Michael Wu, Ph.D. is Lithium's Principal Scientist of Analytics, digging into the complex dynamics of social interaction and group behavior in online communities and social networks.
Michael was voted a 2010 Influential Leader by CRM Magazine for his work on predictive social analytics and its application to Social CRM.He's a regular blogger on the Lithosphere's Building Community blog and previously wrote in the Analytic Science blog. You can follow him on Twitter at mich8elwu.
Last month I wrote a couple of posts exploring the strengths and weaknesses of Facebook (FB) from a relationship perspective. Although these posts were meant to highlight some of the proper and improper use of FB for businesses, the discussions are still rather scientific. They use many network concepts derived from social network analysis, and many sociology and social anthropology ideas. Today, I will try hard to paint a coherent picture with the scientific findings from these two posts for brands and businesses.
Last time, we learned that the small world and navigability properties of our offline social network make it a very efficient medium for spreading relevant information. The structural properties of our real social network enabled a very nice balance between:
a). Keeping the information content relevant
b). Reaching a wide audience rapidly
Because FB tries to mimic our real-world social network, it inherits these properties from our social network. For example, the average path length for a random pair of persons on FB is 5.73. This is very close to the well known claim from six degrees of separation, which is a result initially derived from our offline social network. The balance between relevance and reach is why FB fan page is so great for driving awareness and creating interests for brands and businesses.
We can compare this to another popular social media that also enables social networking: Twitter. The average path length between a random pair of persons on Twitter is 4.12. This means Twitter’s follow network is a smaller world, and people on Twitter are more closely connected with only four degrees of separation. A positive side effect of this network structure is that information spreads faster. But the negative side effect is that the information is also very noisy and less relevant. Many marketers focus on total reach and the velocity of reach, because they are easier to measure, but relevance is crucial. Just remember this: regardless of how fast the information spreads, if it is irrelevant, people will treat it as spam and ignore it.
Clearly fan pages on FB are very effective at driving the unaware consumer into the shallow upper layers of the purchase funnel (Figure 1). The interesting question is can the fan pages push these consumers deeper into the funnel where it is more profitable for businesses. There are several factors suggesting that FB won’t be able to push most of their fan very deep down the purchase funnel.
I must clarify that this doesn’t mean that fan pages do not lead to any purchase action. The purchase funnel is called a funnel because it has natural dynamics that channels consumer through their decision journey (i.e. AIDA – awareness, interest, desire, and action). After the initial draw into the early stages of the funnel, fan pages simply don’t contribute much more to the funnel’s natural conversion dynamics. However, by virtue of increasing the number of aware consumers, brands will benefit from a proportionally greater number of conversions at the other end of the funnel. In other words, simply by fishing where the fish are (with a fan page), brands will end up with more fish.
Communities are Narrower but Deeper
From our cyber anthropology discussion, we learned that there are really only two main categories of social media:
Moreover, these two social structures serve complementary roles in the social history of mankind. (If you are curious about this topic, please see the mini-series on cyber anthropology.) Interestingly, online community also has a complementary role in consumer’s decision journey as we shall see below.
Like a fan page, a brand-sponsored community consists of interest focused discussions around a brand and its products/services. In fact, a fan page is really a community on the FB platform, because it has all of the characteristic traits of a community as we discussed in Community vs. Social Network. However, brand-sponsored communities are never on FB, so they do not suffer from the problems that arise from the attention economy and the conflicting social spheres. Therefore, these communities can engage and interact with their members at a much deeper level to build meaningful relationships with customers.
One of the greatest differences between a community and a fan page is that a healthy and vibrant community cultivates superusers (a.k.a. advocates, evangelists, influencers, and many other names). Superusers are typically a tiny fraction (less than 1%) of the community population, but they can generate up to 50% of the community content (see The 90-9-1 Rule in Reality). So basically these superusers keep the community running by answering questions, responding to new comments, and keeping the conversation alive. And they are doing all this for free. Because these superusers are usually not affiliated with the sponsoring brand, communities are often viewed as voices of the peer, where as fan pages are still viewed as voices of the brand.
Because a well-run community can leverage strength from an unpaid army of dedicated superusers, it is able to scale with the social web. That means the community will be able to address individual needs at the scale of the social web. For example, people can ask very specific questions and get tailor answers that address their specific needs. Notice that everyone can get this level of customized response. This makes the community extremely relevant, down to the single user level. Moreover, conversations in the community will often evolve a brand’s messaging and explore edge use-cases for its products/services. This often makes the products/services even more relevant and adoptable.
By providing objective answers from other customers to critical issues whenever a user wants it 24/7, communities can go much deeper down the purchase funnel and drive actions. However, communities are doing this at the expense of having a narrower reach (Figure 2). From another perspective, the narrower reach of communities is what allowed them to reach deeper into the funnel via high level of relevance and specificity. Furthermore, communities can continue to empower their customers after the purchase action with proper incentives and rewards. This is what cultivates superusers who made everything we discussed possible. So, contrary to a fan page strategy, which is to fish where the fish are, a community strategy involves farming our own fishers, so they can catch fish for us.
So what have we learned today? I have applied the sociological principles we learned to show that fan pages on FB and communities actually have complementary roles for businesses. They act on different stages of the customer decision journey.
A FB fan page has a very wide reach, and it is great for driving awareness and creating interest. It mainly works on the shallow upper layers of the purchase funnel, which correspond to the early stages of a consumer’s decision journey.
A community has a narrower reach, but it can drive more actions and conversions. It can reach much deeper into the bottom layers of purchase funnel, so it can affect both the early and later stages of a consumer’s decision journey.
If you are only fishing where the fish are (e.g. by having a FB fan page), maybe you should start thinking about farming your own fishers (via a community). That is another way to get a steady stream of fish in the long run.
OK, this concludes our sociological discussions about relationships and its applications to business. Next time, I like to start something new. I haven't decided what I'm going to write about yet, so if you like to explore any topic scientifically, please let me know. In the mean time, please let me know if you have any questions or comments. As usual, discussions of any kind are always welcome. See you next time.