Traditional marketing wisdom has been that a dissatisfied customer tells 10 people. But today that customer has the capacity to tell 10,000 people -- or 10 million.
Posted Aug 30, 2007
COLORADO SPRINGS, COLO. -- One of the business world's most talked-about dynamics -- the changes in the market that are being ushered in as a result of the impact that bloggers and podcasters have on consumers -- was a cornerstone of a keynote delivered here Wednesday at the 2007 RightNow Summit.
Paul Gillin, former editor-in-chief of Computerworld and founding editor-in-chief of TechTarget, kicked off his presentation by citing two contrasting cases of how social media influences marketing strategies and brand awareness. His first example, iRobot, which makes the widely popular robotic vacuum cleaner Roomba, encourages its customers to develop their own product innovations, an approach that has helped bolster customer enthusiasm, particularly online. "They built a platform that their customers can innovate upon, and customers love the Roomba," Gillin said, noting that there are more than 1,000 customer-created videos on YouTube of users and their Roombas.
Conversely, Gillin noted the frenzy that followed from AOL customer Vincent Ferrari's dreadful June 2006 ordeal of trying to cancel his account, a firestorm that began about when Ferrari posted an audio file of the call on his blog. Shortly thereafter he contacted The Consumerist, a consumer advocacy site, and Digg, a site that allows users to share and vote on content. Within days of Ferrari's cancellation fiasco, his story was picked up by several major news outlets including The New York Post, The New York Times, and NBC's Today show. "If you had typed 'Vincent Ferrari and AOL' into Google on June 19 you would have gotten zero results. If you do it today you get about 17,000 results," Gillin said. "It's hard to say how many people saw this video or heard this audio file, but it was clearly in the tens of millions. Traditional marketing wisdom has been that a dissatisfied [customer] tells 10 people. [But] today they have the capacity to tell 10,000 people or 10 million people with rare cases like this, and that's the change that we're talking about, that's the change that's going on right now."
Gillin maintains that bloggers, along with other content creators such as podcasters, have become part of what he refers to as the new influencers -- people who, through the power of being able to publish their own thoughts for little or no money, are significantly impacting markets by leveraging the online channel. (Gillin explores this concept in depth in his book of a similar moniker, The New Influencers: A Marketer's Guide to the New Social Media.)
"You need to remember that the Web environment is different from the traditional interaction that you have with your customers," says Rebecca Wettemann, vice president of research at Nucleus Research. "It's important not to go overboard with looking at Web 2.0. But using text-mining tools and search-monitoring tools, you can set up some pretty easy ways to keep track of what customers are saying about you. Acting on a post may be more important than the actual post."
To further illustrate his concept, Gillin highlighted several new influencers, including Paige Heninger and Gretchen Vogelzang, co-hosts and co-founders of the extremely successful podcast MommyCast.com, a site with more 300,000 downloads per weekly episode. Their influence is so intense that, as a result of a MommyCast.com program devoted to a then-little-known film, March Of the Penguins, Universal Pictures attributed about one-fourth of the movie's gross to the viral buzz started by the site, according to Gillin.
"The spread of blogging and social networks is the most dramatic consumer phenomenon in history," Gillin said, noting that control is passed into the hands of individual publishers. "I can't think of another pursuit, another activity that has caught on with quite this speed," he continued. "Any time something like that happens, it changes our lives in very important ways a few years down the road. Right now a lot of us are untouched by this, but we're going see this moving very quickly out of the few markets where it is important--consumer electronics, technology, entertainment. It is going to move broadly across all markets."
"We're moving from...the pterodactyl model where the influencers in the market were few and very large, to this model -- the flock of birds model -- where the influencers are dispersed, and in many cases very small," Gillin continued. "The way we regard our markets is going to have to change as a result of that. One thing we're going to see is the role of traditional media [as an influence point] is going to become much less pronounced in this new world. These industries are going to be fundamentally changed by this because they lost touch with [younger consumers]."
Gillin noted several figures that parallel this shift:
With this fundamental shift, there are many opportunities for companies to capitalize on the enthusiasm of their customers. One company that has is urban clothing retailer Karmaloop. The retailer created a street team, and reps earns points for every sale -- points that the rep can redeem for money or clothes. Karmaloop's Web site also enables reps to upload pictures they take of great ideas they find for clothes. "Karmaloop actually has contests, and will base new clothing designs on the pictures that are submitted by their street team members. That becomes a cheap way to create new products," Gillin said, adding that the $3 million company will generate one-sixth of its revenue ($0.5 million) through the initiative this year.
"You've got to be aware of what's going on out there, but you can also engage and become a player," Gillin said. "It's a great way to test new ideas. Be honest, be open, seek advice, seek input, respond to that, and this is the greatest focus group you have ever seen."
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- There are 23 million active blogs on the Internet and more than 125 million MySpace/Facebook members;
- 34 percent of U.S. college students spend more than 10 hours per week online;
- only 19 percent of U.S. college students spend more than 10 hours per week with television and radio;
- The average age of the evening-news viewer is 60.
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