superfans: building trust and commitment through online reputation

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we help companies unlock the passion of their customers. The Lithium Social Customer Suite allows brands to build vibrant customer communities that:

lithium.com | © 2012 Lithium Technologies, Inc. All Rights Reserved

contents

1 intro

3 defining health factors for online communities

5 after peak Facebook

6 what is online community?

8 organizational ownership

10 conclusion

1


intro

Communities thrive or fail based upon trust. Consumers

must have some degree of trust in the hosting brand to make

the community successful, but far more important is the trust

that consumers have in their peers.

There are two key benefits to peer-to-peer trust, each

one required for a brand community to achieve its

business objectives:

If consumers trust that their peers know what they are talking

about, they are more likely to follow their advice, whether that’s

advice about which product to purchase or how to fix a problem

with a product they’ve encountered. The most prolific users

typically create 90% of the content in a brand community, so it

is vital that visitors know who among them is trustworthy.

If new community members see that the community rewards

engagement with higher levels of status and privilege, they

are more likely to invest their time and effort in making the

community successful. In other words, the community is

something like a video game—the drive to move up to the next

level compels members to higher levels of participation.

Even a customer community with a million members depends

upon a fairly small number of people, typically around 1%, to

generate much of the excitement and interest. Without the

peer trust created by a reputation management system, this

1%—the superfans—will not engage and the community will

not achieve its business objectives. So it is vital to understand

the dynamics of online reputation and use the best available

tools for managing it.

Building this web of trust requires both the right technology

and an understanding of human behavior. Lithium’s approach

to online reputation combines those. Our software and

practices are based upon:

Ten years of social interaction data across several hundred

communities, tens of millions of users, and 50,000

superfans—consumers whose deep engagement with brand

communities drives others to participate.

Research conducted by Lithium’s Principal Scientist, Dr.

Michael Wu, who was recently named (along with Marc

Benioff and Mark Zuckerberg) as one of the most influential

people in CRM. Lithium encourages Michael to share

his research findings in a blog, which you can find on the

Lithosphere, Lithium’s own community.

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Real-world interactions through the communities Lithium

hosts for its clients, including some of the largest, brand-

sponsored communities in the world at HP, AT&T, PlayStation

Europe, and Univision. Lithium’s customer success managers

(CSMs) are actively engaged with our clients in designing

reputation and reward programs in their communities.

A well-executed reputation system delivers tremendous

return on investment by empowering the smartest, most

committed members of the community to take on much

of the responsibility of managing the site and driving its

business objectives. A small minority of superfans makes the

difference between success and failure in brand communities.

For example:

Lenovo’s award-winning customer support site is staffed by a

moderation team composed entirely of customer volunteers

from all over the world—US, Australia, Canada, Germany,

India, Pakistan, and Turkey. Initially, the collaboration focused

on the operation of the community—the policies, the rules,

and the content. But in just one year, 30 members who had

earned the trust of Lenovo and their peers helped grow

Lenovo’s knowledge base to 1200 articles.

English mobile telephony provider giffgaff’s remarkable

customer community is both the customer service and

marketing arm of the company, which has fewer than 20

employees! The average time to receive a response in the

giffgaff support forum is under three minutes, and 100% of

technical questions are answered by the community. Giffgaff

members who answer others’ questions effectively and earn

high status also receive free air-time, which they can then

give as gifts to their friends. This makes these high-status

users word-of-mouth marketing agents.

One user on Logitech’s community has posted 45,000 times

since May 2006, an average of almost 25 times per day! These

answers to technical and purchase questions have been

viewed millions of times, giving him an effective reach larger

and more lasting than the company’s advertising campaigns.

An effective rank and reputation system must do the following:

Reward members for the full range of socially beneficial behaviors. This sounds simple, but many systems do a poor

job of it. For example, simple reputation systems confer

status upon users based purely on the number of posts they

create, but this creates perverse incentives. Members post for

the sake of posting in order to “game the system” rather than

focusing on quality posts. Moreover, some members visit the

community every day, but only post when they have something

very important to say. These members may actually be the

glue that holds the community together, but many reputation

systems treat them poorly because they don’t post often.

Motivate members continuously through their engagement process by progressively making succeeding levels of achievement more difficult to attain. This concept is

sometimes known as “game mechanics,” and it is critical to

keeping members engaged. Some of Lithium’s long-standing

communities have over 150 different levels because members

keep raising the standard.

Confer meaningful privileges upon superfans. Many systems

display visible badges of status, and this is necessary but not

sufficient. While superfans are motivated by public status

markers, long-standing members are motivated by having

authority, such as the ability to move or delete content, the

ability to edit or write blog or knowledgebase articles, the

ability to post comments without moderation, and the ability

to discipline members of the community who cause trouble.

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defining health factors for online communities

Offer multiple paths to success. A brand community is a

complex ecosystem. Some people may be experts in one

product but not in another. Some may be great at starting

discussions, others may be great answerers of questions,

and still others may be friendly and welcoming. The rules

underlying the game must be flexible enough to enable all of

these people to feel as though they are winning. If you make

a domain small enough, every man can be a king. While this

may not be entirely practical, it is an important maxim for

creating participation among diverse audiences.

Lithium’s reputation system has been honed over ten years of

iteration in diverse and demanding environments, from online

gaming communities to the world’s largest brand community

dealing with beauty. Here are some of its key features:

The Lithium platform tracks over 70 behavioral metrics that

can be factored into the reputation system, with more factors

added as new features are built into the system. Moreover,

Lithium can import factors from external user directories, so

customers can be rewarded for loyalty or purchase behaviors

in addition to their actions within the community. No similar

system is as flexible or extensible.

Lithium’s reputation system allows an unlimited number

of ranks, which are all programmable by business rules.

This means that first-time users can experience immediate

gratification as they move up in rank after they make one or

two posts, while long-time users can be rewarded for a range

of behaviors.

Lithium’s reputation system is linked to its role system, which

has over 100 different permissions. As a result, members who

have earned the trust of their peers can be empowered to

moderate the community, can have their content ratings count

more, and can even make badges displaying their status that

carry over into other sites such as Twitter or Wordpress.

Lithium’s reputation system is granular within the

community, so members can have an “overall” reputation in

the community at large, but a particularly high status within a

specific area of the community. This gives product specialists

or people who are prone to submitting particularly valuable

ideas a higher level of visibility than they might otherwise be

able to achieve.

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Lithium’s Customer Intelligence Center uses algorithms to surface to community managers the most important members

in terms of the centrality of their connections with other members, the members who are emerging as extremely prolific posters,

and members whose participation is beginning to wane. The value of a superfan is so great that Lithium recommends that

companies proactively reach out to members whose participation is declining, and the Customer Intelligence Center gives them

the tools to do that.

At Lithium, we have focused on the management of superfans

because all of our experience and data has shown us that if

you take care of the most important users, the rest will follow,

while the converse is not true. We work with each one of our

customers to understand their business objectives and create

a reputation structure that works for them. This is a primary

reason why Lithium communities are more vibrant and

successful than our competitors’.

In the whole, respondents rated their communities as more

successful than Facebook at activities that require trust:

peer-to-peer engagement and providing pre-and-post sales

purchase support; Facebook was seen as more successful in

disseminating marketing messages.

The two channels were seen as roughly equal in their ability

to create brand awareness. Clients who have initiated brand

communities see awareness benefits as particularly salient

in the first year, suggesting that “newness” of an engagement

channel is in itself a big driver of awareness.

The ability for customers to submit and discuss ideas for product

or service improvement is the biggest downstream benefit of

social customer engagement for clients who have developed

brand communities. Clients who consider their Facebook efforts

less successful are particularly interested in bringing this

capability to Facebook in a more structured fashion.

our insightsallow us to identify social

influencers today and predict who will be one tomorrow.

our gaming scienceuses a sophisticated reputation engine to

inspire influencers to get deeply involved

our insightsallow us to counsel our

clients on engaging influencers and bringing better

results to their company

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As Facebook itself approaches full penetration of its core

markets and its members start to regularize their behavior,

historic growth rates for participation in corporate Facebook

pages will slow. Call it “peak Facebook.” Recent surveys

have also shown that existing consumers’ engagement with

corporate Facebook pages may be tenuous and fading. For

example, 81% of those who have become fans of a brand

have abandoned at least one such relationship because of

“irrelevant, voluminous, or boring” marketing messages.

This suggests that marketers who are committed to using

Facebook to foster relationships with social customers will

need to invent or adopt sophisticated long-term strategies for

customer engagement. Fortunately, many of the techniques

learned in brand communities can carry over into Facebook.

after peak Facebook

51.4%50%

answer product questions

8.3%42.9%

display status or achievements

66.7%60%

search our knowledge base

50%62.9%

submit ideas for service/product improvements

58.3%60%

see the best/most useful content that others have submitted

50%42.9%

identify other customers with similar backgrounds or needs

50%60%

find products their friends or colleagues have recommended

mentions by respondents who rate their Facebook pages as less successful

mentions by respondents who rate their Facebook pages as successful

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One of the first questions we see from brands developing

a social customer strategy is, “Do I need both a brand

community and Facebook, and if so, what role does each

one play?”

The answer to this question always depends on circumstances

and business requirements, but given that our audience has

experience with both venues, we have a very good sense of the

role that each one plays.

Figure 1: Overall effectiveness of Facebook and brand community. Figure 1 compares the brand community’s

perceived effectiveness with the Facebook page’s perceived

effectiveness in 10 different areas.

The first thing to note is that the one area where Facebook

shines is in outbound messaging. Because Facebook offers

outstanding reach and many brands use it as a publishing

platform for periodic updates, its prowess as a vehicle for

disseminating marketing messages is not surprising. Social

media marketing vendor Vitrue has computed that a fan

base of 1 million translates into $3.6 million in equivalent

media per year, and brands such as Coca-Cola already see

more unique visitors to their Facebook page than they do

to their company web site. In these situations, Facebook

represents a means of message dissemination that compares

favorably to advertising on a cost-per-impression basis.

Interestingly, however, Facebook was not cited as significantly

more effective than a brand community in creating brand

awareness, or creating goodwill for the brand in social

channels. Given the Facebook platform’s reach and

viral features, one might have expected higher scores for

Facebook’s ability to increase brand awareness, but there are

several reasons why the scores may be lower than expected:

Brand awareness is still largely campaign driven, and a

Facebook page alone does not constitute a campaign.

Even when campaigns drive users to Facebook pages

and increase the brand’s fan base, there is no guarantee

what is online community?

47.6%56%

answer product questions

20%52.4%

display status or achievements

64%57.1%

submit ideas for service/product improvements

60%57.1%

see the best/most useful content that others have submitted

52%38.1%

identify other customers with similar backgrounds or needs

64%47.6%

find products their friends or colleagues have recommended

mentions by respondents who rate their communities as less successful

mentions by respondents who rate their communities as successful

64%57.1%

search our knowledge base

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that these people were new to the brand. Most users who

associate with a brand page probably have a prior affinity for

that brand.

Finally, as we have seen through social media monitoring

studies, “buzz” around brands spikes during successful

campaigns, but typically returns to a steady state after

campaigns end.

One further explanation may be that our community clients

report that brand awareness benefits peak during the first

year, even as other benefits increase over time. If this holds

true across other social channels, it is possible that the

fact of starting a new program in and of itself is responsible

for increased awareness—probably because that program

involves an introductory campaign. When the shock of the

new wears off, what is left?

As it turns out, brand communities annuitize exceptionally

well. Peer-to-peer engagement and an environment where

users answer one another’s questions emerge as a corps of

devoted users forms and mobilizes. Indeed, scores rise in

these areas as communities move into their second and third

years, suggesting that communities hold their users’ interest

over the long haul.

Figure 2: Anticipated benefits versus realized benefits. Peer-to-peer buying advice and customer ideation were two benefits exceeding client expectations. The survey tells

us that benefits clients anticipated when embarking upon a

social customer program are not always the same benefits

that emerge over time. This is particularly true in two areas:

idea development, and peer-to-peer pre-sales consulting.

Customer feedback/ideation was listed as an original purpose of

a community 46% of the time, but a realized benefit 78% of the

time. Peer-to-peer pre-sales consulting was an original purpose

13.5% of the time but a realized benefit 27% of the time.

Both of these “downstream” benefits are most likely to

emerge as byproducts of trust among members of a

community. Brands tend to be more willing to harvest and

discuss rand communities.

The ability to find products or services recommended by

friends or colleagues is also seen as a potential area of

improvement by those who are not particularly satisfied with

their Facebook efforts.

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If we see a coming convergence between the way people

interact on Facebook and the way they interact in a

brand community, it is worth asking who will lead that

convergence and how it will take place. Enterprises vary

in their determination of who owns social customer

initiatives. In some organizations, social customer initiatives

are owned by customer support or customer experience

teams. Increasingly, however, they fall under the purview of

marketing or corporate communications functions.

Figure 6: Additional requirements from Facebook by social program ownership. As we can see from Figure 6,

organizations where marketing owns social initiatives are

demanding less of Facebook in terms of new modes of

customer engagement. In fact, ownership by marketing is

more important than the perceived success of a company’s

Facebook page in determining whether a company is

interested in customers engaging through Facebook in more

involved ways. Customer support and customer experience

groups continue to be more interested in the exchange of

ideas and the answering of product questions.

Figure 7: Largest challenge with social customer programs, by program ownership Marketing-led organizations’ biggest

concern with social customer programs is how to scale them.

Figure 7 shows the chief concern as scaling initiatives with

(relatively) less concern about coordination across teams

and departments. 44% of marketing-led organizations cited

“resources to scale our efforts” as the biggest challenge, as

against 34.4% of everyone and (9/34 - 26%) of non-marketing

led organizations. This suggests that one reason marketers

are less aggressively pursuing “deeper” engagement through

Facebook is that, unlike support or customer experience

organizations, they lack human resources—like contact

centers—that are perceived to be required to ensure that

social customers get the satisfaction they require from

engagement through Facebook. Better, perhaps, not to hold

out the promise of a sustained dialog with customers if an

organization cannot make good on that promise.

The survey shows that marketers and customer experience

are equally committed to responding to customers in brand

communities and through Facebook and Twitter. However,

it would not be surprising if Facebook’s reach threatens to

become overwhelming if customer actions on Facebook

organizational ownership

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called for a response. Indeed, perhaps one thing that

marketers have learned with online communities that they

have not (yet) learned with Facebook is that customers

themselves can be the solution—not just the cause—of the

scaling problem. Time and again, we have seen that larger

communities with a devoted core of superfans actually

require less intervention from companies than fledgling

communities. The “downstream” trust benefits pay dividends.

There is no reason why this shouldn’t be so on Facebook, but

many organizations are in earlier stages of their experience

with Facebook.

Figure 8: Requirement for ROI measurement by channel and program ownership. A final area in which brand communities

differ from other channels for marketing-led organizations

is in the need to prove themselves through ROI metrics.

As we can see from Figure 8, marketing-led organizations

generally have higher demands for ROI, but this is particularly

true for brand communities. We suspect this is a function of

the perception that Facebook engagement is free because

a Facebook page is itself free, but also of the maturity level

of Facebook as a technology and a marketing venue. As we

see increasing convergence of social channels, we should

also expect to see demands for more sophisticated Facebook

measurement tools, and growing demands for Facebook to

prove its value.

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lithium.com | © 2012 Lithium Technologies, Inc. All Rights Reserved

Lithium social solutions helps the world’s most iconic brands to build brand nations—vibrant online communities of passionate social customers.Lithium helps top brands such as AT&T, Sephora, Univision, and PayPal build active online communities that turn customer passion into social media marketing ROI. For more information on how to create lasting competitive advantage with the social customer experience,visit lithium.com, or connect with us on Twitter, Facebook and our own brand nation – the Lithosphere.

conclusion

There are significant synergies between Facebook and brand

communities. Both offer unique marketing advantages, and

we’ve helped customers extend the reach of their brand

communities on Facebook. For its sheer size and viral

features, Facebook is generally considered more successful

at disseminating marketing messages, and is roughly equal in

its ability to create brand awareness. As we’ve seen in online

venues before, however, driving people to a social site without

providing an outlet for their needs invites a peak-and-trough

customer engagement, rather than a sustained, vital and

profitable enthusiasm. A campaign-based wave of awareness

will eventually peak and subside, and may then create

unrealistic expectations for customers. As these channels

evolve and the awareness benefits subside, marketers should

consider Facebook a useful platform for cultivating an online

presence run more like a community than a campaign.

The dividends of a well-developed Facebook presence will

ultimately depend on marketers inventing or adopting

sophisticated long-term strategies for customer engagement,

such that their Facebook presence derives its value from

peer-to-peer relationships. But those relationships also have

to be based in trust, both among customers and between

customers and the brand. Establishing this trust is a key,

long-term strategy. For instance, fostering productive

peer-to-peer relationships among customers and rewarding

positive behavior helps to create trust, as does identifying,

motivating, and highlighting your brand’s superfans. The

downstream annuities of trust and engagement only grow

when brands cultivate true, multi-directional relationships

with their social customers over the long term. The potential

ROI is tremendous.

superfans: building trust and commitment through online reputation

Technology

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