Jonathan, I think you’re correct but decided not to confuse an already complex issue with the Acquisition vs Retention debate, glad you brought it up. The thing is, if interactivity really exisits, if there is such a thing as “Pull”, then Acquisition should be downplayed relative to Retention because the ROI of the marginal dollar invested is so much higher with Retention.

Getting customers is more a matter of developing great products and then customers will find you; there’s no need to beat people over the head. Conversely, as easy as it is to get customers, the downside is it’s dramatically more difficult to keep them, and this is why the ROI of measuring and acting on dis-engagement is so high.

I’m not saying companies should blow off advertising to Acquire new customers, and especially so when they can see clear financial benefits. What I am saying is interactivity is different, and it should be treated that way; and the most efficient interactive Marketing model is one that weights Retention Marketing with a much higher value than is typically used Offline.

The catalog model is in fact one of the earliest demonstrations of optimizing a relationship-based (or engagement-based, if you prefer) Marketing system. The catalog model has *always* been customer-centric and very sensitive to direct customer input as well as driven by behavioral analysis. This is one reason why the transition to digital was so well executed by the catalog / TV Shopping folks very early on – online literally was not a core business model change for most of these folks.

If you think about it, one of the fundamental problems with a lot of online retail is the folks driving the bus came from the Retail / Push model rather than the Catalog / Pull model. And I think this is why so little attention is paid online to customer value and backend analysis – if the business is a “Store”, then all that matters is traffic and Sales – as opposed to Customers and Profit – and that’s why all they know how to do is Push.

In my mind it really becomes a question of CRM vs. Acquisition. It’s a shame there is so little attention paid to CRM especially on the digital side of things where communication channels are multiple and targeted. Kind of like the “deep web” of web marketing that we’ve yet to crack outside of customer segmented email.

So yes, all customers should be treated differently and that should be based on their buying patterns. Fingerhut was a company I worked with that did this very well. Rich CRM systems. I’d say in many ways cataloguers are/were ahead of the curve here.

I’m a bit confused by your reference to Testers, that seems like a 3rd group which are more professional in nature, not “Social”. Point is, if you make great products fans / loyals (some of which may be paid Testers, I guess?) will spread the word about the product very quickly to their friends anyway, so there really so no need to engage in any kind of paid efort to make this happen.

On the other hand, if you produce a shitty product, there is a place in the middle where you have loyals / fans that will be unwilling to spread the word to friends. But I’m not sure a paid social program is the answer there either, a real influencer is not going to do it anyway.

Better to focus efforts on getting the product right (a Marketing responsibility, by the way, not R & D) and taking advantage of the (free) natural inclination of loyals to spread the word. A properly designed product will create it’s own social promotion. Any paid social program should focus on what happens after that – how do we leverage the natural fan-loyal-friend social output into something that reaches less loyals and their aquaintances?

Personally, I see this leveraging of existing loyal output happening a lot on message boards for more traditional products and Blogs / Facebook / Linkedin on more technically oriented products.

2. Do you think this is an important discovery?
>>> It is interesting to me that – preaching to the choir – is an obvious mistake – made over and over again.

3. Do you think this general model – the idea that to maximize Sales, best customers should be treated differently than other customers – might apply to many different types of web / interactive marketing?
>>> I think the aspect of TIME and EVOLUTION is just missing (you mentioned it in a comment a bit). In an early stage you need the few customers to build advocacy and a sound base of trust and support – over time in a maturing cycle you will need to focus resources to broad by focusing on the weaker ends.

4. Will you do anything with this information? What’s first step?
>>> Commenting here ;-) Then thanking Paul Ricket for pointing me here – then usining it in my sales lessen (teaching social selling in the Social Media Academy).

Axel
http://xeesm.com/AxelS

So, to put it in response terms, the loyal-friend combination would have the highest response rate Day 1, the day a product launched, and Awareness would spread like wildfire in that group. This is not a bad thing but largely happens anyway without any kind of effort required by the business.

Problem is, all these folks are *already aware* by the time you get your social program in the field. So there is very little “lift” (incremental) awareness available in this group, no matter what you do. All you have left to drive incremental response is Persuasion.

On the other hand, the less-loyal to aquaintance group has not participated in the original “awareness flash” because they are detached from the thought leaders, by definition. Therefore, it’s much easier to drive incremental awareness (lift) which would result in Sales.

Follow? It’s about where the “base level” of awareness is when you start the program among each group, and in the case of Social, this boils down to a timing issue – you are bound to be way too late with the program to increase awarenss at all in the loyal – friend cohort.

Meaning going after the loyal – friend cohort is a waste of money, because you get zero lift = negative ROI.

I LOVE counterintuitive stuff!

I happen to think you are right.

Those who think we are wrong live in Paradox, and I’m not sure how they can exist holding fundamental contradiction in their heads.

If the web is about interactivity, engagement, then those who are active with you do *not* need to be marketed to, they need to be **serviced**.

It is only when for some reason you drive people away, that you see dis-engagement or engagement fails to materialize, that you need to market to a person (or community).

To do otherwise is incredibly wasteful of resources, and basically says you do not believe the web to be interactive, instead, you believe it to be a giant, one-way TV station.

It’s new medium folks. Use it (and measure it) that way.

Do you think this is an important discovery?
-I’m indifferent about it seems obvious to me.

Do you think this general model – the idea that to maximize Sales, best customers should be treated differently than other customers – might apply to many different types of web / interactive marketing?
-Yes I think it applies to web marketing too. See above.

Will you do anything with this information? What’s first step?
-Keep doing what I’ve always done.

It’s probably easier to specify where you can safely ignore this idea – in any product or category that is launching (any awareness is good awareness) or is totally commodified (persuasion is not effective).

It should be pointed out that unless you are actually investing hard dollars in the WOM program, this test data doesn’t really matter, there’s no spend thing to optimize so no way to lose. Just provide a great product and the WOM will take care of itself ;)

And if you are investing hard dollars and you want awareness, Advertising might be a better alternative because you achieve the same outcome without the potential for creating social hostility through intrusiveness.

In terms of execution, personally I’d lean towards only using paid WOM for products that already have a lot of awareness and need persuasion, because working a program with loyals + their friends has to be easier than trying to work a program with less loyals and their non-friends.

If you know what I mean.

An example that comes to mind is a product like LifeLock, which is all over paid media in terms of awareness, so probably would benefit significantly from persuasion by loyal customers.

In other words, testimonials. They’re just not in the ads, they’re coming from a loyal customer that happens to be your friend.