The Social CRM Virtual Summit is almost upon us - and I am getting ready to take part in two expert chat sessions tomorrow on the Science of Social Analytics, and How you can build Brand Equity through community. This last topic is particularly relevant as last week we published a whitepaper on the value of using your customer network for word-of-mouth (WOM) marketing. This is joint research I conducted with renowned professors in the field of marketing science, including:

1. Barak Libai, MIT Sloan School of Management and the Recanati School of Business in Tel Aviv
2. Eitan Muller, NYU Stern School of Business and the Recanati School
3. Renana Peres, The Wharton School, UPenn and Hebrew University of Jerusalem

This whitepaper is a particularly hot topic, so I will be joining our VP of Product Marketing, Phil Soffer, and chatting on the topic of WOM at 6:15am and 11:15am PST - I look forward to talking with you.

That leads me into my topic for today's post. As I've alluded in previous blog posts, the value of WOM is not particularly tangible. Estimating the ROI on WOM is nontrivial and it is still a research topic for academics.

In a network of hundreds of thousands of customers, the value of WOM really comes down to how we estimate a customer's lifetime value with the effect of WOM and without it. Let's consider the Lithosphere community as an example.

If I told PaulGi about Lithium's mobile community product and he subsequently buys it, then a small fraction of the value that Lithium gains from PaulGi's purchase should be attributed to my WOM interaction. However, if I didn't tell PaulGi about the product, maybe ScottD could have told him about it. Then that small fraction of WOM value should now be attributed to ScottD, instead of me. To complicate things, maybe we both told him about it, and who's to say that people I've spoken with listen to me instead of Scott. So the conundrum is, how should we estimate my WOM value to Lithium?

Working with academics, we use a simulation methodology, which I will refer to as "impact upon removal." In essence, my WOM value to Lithium is the value that Lithium would have lost if I did not tell anyone about their product. So a user's WOM value is the value lost if we blocked all of his interaction with other community members, essentially remove him from the social network. It's like the saying that "You don't really know the value of someone until you lose him/her." In a nutshell, this technique is what allowed us to study the effect of WOM in a customer network.

Now that you know some of insights to our research result, I hope it will encourage you to find out more. If you are intellectually inclined, you can get the details from our whitepaper. Better yet, come by and ask me question during the Virtual Summit tomorrow. You can still register at http://www.bit.ly/vscrmreg. I hope to see you 'virtually' and talk to you tomorrow!

Last time I talked about what got me interested in social analytics and what is the big community topic that is currently taking up most of my brain cycles. This time, let me give you a bit more detail about my current projects at Lithium Lab.

My research at Lithium focuses on a couple of key areas. First, since a community is all about the people, the first area of research focuses on understanding user behaviors. The goal of this research is to understand the complex interplay between different groups of users through social network analysis (see figure below) and discover the dynamics that drives a healthy and successful community.

Currently I am particularly interested in two groups of users

1. the superusers,
2. and the lurkers.

Superusers are obviously interesting because they contribute so much and bring so much value to the community. But why do they contribute? What is their incentive? No one comes to the community as a superuser. Yet, in every community, we observe the rapid emergence of influential superusers. Can we accurately predict who will become a superuser soon after they join the community?

Lurkers are interesting in their ownright because there are so many of them. The majority of the audience - up to 90% of the users - could be lurking. What keeps them engaged even though they don't participate? Can we incent lurkers to change their behavior and start to participate and move up the rank ladder, maybe ultimately becoming a superuser?  That is surely a holy grail for community managers.

Another area of focus is research which aims to derive predictive models for business value. The goal of this research is to discover all the mechanisms where the Lithium platform can bring value and then quantify the actual value they bring to the business. There are many mechanisms that our community platform and services can bring value to our client. Just to name a few, for example: call deflections, word of mouth (WOM), collaborative innovation, crowd sourcing, even lurking can bring certain values to our client. Some of these mechanisms, such as call deflection, are well understood and their ROI are readily quantifiable. But the value of WOM, and lurking are less tangible.

Currently I am working a model that quantifies the value of WOM in a community. This is along the road to quantifying the value of a superuser. Superusers actually come in many flavors (product experts, advocates, brand evangelists, opinion leaders, etc) and each type of superusers brings value through different mechanisms. More importantly, different community needs a different mix of superusers. For example, a support community probably needs a lot of product experts and some opinion leaders; where as a marketing community would need more advocates and brand evangelists. What is the optimal mixture of superusers for any given community?

With all that said, I hope you are excited? I certainly am. I am hoping this will give you a little more context for the live-chat at the Social CRM Virtual Summit. I look forward to seeing you there and chatting with you on November 11th. Remember if you haven't registered for the Virtual Summit, I highly recommend it - and you can sign up here.

Lithium is hosting the Social CRM Virtual Summit on Nov 11, 2009 (you can sign up here), and I was asked to hold a live-chat with the audience at the summit. This will be a great opportunity for me to talk to practitioners and get a sense of what kinds of analytics people want from their communities. To get the conversation started, let me tell you a little bit about what got me into social analytics and what I am working on now.

As some of you know, I was a computational neuroscientist (my bio is here). So what got me interested in social analytics? Honestly, it's all about the data! As a SaaS company, Lithium has recorded a huge data set over the 10 years of its business operation. The data at Lithium is very rich and diverse. Besides the 200+ metrics that Lithium records, there are also loads of conversation data between real people. This is what got me excited about social analytics.

You may ask why I didn't go to some place like Google or Facebook then? Certainly they have also collected a lot of social network data, probably a lot more than Lithium if we are talking about sheer storage volume. But as a statistician, we care about sample size. Facebook may have the biggest social network of 300 millions users, but it is only one network. Lithium has hundreds and the number is growing! This enables benchmarking and cross sectional studies that are not possible anywhere else. It is almost as if you can play god and start the network over and over again hundreds of times with different initial conditions. In statistics terms, this is what gives statistical powers to any inferences we make about the community.

Because Lithium has such a rich set of conversation data, we can also glean much insight from understanding these conversations using advance text analysis tools from machine learning. Because the conversations in a community are highly relevant to the sponsoring company, we do not need to worry about information retrieval and deal with the tradeoff between precision and recall. So we can focus our computing power on understanding the content of the conversation. Personally, I believe this will revolutionize the CRM industry, and this is the topic that I am most excited about.

By listening and comprehending the conversation of their customers, companies can understand customer needs and serve them better. On the flip side, customers can truly make their voices heard! CRM would be much more than an automation system of business processes on top of a database of customers' name, contact, when, what, and where they bought in the past. CRM system would know, for example, is a customer satisfied about the product? Do they like all the features? Which feature didn't they like? What problem did they have when using the product? Are they considering switching to a different brand? Are they considering your brand because of the bad experience with another brand? These are the kinds of insight we can reveal by understanding the conversation within the community.

So now that you know what got me into social analytics and what's in my mind, next week let's can get a little more detail about my research at Lithium Lab and what I am currently working on. Stay tuned at mich8elwu.