The Power of Consumer-to-Consumer Recommendations in the Telecom Sector

About RewardStream

RewardStream is an emerging leader in consumer-to-consumer (C2C) marketing solutions for brands targeting the socially connected customer.

We help clients to energize consumers to recommend & refer to their trusted networks, and then to evolve them into loyal, high value relationships.

Since 1999, we have delivered customer referral, loyalty and engagement solutions for some of the world’s most esteemed brands.

Speakers

Alexandra BestVP Marketing

RewardStream

Agenda

• Quick Look: Marketing in the Telecom Sector• Overview of Research: Keller Fay & WOM for the

Telecom Sector• Fundamentals for Referral Marketing Success• Q&A

Have a Question?

• Use the Chat window in GoToMeeting to submit your questions throughout the session; we have left time for Q&A at the end of the webinar

• If we don’t get to your question during the session, please send questions directly to amberlie.denny@rewardstream.com

Dynamics Facing Telecom Marketers

Facebook and Mobile: The New Search?

• Search was once the stalwart of the web marketing world• The growth of social networking sites and non-PC devices

like mobile has encouraged retailers to shift focus• Search is predicted to lose share from 55% to 44% of all

interactive spend in 2016

*Forrester, US Interactive Marketing Forecast 2011 – 2016 (published August 2011)

“We do on the order of a billion queries a day, and we’re not even trying. Most of it is people trying to find people, but a bunch does link to commercial behavior like trying to find brand pages. You get these search engines where you type in keywords and it runs some magic to tell you what it thinks you want. But I think search is evolving to provide specific answers. Facebook is pretty uniquely positioned to answer most of the questions people want to ask. Like “What restaurants do my friends like?”

- Mark ZuckerbergAt Techcrunch Disrupt

September 11, 2012

North Americans Overwhelmingly Trust Impartial Sources

• Consumers trust recommendations from people they know, consumer opinions and editorial content

• They are highly skeptical of brand-sponsored messaging

• Only 52% place trust in brand-sponsored websites and emails

Do You Know Who Your Conversation Catalysts® Are?

Does the value of any one customer reside solely in what that person buys?

“How Valuable is Word of Mouth,” Kumar, Petersen, Leone: Harvard Business Review, 2007

No. The value of any one customer does not reside solely

in what that person buys.

• Ideally, a company that wants to know a customer’s full value will include a measure of that person’s ability to bring in profitable new customers

• Nearest most companies get to establishing the value of a customer’s referral power is some gauge of the individual’s willingness to make referrals (e.g. Bain & Co., Fred Reichheld “Net Promoter” Score)

How Valuable Is Word of Mouth?

Method

• Polled 9900 Telco customers, 6700 Financial Services customers about referral intentions

• Then tracked customers’ actual behavior and behavior of the referred customers over time

Results

“Marketers spend millions of dollars on elaborately conceived advertising campaigns, yet often what

really makes up a consumer’s mind is not only simple but also free: a Word of Mouth

recommendation from a trusted source. A Word of Mouth recommendation is the primary factor behind 20 to 50% of all purchasing decisions.“

- McKinsey Quarterly, April 2010

Word of Mouth: The Keller Fay Report General Findings

Research Goals

• What is the influence of word-of-mouth recommendations in telecommuncations category?

• Are word-of-mouth recommendations more or less influential at different points during the consideration and purchase lifecycle?

• Is there a difference in the impact of solicited vs. unsolicited recommendations?

Who is The Keller Fay Group?

• The first research-based marketing consultancy focused exclusively on word of mouth

• A few nuggets from The Face-to-Face Book: • It’s an invaluable tool for marketers who want to spread

the word about their products and brands faster than the speed of Facebook and with far greater impact.

• In-person social networking, not online marketing, is the secret to soaring revenues.

• 90% of recommendations that lead to consumer action happen offline.

The Methodology

• RewardStream commissioned Keller Fay to study how recommendations affect purchases in Banking, Vacation Travel, Communications, Subscription Entertainment, and Retail Categories

• The survey was conducted among a total sample of 1,274 adults ages 18-59 who had purchased, applied to, or subscribed to a new product or service in the past 12 months.

The Overall Importance OfPersonal Recommendations

Recommendations are Frequent

Very Often16%

Often43%

Some-times33%

Rarely 7%

Never1%

Recommended a product or service to someone

Very Often11%

Often40%

Some-times42%

Rarely 6%

Never1%

Made a purchase based on a rec-ommendation

Recommendations Impact More Purchases Than Any Other Source

A personal recommendation

Past experience

Something I saw in a store/office

Online consumer review websites

An advertisement in a magazine, newspaper, or online

Price comparison websites

A commercial on TV or the radio

Something on a package, flyer, or brochure

An article in a magazine, newspaper, or online

A TV or radio program

Another type of website

Online blog

Another type of ad

Social media site

Something else

40%32%

19%17%17%

15%14%

10%9%

6%5%

4%3%

2%22%

% of purchases influenced at any purchase stage, all categories

Over 20% of responses of “Something Else” include a reference

to price, cost, an offer, or sale.

Other items include convenience or need, or general references to family

and friends.

Face-to-face Communication is the Most Predominant Way to Make a Recommendation

82%

15%

5%

1%

1%

1%

1%

6%

% of purchases influenced by recommendations by mode at any stage, all categories

Face-to-face

Over the phone

Via e-mail

Via SMS/text

Via IM/chat (e.g. AIM, GChat)

Via Facebook or Twitter

Via another social media site (e.g. Google+, Tumblr)

Some other way

Recommendations are Evenly Divided Between Solicited and Unsolicited

While becoming aware of a specific brand

While researching various options

While preparing to purchase

44% 46%

55%

47% 44%37%

Solicited Recommendations Unsolicited Recommendations

% of solicited and unsolicited recommendations for specific purchases by purchase stage, all categories

Across All Stages, Recommendations are Most Influential in Purchases

0%10%20%30%40%

26% 28% 26%23%

17%8%14%

23% 19%17%

18%13%

% of purchases influenced by purchase stage, all cat-egories

Recommendations Advertisements (Net)Online (Net) In a Store (Net)

Recommendations

Online (NET)

In a Store (NET)

Advertisements (NET)

Nets defined as follows:

Online (Net)• Online consumer review websites • Price comparison websites• Another type of website

• Online blog • Social media site

Advertisements (Net)• A commercial on TV or the radio• An ad in a magazine, newspaper, or

online• Another type of ad

In a Store (Net)• Something I saw in a store/office• Something on a package, flyer, or

brochure

Word Of Mouth: Findings For The Telecom Sector

Telecom Sector Highlights

1. Advertisements have more influence on subscription entertainment and TV/Internet services than on any other category.

2. People more often seek advice from informed acquaintances for telecom subscription services than in any other category.

3. Rewards are effective drivers for mobile and cable subscription services, both for customers making the recommendation and for those receiving the recommendation.

Purchase are Influenced by Recommendations Much More Than Advertisements

0%10%20%30%40% 31% 34% 33%

26% 13%5%

Mobile Phone Service

% of purchases influenced by recommendations or advertisements (net) by category

0%10%20%30%40%

20% 21%19%

35%29%

13%

TV/Internet Service

0%10%20%30%40%

27%

33% 31%38%

28% 12%

Entertainment Subscription

Recommendations Advertisements (NET)

Rewards are Effective Drivers for Both Referrers and Referees

Mortgage/Line of Credit

Personal Banking

Personal Care

Apparel

Subscription Entertainment

9%

8%

8%

7%

4%

4%

3%

3%

2%

1%

…Recommender got rewarded

% of purchases influenced by recommendations where the…

Personal Banking

Cable TV/Internet

Wireless Service

Mortgage/Line of Credit

Vacation Travel

Subscription Entertainment

Personal Care

Personal Health

Consumer Electronics

Apparel

17%

15%

8%

7%

5%

4%

3%

3%

2%

1%

…Recommendee got rewarded

More People Seek Advice From Friends and Family for Subscription Services Than Any Other Category

A subscription service (e.g. phone service, TV service)

58%

25%17%

Somebody Close (Family/Friends) Distant Friend with Experience in Category

% of people likely to look for advice from different types of people for specific types of purchases

Percentage of Purchases Influenced by Recommendations

Family/Friends (NET)

Other family member

A sales person/clerk

An acquaintance

77%34%

26%22%

19%14%

3%4%

Chart Title

% of purchases influenced by recommendations given by each

Family/Friends (NET)

A friend

A sales person/clerk

A co-worker

73%38%

30%9%

27%5%4%6%

Chart Title

Family/Friends (NET)A friend

Other family memberSpouse/Partner

A co-workerA sales person/clerk

An acquaintanceSomeone else

85%49%

34%11%

15%3%2%3%

Chart Title

Research Takeaways

• Word-of-mouth recommendations are a strong driver of consumer purchase behavior at all stages of the purchase lifecycle, regardless of purchase category.

• Even though advertising has a high level of influence on consumers in the TV/Internet and subscription entertainment categories, the influence of advertising declines dramatically the closer consumers get to a purchase decision.

• Telecommunications purchases are more highly influenced by recommendations from family and friends rather than industry experts.

• Verbal referrals are significant driver of new customers.

• Your most valuable customers might be ones who refer you. Do you know who they are?

Great programs have good bones

Telecoms Shifting Focus to Retention & Smart Acquisition

2000-2008 GROWTH in wireless, prepaid sectors

2008 - Present SATURATION

Next? DEFEND MARKET POSITION

ACQUIRE THE RIGHT CUSTOMERS

WATCH OUT FOR THE NEWCOMERS!

Confidential & Proprietary Information

This is what we know*

• 5 referrals per referrer• 30 impressions per referral• 1 new customer per active referrer• Verbal referrals convert at the highest rate, followed by

targeted emails

*Aggregate results based on 10 years’ experience in the telecom industry.

“40% of purchases are influenced by a recommendation”

• Be present where your customers are. – Social networks. – Online portals.– Mobile devices.

• Catch verbal referrals.– 90% of recommendations that lead to

purchase are face-to-face.

• Give them a reason to share. – Differentiate with a meaningful and brand-appropriate thank you.

Get All Your Stakeholders Talking

Give customers and employees something to talk about.Commissioned and non-commissioned employees need

different programs.

Confidential & Proprietary Information

Use the Channels That Resonate

VerbalFacebook, TwitterLinkedInEmailPersonal URL …

Tie the Incentive to the Purchase

Incent customers to share with brand-appropriate incentives.

Motivate their friends and family to respond with product/brand-appropriate rewards.

Reward customers for opening up new business opportunities in other product lines

Keep the Fuss to a Minimum

KISS: Reduce the need for IT, Brand, Legal, and

Creative involvement.

Know What’s Going On

• Monitor program KPIs. • Watch for suspicious activity. It happens – be on top of it. • Know who your advocates. • Know the $ value of your social recommendations. • Can you Prove Social ROI? You bet ;)

Have a Question?

• Use the Chat window in GoToMeeting to submit your questions throughout the session; we have left time for Q&A at the end of the webinar

• If we don’t get to your question during the session, please send questions directly to amberlie.denny@rewardstream.com

Contact

Alexandra BestVP Marketing RewardStreamalexandra.best@rewardstream.com604.282.7549

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