Peer Influence Analysis

27 October 2010 Josh Bernoff

Josh Bernoff and Ted Schadler explain how one empowered customer can disrupt a company.

A guy walks onto a plane in Halifax, Nova Scotia, in the spring of 2008. He's a musician starting a tour through Nebraska: he checks his guitar.

Later that day, as he's getting on the connecting flight in Chicago, he hears a woman say "My God, they're throwing guitars out there." And sure enough, the baggage handlers are heaving musical instruments around like sacks of potatoes.

By now, many of you have figured out that the guy is Dave Carroll and the airline is United. If you know the story, you know that Dave Carroll went from being a not-very-well-known local musician to being about as empowered as one guy can get.

The base of Dave's $3,500 Taylor guitar was smashed. United's baggage claims agents refused to pay the $1,200 cost of the repair, citing a policy about the timeframe in which claims need to be filed. So he took things into his own hands. He wrote a song called United Breaks Guitars, spent $150 to make a video for it with his band, and loaded the video onto YouTube in July of 2009. It's a pretty catchy tune, and of course, the video features (dramatised) careless baggage handlers. By that night, 25,000 people had seen it. The Halifax Herald covered it. The Los Angeles Times covered it. So did CNN.

Since then, more than seven million people have viewed it.

Here's what life has been like for Dave Carroll since then. He's been interviewed in the news media 250 times. He's schmoozed with Whoopi Goldberg on The View. His website is getting 50,000 hits a day. His CDs are selling like mad. CTV, the largest private broadcaster in Canada, hired him as a songwriter. He's got an endorsement deal with Carlton, a company that makes hard guitar cases. And he's getting a different kind of gig now - companies are hiring him as a social media expert.

"Using the reach of YouTube, Dave Carroll created seven million impressions by himself."

Meanwhile, United Airlines is doing penance for the insensitivity of its baggage handlers and claims agents. Sysomos, a company that monitors online mentions of companies, including sentiment (positive or negative), tracked a spike in social chatter about United Airlines just after United Breaks Guitars went live, especially on Twitter.

Examining sentiment in blogs in the hundreds of posts mentioning United in the quarters before and after the incident, positive sentiment went down from 34% to 28%; negative increased from 22% to 25% (the rest were neutral) and the fallout in traditional media was worse - positive stories dropped from 39% to 27%, while negative stories increased from 18% to 23%. Six months after United Breaks Guitars, requests to talk about it still were coming in to United PR almost daily.

United has changed its policies. Baggage claims agents now have a little more discretion with customers whose special situations warrant the company looking into the claim more closely; United uses Dave Carroll's video in its training. And the company has begun monitoring social media regularly, so it can respond to people and cut red tape before they get mad enough to broadcast their anger more publicly. But United Breaks Guitars continues to resonate, since it reinforces people's ideas about insensitive airlines. People will be talking about this for a long time to come.

Was your last customer Dave Carroll?

Let's unpack what's really going on with United and Dave Carroll - or in any case where empowered customers disrupt a company.

In traditional marketing you send out messages to masses of people. You count those instances as "impressions." You hope your message, repeated frequently enough, impresses your audience. One ad campaign might create seven million impressions.

Using the reach of YouTube, Dave Carroll created seven million impressions by himself (and for $150 - what's your TV advert budget?). The baggage handlers and claims agents were his unwitting collaborators. It's practically an ad campaign run by a single empowered customer.

Now we'll quantify this phenomenon. At Forrester, we surveyed 10,000 people at the end of 2009. We asked about the environments in which they spread influence, like Facebook, Twitter and blogs. Here's what we found.

Within social networks, consumers create 256 billion impressions on one another by talking about products and services each year.

In social environments like blogs and discussion forums and on sites that feature ratings and reviews, customers generate 1.64 billion posts. While we can't know how many people view each post, based on data we've collected about readership of blogs and forums, we estimate that this content creates at least another 250 billion impressions. Combined with the social networks, that's more than half a trillion impressions in the US. On average, that's about eight impressions every day per person online.

Here's one way to look at the connections empowered consumers are making. According to Nielsen Online, advertisers delivered 1.974 trillion online ad impressions in the 12 months ending in September 2009, the time period covered by our survey. Do the math. People receive roughly a quarter as many impressions from each otheras they do from online advertisers.

Which ones do you think they pay attention to?

Does your marketing budget reflect the reach of empowered customers? What are you doing to make it work for you? What are you doing to stop it from working againstyou?

A strategy IDEA for energising your customers

The reason marketers generally haven't harnessed these empowered consumers is simple. They know how to use concepts like reach, positioning, and key performance indicators to design marketing strategy and measure effectiveness, but they have no plan of attack for word of mouth, and no vocabulary to talk about it.

"Customer service is typically treated as a cost centre, so service representatives serve customers as cheaply as possible."

The other problem is that marketers work with masses: mass media and mass impressions. Empowered customers are individuals. Marketers don't deal with individuals, customer service people do. Customer service is typically treated as a cost centre, so service representatives serve customers as cheaply as possible. Unfortunately, that level of service is what creates the Dave Carrolls of the world.

Starting now, we want you to think about individuals as potential sources of marketing influence, either positive or negative. Your customer is a marketing channel. Every manager in a customer-facing department must therefore conceive of her job as to create more positive, and less negative, influence and to do it as efficiently as possible. We call this "energising your customers." It's a new way to think about marketing, service and customers.

How to do this? In a HERO (highly empowered and resourceful operatives) -powered business, managers across all customer-facing departments need to connect with empowered customers. Here's the four-step game plan with the mnemonic IDEA:

  • Identify the mass influencers. Concentrate on the people most likely to spread messages about your company.
  • Deliver groundswell customer service. Reach out through groundswell channels and serve these vocal and influential customers.
  • Empower your customers with information, especially mobile information. Keep people happy by surrounding them with the information they need.
  • Amplify your fans. Find the people who love you, and boost the impact they have on their peers.