Be an Ethical Entrepreneur, Marketer, and Business Builder

93% of Word of Mouth happens on this Social Network… It’s not Facebook

Before I tell you the name of this social network, think for a second about your marketing budget.

Word of Mouth

How much are you investing in Facebook? Twitter? LinkedIn?
Don’t think just in terms of money.
How much time are you investing in each of those?

If you could get 93% of the results with a single social network, are you willing to invest your time and money where you can get the best results for the least amount of effort?

According to research by the Keller Fay Group, only 7 percent of word of mouth occurs online. The other 93% occurs offline.

You know… Face-to-face, people talking to other people.

In other words, if you want to grow your business with more referrals, you may need to start focusing your energy on getting your customers to start talking about you OFFLINE.

How to leverage the original social network

It comes down to this, how do you get your customers to talk about your business and tell their friends?

The book, Contagious: Why Things Catch On, by Jonah Berger lists out a 6 step process he calls STEPPS to make your ideas interesting so people want to talk more about them and tell others. It’s loaded with examples of contagious ideas like:

  • A “secret” bar in NYC that does no advertising and you enter through a secret door in a phone booth.
  • The book company that sends 2 copies of pre-print books to prominent figures whom it would like to receive an endorsement. The second book is for them to share with a colleague to get them used to recommending it.
  • The discount luxury goods website that ditched the standard online discount retailer and replaced it with a “members only” online discount luxury retailer that you have to be accepted into.
  • The gourmet Philadelphia restaurant that offered a $100 cheesesteak sandwich to get people talking about their new restaurant. They got featured in USA Today because of it.

These are all great ideas, however let me break it down with some simple actions you can take in any service-based business.

3-Step Process to get Your Customers Talking about You

  1. The Original Social NetworkAsk – Find out which customers LOVE you and which are just satisfied. Online survey’s are a great, low-cost way to do this with your customer base.
  2. Segment – Find out which customers have already recommended you and which would never recommend you.
  3. Develop Exclusivity – Give a limited number of special offers and services to your top customers for them to share with their friends and family.

Ask

In one Nebraska business, we sent out written surveys with self-addressed return envelopes to over 3,000 of their current customers. On it was also a link to complete the survey online. About 1/3 of respondents opted for the online survey. At last count, we had around 450 responses.

This provided a gold mine of information, however the most important question was:

  • How likely are you to recommend us to your friends and family? The answers ranged from, “I’d never recommend you.” to “I’ve already recommended you.”

This business had 97.4% of respondents say they would recommend them. The other 2.6% were neutral. No one said they would not recommend them!

Another part of this survey was to find out how each customer preferred for us to communicate with them.

  • Text
  • Email
  • Social Networks
  • Phone
  • Letter

For this particular business, not a single customer wanted us to communicate with them via Facebook or G+. However 49.6% preferred email with another 36% choosing a phone call and 12.8% requesting a text.

Your market and customers may be different which is why you need to ask. It’s not just about what you say, but how you get your message to them.

Segment

Now that you know who has already recommended you and who is very likely to recommend you, focus on those groups. These people are basically telling you, “I love your business and service and will gladly tell others if you make it easy for me.”

These are your Brand Lovers. All they need is a little friendly assistance and some easy ways to communicate to others what makes your business unique.

In the survey, 32% of respondents said they had already recommended the business. Another 47.2% said they are “extremely likely.”

Let me put this into perspective.

In a business with about 3,000 customers, 450 people responded to a survey in which almost HALF of those people, about 212 customers, are ready and willing to recommend their services but NEVER have.

That’s over 200 people who can be out “selling” their products and services if we just tell them how.

Develop Exclusivity

Now that you have your list of people who have recommended you and those “extremely likely” to recommend you but never have, your goal is to figure out how to get them talking about you.

Here are a few ideas:

  1. Offer Preferred Customer deals. Give your preferred customers 1 card per year to give to a friend with offers that no one else has. The only way to get this “secret” deal is by knowing a preferred customer. Since you’re only giving them 1 it makes it even more exclusive so they have to consider who they really want to tell about your business. Test with different quantities.
  2. Offer Insider Only landing pages. Picture this. John Smith is one of your customers who said he is extremely likely to recommend you. So you send him a couple of cards each year with his name and your business on it, a website with a landing page like http://mybusiness.com/john-smith, and a QR code. On it is an exclusive deal just for his friends. This deal isn’t advertised anywhere else. It’s John Smith’s deal to offer to a couple of friends per year. Scarcity is just as powerful as exclusivity to have people clambering to join and talk about you.
  3. Provide free, useful, interesting gifts. Most people entertain friends and family at their home. So what if you provided them with something to talk about? A unique mug with fun facts (think Snapple). An entertaining BBQ apron or spatula.  A cool brain teaser for their coffee table. If it can relate to the benefits of your services, even better. The goal is a conversation starter that may just lead into why that customer does business with you.

Try to offer the special offer cards without providing any gifts or benefits in return to your current customer. Actually tell them that.

“We don’t want to bribe you. If you’re happy with our services, then here’s an easy way to help your friends with some money-saving deals. If you’re not happy, then please tell us.”

People know a bribe when they see one.

However, if someone asks you if you know who can help them with a kitchen remodel, you have no reservations in telling them who to call and who to avoid. The same is true for your preferred mechanic, plumber, air conditioner repairman, insurance agent, dry cleaner or water treatment dealer.

Now imagine you follow that up with a sincere,

“Bryan’s Plumbing is the best. They’re always on time and charge a fair price. Because I’m a good customer, they gave me this card with a special deal on it to give to a friend. You can’t find this deal anywhere else and I don’t get anything in return for sharing this with you. I know you’ll be happy with them so you might as well use my deal and save yourself a few bucks.”

Helping a friend with an exclusive, scarce deal because they will honestly appreciate it, is often much more motivational than a $50 referral fee or credit.

You should have a record of your preferred customers so that the cards aren’t really necessary. If someone calls up and says, “John Smith said I need to talk to you,” then give them the John Smith Special.

Did a web expert just tell you to kick it old school?

It seems somewhat ironic and even counter-intuitive that the owner of an internet marketing business is telling you the opposite of what all the talking heads are.

If the message isn’t crystal clear yet, don’t waste your time and money with online social networks unless your ideal customers want you to.

For many small, service-based businesses your business is… uh… Boring. Your customers may not really care to like their plumber’s Facebook page. This isn’t an opinion. This is what hundreds of customers have told us so you need to Ask your customers how they want you to communicate with them.

In reality, the best way to determine which local service company to use is still the old fashioned method of asking your friends.

Face-to-face. Person-to-person.

You may just find out that 47% of your customers are “extremely likely to recommend you to friends and family” and just need a little reminder and guidance on how to do so.

 

To your success in developing better relationships with your customers, Bryan

P.S. If you want real, actionable ways to generate more leads online for your business, sign-up for my email news in the footer below.

The power of the Viral Loop and Viral Marketing

Adam Penenberg’s book, Viral Loop: From Facebook to Twitter, How Today’s Smartest Businesses Grow Themselves, is addictive. That’s quite ironic considering the content so maybe he even designed it that way. 🙂

In my last blog, I wrote about the amazing valuations that companies with little to no revenue and often huge losses can achieve. The mantra was more about getting big (meaning getting a lot of customers not necessarily profits) and getting bought up. It’s happened dozens of times with businesses ranging from Facebook (valued at $15 billion thanks to Microsoft) to Twitter (who still has no source of income) to Bebo.com (which sold for $850 million) to Myspace (which sold for $508 million) to…. Well you get the point. Companies got real big, real quick with no marketing. But how did they do it???

Well Penenberg focuses this growth on businesses achieving a Viral Coefficient above 1.0. That simply means that for every person who signs up for your website or service, they influence at least one other person to also become a customer of yours.

Let’s say for every person who signs up for your new social networking site, they invite (on average) 20 of their friends to also join. Out of those 20 people who are invited, if  one person signs up (i.e. 1 out of 20) the viral coefficient is 1 (20*.05) and so the product is considered to be viral and therefore will experience exponential growth. If instead, 2 out of those 20 signed up, the viral coefficient would 2 and the growth would be ridiculous.

viral coefficients
0.8 1 1.2
10 10 10
Number of Cycles 1 18 20 22
2 24 30 36
3 30 40 54
4 34 50 74
5 37 60 99
6 40 70 129
7 42 80 165
8 43 90 208
9 45 100 260
10 46 110 322
11 47 120 396
12 47 130 485
13 48 140 592
14 48 150 720
15 49 160 874
16 49 170 1059
17 49 180 1281
18 49 190 1547
19 49 200 1867
20 50 210 2250

Table illustrating the power of viral marketing for viral coefficients of .8, 1.0, and 1.2 when starting with 10 initial users.

If we consider that it takes 1 day for a current customer to bring you another customer, after 20 days, you’d have 50 customers with a coefficient of .8, 210 customers with a viral coefficient of 1.0, and an astounding 2250 customers with a viral coefficient of 1.2! Some people might suggest that 1 day is a very short time frame and for some businesses it is indeed short, however when Mark Zuckerberg launched TheFacebook.Com at Harvard University with no marketing just by telling friends, he had 1200 people sign up within 24 hours! Within 24 hours of HotorNot.com launching their website (again with no formal marketing) they had 100,000 visitors. Adam Penenberg’s book goes through the numbers of many more of the businesses that I’ve mentioned above so I’m hoping you can start to see the amazing growth potential of businesses that can become viral.

So what does it take to become a viral business?

Well Penenberg’s book addresses this a bit, however he never really provided a precise formula simply because the way Facebook or HotorNot grew was not the same as Hotmail, or even Tupperware. That being said, he pointed out, and I’ll expand on some items that were similar in his viral businesses.

  1. It has to be something people REALLY want. – How do you know people really want it? Because they’ll pass it along to their friends without being asked to do so. Another way things can automatically get passed along would be how Hotmail put a tag at the bottom of all of their emails that said “Sign up for your free Hotmail account.” Obviously they’ve changed it to rotate marketing about Windows 7 now.
  2. It has to be simple. – Becoming a customer or user has to be quick and easy. The more steps or pages or data to fill out and the fewer people will join. That was obviously the beauty of HotorNot and Twitter. Even Ebay and Paypal make pretty quick work of buying and selling online.
  3. There has to be an incentive for people to spread the word. – At first it sounds like this may counter my first point, however that’s not the case…  An incentive can simply be “if all of my friends are on it, this <product>” will be so much better for me. Think of MCI’s Friends and Family plan for instance. I just bought some pants from Bonobos.com and for everyone I refer they give me a $50 credit. Obviously I racked my brain to think of people who might enjoy some high-quality pants.
  4. It has to be easy to spread the word. – Businesses like RockYou and Slide popped up literally overnight because of the viral design of Myspace and Facebook. Myspace and Facebook themselves even make finding and inviting new friends easy by accessing your email addresses from Yahoo, Gmail, Aol, and Hotmail. The easier it is for people to tell their friends, the more people will tell their friends.
  5. You have to be the first one to achieve critical mass for your market. – There are dozens of examples of this from Hotmail to Ebay to Facebook however let’s just look at Paypal for now. Paypal was the first to market and adhered to all the steps above including allowing you to send money to people without a Paypal account (which was simply a way to get new people to sign up). With their viral hooks built-in, they became extremely popular on Ebay in short order. However, Ebay (along with several other companies) wanted their own payment processing company and they even partnered up with Citi Bank to make it happen. They made rule changes to their online listings so that their payment system would show prominently for every item and Paypal’s logo would be pushed to the bottom of the listing. But they did it all too late. They spent millions to make their payment processing company work. Ebay even considered (threatened) banning Paypal altogether. Eventually they decided to just buy Paypal which at the time was privately owned. Unfortunately they didn’t think it was worth the $1 billion dollar asking price and so they let Paypal go public and a few months later were forced to buy the public company for $1.5 billion. You think you had a bad year, at least you didn’t make a half billion dollar mistake (at least I hope you didn’t).

As you know, I own a small “brick-and-mortar” business. Less than 1% of our business currently originates on the internet and my business has a designated service territory so my market is limited. That certainly is a much different playing field than all of the businesses in Penenberg’s book and quite realistically only a tiny fraction of businesses in the world will ever fall into that realm. So for the rest of us in the real world, how can Viral Marketing make a difference to us? Well, understanding the power of a viral business where you develop systems and programs to encourage every single new customer to bring at least one other new customer with them is the key. In the small business world we call this developing referrals. It’s a powerful (and cheap) way to grow any business so I look forward to addressing some ways to do that in the future.

To your viral success, Bryan