Wednesday, May 13, 2009

Social Media Dilemma For CEOs

All Markets Are Conversations.

Your customers and prospects are talking about your brand online, right now. They’re having conversations all day, every day. Are you there, listening? You know you should be there in some capacity, but perhaps you’re uncertain what to do or how to start.

Your first and most significant barrier to social media entry may be internal. He/She likely owns stock in your company, and may hold a corporate title similar to “Sr. VP Marketing.” If yours is a Fortune 500 company, this person’s office wall may be adorned with awards and accolades for the millions of traditional (one-way) advertising dollars spent over the years through his/her office. As you look for ways to trim budgets in these tough times, you may encounter push-back from your highly-decorated marketing guru – as any reduction of his/her advertising budget is perceived as a reduction of their personal power and influence. This is old (and expensive) thinking, and must be overcome.

Back in the early days of social media adoption (nearly a decade ago), the President of an F-500 cruise line retained me to shake up his marketing department, to move the brand(s) online in a meaningful way, and in so doing, transform the culture. This went as far as the President reserving the Executive Board Room for a debate between myself and the Sr. VP Marketing about how to represent the brand(s) online and leverage the communities found there. I won, but not without a significant cost. That such an adversarial encounter was required to move the corporation into the future (to the benefit of the shareholders - including the Sr. VP himself), was unfortunate, and unnecessary. Your marketing department needs to come to the realization that it is their job to cut their own budgets (market more wisely) in order to help your company survive and retain their own jobs. The new paradigm involves marketing smarter, for less.

In Y2K, This Was The Reality:

A cruise is the most complex purchase made online or offline. The research time required is greater than that for purchase of a car, a house or any other researched-product (think weeks and months – if ever). It sounds absurd, but it’s true. As a general rule, cruisers require hand-holding (confidence building) prior to purchase. Cruisers fall into a cohort I broadly define as “Joiners” (as opposed to “Lone Wolves"), and this explains the significant third-party (travel agent) commission of between 15% - 18% required to facilitate the transaction. That translates to about $180 on an average ticket price of $1,000. At the time, fully 95% of cruises were purchased through the reseller channel.

The opportunity to disintermediate the purchase (enable direct purchase) obviously represented a “boat load” of money. The problem was that the cruise lines didn’t want to damage the relationships with their reseller channel, who at that time provided them with 95% of their sales. But the world was changing, and prospects who had yet to cruise were beginning to perform all of their travel research online, booking their flights, hotels and cars with ease, without need for third party assistance. Most came to prefer it, and swore they would never again rely on a travel agent to book anything for them.

Behold The Dilemma.

First-time cruisers rave about the experience, and the satisfaction level (and likelihood to repeat) is exceptionally high. Tipping prospects (fence-sitters) off-the-fence to get them on a ship for the very first time is mission-critical, particularly as more and bigger ships enter the market. Yet in the year 2000, an entire cohort of prospects refused to use the industry’s reseller channel, and the industry was reluctant to provide all the online tools required to facilitate in-depth research or enable the conversations that could lead to direct booking (whether by phone or web).

The vast majority of the world’s population had yet to cruise, and a very high percentage proclaimed that it was something they wanted to do and could afford to do (intenders). The reality is that these prospects sought out the conversations that were occurring online about the various brands, ships, itineraries, activities, cabin classes, etc. in the hopes of educating themselves to enable a comfort level sufficient to pull-the-trigger and book a cruise directly with the brand of their choosing. While the travel agents hated it, and the cruise executives felt constrained to publicly embrace it, the world was changing, and the future of the entire cruise industry was (and remains) at stake.

This cohort of individuals who sought the advice of others flocked to a site called, the largest community of cruisers online. Once there, they learned the basics about cruising by reading reviews initially, and eventually “lurked” within the real-time conversations occurring within the brand or topic-specific forums. These prospects - the most important potential market segment for the entire industry - were behaving in a way that the industry was not prepared to accommodate, and only reluctantly acknowledged (when I personally dragged them there). I literally spent months “lurking” within these message threads - came to learn who the most vocal leaders were, what their likes and dislikes were (about virtually everything), why they switched brands when they did, you name it. Literally everything a cruise marketer needed to know to connect with these individuals in a meaningful, contextual way, was at my finger tips. I was there listening and learning, but the marketing department wasn’t.

Armed with vastly more information about their actual customers and prospects than the marketing department could possibly know, I devised a defensible differentiation strategy for our brand(s). With the blessing of the company President (and against the push-back of the entire marketing leadership of the corporation), I flew to meet with the CEO of Cruise Critic and compelled her to provide us with a differentiated advantage on her web site that no other brand would enjoy for the duration of the contract. We leveraged that differentiation strategy into a new way to hook first-time cruisers on our brands, with the residual benefit of annual return visits within the same brand family, as cruisers repeated with the same groups that had formed online as a direct result of our Cruise Critic initiatives. As groups repeated, they grew both in terms of size and loyalty.

Friendship Facilitation.

Prospective cruisers (those in the “Intender” category) could not picture themselves as “cruisers” for their own personal reasons. The resistance factor that mattered most from my own perspective was finding “other people like me” to cruise with. They were looking for a new way to research the exact vacation experience to suit their own personal preferences and desires. They were hoping to form new friendships as a result of their vacation selection. What they found were groups forming online, with a cruise already booked. Dozens of individuals, couples and families were getting to know one another online prior to meeting onboard - planning how much fun they were all going to have on their forthcoming cruise. These conversations were (and are) the market.

The Cultural Transformation.

The cultural transformation that needed to occur internally, did occur - though only through hard-nosed leadership and my own relentless determination to move an entire industry in a new direction. Is the marketing culture at your company capable of embracing a new way of thinking about your customers and prospects? Are they prepared to reside where your prospects actually conduct their research - seeking the word-of-mouth advice of the leaders of these online communities and others who participate at all levels of the discussion? Is your Customer Service Department prepared to lurk in these conversations? Are they empowered to act to resolve legitimate complaints in real time – to the delight and surprise of the community?

Are you willing to lead your marketers to stop “broadcasting” and start listening – I mean REALLY listening? Are you willing to help facilitate the conversation such that groups form around shared-experiences (and by extension, your brand)? Are you willing to accept that group loyalty leads to brand loyalty – and admit that cutting the marketing budget is in the best interest of the company? Are you ready to join the conversation?

About The Author:

Tom Martin is the Founder of and Look for him on Linked In, Facebook, and on Twitter at VentureStrategy. If you’re ready to start a conversation about moving your corporate culture in this new direction, or to improve your existing approaches if you're already online, drop me a note through my site and let’s talk about your goals. The conversation is free, and you won’t be disappointed. Check out the testimonials here, then introduce yourself:

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