2 - The Shopper Is the Medium
Historically, brands have paid huge sums of money to the media, in order to place advertisement in places they hope shoppers might notice it. With this in mind, it seems sensible to suggest paying the shoppers directly and cutting out the middleman.
In another sense, the shopper (or more aptly, the consumer) is a medium: in telling others about his experience, he is the most credible source of information, and has a great deal more influence over consumers in his social network than external sources of information (advertising, professional critics and reviewers, and even remarks by people who are not in their circle).
Consumer advocacy is important, and so valuable that some brands can count on advocacy alone, spending nothing on advertising. An interesting principle, from another author, is that influential people, more so that advertisers, make the market: "one American in ten tells the other nine how to vote, where to eat, and what to buy." Also, consider the viral element of networks, which has the ability to spread news like a contagion, as one person tells ten, each of them tells ten, and so on.
Between credibility and reach, there is significant untapped power in the voice of the customer.
Each Shopper is a Brand
People are brands in their own right: they feel that they have a reputation to uphold or one that they wish to create. A great deal of effort is put into presenting themselves to one another, creating a positive impression, and wanting to be adored. This is more pronounced in some cultures and segments than others, but is never entirely absent.
Because of this, brands must persuade shoppers to advocate for them. A person will carefully consider which brands to align himself with, and will not automatically espouse any brand. There's a brief mention of user backlash against a Facebook program that would automatically disclose information about user's activities and purchases, though users are amenable to doing so when they have the choice of which brands to show off and which to keep secret.
Some of the qualities that make a brand seem worthy of associating to are the prestige of a luxury brand, the cachet of a socially responsible firm, a reputation for sophistication or excellence, advocacy or use by respected or admired people, or a general sense of being "cool"
This is a marked difference between the medium of people and the traditional media, which was willing to accept payment to run virtually any advertisement (so long as the product and the sport were not overtly offensive to its audience). It's also noted that people are less willing than traditional media to accept and retransmit your message exactly as you would prefer.
There is also a danger in providing financial incentives to promote a brand - namely, that you may attract advocates who are not good channels. Because their sentiments are lukewarm, so will be their messages about the brand. And they may even be the "wrong kind" of person to associate with your brand.
Just as when deciding which magazine is appropriate for an advertisement, so do you also need to consider whether a given person would make a good advocate for your brand in social media. It's not merely a numbers game: your brand and their brand must have affinity.
The Evolution of Tools
(EN: This is a pretty sloppy bit about the various channels that marketers have used in an attempt to reach customers. I'm going to skip a lot and focus solely on that which seems to be specifically germane to the topic of the present book..)
Technology provides tools that are new and largely unprecedented in their ability to reach very specific target markets and measure the impact of our messages.
Encouraging customers to be advocates is likened to getting your press releases run in newspapers: you can provide some encouragement and support, but ultimately accept that they are in control of what they say and when they choose to say it.
Consumers are coming to rely more on the internet and social media for product information, but that doesn't mean the old media are dead, merely that they will no longer be the primary or leading channels to which customers will turn.
However, this is a more fundamental change than previous ones. From print to radio to television, advertisers had more capabilities but used the same basic strategy and tactics. For the Internet and social media, you're playing by entirely different rules.
The author considers the premiums offered to shoppers to be genuine financial transactions: the "points" they earn represent monetary value, which the marketing deposit must pay to operations (or in some instances, which headquarters must pay to independent franchise owners) and should be considered as such.
Shoppers, meanwhile, will consider whether the "wage" is worth doing what is request of them. Some promotions can be onerous (watching through a three-minute video of a product you have no intention ever to purchase), but others can be entertaining in themselves, such as one promotion that challenged participants to go on a scavenger hunt to earn a reward. The author indicates there was a lot of positive buzz in social media about this game-like promotion.
The author then chases the red herring of "gamification": cell phone owners use them to play short, simple games as "boredom killers" - 77% of teenage girls, 61% of teenage boys, and 40% of adults turn to their cell phone while they are waiting or otherwise bored. Creating simple games, or game-like promotions, can leverage this behavior, but be aware that the mobile platform is a "snacking" medium, compared to the five-course standard of the Internet.
Self-Serve Loyalty Programs
Loyalty programs are geared toward getting a customer to make a brand their default choice - to purchase and repurchase over time, and even to take greater effort to purchase the brand rather than a competing one. As such it is difficult to conceive of ways in which to provide rewards or incentives for loyalty that do not involve purchasing the product again.
There is a difference between the people who are functionally loyal (they have specific reasons, which can be imitated by other firms) and those who are emotionally loyal (they will remain customers even if someone else makes a better proposition). This is an additional problem for using direct incentives, because the receipt of the incentive becomes a functional reason rather than an emotional reason for loyalty. These are the "regular" customers who only buy when they have a coupon.
A couple of significant examples of loyalty incentives are frequent flyer miles and credit card reward point programs. These provide the user with points that can be redeemed for cash or other gifts, which accrue from past behavior - the obvious hook being that if you wish to keep getting these premiums, you must keep buying or using the brand.
It's mentioned that grocery and drug stores attempted to do this with shopping cards, but botched it by making the card a coupon (pretend to receive a discount) rather than a true rewards program, so there was little incentive to purchase from the merchant.
(EN: It seems odd to me that the author chose to ignore S&H green stamps, a multi-retailer rewards program that dates back to the 1930s, as well as cereal incentives that required children to collect several "proof of purchase" coupons to receive a reward. Perhaps tehse undermine the notion that this is a new concept, but they underscore the notion that it has been time-tested and found to be highly effective.)
Do-It-Yourself Advocacy Programs and Pass-Along Promotions
The author speaks to the plethora of mechanisms that enable shoppers to share information about brands and retailers, some of which are highly popular and customers do not seek to receive any compensation from the brand. This demonstrates the effectiveness of the esteem incentive (being recognized as an expert, or one who helps others) - but more to the point, it suggests that the "unofficial" channels of information are often more valued than the official ones, precisely because participants do not have mercenary intent.
In this sense, you likely should be mindful of how you reward customers: a gift given to a person who has already made a positive remark is clearly not a bribe because it happened after the fact. If you do this regularly, such that word gets out that you make gifts to reviewers, it can give people incentive to speak up (in hope they might receive a gift).
The author then speaks to affiliate programs that offer people a percentage of revenue in exchange for posting a widget or logo on their site. Groupon is specifically mentioned, though Amazon has operated a similar program for years and "cost-per-action" is a common payment scheme in online advertising.