The Value of Close Encounters of the Offline Kind

Before you get carried away using Facebook or Twitter to curry favor with consumers with lots of clout and generate tons of buzz for your brand, consider this: just 10 percent of talk about brands takes place online, according to Ed Keller and Brad Fay from the word-of-mouth research and consulting firm The Keller Fay Group. Fully 90 percent of the conversations that count take place offline face-to-face, they say. And it's real-life word-of-mouth that matters most.

Keller and Fay are the principals behind The Keller Fay Group. Though they are far from being technophobic Luddites, they believe that businesses need to think about social consumers before they think about social media. They need to think about social consumers, and how, when and why people engage in social activities and what it is that influences that activity before hurling headlong into social media.

Keller and Fay think that all media are social or have the opportunity to be social. And that notion helps you think very differently from a marketing point of view.

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They have been researching the social activity of consumers and the influence of word-of-mouth in all its permutations for more than six years. The results of that research are the basis for their new book, "The Face to-Face-Book: Why Real Relationships Rule in a Digital Marketplace" (Free Press, 2012), the first comprehensive exploration of human beings as consuming animals who are hard-wired to share.

Keller recently visited BusinessNewsDaily to share his thoughts on word-of-mouth and the role of social media in marketing to consumers.

"Our research shows the overwhelming amount of conversations, particularly about brands, still takes place offline and predominantly face-to-face," Keller said. "We think that online networks have their place, but what gets lost in the story is how much more happens offline. It's not just the volume of what happens offline; our research shows that conversations that take place face-to-face are more credible, more believable and more likely to lead to positive business outcomes, in particular the likelihood to purchase brands."

'Klout' doesn't translate into cash

In other words, Klout—the yardstick du jour to measure online influence—does not translate into clout in the consumer marketplace.

A significant advantage of offline conversations and social interactions comes from the fact that emotions can be better communicated when you're sitting face-to-face with somebody, Keller said. Words can only convey so much. In-person communications are, by definition, more interactive and benefit from being rich in nonverbal cues, he said.

The wholesale adoption of social media by marketers may tap into the magpie in all of us, Keller said.

"We tend to have a fascination with the shiny new toys," he said. "It's not all that different then it was when websites first went up. It tended to be the technology guys who put them up before the brand marketers even knew what was happening. It was only over time that we started figuring out what to do with them."

That involved looking at what companies were doing online, why they were doing it and where it all fits in. Over time, Keller said, companies began to integrate the brand website into the rest of the enterprise.

Power of word-of-mouth

The power of word-of-mouth got its bully platform with the advent of the Internet, he said. But it's the not the Internet that imbues word-of-mouth with its considerable power to move markets and consumers.

"There's a lot of evolutionary biology and neuroscience that says that it as human beings we're hard-wired to be social animals," Keller said. "We have an innate need to be interacting with other people. The notion that we are individuals who make individual, rational decisions is being replaced by a view that we're part of a social ecosystem and that this is core to who we are as individuals. In effect, we are born to share. Technology isn't the cause; our biology and our brains are the cause."

Because the thread of our social DNA is so strong, word of mouth is what moves the marketplace, he said. And social conversations have a life of their own. It's happening if you're part of it or if you're not part of it. But those who are in it benefit more than those who aren't.

When business begin to formulate a word-of-mouth strategy with or without a social media element, they need to think about who their customers are and what the company can bring to them that will make their lives better or easier, Keller said.

A people strategy

"First you need a people strategy," he said. "If the name of the game is word of mouth, whether it takes place online or offline, you need to understand people and where your product fits and what they might be interested in talking about your brand in the first place. Social media is only one of many channels that get people talking — there's even plain old television."

Conversations begin with stories, Keller said. Business have to know what their story is and if their brand fits in the conversations people might want to have.

"You have to think about the people who are most likely to be telling that story," he said. "Many businesses think their high-value customer is the person who spends the most money with them. Well, in a social age, it's the people who are the most likely to be talking about you."

Businesses need to recognize that there's social value of a customer as well as an economic value, Keller said. The math is pretty transparent. A customer who spends $1,000 with you has a value of $1,000. A customer who only spends $500 with you but then recommends your brand to four friends who each spend an additional $500 is a $3,000 customer.

Sweet spot for marketers

The sweet spot for marketers is that overlap in a Venn diagram where a customer's economic value and social value intersect, he said. Those are word-of-mouth influencers.

"They talk twice as much as average consumers," Keller said. "And then they talk, because of their credibility, their economic value is four times that of the average person. That's an extremely valuable customer in today's marketplace."

The kiss of death for word of mouth and social media in particular is compartmentalization, Keller said.

"Our hope is that we will soon move away from the notion that there is a social media specialist," he said. We think that smart companies are companies that will realize that everybody in the organization, from product innovation to marketing to customer relations, will think about social as being part of their domain and will begin to ask themselves 'if we do X or we do Y, which will have a better chance of getting people to talk about us?' It's not a department. It needs to become a philosophy."

Reach BusinessNewsDaily senior writer Ned Smith at nsmith@techmedianetwork.com. Follow him on Twitter @nedbsmith.We're also on Facebook & Google+.