The Relationship Quotient: Harnessing the Power of Human Connectivity and Networks to Drive Sustainable Brand

Growth By Brian Salzman and Kate Wolff

Influence 101

Influencer marketing has become the defining marketing trend of the early 21st century. What was a $1.7 billion industry in 2016 surged to $4.6 billion in 2018 and is predicted to reach $6.5 billion in 20191. While still a small portion of the overall media mix, influencer marketing is experiencing exponential growth at a time when traditional channels are either flat or declining. 2 In 2018, spending on print ads were down 17 percent, linear radio sales were down 4 percent, and national TV sales were up just 1 percent. This is because influencer marketing is more than just another channel; it represents a core realignment of the brand-customer relationship. From the day that the first newspaper ad was placed in 1704, marketing has been transactional and focused on building a narrative. Influencer marketing recognizes that a new fundamental truth has emerged: We can no longer focus on the brand narrative without considering who is delivering it. For decades, the research on persuasion, influence, and motivation has made it clear that influencer and word-of-mouth models are superior to traditional advertising. Ninety-two percent of consumers say they trust word-of mouth recommendations, particularly from people with whom they have a relationship3, above all other forms of advertising; and 82 percent say they seek recommendations from friends and family before making a purchase.4 When it comes to making a purchase, trying a service, or “joining a tribe,” there is nothing more powerful than a heartfelt recommendation from a well-informed person with whom you enjoy a trusting relationship. A Fatal Misunderstanding But the way most brands approach influencer marketing has little to do with authentic relationships. Most brands are choosing influencers based on superficial signifiers: follower counts, Q scores, subscribers, and arbitrary status designations (“verified,” “power user”) from social platforms. As the influencer marketing ecosystem grows more sophisticated, these metrics multiply in quantity and complexity. Yet these metrics have little to do with relationships. And, as the research shows, relationships are everything when it comes to influencing people. Today, the majority of brands find it easier and cheaper to choose influencers based on this ever-expanding trove of digital metrics than to seek out partnerships with the flesh-and-blood people who wield true influence in their category. Real influencers may have millions of Instagram followers, or they may have no social media presence at all. They may be household names or have zero name recognition beyond their circle of friends. But they have an understanding of your brand purpose, history, and story and how it’s authentically used, and they have dynamic, mutually beneficial relationships with people who value their recommendations and could be interested in your product.

1 https://influencermarketinghub.com/influencer-marketing-2019-benchmark-report/ 2 https://magnaglobal.com/magna-advertising-forecasts-winter-2018-update/ 3 https://www.nielsen.com/us/en/press-room/2012/nielsen-global-consumers-trust-in-earned-advertising-grows.html 4 https://www.getambassador.com/blog/8-referral-marketing-statistics-that-will-change-the-way-you-think-about-referral-marketing

A New Kind of Intelligence In 2016, we formed RQ with the understanding that a new kind of intelligence was needed to prosper in today’s hyperconnected market. This is true for brands as much as people. In a culture increasingly built on tribalism and selective interdependence, transactional, interruptive advertising is losing its power—and alienating potential customers. Today, the difference maker is your ability to forge healthy, authentic, mutually beneficial relationships that support and advance your goals. We call this the Relationship Quotient (RQ), and it is the crucial X-factor that is missing from most influencer marketing campaigns. We believe it’s vital that brands and marketers take steps to raise their own RQ and start returning to the roots that make marketing powerful and effective: building authentic, honest, and trusting relationships. This paper will define the Relationship Quotient as a key metric of modern human intelligence, explore its power to persuade and influence people, and explain how to deploy the concept to drive sustainable brand growth.

What is RQ? The Age of Efficiency At the beginning of the 20th Century, the newly industrialized West was obsessed with efficiency. At Bethlehem Steel Works, Frederick Winslow Taylor used a stopwatch to identify the fastest worker—whom he dubbed the “first-class man”—and fired anyone who couldn’t match his time.5 Soon after, a student of “Taylorism” named Henry Ford opened a plant where workers on an assembly line, timed by an ever-present clock, repeated a single task for eight hours a day, manufacturing a million cars a year by 1914 and selling them for one-quarter of what they cost a decade earlier.6 The desire to clock, sort, and classify people based on innate ability wasn’t limited to production alone. Driven in part by the influx of more than 8 million immigrants to the United States between 1900 and 1910,7 employers were looking for a way to sort people by intelligence so they could place those with the greatest potential in the positions of greatest responsibility. This gave rise to the earliest intelligence tests, and what would eventually become known as the IQ, short for Intelligence Quotient. In 1905, French psychologists Alfred Binet and Théodore Simon introduced the progenitor of the IQ test: The Binet-Simon Test, which was designed to identify mental disabilities in school children by assessing their verbal skills. When World War I began, the U.S. Army used the Binet-Simon test to evaluate and assign recruits to appropriate tasks. More than 1.7 million recruits ultimately took the test, which, after the war, became widely used in schools and industry. Even in its earliest forms, IQ tests were criticized as biased and misleading. Because they assumed familiarity with American customs, they helped reaffirm racist and nationalist prejudices. And Binet himself called the test an inadequate measure of intelligence because it didn’t measure creativity or emotional intelligence.8 Though the Binet-Simon test was soon supplemented, and later replaced, by a variety of tests covering a wider range of mental skills (word fluency, number facility, spatial visualization, etc.), the criticism of IQ tests remains: They offer a narrow view of human intelligence, critics say. While they are somewhat reliable predictors of academic, personal, and professional success, there are many high-IQ people who seem to struggle with basic human interaction.9 "IQ tests measure an important domain of cognitive functioning and they are moderately good at predicting academic and work success,” said Keith Stanovich, a professor of human development and applied psychology at the University of Toronto who has studied IQ tests. “But they are incomplete. They fall short of the full panoply of skills that would come under the rubric of 'good thinking'."10

5 “These Truths: A History of the United States,” Jill Lepore, 2018, W.W. Norton & Company, pps 382 6 “These Truths: A History of the United States,” Jill Lepore, 2018, W.W. Norton & Company, pps. 383 7 https://spartacus-educational.com/USAE1900.htm 8 https://www.businessinsider.com/iq-tests-dark-history-finally-being-used-for-good-2017-10 9 https://www.psychologytoday.com/us/tests/personality/emotional-intelligence-test 10 https://som.yale.edu/news/2009/11/why-high-iq-doesnt-mean-youre-smart

The Age of Individuality American intellectual life underwent an era-defining change in the 1960s. The cultural move toward liberalism found its way into the classroom, where the emphasis shifted from rote memorization to intellectual curiosity, and American history courses started incorporating more diverse perspectives.11 Meanwhile, many psychologists, frustrated with the limits of Freudian psychoanalysis and Skinner’s Behaviorism, turned toward humanistic theory, which emphasizes self-actualization and every individual’s unique psychological needs.12 Out of this shift came the first threads of the theory of Emotional Intelligence. Formulated largely in opposition to IQ and its perceived blind spots, emotional intelligence—commonly shortened to EQ—was first described in a pair of research papers in the mid-1960s. But it wasn’t until New York Times science reporter Daniel Golman published his 1995 book, “Emotional Intelligence,” that the term gained mainstream recognition. Unlike IQ, there are no standardized tests or scale, nor even a single agreed-upon definition, for EQ, leading many critics to dismiss it as pseudoscience. But it has nonetheless become a well-recognized psychological principle (or, perhaps more accurately, a pop-psychological principle), and is generally understood to refer to a handful of traits:13

• Emotional awareness, or the ability to identify and name one’s own emotions

• The ability to harness those emotions and apply them to tasks like thinking and problem solving

• The ability to manage emotions, which includes both regulating one’s own emotions when necessary and cheering up or calming down other people

People with high EQs are thought to have a keen awareness of their own strengths and weaknesses, and to be highly adept at navigating the intricacies of human interaction, making them more effective and reliable leaders. The most commonly used test to analyze EQ is the Mayer-Salovey-Caruso Emotional Intelligence Test (MSCEIT), which tests for four types of emotional intelligence.14 These are the ability to:

• Perceive the emotions expressed by a face or in designs

• Generate a mood and solve problems with that mood

• Define the causes of different emotions. Understand the progression of emotions

• Determine how to best include emotion in our thinking in situations that involve ourselves or other people

Today, the MSCEIT is used by psychologists, employers, and recruiters to identify potential leaders and better place people in environments in which they are likely to thrive. Studies probing a link between emotional intelligence and job performance have produced mixed results.15 The Age of Networking If the early 20th Century was obsessed with efficiency, and the late 20th Century was fixated on the individual, the early 21st Century has been defined by relationships and networking.

11 https://www.encyclopedia.com/social-sciences/culture-magazines/1960s-education-overview 12 https://www.britannica.com/science/humanistic-psychology 13 https://www.psychologytoday.com/us/basics/emotional-intelligence 14 http://www.eiskillsgroup.com/msceit-psychometrics/ 15 https://www.psychologytoday.com/us/basics/emotional-intelligence

Though it is often referenced as a punchline today, MySpace represented a revolution in human relationships when it debuted in 2003. MySpace not only gave users the then-novel ability to interact directly with one another in a media-rich digital environment, it empowered them to make “friends” based on shared interests, like music, TV, or literature, without regard to geography, age, or economic class. And the power of that functionality was immediately apparent: Within three years of its founding, MySpace surpassed Google to become the most-visited site in the US, accounting for 4.5% of all US Web visits. 16 On a darker note, MySpace also ushered in the age of quantified human relationships. The public nature of MySpace—and later Facebook, Instagram, LinkedIn, Twitter, YouTube, etc.—encouraged users to participate in a networking arms race, collecting so-called “friends” as a sign of social superiority. As social media grew, so, too, would the obsession with follower counts and “likes,” often at the expense of authentic human interaction. Regardless, social networking quickly became the world’s dominant digital pastime. In 2018, 3.2 billion people used social media sites every month, with the top social platform in every country adding an average of 1 million new users every month. The world’s leading social platform, Facebook, had 2.2 billion monthly active users, making it the second-most visited site in the world next to Google.17 Offline, the proliferation of private membership clubs like The Wing, SoHo House, 5 Hertford Street, and the Battery speak to an emerging desire among urban professionals to expand their social circles in a diverse, socially conscious environment. These clubs are rooted in elitist institutions like the Yale Club and Skull and Bones, but have been reborn with an eye toward diversity and inclusion. There are also countless online services that facilitate off-line networking. Meetup and MoveOn.org supercharged community organizing in the early 2000s. Both Virgin Airlines and Delta have launched services that let business travelers choose well-connected people to sit with,18 and apps like Lanyrd and DoubleDutch help conference attendees network with strangers. And though it’s easy to think of Twitter and Facebook as purely digital landscapes, hyper-networking travelers have long used them to broadcast their schedules in search of IRL meetups.19 A society built on networking, much of it digital, rewards people with different skills and aptitudes than those we have previously measured. Both IQ and EQ metrics are still applicable, particularly EQ’s focus on navigating the emotions of yourself and others. But neither fully accounts for the unique capacity to build and maintain a large network of healthy, authentic human relationships that help achieve mutual goals. We call this new standard the Relationship Quotient, or RQ. People with high RQs tend to exhibit five personality traits.

16 https://mashable.com/2006/07/11/myspace-americas-number-one/#TNZIssSJZ5qa 17 https://www.slideshare.net/wearesocial/digital-in-2018-global-overview-86860338 18 https://theweek.com/articles/562574/how-network-flight-right-way 19 https://www.nytimes.com/2015/04/12/style/no-one-to-meet-how-about-a-tweetup.html

• Consistency. They are reliable and predictable; they follow through on their promises and behave in a consistent manner, making it easy for others to work with them.

• Authority. They are deeply knowledgeable on at least one topic, though most have a wide range of expertise. They are the person you call when you or a friend needs advice, insight, or guidance on a specific topic.

• Attentiveness. They are active, engaged listeners, quick to absorb information and good at relaying it to others.

• Reciprocity. They have an innate understanding of mutuality, which expresses itself in a penchant for returning favors and kindnesses.

• Facilitation. They are not protective of their relationships and are eager to connect people to one another. We refer to people who strongly display this trait as super-connectors, and we consider them to have extremely high RQs.

• Self-starter. When armed with the right information, they are not afraid to step up and be the first to take action.

People with high RQs are, by definition, influencers. They may not have an Instagram account; they may not even have a lot of friends. What they do have is a vast network of people who rely on their counsel, authority, or ability to connect them with other influential people. RQ holds significance not just for individuals, but for businesses looking to thrive in a hyper-connected age. Today, brands are expected to communicate on a one-to-one level with consumers. They present themselves as a single voice with a unique personality. Brands now impersonate, in every way permissible, humans; when operating within cultural spheres of influence, it hardly matters that they’re not.

Myths Vs. Realities of Influence

The Forgotten Principles of Persuasion The prevailing approach to influencer marketing is to identify a handful of social media celebrities who are popular with a target audience, then pay those with the most impressive digital metrics to promote a product. Little thought is given to whether these social media stars hold any real-world influence, and whether they have an affinity for the brand or its story. Worse, little effort is made to forge an authentic, mutually beneficial relationship between the brand and the influencer. This has led to an erosion of consumer trust and diminishing returns. In a 2018 study, 15% of influencers admitted they did not like the brands they were promoting. And 35% of women—who follow influencers at twice the rate of men—said they did not think influencers were being honest in their sponsored content.20 In short, consumers can sense when influencers are endorsing a brand they don’t believe in. Consequently, even though 75% of marketers are currently using influencer marketing, only 36% feel it is effective, and 19% say it is ineffective, according to a 2018 Association of National Advertisers study.21 (Remarkably, 43% said they still planned to increase their spending on the practice in 2019.) Yet it is clear that influencers and social-media stars have generated major clout with consumers, particularly younger ones. Generation Z, typically defined as people born between 1995 and 2005, are 1.3 times more likely to purchase a product recommended by an influencer than one recommended by a traditional TV or movie personality. Seventy-three percent of Gen Zers “feel close” to YouTubers, but only 45 percent say the same of TV and movie stars. And 40 percent say their favorite YouTuber understands them better than their real-life friends .22 In his landmark 1984 book, Influence, the Psychology of Persuasion, Dr. Robert Cialdini, professor of psychology and marketing at Arizona State University, laid out six universal principles of persuasion.23 Nearly 35 years later, Dr. Cialdini’s principles remain a core part of the curriculum in marketing and psychology programs around the world. However, the prevailing approach to influencer marketing is at odds with Dr. Cialdini’s principles. Those six principles of persuasion are:

1. Reciprocity A person who receives a kindness will feel obligated to return it in a similar fashion (you invite me to your party, I invite you to mine).

20 https://www.agilitypr.com/pr-news/public-relations/lack-trust-threatening-influencer-effectiveness-yet-influencers-seem-unaware/ 21 https://www.ana.net/content/show/id/48437 22 https://hackernoon.com/gen-z-and-the-rise-of-the-digital-influencers-55cef381b16d 23 https://www.influenceatwork.com/principles-of-persuasion/

2. Scarcity People want more of something if they believe that thing is in short supply. 3. Authority People follow the lead of credible, knowledgeable experts. 4. Consistency People prefer to be consistent with their previous actions or

statements. 5. Liking We prefer to say yes to people we like, and we like people who are similar to

us, pay us compliments, and have similar goals. 6. Social Proof People will look to the actions and behaviors of others to determine

their own behavior, particularly when doubting their own instincts.

Though the practice of influencer marketing has largely lost touch with the science of persuasion, there can be no influencer marketing without it. Persuading people is what influencer marketing is all about. Dr. Cialdini’s work is based on well-mapped human reactions to common stimuli, and it provides a roadmap for understanding why some people are more persuasive than others. In our experience, people with a high RQ understand Dr. Cialdini’s principles intuitively. They are naturally influential because they practice the core tenants of persuasion authentically and spontaneously. This makes them true influencers, which is to say, they possess the rare ability to persuade large groups of people to take action. Likewise, an influencer marketing program that is rooted in and consistent with Dr. Cialdini’s principles will be more effective than the broken model outlined above. The key is identifying and cultivating the high-RQ allies who naturally align with your brand. Identifying Truly Persuasive Influencers You can recognize true influencers not by measuring their social following, but by measuring the degree to which they naturally practice the act of persuasion. Again, people with high RQs are more likely than others to be true influencers. At RQ, we have developed six criteria based on Dr. Cialdini’s principles for identifying influencers.

1. Authority Are they an expert or a thought leader in their field? Do they have a unique point-of-view? Do others instinctively follow their advice or example?

2. Liking Is there a clear and authentic connection between the influencer and a particular

topic, brand, profession, or pastime? Do they strive to be a part of something in a way that makes them relatable to others?

3. Consistency Do they have an ownable voice? Do they have strong engagement rates, online

and off? Does their audience respect them and trust their opinion?

4. Social proof Do they have a distribution channel? Have they been involved in a movement?

5. Reciprocity Do they practice what they preach? Do they take action or enact change?

6. Audience representation Do they reflect the audience and communities they claim to speak to?

Once you learn to recognize the traits and characteristics of a true influencer, you can more effectively identify those influencers who will work best for your purposes.

Building long-lasting, mutually beneficial relationships with influencers who possess the above characteristics empowers brands to put Cialdini’s principals of persuasion to work in the marketplace. But the relationship cannot be transactional or merely convenient. It must be built on a solid foundation of reciprocity, liking, and consistency. And it must be nurtured over time. By forging connections between brands and people of influence, we are able to provide those brands with sustained relevance within culture. This is both a course correction for the wayward path of modern influencer marketing and a fundamental re-imagining of the brand/influencer relationship.

RQ in Action: Pizza Hut and Jimmy Fallon

In 2018, Pizza Hut enlisted RQ to help renew the 60-year-old brand’s relevance by inserting it into the larger cultural conversation. RQ developed and implemented a series of programming efforts designed to build dedicated influencer relationships. Programming focused on driving trial of Pizza Hut among targeted influencers to create organic social content in creative ways (without an associated fee), seeding Pizza Hut with key creator groups (e.g., film and tv writers’ rooms, music record labels, and gaming content developers), and surprising influential pizza fans with acts of generosity. One such activation centered on Tonight Show host Jimmy Fallon. On January 24, Fallon made a joke during his opening monologue about Pizza Hut’s Super Bowl promotion, which promised a free pizza to everyone in the Hut Rewards program if either team broke a running yard record. Fallon’s mention was spontaneous; the brand had no existing relationship with the comedian. But Fallon was already on RQ’s radar. Our intelligence on Fallon marked him as a high-RQ individual, someone with a large network of real, mutually beneficial relationships with other influential people. While several other comedians and hosts had mentioned the Pizza Hut Super Bowl promotion, we had reason to believe that Fallon would respond positively—and publicly—to some good-natured flirtation from the brand. The first step was a simple act of generosity and reciprocity. The brand delivered 75 pizzas to the Late Night crew. The Tonight Show responded by tweeting a photo of the boxes to its 6 million followers with a message: “.@PizzaHut does this mean we are loyal members now?” A positive brand mention to 6 million consumers in exchange for a couple hundred dollars’ worth of pizza would be considered a huge win in most influencer marketing campaigns. But our goal was to forge an ongoing relationship with Fallon on behalf of the brand. So we responded by upping the stakes. A few weeks later, Pizza Hut hand-delivered to Fallon an “Official Loyalty Induction” kit welcoming him to the brand’s Rewards Loyalty Membership Program. Packaged in an elegant wood box, it included an embroidered, customized Members Only jacket, a Custom Certificate of Loyalty, Pizza Hut gift cards, and a handwritten note from the brand president Arty Stars. Fallon responded by posting six separate Instagram stories on his personal account (15.2 million followers) showing off the contents of the kit and excitedly thanking Pizza Hut. His posts came off as sincere and enthusiastic, and generated thousands of comments and reactions. By approaching Fallon in a manner consistent with the principles of persuasion, Pizza Hut generated referrals from a genuinely influential person to tens of millions of consumers who value his recommendations. And like any genuine relationship, it didn’t end once the brand got what it wanted. Shortly after Fallon’s Instagram posts, Pizza Hut sent him and the Tonight Show a larger-than-life birthday cake to celebrate their 5th anniversary, which the show posted as an Instagram story. This signals to Fallon that the brand is invested in him as an individual and will continue to engage with him as time goes on.

In all, the effort cost the brand less than $5,000. This is the original promise of influencer marketing realized. No transactions and no disingenuous endorsements. Just a brand and a high-RQ individual forming a relationship that ultimately benefits both parties.