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5 Things I Know about Marketing - Wharton’s Jonah Berger

 Jonah Berger is Associate Professor of Marketing at the Wharton School, University of Pennsylvania. An expert on word of mouth, social influence, and consumer behavior, he is the author of the best-selling Contagious: Why Things Catch On. His new book is Invisible Influence: The Hidden Forces That Shape Behavior. He spoke with Executive Director Kay Lemon in September.

 

1

If companies don’t focus on their customers’ needs, someone else will.

It’s easy for marketers and companies to be very product focused. The danger is that they fall back on core competencies and don’t think about how their customers’ needs are changing.

For example, Hertz Rental Car would say, “We’re in the rental car business.” But if they were really thinking about rental car customer needs, they would have come up with Zipcar or daily car share. They focused on what they were good at—which was having physical locations and renting cars by the day or week—not what the customer needed, which was a flexible transportation solution.

Segway and Google Glass were interesting from a technology standpoint, but was there a market? These were solutions in search of a problem. You might have a fantastic product that you love, but if the customer doesn’t like it, it doesn’t matter. Without the customer, marketing really doesn’t work!

2

Word of mouth is (much) more than social media.

Guess how much word of mouth is online. Most people would guess 50% or 70%. But the number is much lower. Only about 7% of word of mouth is online. Most is face to face. People share at breakfast with their families, at lunch with their colleagues, and after work (and throughout the day) with their friends.

Harnessing word of mouth, then, requires more than just a social media strategy; you need to think about where your customers are. If they’re online, be online, but if they’re offline (as customers are most of the time) make sure you’re there as well.

Every aspect of marketing is an opportunity for conversation—from the product itself and in-store displays to your website and customer service interactions. Zappos built their business through word of mouth and using great customer service to get it. Surprise and delight customers, shatter expectations, and customers can’t help but tell others.

Another strategy that I love is “giving away two”. Don’t just give people one sample, give them a pass-along sample that they can share with someone else. This simple strategy is remarkably successful in getting people to share.

3

Forget “friends” and “followers”.

Some organizations are dissatisfied with social media’s return on investment, but often it’s because they’re using the wrong metrics.

Many companies are focused on social connections: accumulating friends and followers. But they’ve thought less about whether these connections are actually engaging with their content.

I’ve developed a “contagious index,” or “batting average” content metric. Given that 100 people saw your message, how many of them shared it or commented on it? How many of them engaged with it in some way? This metric is much closer to what actually drives long-term sales impact.

To get people to share our message, we have to understand the psychology of sharing. Why do people talk about one brand rather than another? Forward a YouTube video or hit retweet? As I talk about in Contagious, it’s not random, luck, or chance.  Six key factors or STEPPS (Social Currency, Triggers, Emotion, Public, Practical Value, and Stories) drive people to talk and share and lead all sorts of products and ideas to catch on.

3M, for example, built a newsroom to talk about interesting developments in science. They’re not yelling 3M in their content, they’re whispering it. They’ve built a content generation and distribution system based on understanding why people share in the first place.

4

Word of mouth is more important than advertising.

Word of mouth drives more than twice the sales of traditional advertising. And a dollar spent on word of mouth goes ten times as far as a dollar spent on traditional advertising. One reason is trust. People are more persuaded by what their friends and colleagues say because they know their social connections aren’t trying to sell them something.

Word of mouth is also more targeted. One of the big challenges of traditional advertising is reaching the right customer. Word of mouth does exactly that: it goes through a social network, almost like a searchlight, to find the person or people who are most interested in the product or service.

People tend to be friends with others like them, so firms can use existing customers to help them target new ones. No wonder then that customers who come in through referrals have 15%-20% higher customer lifetime value.

Uber sent out a holiday message a couple of years ago saying, “Having a holiday party? Request free rides for your guests here.” They turned their customers into advocates by giving their customers a deal to pass on.

5

Big Data is nothing without insight.

I work with a lot of organizations that are really excited about big data. But it is not the data that’s valuable, it’s the ability to pull insights from that data.

What’s key is the ability to clearly articulate the questions you want to answer. The question can be as broad as, what drives successful customer interactions? Why are some customers more satisfied than others? Why do some people repeat-purchase and others don’t? Or the question can be as narrow as, what specific content drives customers to our website?

It doesn’t necessarily have to be hypothesis-driven; we can look for relations among the variables. But then follow up with A/B tests and experiments and further study.

Some of the work with unstructured data may require data scientists or statisticians. What’s critical is to have a team who’s tasked with thinking about these things—that is a great place to start.

Ask the right questions—the insights can then emerge from the data. The true value of big data is in the questions marketers can answer.

Related links

Finding Versus Receiving: How Content Acquisition Affects Sharing
Zoey Chen and Jonah Berger (2015) [Report]

How Expertise and Endorsement Style Impact Word of Mouth Persuasion
Grant Packard and Jonah Berger (2015) [Report]

Comments:

  • 10/01/2016 by hans-willi.schroiff@dartmouth.edu

    A great set of statements. After 30 years in Marketing, I endorse each one of them.

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