In a post on my own blog yesterday, I wrote about how companies should not think about how to leverage social media as a new channel for doing marketing, but instead realize how social media has transformed the marketing game. I promised to expand on the topic and decided it made more sense to move the conversation to the marketing 2.0 community so we can continue this discussion until way after this post will have disappeared below the fold.

In yesterday’s post I said:

Social media is what transformed the rules of marketing. By providing a platform of participation to your employees, customers and prospects, social media has changed the fundamental pillars of the marketing game. Not only have the rules of game changed, so have the players, the scope, the tactics and the added values - to use the game theory elements of the game.

I further said that the end goal of marketing - creating a customer - had not changed.

Let’s take a quick look at the different elements of the marketing game and how they changed.

The New Rules

1. People do not want to hear from companies anymore
2. People want to hear from other people

Some people will argue that this has always been like that, and they are right. The problem is that prior to this platform of massive participation called social media becoming commonplace, you could not hear from other people in a scalable way - and so you had to listen to what companies were telling you.

The New Players

• Customers
• Employees
• Prospects

Except for competitors not being on the list, it sounds like the old players - doesn’t it?

The difference is what Clay Shirky calls “here comes everyone” in his latest book - which is a must read if you are in marketing. It is not just the employees that are in your direct line of command who are playing key roles in your decision making processes, it is all employees. And it is not just your largest customers, or those you pay to advise you, who will participate in your decisions - it is all of them, including people who have not yet bought from you.

The New Scope

The scope of marketing for many old school marketers was everything pre-sales. Many corporate marketing executives are not even in charge of product innovation - where you bring the voice of the customer back into the process of defining your next offer.

The new scope of marketing is everything pre-sales all the way to post sales customer support and new product innovation. And that for global tribes of people who talk to one another instead of just those who bought from you.

The New Tactics

• Business communities
• Social media & social networks
• People-speak and authenticity
• Speed of response

Those are big changes in how marketing departments will have to think and work in order to create new customers. No more corporate-speak, no more interrupt-based marketing programs, and no more targeting. It is now all about attracting customers, building relationships and trust by helping them and letting them help one another, and leveraging the tribal nature of people.

Is this how the marketing tactics should have been all along? Absolutely! But how many companies were doing that when they did not have to? Almost none.

Now they will have no choice if they are to survive.

The New Added Values.

• People’s attention
• People’s trust
• Talent in employees and customer champions
• Externalized business process that include employees, customers and prospects
• Retell-able stories to market with you customers instead of at them

So out are the switching costs, the better mousetraps, the big advertising budgets, marketshare and other added values that determined your marketing competitive value in the marketplace before social media shifted the power away from companies and into individual’s hands.

Summary

So while the end goal of marketing has not changed, the game you play to get to that end goal has forever been transformed. You can argue that whatever marketing 2.0 becomes is what marketing should have been all along, as I did before, but the reality is that for most companies it never was like that because they did not have to.

And the changes that need to happen are so fundamental that many will not make it.

[While I am not a big fan of cross-posting, I thought it would be appropriate to cross-post this post with Emergence Marketing as I have had part of my recent community-based thoughts here]

Based on research in the field of virtual communities, most business thinkers will agree that there are 4 fundamental pillars to successful communities - content, members, member profiles and transactions. If managed properly, these 4 dynamics can lead to economics of increasing returns that characterize most successful communities. The more members you have, the more content they will create. That in turn will increase the value to the community members and attract more members. If you capture information about your members and you make it easier for them to find stuff in the community based on their profile, the higher the value of the community to the members and the more members you will attract. It’s easy to understand the workings and to get the benefits of the dynamics of increasing returns that happen in successful virtual communities. Many of those were first described by business thinker and management consultant John Hagel in Net Gain more than a decade ago.

There are other aspects that drive and define communities, such as the social and technology infrastructures of communities as well as the business processes that they support. But none of those characteristics have the power to create the positive value creation loops that the original four can.

While most successful communities will have a mix of all of the ingredients - we can characterize communities by their dominant dynamic.

First there are content-based communities, where members interact with one another primarily in the context of content - either consumer generated or licensed/acquired. News sites or blogs are communities that would fall in this category.

Then there are communities that are primarily member-based. Member-driven communities can take on many different forms. Brand communities like the Harley or the Ducati communities are clearly member-centric communities, even though some companies mistakenly think that the brand is at the center of those communities, and not the members. Networking communities like LinkedIn and Facebook are clearly communities that have members at their core. Many developer communities in the tech world also fall within this category.

Lastly there are transaction-centric communities. eBay and Amazon.com come to mind when talking about those communities.

Of course, all of those communities have content, and all have members, and most have transactions - it’s just that they are more heavily tilted towards one of the community ingredients than another. And in some cases communities with the same end-goal can take on very different forms. Brand communities could also be set up as content-centric communities or as transaction-centric communities. Customer support communities or developer communities could also be started as content-centric communities - and perhaps evolve into transaction-centric communities.

The reason it’s important to understand the different types of communities is because of the requirements to get them started. You cannot start a member-centric or a transaction-based community without a critical mass of members or offerings - something most companies do not have. Without a critical mass of members or offerings, there will not be enough content generated (i.e., customer reviews, etc.) in order to make the interaction for the community members valuable. So if you have a total potential number of users ranging in the hundreds, you will never be able to set up a vibrant customer support community as Intuit. Microsoft or Apple can. That does not mean that you cannot leverage customer support communities, it means that you have to start them up as content-driven communities. Instead of relying on the community members to re-write your manuals and to create meaningful FAQs, you may have to hire a few people to kick-start the process on a for-hire basis.

While the economics of increasing returns may be somewhat diminished with a smaller number of members and some hired guns, they are still very much present. Most likely they will handily beat the economics of diminishing returns that most business practitioners face when trying to interact with customers and prospects in the old-fashioned interrupt-driven way.

[While I am not a big believer in cross-posting, I thought it would be worth cross-posting this post with emergence marketing as I had some other posts on community building earlier]

Some of these thoughts have been triggered by the many conversations I have had the pleasure to have as part of the Community Effectiveness Study that we are conducting with Deloitte and the Society of New Communications Research. Some of the preliminary results of this study will be discussed at the Society for New Communications Research Forum in two weeks and more detailed results will be unveiled at the Community 2.0 Conference in May.

As a senior research fellow with the Society for New Communications Research I can extend a special discount to some of my friends who want to attend the forum. Email me if you want to attend at a special rate (francois [at] emergencemarketing [dot] com). Note that there are also 1/2 day flex passes available for those who can’t attend the full event.