poll app to ask “What content are you most excited to see on our Facebook page?” Interestingly, videos and product announcements topped the list.

Cisco is also terrific at generating discussion. A post on Monday offered fans the chance to win a Casio camera by telling how the Cisco Unified Computing System can benefit their business. That’s a great way to generate word-of-mouth, because posts are shared with people’s friends. Contests and giveaways work well on Facebook.

Cisco SuperFanCisco also has a clever concept called the SuperFan, which is a recognition awarded to their most active visitors. There’s no money involved: SuperFans get their name and face on the Cisco page, and that’s good enough for many of them. Here’s how it works.

Salesforce.com leverages Facebook to drive attendance to its many events. The company knows that its core audience is sales professionals, and it uses discounts, referral bonuses and contests to reach these individuals. Salesforce also post lots of photos of people, which reinforces the image that this is a company with a personal touch.

Desperately Seeking People

One of the most popular uses of Facebook for B2B companies is as a recruiting tool. Facebook has an app to support career postings on your page, but some companies take it to the next level.

UPSjobs goes beyond simply posting job opportunities. It makes the extra effort to quickly respond to inquiries from its fans, often within a few hours. As a result, UPS has turned the tables on traditional recruitment: People come to its page seeking jobs because they know they’ll get a rapid response. As a result, most of the wall comments are from people who want to work for UPS.

Microsoft celebrates its interns on its recruiting page, which is a smart move given the young demographics of the Facebook audience. Sodexo is a master of using social media for recruitment. It uses apps for Twitter, YouTube, Flickr and Foursquare to pull its content from other social networks into Facebook. This company’s entire recruiting effort  – it hires about 5,000 people in the US every year – is built on social media. Check out its impressive recruitment site, which lists the many social channels it uses. Other notable careers pages on Facebook include Shell, Hilton and Abbott Laboratories.

Takeaways

Now that we’ve looked at examples of Facebook best practices, what can we learn from them? Here are some of my takeaways:

Firehouse.com on FacebookHave fun. I think of Facebook as the after-hours social network. The style that works best is relaxed, informal and a little edgy. Be personable and distinctive. No company does this better than M&M Mars, whose Skittles page is closing in on 19 million likes. Its style is unique: funny, unpredictable and tuned to generate response.

Respond. Facebook is a place for conversation, not publication. If people ask questions, you need to respond and quickly. One common mistake companies make with their Facebook pages is to launch them and leave them. Successful fan pages feature a constant stream of new posts by the company and quick response to visitor comments.

Be Colorful. Welcome pages are one of the big differences between Facebook and LinkedIn. They enable you to add a colorful and multifaceted dimension to your presence. The best welcome pages have lots of entry points and a vigorous, hip feel.

Share. One aspect of Salesforce.com’s Facebook presence that I particularly like is its willingness to share content from other sources that its audience may find useful. This not only makes the Salesforce.com fan page a resource but builds goodwill with the sources it links to.

Ask. Firehouse.com has built an impressive Facebook presence for its audience of firefighters and emergency medical technicians. “Is your department participating in National Night Out?” It asked earlier this week. It’s “Sunday Morning Roll Calls” sometimes generate hundreds of responses. Something as simple as asking people what they plan to do for the weekend can create interaction.

* I’m personally not a big fan of tracking page likes as a measure of success, particularly since Forrester has estimated that less than 15% of people who click that button ever return. What impresses me more about Cisco’s Facebook presence is the number of likes and comments that individual wall posts receive.

 

Awareness E-Book Raises the Bar on Social Measurement

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The question of how to measure social media performance, particularly in a marketing context, continues to be one of the industry’s hottest topics. Although many people are aware that traditional metrics like page views, visitors, followers and likes are poor indicators of success, the vast majority of marketers I speak to still focus on these overly simplistic criteria. These numbers may be of little value, but at least they’re understandable.

The more sophisticated practitioners are turning toward metrics that indicate engagement. Examples include comments, retweets, shares and subscriptions. Now Awareness Networks has contributed some important new thinking to this topic with a free e-book entitled “The Social Marketing Funnel: Driving Business Value with Social Marketing.” (Full disclosure: I am quoted in the book but did not contribute meaningfully to the methodology and received no compensation.)

Awareness outlines five priorities that companies should define in becoming a best-in-class social marketer:

  • Measure and Grow Social Reach
  • Monitor Social Conversations
  • Manage Social Content
  • Practice SEO
  • Measure and Analyze Social Activity

Not surprisingly, the company has tools that help in many of these areas, but that’s one reason its research is so useful: The recommendations are based upon the experiences of more than 100 customers.

The most successful of those are reporting direct correlations between social media marketing and sales, and they have certain practices in common. Most use at least three major social media channels, compared to less than two for the average company. They also have multiple presences within each channel, such as product-specific pages on Facebook. And they measure like crazy.

Nearly 80% of the companies Awareness surveyed use social media channels to identify and respond to customer service issues and two-thirds use them for prospecting. Remarkably, only 18% said they have “formal tracking process in place to manage processes and better understand success criteria.” In other words, a lot of social media is still being done with seat-of-the-pants justification.

That’s going to change as more sophisticated metrics emerge, however, and here’s where this report has particular value. It describes four measures of content effectiveness that take into account multi-channel activity: Content-to-Contact Ratio, Comments-to-Content Ratio, Comments-to-Profile Ratio and Content-to-Share Ratio. I won’t describe these metrics in detail – you can find that in the e-book – but each speaks directly to the value of engagement.

As businesses spread their wings across increasing numbers of social communities, they need to get a better handle on what’s working and what isn’t. The cost of maintaining an effective presence is only going to go up as the market gets crowded, and it won’t be acceptable for only one in five companies to have meaningful measurements in place.

As I have noted elsewhere, our current obsession with counting fans and followers is an artifact of old media thinking. Online marketing provides much richer options for understanding how people interact with our content. Awareness’ e-book is an important attempt to try to nudge marketers toward realizing the potential of the information they gather.

Awareness Social Funnel