The Problem with Loyalty

Posted by under Social Media, Work

Whilst most of us are familiar with theory of Participation Inequality, the much spouted rule (but rarely alongside any type of empirical data) that states 90% of users are lurkers who never contribute, 9% passively contribute (i.e. comment) and only 1% account for almost all of the activity within an online community. Thankfully, the bods at Forrester Research were kind enough to add more meat to the bones of this theory, providing us with the following results:

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But how does this tie in with buying behaviour? Another ill-documented factoid often spouted by marketers is that, and I quote, “for most brands the 80-20 rule applies; most sales come from 20% of the buyers”. On this basis it would be safe to say that given that the more ‘involved’ a consumer is with your brands communications, the more likely the crossover between the 24% of creators and 20% of buyers would be significant. A concentration of your communications efforts on this top 24% would therefore be the most efficient use of your time and budget, because after all, these are most likely to be the ones who buy the product.

What’s not often mentioned?

As much as any brand or marketing manager would wish to believe, the fact is that people very infrequently buy any one brand and the concept of consumer loyalty is a rather loose one. Whilst common sense tells us that the loyalty of common social situations somehow translates into one of commercial trade is not only ignorant but proven wrong on many occasions.

For example, the buying frequency per year of Pantene products:

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From this graph it’s obvious that the vast majority of sales come from people whom will only purchase 1 to 2 times per year. Any more than 6 and we’re looking at a demographic so insignificant it’s hardly worth noting. How about Fructis?

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We witness the same thing again – the non-loyal customers make up the vast majority of buyers. Interestingly, Pantene, who have the highest market share, also have the highest rate of loyalty with an average 1.8 purchases per year compared to Fructis’ 1.6.

How does this tie back to communities?

To witness a linear growth in loyalty requires an exponential growth in market share, and eat my hat if this wasn’t the case with online communities. Whilst pushing the benefits of creating loyal customers without much reference to any sort of research, as seen in this quote from AdAge –

Do consider VIP treatment or special access. These are your best and most-loyal consumers. They are the 20% of the Pareto principle (roughly 80% of the effects come from 20% of the causes.)

From our research it’s simple to conclude that loyalty just isn’t where the dollar is.

Sources:

http://planninginhighheels.com/2011/02/08/planning-for-participation/

http://madebymany.com/blog/how-much-more-participation-can-you-handle

http://bbh-labs.com/the-power-and-perils-of-participation

http://mweigel.typepad.com/canalside-view/2012/02/the-participation-paradox-how-to-survive-it-how-to-prosper-from-it.html

Connecting: The Future of Interaction Design and User Experience

Posted by under Natural User Interfaces, Work

The 18 minute “Connecting” documentary is an exploration of the future of Interaction Design and User Experience from some of the industry’s thought leaders. As the role of software is catapulting forward, Interaction Design is seen to be not only increasing in importance dramatically, but also expected to play a leading role in shaping the coming “Internet of things.” Ultimately, when the digital and physical worlds become one, humans along with technology are potentially on the path to becoming a “super organism” capable of influencing and enabling a broad spectrum of new behaviours in the world.

Connecting (Full Film) from Bassett & Partners on Vimeo.

As co-founder of Arduino, one of the development platforms that excites me most, Massimo Banzi’s views are particularly poignant. The view of technology that enriches without being disruptive to living is a theme touched on by a number of the speakers, however Arduino promises to offer the most frictionless interface, bringing the benefits of digital inputs and algorithms to the natural environment.

via MetroMcCann

Aaron Swartz: Standing on the Shoulders of Giants

Posted by under Uncategorized

As a user of Reddit, RSS and an advocate of open knowledge, it’s sad news to me that Aaron Swartz passed away. A man who sacrificed his own liberty to enrich the livelihoods of others, let his crusade in the face of oppression be a lesson we can all learn from.

“It’s called stealing or piracy, as if sharing a wealth of knowledge were the moral equivalent of plundering a ship and murdering its crew. But sharing isn’t immoral — it’s a moral imperative. Only those blinded by greed would refuse to let a friend make a copy.”

— Aaron Swartz, a Data Crusader and Now, a Cause 

The Importance of Networks

Posted by under networks, Work


We’re a society conditioned through millennia of experience that the way to structure ourselves in order to achieve anything is to assign individuals tasks with set rules and guidelines of how we must follow them, and stick rigidly within these formations no matter what the outcome. The individuals chosen to assign the tasks are in that position for a number of reasons, some have a long history of success and the ability to demonstrate the skills they need to be there, others due to the interpersonal networks they belong too. Assigning people their position within this kind of structure is cumbersome and resistant to change, and more often than not proves to be ineffective in the long-term. Only 4 of the original constitutents of the FTSE 100 remain: GKN, Imperial Tobacco, Rolls-Royce and Tate & Lyle. Our current systems vastly reliant on uniformity and stability to function smoothly, but day after day the world is throwing obstacles that are not only challenging, but corroding the foundations of what they have relied upon for so long.

Our world isn’t becoming more complex, we’ve always had unpredictable circumstances. Rather, we’re just at a point where the rate of discovery and change is vastly outpacing the rate of understanding. In The Technological Society, French sociologist Jacques Ellul coined the term technique, “the translation into action of man’s concern to master things by means of reason, to account for what is subconscious, make quantitative what is qualitative, make clear and precise the outlines of nature, take hold of chaos and put order into it.” (Doug Hill). Whether designed with sinister intentions or not, the systems that we have in place to quantify, make sense of and make rational out of these complexities have lost site of their proper focus: to benefit the welfare of the human race. Systems no longer accommodate the ability to allow humans to experience personal feelings and reactions, after all balance sheets don’t have room for joys and sorrows.

Despite it’s obvious short sightedness, the reason technique prevails is that the systems we have built become increasingly more reliant on it. Hill summarises Ellul’s ethic as the relentless pursuit of two fundamental goals: expansion and efficiency. These goals are mirrored in the across every organisation or institution we’ve ever developed. Whether it be political, educational, financial or business. The reason it’s no longer serving it’s purpose to the ability it once has, is that predictable environments, the ability to control resource allocation and hierarchies of power are becoming less and becoming replaced by self-organising systems that rely on distributed resources and consisting of relatively autonomous actors.

Take for example the media industry. Once controlled by a small amount of players controlling a large amount of resource, individuals are now able to not only distribute other peoples work (legal or not) but produce their own at minimal cost. No longer does an artists want to create, indulge in and share their work need to be governed by a companies financial goals. The venture capital industry is being challenged by the likes of Kickstarter, the travel industry by the likes of AirBnB and even the behemoth automotive industry by Zipcar. But even the institutions that sit at the very heart of our society, financial and governmental, are being challenged by the occupy movements.

By being reliant on a network, they are able to challenge institutions because they organizational structure is suited towards today’s complex social and political environment. Their strength is attained by only having a few simple rules, much like the flight of the bird: 1) avoid crowding, 2) go in the same approximate direction as your flockmates, and 3) always try to stay close to the center mass of the flock. To be an occupant you had to do only 3 things, frequently hold assembly, organize action within working groups and work towards centralized accumulation of wealth. Although relatively short-lived in regards to media exposure, the awareness of economic inequality and financial corruption is becoming an increasingly frequent issue of public interest.