Viral Loops: From Tupperware to Ning and Beyond

In early October Adam Penenberg’s new book will be released Viral Loop: From Facebook to Twitter How Today’s Smartest Businesses Growth Themselves. While I’m a bit envious that he’s published a book on a topic that has been the subject of so many of my conversations with entrepreneurs in the past year, he first covered the topic in April 2008 for Fast Company in an astute article on the growth of Ning.

While I haven’t read an early preview of the book, here’s why I’m excited. In my conversations with CEOs of companies that sell both virtual and physical products, tough times have created a very basic need to get close to their customers, to develop exceptional products that deliver true value, so consumers are willing to part with their declining discretionary income. The exuberance of astronomical valuations is gone, and leaders are more likely to be out in the field building business rather than in the corner office. Build a fantastic product that delights someone, and that person is likely to recommend it to a friend. What is viral, fundamentally? It is something that is passed along, exponentially, so that one person tells two people, who each tell two more, etc. It’s a process as old as fire itself, elegantly accelerated by the internet.

As Marc Andreesen states in Fast Company’s feature on Ning, “a viral loop is something that incorporates virality into the function of the product.” If you haven’t heard of Ning, the most familiar illustrative example today is Facebook, where the product only has value if you invite others to join you, then those who have joined from your invitation create their own networks by inviting more of their friends. A virtuous cycle of growth. Tupperware and Avon are examples in the physical world, where one purchases the products from a friend or acquaintance at an event, yet also has the opportunity to become a rep and sell the items to their own networks.

What’s missing from this discussion of viral loops? While most discussion to date has focused on the growth mechanism of these networks, few have articulated the benefits consumers receive from being part of them. The Tupperware parties of the 60′s and 70′s weren’t just about creating financial independence among housewives, the events built and supported social relationships and connection, and fostered esteem as reps were engaged in new work. All of these psychological benefits are components of happiness and well-being, according to icons like Maslow and respected psychologist Diener. Suddenly passing along Smirnoff’s Tea Party video doesn’t seem so trivial.

How can companies that create physical goods, such as beverages or books, capitalize on the virtuous circle know as viral loops? While I don’t have all the answers, I’ll suggest it’s not just about the utility and connection between a consumer and a product, but the psychological benefits and rewards in sharing insight, expertise, and being connected within their social circle. While a bottle of Bailey’s doesn’t come with a “pass along” button, enabling a night of Bailey’s tasting parties in homes with new cocktail recipes creates an opportunity for connection, sharing, and memories among friends.

What do you think of viral loops?

Job Opening or Savvy Marketing Campaign?

Image from The Best Job in the World Campaign

On May 5th, amid a flurry of press coverage a 34 year-old British man won “the best job in the world”: the opportunity to live on a small island off Australia and get paid to feed the fish and blog about the experience. In June the masterminds behind the dream job campaign, Australian agency CumminsNitro, scooped up three Grand Prix Lion awards for direct, PR, and interactive results that drove awareness of the islands off the Great Barrier Reef for the Queensland Tourism Bureau. The stats are quite stunning: 36,600 entries from aspirational experience-seekers around the globe, an estimated $100M in press coverage in 8 target countries, and nearly 7M visits to the website islandreefjob.com.

The campaign kicked off with job listings in print classifieds and on sites such as monster.com and glossy printed and interactive kits to press in the target countries. In a climate of job loss and dire news, the story spread like wildfire among hungry news outlets: “Looking for a job? You may want to consider a move to Australia!” And the imagination of the target audience was piqued, dreaming of a paid year spent on white sandy beaches. While the contest is over, the engagement continues with weekly blog posts by the new “island caretaker” that are punctuated by captivating video and flickr streams. Ultimately the measure of any successful tourism campaign is traffic to the destination, and Fast Company reports that Australian air carrier Virgin Blue launched a new flight to the featured island to keep pace with demand.

This spring a small winery in Sonoma County named Murphy-Goode launched a contest targeted at another genre of dream job seeker: “Wine Country Lifestyle Correspondent.” For six months the lucky winner will: “report on the cool lifestyle of Sonoma County Wine Country and, of course, tell people what you’re learning about winemaking” using social media. Like the island campaign, applicants are required to submit a 60 second video application, and entries have flooded the web. In fact, when googling Murphy Goode hundreds of applicant sites appear, including uber-enthusiastic entrants who have purchased url variations of the company’s brand name to host their videos. (A quality problem?) The campaign took off on blogs, Facebook, and Twitter and a winner will be announced on the site areallygoodjob.com on July 21st.

A few thoughts on why these campaigns will ultimately drive revenue:

Customers not just influencers. The concept drove discussion among groups most likely to be prospective customers. Not generic, faceless groups we so often call “bloggers” and “twitterers” to drive coverage (although the target obviously engaged in both) but well-defined groups of prospective island visitors (“global experience seekers”) and wine drinkers/aficianados who are likely to be purchase the products as well as influence friends.
Brand engagement was built into the contest. How many of us wish our customers spent time pouring over our websites and pondering why our brands were perfect for them? Entrants were required to engage with the companies/brands to create video entries. To improve their chances of winning, they researched the island and winery and spent time creating a pitch on why they would be a perfect fit. After entering, they were well-educated consumers who were likely to think positively about the brand they just invested several hours in. The long duration of the contests (3 months) also assured entrants were likely to think about the brand, imagine winning, and tell their friends as they waited for the final result.
The concept struck a powerful chord due to cultural trends. The best marketing campaigns resonate powerfully because they connect with the cultural psyche at a moment in time. During the internet boom of the late 90′s, a job on an island or winery may not have driven incredible press coverage while twenty-somethings became paper millionaires after their companies went public. However in a time of record unemployment and financial uncertainty, a “paid dream job” captured our imagination in a way a “year-long dream vacation” could not.

Come across another job-opening as marketing campaign? Think the trend will continue? Add a comment below.

The Rubber Duck: Driving Talkable Moments in Your Consumer Experience

This week I’m going to dodge the Oprah/Twitter hype and unfortunate Dominos incident in favor of a little reminiscing. In 2001 I had the pleasure of sitting in on a talk given by Professor Bernd Schmitt as a prospective student at Columbia University’s Graduate School of Business. He is known for his expertise in experiential marketing, and was sharing the story of an upscale hotel chain that placed rubber ducks in guest bathtubs as a delightful touch to make the stay memorable. The ducks then traveled home with the guests as a reminder of their stay at the hotel, a daily visible cue to return.

Recently I was reminded of this example when asked if companies can truly harness word of mouth as a marketing tool. In a prior post I mentioned that customer satisfaction does not predictably drive word of mouth: customer delight does. For many of us, delight seems a bit ethereal.Savvy brands engineer or amplify delightful “talkable” moments in their customer experience to drive word of mouth. What’s a talkable moment?

The Colonnade Hotel uses rubber ducks to drive word of mouth. What's your duck?

Take a hint from your consumers. How do they describe you to a friend? At the Colonnade Hotel, many guests returned from their pleasing stay and mentioned the unusual rubber duck to their friends. Unfortunately, or perhaps fortunately for rubber duck aficionados, this was copied widely and became less noteworthy. For Virgin Atlantic’s business class passengers, flyers return raving about the posh and entirely unexpected Heathrow Clubhouse with a spa pool. Do many flyers use the pool? No. But it certainly drives word of mouth!

What are triggers of discussion? Let’s use Facebook as an example. I was lunching with a colleague who had just returned from a reunion with her best friends from camp. They lost touch 20 years ago and found each other on Facebook. After hearing her story, I was similarly inspired to track down my best friend from camp, and proceeded to barrage anyone in my vicinity with the story. Was I likely to spontaneously articulate that I find Facebook rewarding because it allows me to connect more deeply with the people and interests in my life? No. Meeting my best friend from camp for drinks thanks to Facebook? Very easy to relate. And often led to a more in-depth conversation on why someone should join.

Amplifying. Can you guarantee that your potentially talkable moments will work predictably on everyone? Well, no. But you can use the insight to increase the odds that each consumer experiences that potentially talkable moment, and measure the outcome. Walk into the Virgin Atlantic Clubhouse and you’re greeted by a concierge who will give first-timers a tour of the amenities. Hear a few heart-warming stories in the press about reunions driven by Facebook? What if users were asked to update their status with the most interesting person they connected with? You too may be inspired to give it a go and talk about it.

So, what’s your duck?

A word about word of mouth

Most marketers agree that positive word of mouth is an important tool to drive growth. Recent studies underscore this importance: An April 2008 study by Zenith Optimedia found that recommendations from family and friends trumped all other customer touchpoints in influencing purchasing behavior. Not surprisingly, social network users are three times as likely to trust their friends and peers rather than advertising when making purchase decisions. However many misconceptions exist. Let’s debunk a few:

1. Your most valuable customers are your most passionate advocates. Logic would follow that your most loyal and lucrative customers are the most satisfied, and therefore would be most likely to recommend. However a 2007 study by V. Kumar and colleagues published in the Harvard Business Review discovered that customers with the highest lifetime value were not the most likely to refer. Instead, a customer’s referral value (the value of the revenue they generate through recommendation) is not significantly related to their traditional LTV. The authors submit that true customer value is a combination of LTV and CRV, and provide examples in Telecom and Financial Services in which their highest tier customers are actually less valuable than a lower-tier customer with high referral value. Kumar confirmed via email that they’ve replicated the findings across a broad array of industries.

2. Customer satisfaction drives WOM.High customer satisfaction ratings do not guarantee word of mouth. As with many human behaviors, eliciting the action requires a trigger. In this case, the disconfirmation of expectations is most likely to result in recommending or dissuading. At Virgin we often used the phrase “surprise and delight,” and in fact both the element of surprise and delight are necessary conditions to drive positive WOM. If you’re in a category with generally high customer satisfaction, such as commercial banking (pre-2009) and e-commerce, it is more challenging to create an experience which defies customer expectations positively. In categories with low satisfaction, such as airlines in the 1990′s, Jet Blue defied customer expectations of the category by offering friendly service and in-flight TVs. This delta between expectations of the category and actual experience was more likely to result in word of mouth.

3. All word of mouth is equal. I’ve attended several meetings over the years where the ambiguous goal “drive WOM” was uttered. In fact, the type of referrer matters. According to a study by Yankelovich, consumers trust friends above experts in product purchases. 65% trust friends, 27% trust experts, and a mere 8% reported trusting a celebrity. There is some variance by category, as studies have found consumers are more likely to rely on expert opinion in technology more so than other categories.

So, a few questions:
1. Do you truly know who your referrers are?
2. Have you designed industry-defying moments into your customer experience? Investing in a memorable positive point of difference may have higher returns than end-to-end “OK” for both products and services.

Click on the word “comment” below to share your thoughts. Next week: profiles of a few exciting new companies that enable word of mouth.

My nomination of the latest jargon we can live without:trimessaging.