Customers recommended to businesses are 18% more likely to stay
Why Not Ditch Rihanna for an army of micro-influencers?
When making a purchase decision, are you influenced by your network? According to Neilson, 84% of consumers say they either completely or somewhat trust recommendations from family, colleagues and friends about products, and 74% of consumers identify word-of-mouth as a key factor in buying decisions. This effect isn’t limited to B2C brands – 91% of B2B buyers report trusting word-of-mouth recommendations. Unsurprisingly, as corporates become alive to the power of networks, they’re increasingly leveraging influencers to drive scale.
Swedish watch empire Daniel Wellington became Europe’s fastest growing company between 2013 and 2015 following their decision to bypass traditional channels in favour of influencer marketing. They pay celebrities for sponsored posts, but also identify micro-influencers within key target networks, gifting watches to them in exchange for a post featuring them wearing the watch. These micro-influencers will accompany their image with a unique money-off code, encouraging sales whilst tracking which influencers and networks prove most valuable. The company sold over a million watches in 2016, equalling approximately $230m annual revenue. Every watch produces a 50% margin.
With the decline in TV viewership, and consequently broadcast ad buys, influencers can provide a cost-effective channel to not only generate sales but also a sense of trust and loyalty in customers. According to Forbes, customers recommended to businesses are 18% more likely to stay.
At Inzenka, we frequently help our clients to amplify network effects by identifying and leveraging the micro-influencers and markets that hold the potential to drive scale. Social media targeting can be a powerful means of reaching an audience quickly, but a recent study indicated that 2/3rds of buying conversations happen offline. With this in mind, we’ll often go a step further to help our clients tap into more unconventional channels. When working with British American Tobacco to take a new vaping product to market, for example, we recruited barbers as product advocates. Customers waiting for a haircut proved the perfect captive audience and, in leveraging the established relationship that barbers have with their customers, we created a new channel that the brand could own.
When scaling a product that’s targeted at a range of audience types, it’s important to identify the target markets and customers that will deliver the fastest growth. How might you do this? In ‘The Tipping Point’, Malcolm Gladwell argues that influence isn’t just about having a wide network. It’s driven by expertise and credibility on subject matter and the relationship between the influencer and his or her followers. When Phillips came to us with the challenge of launching a new healthcare device that met a range of needs, we quickly set about identifying the customers who offered the quickest route to scale through expertise and the urgency of need in their network, in addition to network size. We could then leverage their influence to drive sales in peer groups. Applying this lens provided a prioritised target customer list, enabling Phillips to efficiently target customers in multiple markets by making best use of sales resource.
Given the upcoming changes to Facebook’s Newsfeed, where posts that spark conversations and meaningful interactions between people will be prioritised, it’s going to be increasingly important for corporates to look beyond celebrity when leveraging influencers to reach their networks. The Newfeed update has been met with concern, but it does present a real opportunity for those who are able to mobilise their users as product advocates to drive growth through networks.
Could amplifying network effects power your route to scale? Let us know if we can help.