Turning ‘Fans’ into ‘Customers’
Marketing in an Age of Virtual Echo Chambers
Internet technology has facilitated the rise of social media “tribes” that promote their own ideas or interests through highly insulated “echo chambers.” How can marketers penetrate these social media groups to turn “fans” into customers?
Marketing in an Age of Virtual Echo ChambersBy Yi-Shan Chen
From CommonWealth Magazine (vol. 617 )
The manager of the Family Mart convenience store in Shang’an in the Taichung area, Chen Yi-hsin, harbors a “public” secret. Known online as “Mama Bear,” Chen simply has to pull out her smartphone and her store’s sales immediately go through the roof.
Her secret weapon is the “Taichung Sister Group,” an online community formed by Chen and 300 of her store’s best customers that set a monthly record with 30 group purchases of more than 1,000 boxes of sweet potato cakes. Most remarkably, “Mama Bear’s” group includes many women in their 50s and 60s, not exactly the demographic one associates with being tech-savvy.
Chen Yi-hsin (foreground), the manager of the Family Mart store in Shang'an in Taichung, has extended the store's services to people's mobile phones through messenger apps like Line.
This year, the experience of her social network has been incorporated into company policy by Family Mart headquarters. At a press conference soon after the Lunar New Year holiday, Family Mart President Hsueh Dong-du announced that one-third of the chain’s 3,065 stores in Taiwan will open social networks through the “Line” messaging app to target middle-age customers.
From small community shops to the American presidential election, from store managers and companies to even politicians, nobody dares underestimate the power of social networks, because they are in the midst of upending the relative hierarchy of the strong and the weak that has existed for a long time.
Liu I-cheng, the chief executive officer of CTBC Bank’s Cards & Payment Division, has repeatedly used the term “tribal society” in recent years to describe the new society forged by the emergence of social media.
In contrast to traditionally passive groups that fall into neat categories, people in the tribal online society feel compelled to click on “Follow” and “Like,” define for themselves how they are identified, enjoy taking the initiative and are diverse and highly mobile. The tribe’s chief is the opinion leader who shapes the tribe’s character. In this world, there are no bureaucracies that link tribes together, which allows for free associations and alliances but can also lead to confrontation. Anybody can rise up to “deity” status, but “deities” can also be quickly “dumped,” leading to the tribe’s extinction.
“In the future, as long as there are tribes, the people who are closest to consumers’ lives will have power,” Liu believes.
Based on that belief, CTBC Bank, which has nearly 4 million active cards in circulation, took steps to immerse itself in this culture by soliciting partners in several fields, including group purchase platform Gomaji, restaurant reservation service EZTable, restaurant management app iChef and taxi service Taiwan Taxi Corp. CTBC Bank has even set up application programming interfaces (APIs) that give access to previously off-limits credit card databases without compromising customers’ personal information.
Another giant that has jumped into the fray is Yahoo. Yahoo! Taiwan remains Taiwan’s biggest web portal, but it began promoting an audiovisual platform last year. Kris Ou, Yahoo! Taiwan’s public relations director, has come to realize that in this era of internet fragmentation, it is impossible to target the general public because most people live in their own “echo chambers,” social network bubbles that coalesce around specific beliefs or interests.
‘Known by Everyone but Loved by No One’
Yahoo TV broadcasts live at noon. On Monday, the broadcast is hosted by weather expert Peng Chi-ming, while four other hosts with political affiliations – Hsu Chiao-hsin of the Kuomintang, Wu Cheng of the New Power Party, Miao Poya of the Social Democratic Party and Hou Han-ting of the New Party – rotate from Tuesday to Friday.
James Harkin wrote: “It’s about a world in which no size fits all, and in which anyone who tries to be all things to everyone ends up as nothing to anyone."
After experimenting with the format for about six months, “I’m even more certain of the existence of ‘echo chambers.’ In terms of strategy, you can no longer hope to have a program that can reach the whole country. Your only option is to target and work your way into different echo chambers,” Ou says.
In summarizing the main theme of his book “Niche: Why the Market No Longer Favours the Mainstream,” trend-watcher James Harkin wrote: “It’s about a world in which no size fits all, and in which anyone who tries to be all things to everyone ends up as nothing to anyone.”
Harkin argues that the era of “mainstream culture” that some brands yearn for “only emerged in the middle decades of the twentieth century, and under the supervision of a few big beasts.” That “mainstream culture” opened up a “middle ground” suitable to everyone, but in the last few decades, that “middle ground” has broken down, and companies that were not able to control a whole ecosystem or identify their place within it suffered.
“They have been left stuck in the middle, known by everyone but loved by no one,” Harkin wrote.
Many enterprises are clearly at a loss how to react to consumers in the social network age, and the faces of the companies that can help them are changing.
Over the past two years, many advertising companies have suddenly discovered that computer giant IBM and accounting firms Deloitte Touche Tohmatsu and PricewaterhouseCoopers have become their competitors. In the past three years, IBM has acquired six marketing companies while Deloitte’s digital practice acquired creative agency Heat in 2016 and PwC bought social media strategy firm Ant’s Eye View in 2012.
“Companies want to use digital tools to come in closer contact with customers. They have to be able to collect and capture data to generate insight,” explains Benson Cheng, a partner of consulting services at Deloitte Taiwan.
Content Marketing and Crowd Culture
Douglas Holt, the founder of the Cultural Strategy Group and a former Harvard and Oxford professor, made it clear in an article in the Harvard Business Review in March 2016 how far companies still have to go to adapt to this new world. He wrote that McDonald’s and Coca-Cola have invested heavily in producing slick social media branded content, but their YouTube channels rank outside YouTube’s top 2,500 channels based on the number of subscribers.
Social media binds together communities that once were geographically isolated, greatly increasing the pace and intensity of collaboration. Now that these once-remote communities are densely networked, their cultural influence has become direct and substantial.
Holt explained that in the Internet 1.0 era, advertising involved one-way communication, where brands competed on speed and “eyeballs.” As a result, companies believed that if they delivered Hollywood-level creative content at internet speed, “they could gather huge engaged audiences around their brands.”
But in the social media era, “digital crowds now serve as very effective and prolific innovators of culture – a phenomenon I call crowdculture. Crowdculture changes the rules of branding – which techniques work and which do not,” Holt wrote.
Social media marketing goes far beyond simply punching a keyboard. Carat Taiwan marketing director Dave Weng (left) and his team went around Taiwan looking for real social communities last year "because they are not Facebook.
Historically, cultural innovation has flowed from the margins of society – from fringe groups, social movements and artistic circles that challenged mainstream norms and conventions, according to Holt, but social media has changed everything.
“Social media binds together communities that once were geographically isolated, greatly increasing the pace and intensity of collaboration. Now that these once-remote communities are densely networked, their cultural influence has become direct and substantial,” Holt wrote.
Social Media Marketing Cultivated, not Bought
“Social marketing is values-based marketing,” says PX Mart marketing director James Liu.
To be successful in the social community age, “you have to be able to link together the company’s products and services with certain issues and themes in society. That’s the only way to resonate with consumers. Otherwise, you’re just talking to yourself,” Liu adds.
Dave Weng, strategy director for media agency Carat Taiwan, is also a big believer in values-based marketing.
“Social communities are cultivated, not bought,” Weng says. Last year, his Mitsubishi Motors ad highlighting the need for more young people to return to their rural hometowns was the top-ranked commercial on YouTube in Taiwan, accumulating 5.9 million views.
At the time, the client told Carat its goal was to strengthen Mitsubishi Motors’ brand favorability in Taiwan, especially in the over-20 and over-35 age brackets. Weng decided to put the campaign’s main emphasis on social media, because “participation” and “discussion” are the best ways to boost brand favorability.
People the Essence of Social Media Marketing
Weng divided the campaign into three phases to create the maximum impact. The first was to focus on social communities. He wanted to identify inspirational youth scattered around the country who were contributing to their rural hometowns and encourage them to come forward.
He visited indigenous singer and Amis Music Festival founder Suming Rupi in Taitung County, the founder of B&B El Patio del Cielo, Ho Pei-jun, in Zhushan in Nantou County, and the leader of the band Youth Banana, Wang Chih-wei, in Chishan, to persuade them to help mobilize people to participate in a “NT$1 million dreams” contest for young farmers. They also helped contact 40 schools with fewer than 50 students to get them to participate in a sports meet.
The second phase was participation. Inspirational youth from 225 small communities eventually bubbled to the surface, and when the sports meet for the rural elementary schools was held, Mitsubishi drivers and employees, teachers at remote schools, and parents all showed up.
It was only in third phase that Weng made use of video, advertising, word-of-mouth and social communities to maximize his campaign’s impact.
“Social communities are not Facebook. They are groups of real people. It’s just that they can be seen through Facebook,” Weng says, explaining that people are the essence of social media marketing, not digital tools.
In fact, many social communities do not even exist on Facebook or YouTube.
Part of the reason for that, according to Gso Tseng, a former marketing manager at Asustek Computer and now a social media marketing lecturer, are changes in the social media advertising marketplace.
“People have had an unrealistic belief in viral marketing. Now, we’re just going back to square one.”
Even after Facebook’s repeated changes to its algorithms, companies can still only reach 200,000 to 600,000 fans in fan clubs with 1 million members, unless they invest in ads, Tseng says. Also, the monthly fee for an outside agency to handle fan clubs has quadrupled since 2012 to more than NT$200,000. Well-known YouTubers (YouTube celebrities) are even charging NT$150,000 for an 8-second product placement on their programs, five times as much as the NT$30,000 local TV stations charge for 10 seconds of exposure.
These high costs have forced companies to reconsider how they view the effectiveness of social media marketing.
“People have had an unrealistic belief in viral marketing. Now, we’re just going back to square one,” Tseng says.
Many fan clubs overseas have already transformed themselves, Tseng observes, citing KLM’s use of its fan club for customer service and Marriott International and Dell using fan clubs to recruit talent, rather than using them for advertising and sales.
As the walls surrounding social media echo chambers have grown thicker, the cost of breaking through them have continued to go up, leading many brands to veer in a different direction and work harder at cultivating “members” of their own fan clubs. Marketers have suddenly realized that these “members” are the communities brands most need to cultivate.
“Companies have to capitalize on these groups of members more than any other,” Tseng says.
The Most Important Echo Chamber -- #Member
President Starbucks Coffee Corp., a joint venture between President Chain Store Corp. and Starbucks, has gotten the message. It decided two years ago to introduce the “Starbucks Rewards” program in Taiwan to nurture customer loyalty and slowly phase out promotions directed at the mass market, such as “buy one, get one free.” From Feb. 24, 2016, when the program was launched in Taiwan, to the present, membership in President Starbucks’ “Starbucks Rewards” program has grown to 1.16 million, and members now account for nearly half the company’s revenues. Some 24 percent of Starbucks customers use phone ads to pay for their purchases, one of the highest ratios among Starbucks chains in the Asia-Pacific region.
Today, President Starbucks’ “buy one, get one free” promotions are mostly limited to relatively high-contribution Green and Gold level Starbucks Rewards members. At the same time, President Starbucks has hooked up with President Chain Store Corp., which also operates Taiwan’s biggest convenience store chain 7-Eleven, on a promotion to attract new customers. Convenience store customers who have racked up enough reward points can get a 30 percent discount on a Starbucks membership card.
“In these last two years, Taiwan’s coffee market has been really competitive. A high percentage of consumers switch between brands freely,” says Charles Ho, marketing director at President Starbucks, explaining the motivation behind introducing the company’s loyalty program.
Over the past year, President Starbucks has also built a database to get a clearer understanding of its members’ behavior and taste preferences. In the second half of 2017, it will begin directing targeted, personalized promotions at different client segments based on the data collected.
“In fact, you don’t need a lot of categories of data,” says Boston Consulting Group (BCG) partner and managing director of its Taiwan operation, J.T. Hsu. The Boston Consulting Group and Starbucks in the U.S. have already invested in marketing personalization startup TAKT Inc. to get the most out of the coffee giant’s marketing apps.
The latest app has added a weather function, and for members to subscribe to it, all they have to do is agree to give their location to Starbucks. That information allows Starbucks to deduce where customers work and whether their job is more outside or inside an office. Based on that information along with customers’ purchase history and weather data, Starbucks can concoct special offers targeted at members.
“New technology has turned pricing into something of a hot discipline,” Hsu says.
" The winners of the future will be the people who are able to integrate transaction-related data and non-transaction-related data."
Daisy Tsai, assistant vice president for the Test Rite Group’s customer relationship management, also sees data as critical to retailers.
“The winners of the future will be the people who are able to integrate transaction-related data and non-transaction-related data,” Tsai says.
With 6 million members, Test Rite’s membership marketing has earned a strong reputation in the industry. But Tsai believes that membership data alone cannot be used to make projections; it has to be reinforced by following members’ online browsing behavior, social listening and other non-transaction information.
Tsai cautions, however, that data itself does not generate value. Only by having management work in tune with data analysis can data be meaningful, she says.
Companies that find a way to resonate with communities and unearth consumers’ real needs, and then apply data to provide them with attractive products and special offers at just the right time can still succeed. Technology has spawned insulated “echo chambers,” but ultimately, people’s needs will always be there.
Translated from the Chinese by Luke Sabatier
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