The prevailing opinion is that social media is a free marketing channel that is good for sharing information but has little consequence on reputation and business results. It is important to distinguish between social media and social networking. Social media is content created by people using publishing technologies. Social networking is focused on building online communities with shared interests and activities. It is also important to understand how users engage in social communities. The 90-9-1 Principle of “participation inequality” applies here- 1 percent of people create content, 9 percent edit or modify that content, and 90 percent view the content without contributing.

There is some good news. Those CMOs who have adopted Social Media successfully have used carefully crafted strategies that are aligned with their corporate business plans to cover three broad areas: increasing employee engagement, engaging customers and prospects and strengthening the company’s reputation. CMOs must consider some important facts about Social Media:

Engage employees

Here are some surprising insights from the 2011 Arcus Employee Engagement Research Report. Only 20 percent of employees are engaged with their organizations, the remaining are actively disengaged. Moreover, managers rank internal communication problems as the top barrier to productivity. 55 percent of employees feel they work in silos and only 28 percent of employees say their companies are effective in communicating with them. Social media can help. Here are three steps you can take to address these gaps:

• Create a “You Ask, We Answer” Forum. A key tool used by CEOs to leverage social media is to open a highly transparent two-way communication channel with employees. A “You Ask, We Answer” forum hosted on the company’s Intranet will enable employees to post questions with an anonymous post option. The response time is important. A 24 hour turn around will increase employee confidence and also demonstrate that the channel is important to the management team. Mandating an answer to every question also reinforces the transparency of the channel. The benefits of the Intranet Q&A strategy includes a deeper understanding among employees of the corporate strategy, the challenges faced by the company and how employees can help with a shared decision making process.

• Recognize Performance. A second strategy is to use the Internal channel to recognize outstanding employee performance. A monthly recognition program with an outline of the case that led to the award can inspire employees to find new and innovative ways to solve problems.

• Empower employees to blog. The third strategy for the Intranet would be to encourage Employee blogs. This allows employees to share ideas, knowledge and solutions within the organization. A scan of these ideas may allow the company to tap into new strategies to increase client satisfaction and solve problems that may otherwise not be apparent. Employee blogs also allows quick insights into departments and issues such as gaps in employee development, leadership issues or product sales related challenges.

Engage customers and prospects

• Define your social networking strategy. A good strategy is focused on sharing useful content that is of interest to your network of customers, employees and partners. A good strategy will also allow you to identify success points in your social media plan and leverage information that can position your company as a leader and innovator. A key driver of the process is a continuous and ongoing stream of relevant information that we call a “drip strategy”.

• Engage your contacts. Most of us have a presence on LinkedIn, Twitter and Facebook. Few of us really understand how to leverage the platform. Leading social media users will tell you that it isn't about the number of connections, it is more about the quality of connections. A good gauge is to ask if your connections would recommend your company or your work. A higher percentage of recommenders means your social strategy is working harder for you.

• Foster a community. Your sites should promote active participation and foster a community as part of an enhanced shopping experience. This is facilitated by a high level of social interaction and consumer-driven content that support the shopping experience and deliver superior value to the customer. A community can be a valuable asset to help your customer support team solve problems quickly and efficiently. Fans of your company can connect directly with other customers and offer solutions that could strengthen customer satisfaction.

Strengthen your social commerce strategy

• Focus on destination branding. Making your brand a destination is likely to drive your social commerce strategy. Create a channel to listen to what your customers are saying and respond and act quickly to criticism. Our research shows that customers can be a valuable source of feedback on satisfaction drivers and their input can dramatically increase sales. The approach allows more informed decisions about social commerce strategies and improvement of the customer experience. A key measure of success is how many of your customers become your advocates.

• Monitor online conversations. It is critical to monitor in-market conversations about your brand and products. A better understanding of the tone of conversations can provide valuable indicators of the value your brand delivers to customers. A good social media strategy will include metrics that provide insights on activity, sentiment, share-of-market, and themes of online conversations. Thought leaders who are also prolific bloggers are closely monitored. With a sound impact measurement strategy, companies will be able to assess the return on social media investments and also offer benchmarks for ongoing social media activities. Companies can use analytics tools such as our Reputation Analysis and Management Tool for a real time, on-demand and in-depth understanding of the reputation of their brand on the Web. An advanced analytics tool searches, tags, and indexes topics on the Web. It can filter thousands of online content sites and identifies relevant brand and reputation information by applying discovery tools that interpret content trends and provide deeper visibility into impacts on strategies and sales.

• Leverage key social networking tools. Explore emerging trends in social media tools such as Widgets (portable carts (e.g., zazzle.com) and brand engagement (e.g., lemonade.com), social bridging (enable shoppers to log into e-commerce sites without a registration ID) and Mobile Social Networking Applications (allow users to access social networks from their smartphones). These cutting edge tools create seamless interfaces with customers and your brand. They encourage more frequent interaction and robust two way communication.

Benchmarking your social media strategy can provide surprising insights about where and how you need to recalibrate your approach. Email me for best practices from 1500 companies and viewpoints of CEOs on social media.

Merril Mascarenhas

A teaching moment for marketers

The Occupy movement is different and could potentially become a teaching moment for marketers. As you see in the video below, produced on the one month anniversary of Occupy Wall Street, most protesters don’t know where the movement is going or what it should achieve. And yet they are united by common themes and beliefs.

According to posts on Wikipedia, "The original protest began on September 17, 2011, and by October 9, similar demonstrations were either ongoing or had been held in 70 major cities and over 600 communities in the U.S. Internationally, other "Occupy" protests have modeled themselves after Occupy Wall Street, in over 900 cities worldwide.

A catchy 1% and 99% slogan certainly helps (My favourite- "The 1% have Addresses. The 99% have Messages"). There is even a claim that the protests were initiated by the Canadian activist group Adbusters.

Elevating the conversation

One lesson that resonates with me is the importance of elevating your conversation with consumers. Find a big theme that is above a specific need, want or desire. The theme represents a deep insight about a belief that needs to be unearthed. It is rare that campaigns dig that deep. Most focus on insights, benefits and product features. Our research indicates that campaign ideas that have withstood the test of time are based on basic beliefs that connect a group of consumers.

Merril Mascarenhas

Walter Isaacson wrote a 571-page biography of Jobs, which went on sale earlier this month. The book confirms what we know today: Jobs was focused on exploring new and interesting ways of doing things. There's even a Facebook page dedicated to WWSJD (What would Steve Jobs do?).

Here are three themes that marketers can use as guideposts when developing marketing strategies:

1. Get your thinking "clean to make it simple"

“Simple can be harder than complex. You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end.”

We often hear about the need to “keep it simple” in marketing campaigns. But most marketing strategies don’t follow this principle. For example, in product development today, the emphasis is on new variants instead of original product ideas. A twist on keeping it simple is to start with a simple concept and stay true to the original brand idea. Jobs summed it up really well- “it’s only by saying no that you can concentrate on the things that are really important”.

Steve Jobs told Fortune magazine in 2008, "Apple is a $30 billion company yet we've got less than 30 major products. I don't know if that's ever been done before". He went on to add:

"Certainly the great consumer electronics companies of the past had thousands of products. We tend to focus much more. People think focus means saying yes to the thing you've got to focus on. But that's not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I'm actually as proud of many of the things we haven't done as the things we have done. The clearest example was when we were pressured for years to do a PDA, and I realized one day that 90% of the people who use a PDA only take information out of it on the road. They don't put information into it. Pretty soon cell phones are going to do that, so the PDA market's going to get reduced to a fraction of its current size, and it won't really be sustainable. So we decided not to get into it. If we had gotten into it, we wouldn't have had the resources to do the iPod. We probably wouldn't have seen it coming.”

“A lot of times, people don’t know what they want until you show it to them.”

Eric Schmidt, Executive Chairman of Google and former Apple Board Member said in an article in Bloomberg Business Week, “One of the things about Steve is, he was always in the realm of possibility. There was a set of assumptions that Steve would make that were never crazy. They were just ahead of me.” He added, “he had a level of perception about feelings and emotions that was far beyond anything I’ve met in my entire life.”

At Arcus, we have found that the biggest insights and ideas come from observing and analyzing in real time how consumers interact with products in their daily lives. Jobs believed that technology can be a tool for individual definition and self-expression. A pink iPod is about much more than just listening to music. Simple insights can lead to great campaigns. This goes against conventional thinking about market research. Focus groups and quantitative research generate insights but these tools will never match the depth of understanding that observing feelings and emotions of people in real life situations can offer.

3. Anticipate surprising and completely new strategic directions

“Creativity is about connecting things.”

We live in a connected world. Interaction between brands and customers has never been more complex with so many touch points. However, some things never change. Good ideas are scarce. No matter how complex we think marketing has become, the most successful strategies tend to have a simple premise that captivates and delights audiences. Jobs' last advice to the new Chief Executive Officer of Apple Inc., Tim Cook, was to 'never ask what Steve would do'. He would suggest, ‘Just do what’s right’. He felt that followers tended to spend all their time thinking and talking about what someone else would do.

Merril Mascarenhas

Coca-Cola tested its Freestyle vending machines in 2009 and is rolling out the machines in the US this year. The machines offer consumers a touch-screen with an incredible 100+ different beverage choices ranging from Diet Cherry Coke to Dasani waters. Customers can even create their own combinations of flavours. Already, Coke lists a portfolio of more than 3,500 beverages, from diet and regular sparkling beverages to still beverages on its website.

In today’s mature markets, a popular strategy has been to take mass customization to the next level, to create highly personalized brand experiences for existing products. Coke has launched apps for social networks that allow consumers to create and name their own drinks. In the future, it may be possible for an app to create a bar code for a customized flavour that a vending machine can create.

Customization is driving collaborative consumption

The buzz word for C2C (Consumer to Consumer) commerce is 'collaborative consumption'. An example is Airbnb. Less than four years old since launch, the website provides accommodations in nearly 11,000 cities in 180 countries. According to Inc Magazine, Airbnb’s popularity has exploded recently, growing more than 800% last year. Airbnb reports it has booked 1.6 million night stays in other people’s homes to date. Airbnb allows its members to customize their vacaction accomodations based on a number of variables.

Five steps to deploy collaborative consumption

1. Explore surprising vectors of innovation of your products.
2. Define the relevance of these vectors. Which ones delight customers?
3. Create an experiential component to the brand. How will customers create unique experiences for themselves?
4. Create communication channels to allow customers to share ideas and innovations.
5. Stay true to the brand position. Look for innovations that reinforce the brand idea.

What other examples of mass customization are working for brands?

Masstige is in. Its prestige products available to the masses. Consumers want to connect emotionally with brands in categories where they expect quality, performance, and engagement. But in other categories that aren’t emotionally important, they become bargain hunters. For example, a passionate BMW driver will shop for store-brand groceries every weekend. Which one of these categories is your brand in?

A new emerging market segment called Masstige is growing at the expense of the premium segment in several product categories. Retail has seen a lot of activity in the Masstige space. 2008 and 2009 saw the introduction of new store concepts by the mainstream retailers, such as Murale by Shoppers Drug Mart and Oasis by Sears, while Sephora and Bath & Body Works continued their geographic expansion. Additionally, Yves Rocher introduced a new store concept that was well-received by customers.

This trend is notable in such products as skin and hair care, where Olay and TRESemmé positioned themselves directly against the premium segment, openly questioning the need to pay extra. There are many more successes - Coach persuaded women to buy $300 handbags when a $40 version from a value chain could have sufficed. Williams-Sonoma trained shoppers to covet a $50 stainless-steel hand-crank can opener, even though Wal-Mart sells a high-quality electric model for less than half the price.

The term Masstige was popularized by Michael Silverstein and Neil Fiske in their book Trading Up and their Harvard Business Review article "Luxury for the Masses".

Why is this trend important to senior marketers? Democratization of brands is strongly associated with higher market share and margins. It drives value and makes brands more resilient. Plotting your brand in the continuum of Masstige hierarchies can reveal new insights on how to optimize brand value and strengthen pricing strategies.

Merril Mascarenhas

The critical question is not whether community is important but how the definition of community has evolved and whether our lives have become more jangled and fragmented which has led to a desire for new connections with strangers. A lot has been written about the trend. But the trend isn’t just restricted to online communities.

The success of Starbucks has been built on the desire of consumers for a "third place”- away from work and home. Ray Oldenburg talked about it in “The Great Good Place: Cafes, Coffee Shops, Bookstores, Bars, Hair Salons, and Other Hangouts at the Heart of a Community”.

The success of Credit Unions is also built on this concept. In a recent interview, Ms. Christine Zalzal, AVP, Sales and Marketing, FirstOntario Credit Union, said that the grassroots strategy of a Credit Union is about being part of the community and staying for the long run in those communities.

What does this mean for marketers? They should look at the "quest for community" as an integral part of their marketing plans – at a strategic level. Different age groups and consumer segments have very different definitions of community. Often, “community” is quickly translated into a tactic- a presence on Facebook, Twitter and Myspace in a marketing plan. It is really more about understanding what defines a sense of community for your most profitable consumers and leveraging this insight for a deeper connection with them. The question to ask is what is the "third place" for your brand?

A tapestry segmentation system can help. It combines the “who” of lifestyle demography with the “where” of local neighborhood geography to create a model of various lifestyle classifications or segments of actual neighborhoods with addresses—distinct behavioral market segments. Adding the layer of a deeper understanding of the context of their "quest for community" can open up new opportunities to create a more meaningful dialogue with your brand with or without the constraint of geography.

Merril Mascarenhas

Wharton marketing professors David Reibstein and John Zhang have explored the topic and say that a company could experience a backlash as early adopters move on to other new products. An example is Porsche, a successful brand for sports car enthusiasts. The brand saw a decline in sports car sales after it entered the SUV mass market. The backlash was significant.

In fact, as The New York Times points out, teenagers would rather text their friends a message rather than post it on Twitter. Instead, Twitter has been embraced by an older demographic. Twitter’s success has shattered a widely held belief that young people lead the way to popularizing innovations. The brand has proved that an offering can take off in a different demographic than you expect and become very popular. Twitter is defying the traditional model.

So why do marketers assume that success with early adopters will lead to quick adoption by the mass market? The "early adopter" concept is flawed because they aren’t always a good indicator of the growth potential of a brand nor do they have an extended Customer Lifetime Value. Most early adopters move on to the next big thing and may not be loyal to brands.

What is more important is to identify your most profitable potential customers. These profitable customers will eventually be the core of your growth strategy and profitability. The important indicator is the rate of adoption - the relative speed with which the most profitable consumers adopt an innovation. Success depends on an organization's ability to build and maintain loyal and valued customer relationships. Therefore, it is essential to build refined strategies for customers based on their value to the organization. The best marketing strategies pursue long-term relationships with profitable customers.

Two questions for you: (1) Who is your most profitable customer? (2) What is their lifetime value to your organization?

Please email me for our "View from the Top" series on best practices in customer satisfaction strategies.

Transition to the mainstream

The transition has been driven by mainstream brands. Today, green has become another product attribute in a matrix of good-better-best benefit hierarchies. Tide has "biodegradable" ingredients. Others are labelled concentrates and cold water detergents. These are add-on benefits and enhance the core value proposition of the brand. They do not replace that core value proposition (superior product performance).

Today's customers are more demanding. They don’t believe all the claims being made by marketers- a fall out of greenwashing. Consumer scepticism has led marketers to include eco labels in their communication strategies. North America has over 350 eco-labels offered by trusted third parties. Marketers have laucnhed blogs and social networks with "fans" who contribute new product ideas. Method has its own Facebook page complete with a wall of comments from many of their 7,415 "fans" and a Twitter following of 3,284 users. Tide has 104,235 Facebook fans.

Please email me for additional insights from Arcus Consulting Group's studies on changing market drivers & successful strategic responses.

Henry Ford famously said, "If I had asked my customers what they wanted, they'd have asked for a faster horse." In other words, the road to true innovation is rarely illuminated by customers telling you what to do next; they may often not know what they want next or rely on a "confirmation bias" about their preferences.

Most innovative marketers say that fighting confirmation bias is a never-ending battle. But if you can't conquer this gremlin of your own mind, you don't stand a chance of outwitting your competitors.

We see this behaviour in all our decisions. A case in point is how retail investors hold on to stocks in a falling market, believing that the markets will rise, without any empirical evidence that this is likely to happen. Consumer confidence is a big driver of purchase behaviour. If consumers believe this recession will last a lot longer than it will because they recently lost their jobs, they are likely to scale back discretionary spending even after they find a new job because of a "confirmation bias".

In short, the human mind acts like a compulsive yes-man who echoes whatever you want to believe. Psychologists call this mental gremlin the "confirmation bias". A recent analysis of psychological studies with nearly 8,000 participants concluded that people are twice as likely to seek information that confirms what they already believe as they are to consider evidence that would challenge those beliefs.

Why is a mind-made-up so hard to penetrate?

Psychologists say its easier for consumers to repeat decisions than to take new ones. Whatever decisions consumers are inclined to make, are the decisions consumers are likely to go about justifying. It's simply easier to focus our attention on data that supports our preferences, rather than to seek out evidence that might disprove it. "Confirmation bias" is one of the biggest drivers and often under reported influencers of brand loyalty. It transcends the usual influencers such as product performance, emotional empathy and brand recognition.

It also is easier for people to rationalize than to be rational. Consumers and marketers are very good at cooking up post-hoc explanations of why our predictions didn't work or why we made some decisions. We tend to reinterpret our failures as near-misses.

The more you learn, the more certain you become that you are right. While gathering more data makes people more confident, it doesn't make their predictions much more accurate. Each new fact makes you more inclined to find another fact that resembles it, reducing the diversity and value of your information.

Confirmation bias contaminates the thinking of brand preferences of consumers. A lot of psychological traps can be combated with humility, but on this one, that doesn't help. For example, several North American auto companies missed the significant growth opportunity in fuel efficient cars because they clung to outdated strategies for gas guzzling SUVs and eroded brand value with carrots such as 'employee pricing'.

So how can marketers counteract confirmation bias?

A way to approach it is to imagine that you have looked into a crystal ball and have seen that your strategy has gone bust. Next, come up with the most compelling explanations you can find for the failure. This exercise, which some of the most innovative and successful marketers have integrated into their research process, can help you realize that your beliefs regarding why consumers might or might not prefer your brand might not be as solid as you thought.

Try estimating the odds that your analysis is wrong. Let us say that you reckon there is a 20% chance of an adverse outcome; that is like saying you will be proven wrong one in every five times. This way, if the investment does go awry, you will be less likely to dig in your analytical heels and desperately try to prove that you are still right. This procedure provides "psychological cover for admitting that you're wrong."

Show your ideas and strategies to another person you respect whose ego isn't already invested in the decision. Ask: If you didn't have to take this decision, would you still agree with it?

Run an imaginary strategy alongside your real one. There, you can change it at will, with no risk to your brand portfolio. On that blank slate, would you do more—or less—of your existing approach to strategy and consumer engagement? Some organizations require each team member to run a stress test of their brand portfolio and to justify any differences between their paper strategies and the company’s real-world plans. It helps senior executives know what people really think.

Before you decide on a marketing or business strategy in the first place, write down a statement of what would compel you to change your view of the strategy. If any of those influencers come to pass, the written record will make it harder for you to pretend nothing has changed or that you don't have to do anything in response.

Please email me if you would like to receive Arcus Consulting Group's series on "Better consumer engagement strategies".

Henry Ford famously said, "If I had asked my customers what they wanted, they'd have asked for a faster horse." In other words, the road to true innovation is rarely illuminated by customers telling you what to do next; they may often not know what they want next or rely on a "confirmation bias" about their preferences.

We see this behaviour in all our decisions. A case in point is how retail investors hold on to stocks in a falling market, believing that the markets will rise, without any empirical evidence that this is likely to happen. Consumer confidence is a big driver of purchase behaviour. If consumers believe this recession will last a lot longer than it will because they recently lost their jobs, they are likely to scale back discretionary spending even after they find a new job because of a "confirmation bias".

In short, the human mind acts like a compulsive yes-man who echoes whatever you want to believe. Psychologists call this mental gremlin the "confirmation bias". A recent analysis of psychological studies with nearly 8,000 participants concluded that people are twice as likely to seek information that confirms what they already believe as they are to consider evidence that would challenge those beliefs.

Why is a mind-made-up so hard to penetrate?

Psychologists say its easier for consumers to repeat decisions than to take new ones. Whatever decisions consumers are inclined to make, are the decisions consumers are likely to go about justifying. It's simply easier to focus our attention on data that supports our preferences, rather than to seek out evidence that might disprove it. "Confirmation bias" is one of the biggest drivers and often under reported influencers of brand loyalty. It transcends the usual influencers such as product performance, emotional empathy and brand recognition.

It also is easier for people to rationalize than to be rational. Consumers and marketers are very good at cooking up post-hoc explanations of why our predictions didn't work or why we made some decisions. We tend to reinterpret our failures as near-misses.

The more you learn, the more certain you become that you are right. While gathering more data makes people more confident, it doesn't make their predictions much more accurate. Each new fact makes you more inclined to find another fact that resembles it, reducing the diversity and value of your information.

Confirmation bias contaminates the thinking of brand preferences of consumers. A lot of psychological traps can be combated with humility, but on this one, that doesn't help. For example, several North American auto companies missed the significant growth opportunity in fuel efficient cars because they clung to outdated strategies for gas guzzling SUVs and eroded brand value with carrots such as 'employee pricing'.

So how can marketers counteract confirmation bias?

A way to approach it is to imagine that you have looked into a crystal ball and have seen that your strategy has gone bust. Next, come up with the most compelling explanations you can find for the failure. This exercise, which some of the most innovative and successful marketers have integrated into their research process, can help you realize that your beliefs regarding why consumers might or might not prefer your brand might not be as solid as you thought.

Try estimating the odds that your analysis is wrong. Let us say that you reckon there is a 20% chance of an adverse outcome; that is like saying you will be proven wrong one in every five times. This way, if the investment does go awry, you will be less likely to dig in your analytical heels and desperately try to prove that you are still right. This procedure provides "psychological cover for admitting that you're wrong."

Show your ideas and strategies to another person you respect whose ego isn't already invested in the decision. Ask: If you didn't have to take this decision, would you still agree with it?

Run an imaginary strategy alongside your real one. There, you can change it at will, with no risk to your brand portfolio. On that blank slate, would you do more—or less—of your existing approach to strategy and consumer engagement? Some strategists requires each team member to run a stress test of their brand portfolio and to justify any differences between their paper strategies and the company’s real-world plans. It helps senior executives know what people really think.

Before you decide on a marketing or business strategy in the first place, write down a statement of what would compel you to change your view of the strategy. If any of those influencers come to pass, the written record will make it harder for you to pretend nothing has changed or that you don't have to do anything in response.

Most innovative marketers say that fighting confirmation bias is a never-ending battle. But if you can't conquer this gremlin of your own mind, you don't stand a chance of outwitting your competitors.

Please email me if you would like to receive Arcus Consulting Group's series on "Better consumer engagement strategies".