Customer Influence Value

Consumers engage in a range of online activities, including product discovery and recommendation, organizing and participating in discussions, and information sharing. To make sense of all these social media activities, it would be helpful to group them into five broad buckets – Online Interaction, Collaboration, Multimedia, Entertainment, and Reviews, as illustrated below. Of course, the ones listed here are only the popular functions of social media portals. Many niche social media applications and portals exist that are popular among the respective user communities.

Across the social media landscape examples, users experience a perceived utility of what the scope of social media networks offer them. The longer users engage on social media, they develop a need to share mentality, which generates usage across a variety of social media platforms in varied and unique mechanisms, therefore continuing the cycle of embedding social media usage into the cultural fabric. In the age of widespread social media usage, the mounting of effective social media marketing campaigns has obtained tremendous importance. But with an overabundance of social media channels, it can be difficult to aim the right message at the right people. Online Word-of-Mouth (WOM), if positive, can yield significant gains for a firm. But, if negative, WOM can also lead to widespread backlash. The drivers of WOM, both positive and negative, are the users who wield the greatest influence on others. By implementing a strong Customer Influence Value (CIV) metric, firms can identify these influential users capable of generating value through WOM (Kumar, V. (2013)).

The most important component of CIV is the Customer Influence Effect (CIE), which gauges the spread of a message communicated via WOM. The CIE of any given user in a network of WOM influence refers to that user’s proportional share of the total influence. The determination of CIV is more complicated. The CIV of the initial influencer can only be determined if we know the subsequent CIV of each user that was influenced in turn. For those at the end of the chain, who exerted no influence, all that must be computed is their Customer Lifetime Values (CLV). So, in effect, it is necessary to work backwards. However, before a firm can implement such a measure, it must be adept at identifying and tracking social media interactions.

Unlike Customer Referral Value (CRV), CIV exhibits high correlation with CLV. CRV and CIV may seem similar, gauging indirect value arising from an existing customer’s communications with others, but they are markedly different. Perhaps most importantly, CIV does not depend on any sort of incentive offered by the firm (Kumar, V. and Rohan Mirchandani (2012)).

To demonstrate the power of customer influence in an online setting, we developed and implemented the following seven-step social media strategy for HokeyPokey, a popular ice-cream retail chain in India (Also see the Video below) (Kumar, V., Vikram Bhaskaran, Rohan Mirchandani, and Milap Shah (2013)).

Step One:

We spent the first six months in planning, understanding and analyzing the social media and HokeyPokey’s market in Mumbai, India. This resulted in monitoring 825,091 conversations involving 1,736 individuals across different social networking channels.

Step Two: 

We identified the ‘right’ type individuals who can spread the message, based on three parameters:

(1) number of times they forward messages,

(2) number of connections that the message jumped, and

(3) number of comments and replies they received for each message.

Based on these characteristics and the ease of data collection, we zeroed on Facebook and Twitter as suitable platforms for this study.

Step Three: 

We identified the following factors that make the influencers the ideal choice.

Activeness compatibility – number of times the influencer and their network friends “see” and “share” a message

Host clout – number of user connections and number of users “following” an influencer

Talkativeness of the receiver – number of times an influencer’s message gets retweeted and “hash tagged”

Generosity – a factor revealed by common interests and similarities between an influencer and their connections.

Step Four: 

We ensured that HokeyPokey was now moving beyond simply “listening” to conversations on social media platforms, to actively engaging in the identification of brand ambassador(s). While individuals could have a strong relation by way of shared interests, it was important to group those network individuals who shared interest in ice cream. This was achieved by developing the “Stickiness Index” that measures the percentage of the total conversation an individual has that would be related to the category of interest. This grouping was also important to identify brand ambassadors for HokeyPokey.

Step Five: 

The influencers that were identified were recruited. This group consisted of influencers who were already engaged to participate in HokeyPokey’s ice cream promotion campaign.

Step Six:

We implemented the campaign in two stages, named as – “Creations on the Wall” and “Share your Brownies” – to help us spread positive WOM. These two stages of the campaign encouraged influencers recruited for the campaign to make their own creations (custom creations) at any of the parlors, identify themselves with their own creation, and spread the WOM about their creations on the social media platforms.

“Creations on the Wall” campaign 

In this campaign, the parlor employees were trained to educate influencers about custom creations and distribute a form in which the influencers could enter the recipe for their creations. Influencers could name their creations and post these on one wall in the parlor that was dedicated for this purpose. Customers walking in to the parlor could browse this wall and purchase these creations or order from the regular menu.

Share your Brownies” campaign

This campaign was aimed at generating a viral spread of creations by nurturing a sense of personal identity. For example, the creators from “Creations on the Wall” were motivated to ‘tweet’ their purchases along with the creator’s social media credentials using tangible incentives (e.g., customized T-shirts) and intangible incentives (e.g., ability to seed and initiate WOM about their creations on Facebook and Twitter). All the creations were also shared with all the parlors of HokeyPokey, which invited more buzz about the campaign.

Step Six:

We measured the results of the social media campaign by relating the abstract social media measures such as “comments” and “conversations” to the financial metrics in order to demonstrate the increase in buzz and monetary gains. This was done through the development of the Customer Influence Value (CIV) metric that calculates the influence of an individual’s WOM on future sales.

This campaign was effective at both the company and the customer level. At the company level, the main impact was in the area of social media accountability. At the customer level, being able to calculate the value of an individual’s influence in a network and measure the monetary value of customer influences made it possible for HokeyPokey marketers to greatly enhance the efficacy of their social media campaign. Specifically, we found that out of the total revenue generated from the “Share Your Brownies” campaign, about 23% was attributable to conversations on Twitter and about 80% was attributable to Facebook, with a 3% to 8% overlap between the two social networks. Overall, the campaign was a huge success – HokeyPokey realized increases of 49% in brand awareness, 83% in ROI and 40% in the sales revenue growth rate. See the 2012 ISMS-MSI Practice Prize presentation on Hokey Pokey below.

Kumar, V. and Rohan Mirchandani (2012), “Increasing the ROI of Social Media Marketing,” MIT Sloan Management Review, Vol. 54 (1), pp. 55-61.
Kumar, V. (2013), Profitable Customer Engagement: Concept, Metrics, and Strategies. New Delhi, India: Sage Publications.
Kumar, V., Vikram Bhaskaran, Rohan Mirchandani, and Milap Shah (2013), “Creating a measurable social media marketing strategy: Increasing the value and ROI of intangibles and tangibles for hokey pokey,” Marketing Science, 32 (2), 194-212.