In this day and age, we’re all part of networks and groups of peers that communicate and interact multiple times a day. With the rise of social media and other interactive networks, it is easier than ever before to reach out to someone and get information directly from the source. This is never more prevalent than in the realm of social influence.
Let’s take this scenario: It’s Friday night; you’re new to the area and want to go out for dinner but don’t know where to go, and more importantly where is good to eat. So you jump online and search for something like “best restaurants in St Kilda”. It brings up many different results within a close distance to your home, and you spend 20 minutes sifting through menus and making judgments on which restaurant is the best.
As you’re leaving the office, your colleague Michael recommends a “really great restaurant with fabulous food and a fun atmosphere”. So now you have two restaurants in mind – do you trust your friend or the search results?
The evolution of the internet and other technology such as smartphones and hand held devices gives us immediate online access where we can leave and find reviews on absolutely anything. Why trust the brand itself when we can read consumer opinions based on experience?
The following discusses a relatively new form of market segmentation called “sociographics”. This concept is defined by Tom Philips as “The science of creating targeting models, based on the connections between people and brands”.
This article details the case of why “sociographics” will be the way in which marketers target their customers in the future.
Market Segmentation in the Digital Age
The world of Marketing has seen significant change in the past decade with the development of the Internet. This traditional model has been around since the industrial era. It focused on one message being pushed out to consumers via means such as TV, newspapers and billboards. Typically, marketers bought ad space on these traditional platforms where their ad was then exposed to the public where it was hoped that individuals would respond positively to the message either by purchasing the product, changing their behavior, or developing a favourable impression of the brand.
As outlined by Kevin Lane Keller, in order for a person to be persuaded they must go through 6 steps:
- Exposure to the ad
- Attention: Person must take notice
- Comprehension: Person must understand the intended message
- Yielding: Person must respond favorably to the intended message
- Intentions: Person must plan to act in the desired manner
- Behaviour: Person must actually act in the desired manner.
The laws of probability suggest the likelihood of all six points successfully occurring is around 1.5%. This low Return on Investment is one of the reasons why marketers have lost face in the boardroom.
A lack of effectiveness from marketing practice, and its public perception of being “manipulative” have led to a lack of consumer trust. No trust means you can’t build relationships, and in turn price becomes the main focus. This is a dangerous position for companies to be in as price is one dimensional-up or down; whereas value is multidimensional and is based on the consumers’ interpretation of the brand.
“Price is what you pay, value is what you get” – Warren Buffett
We have now seen a shift of consumer trust from businesses to peers through the Internet. Although the rise of consumer empowerment, media fragmentation and increased “noise”, is seen as a challenge for a number of traditional marketers, it can also be seen as an opportunity. The opportunity lies in mining through the network value that a customer has on the Internet through “Sociographic Segmentation”.
Why Next Generation Marketing will revolve around “Sociographics”
In the traditional form, target marketing had been done usually by demographics (age, sex, gender) and psychographics (lifestyles, activities, interests). The Internet has broken down the demographic and psychographic barriers. People are now coming together based on communities of affinity.
As highlighted by Seth Godin’s talk (http://goo.gl/jQhw1) the Internet has changed our world because it allows people to be connected. It has split the world up into a variety of different niches, from Ukrainian Folk dancers to Vegemite fanatics. It has allowed people to build emotional relationships with like-minded people. These relationships (like most) are based on the concept of trust; which for marketers, as we know, has decreased significantly.
It is relatively common knowledge in the marketing world that 30% of purchase decisions are rational, while 70% of purchase decisions are emotional. Demographics do not tell marketers how to reach people emotionally, or indeed physically. Sociographics do.
“We are not thinking machines that feel; we are feeling machines that think” – Antonio Demasio
What are Sociographics?
“Sociographics” or studying the social graph is a fairly recent phenomenon. On a basic level, this new way of targeting customers is to go after existing customers and find their friends.
The increase in sales to others that result from marketing to an influential customer is called the network value of a customer. Sociologists know that in any group, emotions ripple outward with the strongest concentration of emotion coming from the most powerful person in the room. So why can’t marketers use this approach in the online environment?
Awareness or adoption spreads from consumer to consumer through social networks, blogs, Internet chat & more recently, mobile phones, making words such as “trust”, “community” and “engagement” evermore important for digital marketers. Firms are now being able to use their websites to facilitate consumer-consumer advocacy via product recommendations or via online customer feedback mechanisms.
New forms of technology are allowing people to interact with each other more frequently and share information, values, and ideas. Early research has shown that marketing to people socially connected to an existing customer of a product has 3-5 times higher response rate to advertising versus traditional methods.
Peer-to-peer communication is now the way consumers get their news. The Internet has allowed companies to build individual customer profiles more easily. This will allow marketers to understand the values, needs and wants of potential consumers and help build customer loyalty. This can be done by targeted advertisements and personalisation.
So lets go back to the initial restaurant dilemma. Around 90% of readers would go to the restaurant that your colleague Michael suggested, right?
Michael has influence over you. Michael is marketing the restaurant.
So how can we as online marketers use online social networks to find influencers like Michael to boost our traffic or brand profile?
In conclusion we can see that the newspapers, billboards and promotional flyers are being taken over by the screen. One window enables us to gather information from all forms of media such as video and print and enables us to share this information. Everything increases in value by sharing.
Marketers must therefore move forward by asking current customers: “Who they know?” and “How can they influence?” through sociographics rather than “where they live?”
From this they are able to create customised advertisements for a particular network that people can share through their social networks. This will ultimately increase a company’s customer base and will have a positive return on investment.
And remember: “Where attention flows, Money will follow” – Kevin Kelly
How is your company gaining insight into its social graph?
On which social networks are you finding influencers for your brand or product?
How are you using that influence to boost ROI?
Share your experience and insights in the comment box & if you found this article interesting, increase its value by sharing