By Ran Shaul, Founder of Pursway.
Marketing chiefs have entered the new decade facing many of the same challenges they’ve always faced. Short term, they need to hold on to existing customers (i.e., minimize customer churn) while attracting new customers and innovating with new products and services.
At the same time, they need to look more strategically at maximizing customer lifetime value and creating more sustainable streams of revenue and profit.
But there are critical new challenges as well. Consumers have increasingly taken control of the buying process.
With new powers at their disposal, consumers are simply tuning out most of the marketing messages pushed at them by fast forwarding through television ads, joining “do not call” lists, and ignoring direct mail and email.
The reality is that the way most companies do marketing simply does not connect with the way most people learn about new products and make decisions on where to shop and what to buy.
As numerous studies have documented, most people buy based on the conversation and recommendations of trusted friends, family members, colleagues, and, increasingly, online influencers.
The “consumer decision journey” has changed dramatically in recent years, according to new research from McKinsey.
Examining the purchase decisions of almost 20,000 consumers in five industries globally, McKinsey concluded that in the active consideration stage of buying, “consumer-driven marketing activities, such as Internet reviews and word-of-mouth recommendations from friends and family,” are twice as important as company-driven marketing.
The Challenges of Influencer Marketing
If Influencer Marketing is so great, why isn’t every company doing it?
For all the talk about influence networks, viral marketing, and word of mouth, the reality is that it’s not easy to identify the true influencers for specific customers, never mind figuring out how to connect with these influencers once you’ve identified them.
A few approaches to Influencer Marketing are:
1. Focus on celebrities and other figures with broad popular awareness and credibility.
This strategy has some value in certain markets, but it is extremely difficult to control, much less measure. Moreover, there is little evidence that celebrities influence purchase behavior in any widespread way.
2. Give special attention to those customers most likely to recommend your products and services.
This strategy can be effective, but it often relies on annual or semiannual surveys, so time to market with the results is extremely slow. Moreover, identifying advocates in general fails to take into the account the reality that influence varies greatly from product to product and service to service. Advocates for the company in general might have little influence on products and services in particular.
3. Digging into social media and social networks.
Some social network analysis initiatives are scanning thousands or millions of conversations and network linkages to identify the consumers with the most connections and conversations, who can then be targeted with special attention and offers.
This approach too has great promise, but limitations are also significant. For one thing, social media and online social networks still cover only a fraction of our personal and group interactions.
Even more important, recent work done in this area has demonstrated convincingly that the people with the largest networks and the loudest voices are not necessarily the most influential when it comes to actual purchase decisions.
Pursway’s work with a large European mobile operator, showed that only about 20% of the highly connected people were truly influential in driving purchase behavior and the customers who were actually the most influential in driving purchase behavior by other customers rarely showed up among the most connected.
Although Influencer Marketing has come a long way in a relatively short period, the primary approaches today still fail to accurately identify the most important influencers for specific products and services, take too long, are difficult to implement at scale, and are difficult to measure.
Changing the Game
Transcending these barriers, a new approach to Influencer Marketing is beginning to emerge, one that addresses the core challenges of accuracy, measurability, scale, and speed.
The new approach emphasizes four key principles:
Precisely identifying the individual customers with the most direct, everyday influence on purchase behavior for specific products and services, and doing so with a degree of confidence far beyond the limitations of earlier approaches
Conducting campaigns in ways that allow precision monitoring and measurement of financial impacts and results
Supporting Influencer Marketing at a strategic level by companies with millions of customers and tens to hundreds of millions of purchase transactions
Monitoring influence networks and interactions on a near-real time basis to enable rapid marketing response to positive and negative behavior by influence leaders
By addressing these core challenges in a new way, an Influencer Marketing Management (IMM) solution provides an opportunity to literally change the marketing game with orders of magnitude of improvements in marketing results.
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