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Propensity or influence? During the past months we’ve had several discussions internally and with our customers about virality. Our experience clearly shows that not everything is viral in marketing. Churn virality varies in different networks and there are cases where churn is not viral at all. Product marketing is a more potential case, but it’s become clear that the viral spread totally depends on the attractiveness of the offering.

This week I attended a seminar on how to do marketing in Facebook. One of the success stories was the launch of a new IKEA store in Malmö – a campaign designed by ad agency Forsman & Bodenfors in Sweden (check IKEA Facebook showroom campaign ). They succeeded in creating an incredible viral spread by allowing people to tag IKEA items on the store manager’s profile page, and get the items for free. Obviously a compelling offer – but the point of the designers was that if you want things to spread – it’s all in the offering. Simple ideas usually work best. You are fighting for your customers’ time, to succeed you need to offer them something worthwhile, and your brand needs to be something they are willing to promote. How do you find such ideas? These guys advice was – gut feeling.

This basically means that you are working on a trial and error basis. It also means that finding so-called influencers in your network will not guarantee viral spread. Influence is always context related, and you need to find the first tier targets to get any results at all. That’s why we put so much emphasis on finding the people that have the highest propensity in each context. At the same time we find the ones with the highest influence on others. So, if your gut feeling was right and you have a killer offering, you’ll get both the high first tier pull rates and the virality. But if you cannot find even the first adopters for this particular offering – you’ll have no virality either. Simple.

The good news is that if your offering is relevant but not viral (and you will have lots of these), you need to find the customers with the highest propensity in each case. These revenue streams are what matter for your business and they directly affect your bottom line.

I recently attended two events for the mobile industry: Mobile Asia in Hongkong and an IIR event on Customer Segmentation and Intelligence in London. I had the opportunity to listen to numerous speeches, and two themes in particular caught my attention:

· The necessity to use microsegmentation to reach and engage consumers and

· The challenge and opportunity of data services and applications for mobile operators

As Garrett Johnston from MTS Russia put it In his presentation in Mobile Asia, the key to operators’ success in the future lies in the long tail of brands – and these are the brands of their application partners. How can operators matchmake between the varying and versatile needs of their customers and the supply of niche applications? Analytics was seen as the answer by many, but several open questions remain on the implementation, especially on truly making analytics part of marketing processes.

Operators have worked on segmentation models for a long time already. The projects have been long, cumbersome and internally focused (!). Are these static segmentation models going to help in selling a large variety of products, services and applications to subscribers? Yes and no. When resuming the key learnings at the IIR event on segmentation, one of the groups came up with the idea of hierarchical segmentation where the operator works with a few high-level segments on a strategic level, but uses dynamic segmentation with more variables as input on a tactical level . I believe there is food for further investigation in this idea – more flexibility to really engage the versatile consumers with niche marketing, offerings and flexible pricing through microsegmentation, based on strong but easy-to-use analytics.

This year’s Customer Segmentation and Intelligence conference will focus on the development of actionable strategies for mobile operators’ main challenges – drive ARPU and minimise churn. As the recession bites and customers radically change their behaviour, how can you use your segmentation tools and strategies to establish what they really want and develop valuable propositions that meet their needs?

The conference will cover what data, tools and models operators should use to develop meaningful segmentation strategies at both the macro and micro levels.

Xtract’s VP of Product Management & Marketing, Sari Aapola will speak in the morning of Day Two of the Conference. These are some of the points her presentation will cover:

Engaging Consumer 2.0 – Understanding And Exploiting Social Intelligence In Operator Segmentation And Marketing

• Consumer 2.0 is in the driving seat – understanding how a paradigm shift in consumer behaviour is changing the rules of marketing
• Defining Social Intelligence and determining how it can be used to tackle the most burning business challenges of churn and product up- / cross-selling
• Identifying the deliverables of Social Intelligence today and establishing how it can be integrated into the operator’s marketing processes and systems
• Where is Social Intelligence going next?

UTalkMarketing featured an article by Jouko Ahvenainen of Xtract. In this article, Ahvenainen looks at word of mouth marketing in a pragmatic manner. Here is a quick peek with some of the requirements for starting a positive word-of-mouth effect:

• Identifying who within the social ecosystem of your customers is influential. In this way, any company can consider its customer base as a social network; we aren’t talking just about Facebook users

• Targeting these influential people (what can be called ‘Alphas’) with campaigns that are most relevant to them, which they are likely to want to share with their network

• Making real-time marketing decisions based upon actual data and the way it’s analysed.

A full version of the article can be found from: UTalkMarketing

I run into an interesting website the other day. It’s called “My Parents Just Joined Facebook”. The site is edited by Jeanne and Erika who love their parents dearly (their words). I laughed while reading the cuts of conversations between the young kids and their parents over Facebook. If I were a mother of a teenage kid I would for sure visit this site often hoping to find new conversations and opinions every time I visited it. But, I do have other good reasons. As a marketer, I want to understand the new generation of “digital born”. I often ask myself the question: Do I get them?

Jeanne and Erika are good examples of the customer 2.0. Born digital, the customer 2.0 can be very different from what we’re used with. Why? Because, in most of the cases, we are simply just not well prepared to start a dialog with them. Customer 2.0 is asking us to make their experience with our brand fun, social and engaging. They are asking us to participate in a conversation with them. They can and do express their opinions about our brand freely and with as sophisticated tools as we do. This way, contributing in building our brand’s image. So, ready or not, we have jumped on the same boat with our customers and started a dialog.

Holding their attention
Here comes the next question: If we’ve handled the dialog part well and they use our services today, does that mean they will use them tomorrow? Holding the attention of the customer 2.0 means we need to hold the attention of their friends and community too.

We must learn more about communities and try understand how social networks work. Take churn in telecoms as an example. It has been shown that churn is highly viral. The churn behaviour within one’s community affects the individual’s churn decision. Combining information about social networks with the more traditional information about customers such as demographics and behavioural data in churn prediction can maximise the total number of saved customers through loyalty campaigns.

“Can customer 2.0 be a loyal customer” is also the topic of Sari Aapola’s speech at the 9th Customer Retention Forum on June 23rd in Singapore.

Further resources about social network analytics and solutions can also be found at our website: www.xtract.com.

An Alpha is similar to a champion or an influencer. Nevertheless, in addition to having high influence and links in the community, the Alpha also has high probability to buy some of your products, acquire more customers or churn away. So, there are different kinds of Alphas and today I want to tell you how we find the Acquisition Alphas.

For Customer Acquisition, we use highly advanced analytics software that can process billions of data points. This powerful software is highly accurate. We find exactly those subscribers that have the highest potential to recruit new ones from another network. We take into account their influence level and number of off-net (out of your network) friends.

The illustration shows subscribers that have high or low influence and that might have off-net friends. Xtract identifies that the subscriber with the green circle has off-net friends (the ones in yellow) as well as high recruiting influence. This means that she would be the best target for your member-get-member campaign.

Finding the Alphas in your customer base is like finding gold in a goldmine. Remember! You need your Alphas and you need to treat them well.

Yesterday, the second floor of Molly Malones offered a nice and friendly environment for mobile people from all industries to connect with each others in the event organized by Mobile Monday (MoMo). The topic of the evening was Earning models in Mobile Entertainment, which is also an important question to many of our customers.

Our board member Alan Moore gave interesting insights into the big opportunity in utilizing the players with different roles in social networks. This topic is closely related to what we do here at Xtract for mobile operators and other customers.

Other speakers gave also fascinating presentations. Dr. Josef Noll from Norway spoke about privacy issues in entertainment business. He forecasted that privacy matters will be huge business in the future. Dr. Madanmohan Rao pointed out that in India, where Bollywood and cricket are the most popular forms of entertainment, the ones who will understand how to make money from mobile entertainment will earn a lot of money.

The place of yesterday’s event, Molly Malones in Helsinki, was also the place where the idea of MobileMonday was invented. The original founders of MoMo were present at the event and told about how no-one could believe at the beginning (Sep 2000) that eight years later MobileMonday events would be organized in tens of cities all over the world. It is exciting how a good concept, such as that of MobileMonday, has the power to spread all over the world, thanks to world-of-mouth and people networking with each other.

The latest Technology Review has an interesting article about social network business and how social networks still have a lot of challenges to monetize their communities. New models, but also new solutions, are needed. And a key issue is to get advertising work properly in the social media.

Technology Review summarizes the new technologies to get advertising work in social media: “Startups that help advertisers and marketers better target the users of social-networking sites are fashionable investments for venture capitalists in North America and Europe. Such startups hope to sell advertisers detailed information about individual social networkers. They include the brand-new 33Across (which we profile in our list of 10 notable startups, which begins on page 50) and the more established Finnish company Xtract, which counts Vodafone, T-Mobile, and Blyk among its customers and has begun selling its software to advertising agencies and online marketers and publishers. ”

Jason Pontin, Editor in Chief and Publisher of Technology Review, commented in the Millenium Prize event that our solution is the most complete solution he has seen for solving “the multi-billion dollar problem.” It is nice to see that we have really found a way to build solutions to monetize digital communities.

The upstairs of Grand Café in the center of Barcelona offered a warm atmosphere for Mobile Monday’s gathering. Very untypical for the Mobile World Congress glamorous experiences, this networking dinner was low key, more like a traditional southern wedding. Participants, obvious for Barcelona during the MWC, came from all around the world and the bunch consisted of MoMo chamber members, start ups, large corporations, industry analysts, VCs as well as officials, all having one thing in common – passion and appreciation for social networks between peers.

Xtract was the runner up of a public voting to select Finland’s Most Promising Growth Company. View a 2 minutes elevator pitch for the jury by founders Kimmo Kiviluoto and Jouko Ahvenainen at the Helsingin Sanomat event yesterday. In Finnish only.