superfans: building trust and commitment through online reputation

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contents

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intro defining health factors for online communities after peak Facebook what is online community? organizational ownership conclusion

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we help companies unlock the passion of their customers.

The Lithium Social Customer Suite allows brands to build vibrant customer communities that:
reduce service costs with grow brand advocay with drive sales with innovate faster with

social support

social marketing

social commerce

social innovation

lithium.com | 2012 Lithium Technologies, Inc. All Rights Reserved

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intro

Communities thrive or fail based upon trust. Consumers must have some degree of trust in the hosting brand to make the community successful, but far more important is the trust that consumers have in their peers. There are two key benefits to peer-to-peer trust, each one required for a brand community to achieve its business objectives: If consumers trust that their peers know what they are talking about, they are more likely to follow their advice, whether thats advice about which product to purchase or how to fix a problem with a product theyve encountered. The most prolific users typically create 90% of the content in a brand community, so it is vital that visitors know who among them is trustworthy. If new community members see that the community rewards engagement with higher levels of status and privilege, they are more likely to invest their time and effort in making the community successful. In other words, the community is something like a video gamethe drive to move up to the next level compels members to higher levels of participation. Even a customer community with a million members depends upon a fairly small number of people, typically around 1%, to generate much of the excitement and interest. Without the peer trust created by a reputation management system, this 1%the superfanswill not engage and the community will not achieve its business objectives. So it is vital to understand the dynamics of online reputation and use the best available tools for managing it. Building this web of trust requires both the right technology and an understanding of human behavior. Lithiums approach to online reputation combines those. Our software and practices are based upon: Ten years of social interaction data across several hundred communities, tens of millions of users, and 50,000 superfansconsumers whose deep engagement with brand communities drives others to participate. Research conducted by Lithiums Principal Scientist, Dr. Michael Wu, who was recently named (along with Marc Benioff and Mark Zuckerberg) as one of the most influential people in CRM. Lithium encourages Michael to share his research findings in a blog, which you can find on the Lithosphere, Lithiums own community.

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Real-world interactions through the communities Lithium hosts for its clients, including some of the largest, brandsponsored communities in the world at HP, AT&T, PlayStation Europe, and Univision. Lithiums customer success managers (CSMs) are actively engaged with our clients in designing reputation and reward programs in their communities. A well-executed reputation system delivers tremendous return on investment by empowering the smartest, most committed members of the community to take on much of the responsibility of managing the site and driving its business objectives. A small minority of superfans makes the difference between success and failure in brand communities. For example: Lenovos award-winning customer support site is staffed by a moderation team composed entirely of customer volunteers from all over the worldUS, Australia, Canada, Germany, India, Pakistan, and Turkey. Initially, the collaboration focused on the operation of the communitythe policies, the rules, and the content. But in just one year, 30 members who had earned the trust of Lenovo and their peers helped grow Lenovos knowledge base to 1200 articles. English mobile telephony provider giffgaffs remarkable customer community is both the customer service and marketing arm of the company, which has fewer than 20 employees! The average time to receive a response in the giffgaff support forum is under three minutes, and 100% of technical questions are answered by the community. Giffgaff members who answer others questions effectively and earn high status also receive free air-time, which they can then give as gifts to their friends. This makes these high-status users word-of-mouth marketing agents.

One user on Logitechs community has posted 45,000 times since May 2006, an average of almost 25 times per day! These answers to technical and purchase questions have been viewed millions of times, giving him an effective reach larger and more lasting than the companys advertising campaigns.

An effective rank and reputation system must do the following:

Reward members for the full range of socially beneficial behaviors. This sounds simple, but many systems do a poor job of it. For example, simple reputation systems confer status upon users based purely on the number of posts they create, but this creates perverse incentives. Members post for the sake of posting in order to game the system rather than focusing on quality posts. Moreover, some members visit the community every day, but only post when they have something very important to say. These members may actually be the glue that holds the community together, but many reputation systems treat them poorly because they dont post often. Motivate members continuously through their engagement process by progressively making succeeding levels of achievement more difficult to attain. This concept is sometimes known as game mechanics, and it is critical to keeping members engaged. Some of Lithiums long-standing communities have over 150 different levels because members keep raising the standard. Confer meaningful privileges upon superfans. Many systems display visible badges of status, and this is necessary but not sufficient. While superfans are motivated by public status markers, long-standing members are motivated by having authority, such as the ability to move or delete content, the ability to edit or write blog or knowledgebase articles, the ability to post comments without moderation, and the ability to discipline members of the community who cause trouble.

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defining health factors for online communities

Offer multiple paths to success. A brand community is a complex ecosystem. Some people may be experts in one product but not in another. Some may be great at starting discussions, others may be great answerers of questions, and still others may be friendly and welcoming. The rules underlying the game must be flexible enough to enable all of these people to feel as though they are winning. If you make a domain small enough, every man can be a king. While this may not be entirely practical, it is an important maxim for creating participation among diverse audiences. Lithiums reputation system has been honed over ten years of iteration in diverse and demanding environments, from online gaming communities to the worlds largest brand community dealing with beauty. Here are some of its key features: The Lithium platform tracks over 70 behavioral metrics that can be factored into the reputation system, with more factors added as new features are built into the system. Moreover, Lithium can import factors from external user directories, so customers can be rewarded for loyalty or purchase behaviors in addition to their actions within the community. No similar system is as flexible or extensible. Lithiums reputation system allows an unlimited number of ranks, which are all programmable by business rules. This means that first-time users can experience immediate gratification as they move up in rank after they make one or two posts, while long-time users can be rewarded for a range of behaviors. Lithiums reputation system is linked to its role system, which has over 100 different permissions. As a result, members who have earned the trust of their peers can be empowered to moderate the community, can have their content ratings count more, and can even make badges displaying their status that carry over into other sites such as Twitter or Wordpress. Lithiums reputation system is granular within the community, so members can have an overall reputation in the community at large, but a particularly high status within a specific area of the community. This gives product specialists or people who are prone to submitting particularly valuable ideas a higher level of visibility than they might otherwise be able to achieve.

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Lithiums Customer Intelligence Center uses algorithms to surface to community managers the most important members in terms of the centrality of their connections with other members, the members who are emerging as extremely prolific posters, and members whose participation is beginning to wane. The value of a superfan is so great that Lithium recommends that companies proactively reach out to members whose participation is declining, and the Customer Intelligence Center gives them the tools to do that.

allow us to identify social influencers today and predict who will be one tomorrow.

our insights

uses a sophisticated reputation engine to inspire influencers to get deeply involved

our gaming science

allow us to counsel our clients on engaging influencers and bringing better results to their company

our insights

At Lithium, we have focused on the management of superfans because all of our experience and data has shown us that if you take care of the most important users, the rest will follow, while the converse is not true. We work with each one of our customers to understand their business objectives and create a reputation structure that works for them. This is a primary reason why Lithium communities are more vibrant and successful than our competitors.

In the whole, respondents rated their communities as more successful than Facebook at activities that require trust: peer-to-peer engagement and providing pre-and-post sales purchase support; Facebook was seen as more successful in disseminating marketing messages. The two channels were seen as roughly equal in their ability to create brand awareness. Clients who have initiated brand communities see awareness benefits as particularly salient in the first year, suggesting that newness of an engagement channel is in itself a big driver of awareness. The ability for customers to submit and discuss ideas for product or service improvement is the biggest downstream benefit of social customer engagement for clients who have developed brand communities. Clients who consider their Facebook efforts less successful are particularly interested in bringing this capability to Facebook in a more structured fashion.

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after peak Facebook

As Facebook itself approaches full penetration of its core markets and its members start to regularize their behavior, historic growth rates for participation in corporate Facebook pages will slow. Call it peak Facebook. Recent surveys have also shown that existing consumers engagement with corporate Facebook pages may be tenuous and fading. For example, 81% of those who have become fans of a brand have abandoned at least one such relationship because of irrelevant, voluminous, or boring marketing messages. This suggests that marketers who are committed to using Facebook to foster relationships with social customers will need to invent or adopt sophisticated long-term strategies for customer engagement. Fortunately, many of the techniques learned in brand communities can carry over into Facebook.

answer product questions

51.4% 50%
display status or achievements

42.9% 8.3%
submit ideas for service/product improvements

62.9% 50%
search our knowledge base

60% 66.7%
see the best/most useful content that others have submitted

60% 58.3%
identify other customers with similar backgrounds or needs

42.9% 50%
find products their friends or colleagues have recommended

60% 50%

mentions by respondents who rate their Facebook pages as less successful mentions by respondents who rate their Facebook pages as successful

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what is online community?

answer product questions

47.6% 56%
display status or achievements

52.4% 20%
One of the first questions we see from brands developing a social customer strategy is, Do I need both a brand community and Facebook, and if so, what role does each one play? The answer to this question always depends on circumstances and business requirements, but given that our audience has experience with both venues, we have a very good sense of the role that each one plays. Figure 1: Overall effectiveness of Facebook and brand community. Figure 1 compares the brand communitys perceived effectiveness with the Facebook pages perceived effectiveness in 10 different areas. The first thing to note is that the one area where Facebook shines is in outbound messaging. Because Facebook offers outstanding reach and many brands use it as a publishing platform for periodic updates, its prowess as a vehicle for disseminating marketing messages is not surprising. Social media marketing vendor Vitrue has computed that a fan base of 1 million translates into $3.6 million in equivalent media per year, and brands such as Coca-Cola already see more unique visitors to their Facebook page than they do to their company web site. In these situations, Facebook represents a means of message dissemination that compares favorably to advertising on a cost-per-impression basis. Interestingly, however, Facebook was not cited as significantly more effective than a brand community in creating brand awareness, or creating goodwill for the brand in social channels. Given the Facebook platforms reach and viral features, one might have expected higher scores for Facebooks ability to increase brand awareness, but there are several reasons why the scores may be lower than expected: Brand awareness is still largely campaign driven, and a Facebook page alone does not constitute a campaign. Even when campaigns drive users to Facebook pages and increase the brands fan base, there is no guarantee
see the best/most useful content that others have submitted search our knowledge base submit ideas for service/product improvements

57.1% 64%

57.1% 64%

57.1% 60%
identify other customers with similar backgrounds or needs

38.1% 52%
find products their friends or colleagues have recommended

47.6% 64%
mentions by respondents who rate their communities as less successful mentions by respondents who rate their communities as successful

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that these people were new to the brand. Most users who associate with a brand page probably have a prior affinity for that brand. Finally, as we have seen through social media monitoring studies, buzz around brands spikes during successful campaigns, but typically returns to a steady state after campaigns end. One further explanation may be that our community clients report that brand awareness benefits peak during the first year, even as other benefits increase over time. If this holds true across other social channels, it is possible that the fact of starting a new program in and of itself is responsible for increased awarenessprobably because that program involves an introductory campaign. When the shock of the new wears off, what is left?

As it turns out, brand communities annuitize exceptionally well. Peer-to-peer engagement and an environment where users answer one anothers questions emerge as a corps of devoted users forms and mobilizes. Indeed, scores rise in these areas as communities move into their second and third years, suggesting that communities hold their users interest over the long haul. Figure 2: Anticipated benefits versus realized benefits. Peer-to-peer buying advice and customer ideation were two benefits exceeding client expectations. The survey tells us that benefits clients anticipated when embarking upon a social customer program are not always the same benefits that emerge over time. This is particularly true in two areas: idea development, and peer-to-peer pre-sales consulting. Customer feedback/ideation was listed as an original purpose of a community 46% of the time, but a realized benefit 78% of the time. Peer-to-peer pre-sales consulting was an original purpose 13.5% of the time but a realized benefit 27% of the time. Both of these downstream benefits are most likely to emerge as byproducts of trust among members of a community. Brands tend to be more willing to harvest and discuss rand communities. The ability to find products or services recommended by friends or colleagues is also seen as a potential area of improvement by those who are not particularly satisfied with their Facebook efforts.

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organizational ownership

If we see a coming convergence between the way people interact on Facebook and the way they interact in a brand community, it is worth asking who will lead that convergence and how it will take place. Enterprises vary in their determination of who owns social customer initiatives. In some organizations, social customer initiatives are owned by customer support or customer experience teams. Increasingly, however, they fall under the purview of marketing or corporate communications functions. Figure 6: Additional requirements from Facebook by social program ownership. As we can see from Figure 6, organizations where marketing owns social initiatives are demanding less of Facebook in terms of new modes of customer engagement. In fact, ownership by marketing is more important than the perceived success of a companys Facebook page in determining whether a company is interested in customers engaging through Facebook in more involved ways. Customer support and customer experience groups continue to be more interested in the exchange of ideas and the answering of product questions. Figure 7: Largest challenge with social customer programs, by program ownership Marketing-led organizations biggest concern with social customer programs is how to scale them. Figure 7 shows the chief concern as scaling initiatives with (relatively) less concern about coordination across teams and departments. 44% of marketing-led organizations cited resources to scale our efforts as the biggest challenge, as against 34.4% of everyone and (9/34 - 26%) of non-marketing led organizations. This suggests that one reason marketers are less aggressively pursuing deeper engagement through Facebook is that, unlike support or customer experience organizations, they lack human resourceslike contact centersthat are perceived to be required to ensure that social customers get the satisfaction they require from engagement through Facebook. Better, perhaps, not to hold out the promise of a sustained dialog with customers if an organization cannot make good on that promise. The survey shows that marketers and customer experience are equally committed to responding to customers in brand communities and through Facebook and Twitter. However, it would not be surprising if Facebooks reach threatens to become overwhelming if customer actions on Facebook

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called for a response. Indeed, perhaps one thing that marketers have learned with online communities that they have not (yet) learned with Facebook is that customers themselves can be the solutionnot just the causeof the scaling problem. Time and again, we have seen that larger communities with a devoted core of superfans actually require less intervention from companies than fledgling communities. The downstream trust benefits pay dividends. There is no reason why this shouldnt be so on Facebook, but many organizations are in earlier stages of their experience with Facebook. Figure 8: Requirement for ROI measurement by channel and program ownership. A final area in which brand communities differ from other channels for marketing-led organizations is in the need to prove themselves through ROI metrics. As we can see from Figure 8, marketing-led organizations generally have higher demands for ROI, but this is particularly true for brand communities. We suspect this is a function of the perception that Facebook engagement is free because a Facebook page is itself free, but also of the maturity level of Facebook as a technology and a marketing venue. As we see increasing convergence of social channels, we should also expect to see demands for more sophisticated Facebook measurement tools, and growing demands for Facebook to prove its value.

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conclusion

There are significant synergies between Facebook and brand communities. Both offer unique marketing advantages, and weve helped customers extend the reach of their brand communities on Facebook. For its sheer size and viral features, Facebook is generally considered more successful at disseminating marketing messages, and is roughly equal in its ability to create brand awareness. As weve seen in online venues before, however, driving people to a social site without providing an outlet for their needs invites a peak-and-trough customer engagement, rather than a sustained, vital and profitable enthusiasm. A campaign-based wave of awareness will eventually peak and subside, and may then create unrealistic expectations for customers. As these channels evolve and the awareness benefits subside, marketers should consider Facebook a useful platform for cultivating an online presence run more like a community than a campaign.

The dividends of a well-developed Facebook presence will ultimately depend on marketers inventing or adopting sophisticated long-term strategies for customer engagement, such that their Facebook presence derives its value from peer-to-peer relationships. But those relationships also have to be based in trust, both among customers and between customers and the brand. Establishing this trust is a key, long-term strategy. For instance, fostering productive peer-to-peer relationships among customers and rewarding positive behavior helps to create trust, as does identifying, motivating, and highlighting your brands superfans. The downstream annuities of trust and engagement only grow when brands cultivate true, multi-directional relationships with their social customers over the long term. The potential ROI is tremendous.

Lithium social solutions helps the worlds most iconic brands to build brand nationsvibrant online communities of passionate social customers. Lithium helps top brands such as AT&T, Sephora, Univision, and PayPal build active online communities that turn customer passion into social media marketing ROI. For more information on how to create lasting competitive advantage with the social customer experience, visit lithium.com, or connect with us on Twitter, Facebook and our own brand nation the Lithosphere. lithium.com | 2012 Lithium Technologies, Inc. All Rights Reserved

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