[Webcast Q&A 2-17-10] Dr. Wu and Professor Libai, could you explain the research further? [Customer Community - Holy Grail for WOM] [ Edited ]

[IngridS]

Attendee #2:
(Repeated from earlier) I would like to learn a little more about "seeding" that Professor Libai discussed.  How does one go about doing that without "leading the witness" etc.?

Attendee #14:
To what degree do the models apply to b2b relationships? Is it a false assumption that this science is primarily a consumer mkts system?

Attendee #15:
Is it possible to have a customer community with all big red dots with very little or no orange and yellow?

Attendee #16:
How do you account for individuals belonging to multiple communities that may overlap?

Attendee #17:
Customer acquisition: how and for whom can you conclude that he/she would otherwise have bought the competing brand? By qualitative market research?  That would be like in the old mobno-directional, mass marketing world. 

Attendee #18:
Do you see any effect of network structure and properties on the diffusion process (word of mouth marketing)?

Attendee #19:
Can you provide some examples of how to measure ROI from communities? For example, how do we measure communities’ impact on transactional conversion rates?

Attendee #20:
Where can we get more information on how exactly the data is collected and how we calculate and measured the ROI?

Attendee #21:
I agree ROI can be quantified after the fact, but do you see businesses assuming that the ROI that another company got will be what they themselves will achieve? What about businesses who need to see the case "before" they invest? What can they look at to give them any sense of how this investment will pay off?

Attendee #22:
How do you close tracking gap between exposed to the WOM and people buying in the B2C world, for example a)person watching a movie, b) buying a car c) buying an insurance on a website d)buying insurance from insurance salesman.  How do you attribute those sales to WOM exposure/participation?

Attendee #9:
(Repeated from earlier) To be effective, should WOM be part of a marketing mix?  When resources are limited, can you ever use WOM as the exclusive tool to sell products?  What about selling tickets to theatre productions that have limited runs?  Can you effectively (i.e., consistently) sell out the house without supplementing WOM with print and direct mail advertising?

[MikeW Lithium Guru]

[Question From Attendee #15]
Is it possible to have a customer community with all big red dots with very little or no orange and yellow?

[Response]

Possible? YES, but realistically, NO. You can construct an artificial community that where everyone talks to everyone else in equal amount, then you can have a community with all big red dots. But that is not a realistic community. I’ve never seen one in all 200+ of Lithium’s communities.

However, it is the case that there are usually very small amount of yellow and orange dots. Superusers (influencers) usually constitute a very tiny fraction of the community population, usually less than 1%.

[MikeW Lithium Guru]

[Question From Attendee #18]

Do you see any effect of network structure and properties on the diffusion process (word of mouth marketing)?

[Response]

Yes, the structure of the network determines to a large degree the speed and pervasiveness of the diffusion. Network structure also determines who ends up being the influencer. I’ve talk about Google’s PageRank(TM) algorithm in my talk, but there are actually many other network centrality measures that we use to score community members.

If you are interested on this topic, I've written a blog on the topic of influencers here.

[MikeW Lithium Guru]

Attendee #14 Question:
To what degree do the models apply to b2b relationships? Is it a false assumption that this science is primarily a consumer mkts system?

Response:
Based on the fact that the structure of communication within a B2B community is not that different from that of a B2C community, I would say that the numerical results will not differ much. For example, if you seed a WOM program with influencers, you gain 45% more benefit than if you seed randomly.

However, there is one difference between B2B and B2C communities. And that is the rate of communication tends to be a slower for B2B communities. So it may take longer for WOM programs in B2B communities to realize that 45% gain over a random seeding WOM program. But the end result would still be 45%.

As professor Libai mentioned, even though we know much more about B2C, the basic dynamics of WOM in B2B do not differ much. Because ultimately WOM is a phenomenon between people, and at the end of the day people are people.

[MikeW Lithium Guru]

Attendee #22 Question:
How do you close tracking gap between exposed to the WOM and people buying in the B2C world, for example a)person watching a movie, b) buying a car c) buying an insurance on a website d)buying insurance from insurance salesman.  How do you attribute those sales to WOM exposure/participation?

Response:

As I mentioned in my presentation, WOM in the real world is virtually impossible to measure. Even if it were made possible to track all WOM, its effects are hard to isolate. That is why we study WOM in an online community, where WOM is carefully tracked and measured. And using the impact upon removal methodology, we can begin to quantify the effect of WOM. It does take a leap of faith to generalize what we find in the community to the real world. But given that this problem in the real world (as you described in your question) is intractable; our result offers a conservative estimate, as it is still real people interacting, but it is limited to only the conversations within the online community.

[MikeW Lithium Guru]

Attendee #21 Question:
I agree ROI can be quantified after the fact, but do you see businesses assuming that the ROI that another company got will be what they themselves will achieve? What about businesses who need to see the case "before" they invest? What can they look at to give them any sense of how this investment will pay off?

Response:
I have not seen many businesses looking at other company’s ROI and expect that to be what they can achieve. It is more often the case that they look at their past ROI, and use that as a benchmark.

I’m afraid I must say that for companies who must see the case before they invest, they will miss the huge first mover advantage that Prof Libai mentioned. Everything has a risk and everything has a price. And the price that one must pay to get the first mover advantage of 107% gain is to take the risk to be the first in the industry. Although Lithium has not penetrated every industry, and in some case there are no other examples to look to, we have accumulated best practices over 10 years of our business operation to mitigate the risk of failure to a minimum.