Announcing Social Networking

Starting August 29th Telligent will host a monthly breakfast at our office in Dallas as an interest group for Social Networking and Communities.

What is it?

It’s not going to be technical. Visual Studio won’t get opened. What it will be is a fun conversation with like-minded people about topics related to social networking and communities all centered around how these concepts and technologies can be applied successfully for organizations.

Where is it?

We’ll have the first meeting at our office in Dallas, TX, but we’re going to video-cast (not live) too. If it takes off we may even do a small road-show.

Who is it for?

It’s for anyone that is interested in these topics. It’s going to be more about “how do I make this stuff work for me” and less about “how does the technology work”. For example, our first topic is going to be Blogging in your Business. We’ll talk about how tools such as blogs promote transparency and really open some news ways for you to talk to customers or employees.

What is the format?

8:00 – 8:30 – Light breakfast (coffee, bagels, etc.)

8:30 – 9:30 – Blogging in your business, Rob Howard

9:30 – 10:00 – Open discussion

Where Are We?

In our mini-van, yes I know I just lost major street-cred by referencing the fact that my wife and I do in-fact own a min-van, but it’s a fully loaded mini-van thank you very much!!! We have built-in navigation and DVD systems for the kids.

Now instead of actually paying attention to where I am going, I am mindlessly following the directions given to me by the authoritative female voice and glowing maps. As my brain wanders, thinking about parenting, profitability and ROI analysis, Xbox 360 gaming and what’s for dinner, I realize that if we suddenly lost power to the nav system I would have no idea how to find where I am going.

Thinking about this and the High-Tech industry in general and reading Geoffrey Moore’s Crossing the Chasm I began to think about the importance of not only understanding where you are going but more importantly how are you going to get there.

We at Telligent are at a crossroads. We are almost upon the transition from the Innovators and Early Adopters to the pragmatic Early Majority in terms of product adoption. Marketers are good at identifying fads and even better at exploiting trends. We are currently in the middle of a major trend which is the collaborative boom of Web 2.0 solutions. And Telligent is definitely on the forefront of providing the needs to those Innovators and Early Adopters. With success implementing solutions and providing Community Server to organizations such as: Disney, MSNBC, Dell, Microsoft, Electronic Arts, Intel, Mazda, Honda, Adidas, Lego, etc… We have laid the foundation to successfully cross over to the upcoming Early Majority.

But the Early Majority requires different messaging and they are less concerned with the technology and more concerned with ease of use, support and referrals from others in the Early Majority. This is one of the key areas where High-Tech companies fail. They see the growth in sales between Innovators and Early Adopters and they ramp up their teams and expect big revenue numbers to continue to spike, what they do not count on is the potential marketing pitfall that occurs between the Early Adopters and the Early Majority.

The Early Majority is a very important segment during the product adoption life-cycle. If you catch the wave between Early Adopters to the Early Majority this is where true success starts to materialize.

What we are seeing from organizations is that the Early Adopters were looking for an edge on the competition and now they have found a way to leverage collaborative solutions and engrain them into their marketing strategy. Now the Early Majority is taking note of the trend and patiently waiting to see what best practices arise.

The one thing to keep in mind in all of this is that it is not always the best product that gets selected by the Early Majority, it is normally the products that can market themselves in such a way and are continuous in their innovation that they speak directly to the needs of the Early Majority and are not as disruptive as the competition that they in turn cash in with market share. We at Telligent have the premier collaborative solution in Community Server. The next step is ensuring that we speak to the Early Majority and let them know exactly why it is the best. The rest will take care of itself.

What Do You Look For?

One of the most difficult tasks to undertake is adding a new member to a team. There are so many factors that you have to consider, the balance of personality types… strategic thinker vs. execution mindset… you have to factor in the dynamics of the existing team members and you want to ensure that the prospect has a clear understanding of the expectations of the position.

When I look to hire a new member to the team the main area I focus on is not necessarily their extensive skill set or the impressive list of previous positions on their resume. I look for both tangible and intangible traits. Does this individual possess the type of personality that can thrive in this environment. From my experience individuals can really thrive in an open/start-up type environment, others it can be a very uncomfortable place to be if they are not accustomed to fluid processes.

The other personality trait I focus on is ego. When hiring, especially in a sales type capacity you want someone who is confident in their abilities but at the same time recognize a sense of humility. This is very key as with this type of position the ability to develop and maintain relationships is such a key element.

To succeed within this culture attitudes and egos need to be checked at the door. I also look for signs from the individual that they have the ability to add value in multiple areas, be it experience in an area of interest or the desire to continue to develop professionally. Finally, is the individual an enabler. Can they bring the best not only from themselves but positively impacting the other members of the organization.

To summarize, it is not always about the resume and what you have done that get you in the door, it is more along the lines of highlighting the value that you can bring to the team and having just the right mix of personality that can take you all the way.

Community ROI

Changes have been in the works over the past few years, dramatic changes and challenges are beginning to have an effect on traditional business. You look at software as a service (SaaS), service oriented architecture, and especially Web 2.0 and how organizations are trying to define new strategies. From my perspective, I focus a lot of time around discussing Web 2.0 and the value to traditional business. 

Some of the common questions that are raised are: how do I calculate ROI around community? What are the contributing factors? How do I know that it is truly beneficial for me to have a community vs. not having one? The most common mistake when calculating ROI around community is to focus solely on the activity of the community. Things like unique visitors, page views, session time, community click throughs, read-to-post ratios, are all very useful in defining the health of a community, but they alone do not translate into a tangible business value that you can hang your hat on. When reviewing ROI you have to look at economic indicators such as the incremental value of the community and conversion rates.

Incremental Value is the difference between the value created by a business with an online community and the estimated value that the business would generate in the absence of community. There are a few guidelines that serve as baseline factors when calculating ROI. Research shows that Community members make up only 5% of the overall customer base, but this group accounts for 30% of the purchases and average transaction size is twice as large for community members as for non-community members. One of the biggest factors in calculating Incremental value is the referral factor. Community members are twice as likely to refer others to the site and the retention rates are 50% longer for community members than for non-community members.

With that in mind I began the process of creating a formula that took into consideration variables such as Advertising Dollars, Potential Market, Current Market Over Time and Direct and Indirect Growth to both Community and Non-community Members as well as accounting for retention and Word of Mouth. The end result is the following:

(A+(Nt/M) (b)) (M-Nt) = Community Member
(A’+(Nt‘/M’) (b’)) (M’-Nt‘) = Non-Community Member

Here are the variables
A= Advertising Dollars
M=Potential Market
Nt=Current Market over time
b= Direct Growth + Indirect Growth (CMs)
b’= Direct Growth + Indirect Growth (NCM)
r = Retention = 10% or .1
w= Word of Mouth Referral = 5% or .05
c= Content = 5% or .05

b = referral + 2(.005) = r + 0.0115
b’ = referral + (.005) = r + 0.01/2

So with this in mind you can look at this practical example:

Nt/M (M-Nt)

Nt= 10,000
M= 1,000,000

10,000/1,000,000 (b) (1,000,000 – 10,000)
b/10 (990,000)                                           

b=.1 + 2(.05) + .05 = .25                             b= r + 2w + c
b’= .1/2 + .05 = .1                                       b’ = r/2 + w

CM (10K, 1,000K) = (.25)(99,000) + 10,000 = 34,750
NCM (10K, 1,000K) = .1(99,000) + 10,000 = 19,900

Thus based on the criteria referenced above, having a community will yield a 74% increase over time as compared to not having a community based on the sample size.

In future posts I will look at another example of ROI calculation based on the average value of a Non-Community Member compared to the value of a Community Member. This will focus on monetizing the community and assumes a product based community. This requires an understanding of the average transaction per customer, total customers (projected or actual), potential market and the current conversion rates of the product. I will also review how Subject Matter Experts and Word of Mouth is calculated to come up with the 5% referenced above.

 

 

Viral Marketing & SMO

Viral Marketing is now one of the most powerful ways to market online. The key to viral success comes down to interruption vs. invitation. Traditional media such as television has the potential to reach hundreds of millions but the message may not resonate or be clearly discerned by the prospective target audience due to the “noise” and passive positioning associated with this type of delivery. The beauty of viral messaging is that it has a much better chance to get the users attention as the message is either coming from a trusted source, a recommendation, or meets the search criteria defined by the user.  Also, this type of message is available on-demand which gives the user ultimate control over when and where consumption occurs.

One viral aspect that is getting a lot of attention is online video. If you are reading this you have more than likely viewed a user created video on YouTube or some other site and you are not alone.  Online video is beginning to garner more attention from average viewers with 4% of people over the age of 18 watching videos daily and another 14% watching at least once a week. Research shows more organizations will be shifting marketing dollars to producing and positioning online videos. The reason for the shift is that video ads show a propensity to generate higher ad interaction and longer ad viewing (2/3 of the way through on average) this in turn leads to higher click-through rates.

So as an organization you may be thinking about focusing on online video or maybe you are looking to tie into user generated content and incorporate your advertising. If so, you need to focus on a few key factors. As with any type of marketing activity consistency is the key. Ensure that you are intrinsically linked to your brand, your video should require online interactivity and it needs to have synergy with offline marketing material. The other key factor revolves around the concept of Social Media Optimization or SMO.

SMO is the process of optimizing your online media presence by becoming more visible through searches within online communities and community web sites. The concept of SMO is to increase the chances of your video being distributed more widely through community search engines. This is very important as this is the key driver for this type of viral strategy.

As you consider your viral strategy it may become clear that you need a solid community presence associated with your brand. This is where branded community offerings can be applicable. Integrated platform (Blogs, Forums, File, Photo Galleries, Video & Podcast support, RSS) that streamline the positioning of an online community. Let me know if we can assist you with your community or viral marketing needs. We would be more than happy to assist. Feel free to contact me with questions at tedwards@blackfin360.com