A lot has been written lately on the similarities and distinctions between … viral marketing vs. word-of-mouth … telesales vs. telemarketing … and network effect vs. bandwagon effect. In this entry, I’ll attempt to bring it all together as best as a 1,500 word entry could do with particular focus on the enterprise B2B startup.
Several months ago, I was in a board meeting of a technology startup where someone in the room cavalierly pronounced, “What we really need to do is virally market this thing and get the network effect going. Then, our lead generation engine will work!” I sat down with the CEO of this infrastructure company not a long time thereafter and basically told him that – a) your company does not develop and market a viral product or service, b) your company does not deliver a good or service that generates network effect, and c) you have one person in telesales much less a telemarketing staff, infrastructure, tools, and programs.
A short version of the rest of this blog is in bullet form (below).
· unless your product/service was engineered and/or designed from the ground up to be viral, forget about viral marketing
· word-of-mouth marketing still works
· network effect starts with delivering local value then network value (and then it loops) so, like viral marketing, figure out if it applies to your business
· bandwagon effect still works especially as a complement to word-of-mouth marketing
· telesales is telemarketing and vice versa but it’s not enough
· lead harvesting must serve as the front end of any telesales or telemarketing efforts
Viral marketing and word-of-mouth marketing are different. I realize that many people say it’s the same thing. But, for me, the two techniques are similarly conceived but very dissimilar in the means employed to reach the end goal. At some point in time, word-of-mouth marketing evolved into viral marketing. And, the inherent network effect of the Internet allowed viral marketing to be implemented in powerful ways.
Viral marketing works best for products that are engineered from the outset to be viral. YouTube is a highly viral service because it is both engineered to be viral AND it enjoys a limitless “social” network. The ability to embed a video clip into your website (or, blog) is what I refer to as “viral-ness” for lack of a better term. The fact that YouTube videos are available to both a closed (lock-in) and open (keyless) community makes it the beneficiary of a powerful network effect – hence, we can refer to it as “network effect suitability.” I’d say YouTube enjoys the most powerful network effect precisely due to the fact that you can enjoy a video without having to go to YouTube and sign up. Citrix’s GoToMeeting and WebEx online conferencing tools as well as Evite and PayPal are good examples of viral products that enjoy lock-in network effects.
Putting a “try me” hot link on your web site is not viral marketing. People will try it then the motion ends there. Asking current customers to refer your product to their peers is not viral marketing. Viral marketing involves very little to no intermediation. Word-of-mouth marketing, on the other hand, requires intermediation in the way of personal recommendations across or through a personal or social network. It involves figuring out a way to put the phrase “try this” on the tips of all customers’ lips. Viral is auto propagation with (in theory) no limitation whereas word-of-mouth is manual propagation with (in practice) limits. Affinity marketing and lifestyle marketing pros have mastered successful word-of-mouth for many decades.
Now, let’s turn to the network effect. For a product or service to enjoy the benefits of network effect, local value must first be delivered to the customer. People go into a restaurant if they see other diners already in the restaurant. Supermarkets sometimes do not restock partially empty shelves to implicit tell grocery shoppers that a certain product is experiencing high demand. These examples are not illustrative of the network effect. These are great examples of the bandwagon effect – where others influence a choice you make. At NetScaler, the Customer Satisfaction #1 thrust with a prominent analyst firm was a classic example of driving the bandwagon effect toward revenue. Unlike bandwagon effect, network effect has no initial reliance or dependence on others – you make your own choice and when others make the same choice, it makes you reap even more benefits from your initial choice.
Microsoft Office’s rise to dominance in productivity software is often cited as a prime example of network effect (Wikipedia lists it along with Windows and x86-based PC hardware in its entry for network effect). It says that people buy, learn and use MS Office because it is valuable to know how to use it (i.e., good for employability). What it’s really pointing out are characteristics of a network effect already in motion. It fails or neglects to mention how the network effect got started. All network effects start locally. That is, you have to deliver a value locally to one user before other users of a network can make the network itself equally or exceeding more valuable than the individual value.
The first users of MS Office selected it because of what they could do with it – independent of anyone else using it. What is the benefit of the product to me? What is the benefit of the product to me if others are also using it? These are questions that need to be answered serially – not in parallel – if you’re to successfully reach the network effect nirvana. In contrast, bandwagon effect has no element of the shared value leading to better value. If you go into a packed restaurant, the food will likely taste good since so many diners can’t all be wrong. But, the food won’t get better with each new diner who enters the restaurant.
Finally, telesales and telemarketing are the same. About 16 years ago, I earned less than the minimum hourly wage to work part-time as a student telemarketer. We sold newspaper subscriptions over the phone. It was a thankless job and I got my share of threats from irate folks who felt I was intruding and interrupting their dinner. By definition, telesales is selling over the phone. It is the back end of what should be a rigorous lead generation or lead harvesting program. Most startups treat telesales as if it were a lead generation tool or inexpensive lead qualification process. And, most startups fail miserably.
If you have a product that can be sold over the phone, go for it and hire a bunch of telesales people at half the cost of a direct sales force. Unfortunately, most enterprise products cannot be sold over the phone because they tend to start at the high end of the market, targeting unique customer needs in an ambiguous, competitive selling environment. If the sales process is inefficient and you need better lead qualification, go ahead and hire a handful of telesales people to canvass, qualify, harvest/nurture then toss over hot prospects over to direct sales for follow up. This is a more effective approach but it’s still not the ideal thing to do. Many marketers will say it’s not effective because telesales people are not suited or trained to do the job of qualifying and converting cold leads into hot ones. Or, even worse, marketing claims that great leads are being generated and sent over to sales but they are ignored because salespeople have their own list of prospects to spend time on. Utter nonsense. The “he said, she said” cycle of finger pointing persists because there is no joint ownership and accountability of the lead management process.
The real underlying issue is that telesales people are no different than sales people. The job is created with “sell right now” in mind. It’s not a job designed to create demand or generate interest over a period of time.
It really comes down to the law of numbers and proper structure. If you input a small amount of random junk, you’ll be sure to output junk. Input a big pile of quality or select junk (pardon the term), you'll be sure to get a few gems. Somewhere between the big pile of junk and a few gems there is a process of creating demand. This demand gets created through effective marketing programs that opt-in qualified buyers and continually feed them with persuasive material. Some people call it lead “harvesting” for this very reason. If good lead capture programs are running, you’ll be able to pour a big volume of quality junk (vs. tiny amount of random junk) into the lead database. Then, your marketing team can run and monitor various campaigns against this database to continually deliver best qualified leads to sales. In so doing, you’ll turn marketing into a metric driven practice vs. opinion driven art form.
As for structure, if it’s telesales put it under your sales organization. But, if it’s really lead generation or lead harvesting, budget for it separately and put it under your marketing head with full commitment and shared accountability for goals with your head of sales.
And, as they say in team sports, you’ll be sure that your “players are not playing out of position!”
- John
Is viral videos going to be the next 'business' marketing gimmick? Don't think so, but they sure can be funny! Check this out:
Palo Alto Network's weak attempt at viral videos:
http://video.google.com/videoplay?docid=-8742561842637953323&hl=en
Just say NO!!!
According to the BBC, these are the Top 10 Viral Videos of all time:
http://la2day.com/toys/top_10_viral_videos_of_all_time
Posted by: James | April 02, 2008 at 02:43 PM