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Rizwan Tayabali - Digital Strategy and Agile Blog

NOTE: My blog has now moved to HTTP://WWW.SOCIALEFFECT.ORG with all new content aggregated at HTTP://RIZWANTAYABALI.INFO - I'm writing about social business, change and human transformation, customer centricity and organisational design.

It's a small world: Natural networks and customer engagement

Post Summary: With the improvements in analytics, we can now really begin to understand and map customer networks to identify the ‘hubs’ or key people that we should be engaging with and turn them into advocates to drive word of mouth business. With the ubiquity and popularity of blogs, reviews and the web, this area is turning into a marketing tool that should be taken extremely seriously. // 

To start with, here are three books you should read

  1. Small World - Mark Buchanan
  2. Linked: How Everything Is Connected to Everything Else and What It Means for Business, Science, and Everyday Life - Albert-Laszlo Barabasi
  3. Tipping Point – Malcolm Gladwell

Why? Because they are essentially about natural networks, degrees of separation, hubs, randomness and the importance of weak ties between elements in these networks. All jargon you say? Well maybe, but society is a natural network and your customers belong to it.

Why now? Because with the improvements in business intelligence and analytics modelling, we can now really begin to understand, map customer networks and identify the ‘hubs’ or key people that we should be engaging with and turn them into advocates to drive word of mouth business. With the ubiquity and popularity of blogs, reviews and the web, this area is turning into a marketing tool that should be taken extremely seriously.

Complex networks like those involving people, although seemingly random, surprisingly do actually follow patterns that can be mapped, and essentially fall into two categories – small-world networks and scale free networks. If networks were linear i.e. A knows B, and B knows C, and so on... the link between A and Z would involve 26 steps; and any knowledge, opinion or influence Z might have would be pretty much inaccessible to A.

Small world networks however essentially describe a pattern of interconnectedness that involves a degree of randomness, i.e. maybe B also knows M and X, and maybe X knows Z, which dramatically improves the connectedness between A and Z. The originally studies in this area were carried out by Stanley Milgram who was responsible for identifying the phenomenon we now know as “6 degrees of separation”. Yes, it’s not a myth!

However real world natural networks do not work as simplistically as this. They have another property that’s even more crucial, known as preferential attachment. Preferential attachment is an example of a positive feedback cycle where initially random variations are automatically reinforced, thus greatly magnifying differences. In popular speak this is the 'Matthew effect' i.e. the rich get richer! What this means is that the more connected something is, the more likely it is to gain new connections. In a social network this means that any new unconnected member is more likely to become acquainted with more visible members than with relative unknowns. These ‘visible’ elements are effectively hubs with lots of connections and therefore influence, and these networks show a pattern called the ‘Power law’, which basically means that doubling the number of hubs reduces the degrees of separation between elements in the network by a constant; in this case, your customers.

In other words all your customers are connected to one other, and although we all know this, so far I’ve not heard of any company that’s really using business intelligence to leverage this connectivity for market advantage.

Customer relationship management is all about understanding individual customers and we’ve been doing this for years, to limited success. Personally I reckon this is because we aren’t thinking outside the box and simply doing the obvious. Social network analysis on the other hand is based on the view that the attributes of individuals are less important than their relationships and ties with other actors within the network, and it is by exploiting these that you can really begin to focus on who your important customers are.

As a business your customers are currently most likely to be a random/exponential social network, but you want it to be a scale free network with hubs that positively reinforce your service or product. Now that we’re talking specifically about networks of people, this is where Tipping Point theory comes in. The tipping point is a concept related to collective behaviour and the fact that any behaviour pattern has a threshold at which point there is a sudden, marked and significant change. Tipping points are what makes marketing go viral; turning products into the epidemic type fads that companies dream about, but that’s a concept for another post.

What’s relevant about Gladwell’s book in terms of networks and business intelligence, however, is that he identifies not only the importance of word of mouth and social interaction in the take-up of ideas, products and services, but also three key types of individual that are needed to achieve this - Connectors, Mavens and Salespersons. I’m not going to go into detail here, but Connectors are people with huge numbers of network links, Mavens are people who research everything before they buy, compare and search out all the best deals, and Salespersons are the persuaders i.e. the ones who find a good or deal and have the drive and power to convince others and sell their ideas. In the real world, Connectors need charm and personality, but I’d argue that online it is different. Connectedness is much easier and more democratic online as people are already well connected through search engines. The really connected ones then are those who not only share their views, but those whose content or opinion is considered valuable by others and visited frequently, added to favourites and followed through RSS. These then, are your hubs. The ideal version are a personality combination of Maven and Salesperson, and if you are a company, your dream hub is someone is also well connected offline, buys a lot of your products, is positive about them and willing to share their views.

Your first step is then to set up mechanisms to identify these ideal hubs. Your second step is to focus on these people and try and get them evangelising about your business. In the bricks and mortar arena you have little hope of exploiting your customer networks because you have no easy way of getting your customers talking to each other. Your online channel however, presents the perfect opportunity.

The framework you will need in order to leverage the power of your customer network is to make sure your website provides easy user friendly opportunities for your customers to comment and review, possibly with profiles that display the sort of things they buy along with incentives for them to share this information. You will also need to procure and implement web analytics software to capture data and track customer behaviour and interaction. Finally if you’re a real future thinker you’ll probably want to invest in or develop network analytics software, employ some intelligent analysts who can both model your audience and help shift it from a random to a scale-free network, and of course build a forward thinking marketing department that can engage and increase the number of ‘hubs’ and turn them into your own personal evangelists.

Published Friday, October 19, 2007 6:11 PM by Rizwan.Tayabali

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Valdis said:

Some exmples of social network analysis applied to marketing & sales... http://www.orgnet.com/KOL.html http://www.orgnet.com/divided2.html http://www.orgnet.com/divided.html
October 20, 2007 2:39 PM

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About Rizwan.Tayabali

Background in business and management consulting. Current focus - Social Business and Social Enterprise.

Contact: http://rizwantayabali.info or email at rizwan dot tayabali at gmail dot com
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