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Track: SocialThe Science of Relationship Michael Wu, PhD (mich8elwu) Principal Scientist of Analytics @ Lithium April 24th, 2012

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agenda▪ Introduction: CRM data▪ Development and maintenance of relationship • Anthropology: complementarity between social network and community▪ Interpersonal relationship and the Dunbar limit • Sociology: the attention economy▪ Customers relationship (with brands) • Application: dealing with the Facebook irony▪ Future work twitter: mich8elwu #scon12 linkedin.com/in/MichaelWuPhD

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what’s the “R” in social CRM▪ What data do CRM system store? • Contact record • email, phone, address • twitter, facebook, linkedin? • Transaction record • purchase/sales history • order/fulfillment data • Support record • support case history • service delivery data▪ Where’s the “r”elationship data in CRM system? #scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 3

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Today’s CRM system “R” ≈ record ≠ relationship#scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 4

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where do we find relationship data?▪ On social media • Facebook • Linkedin▪ It’s a huge ecosystem of tools+services▪ There are too many places to look! #scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 5

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where do we find relationship data?▪ On social media • Facebook • Linkedin▪ It’s a huge ecosystem of tools+services▪ There are too many places to look! #scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 5

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Social is not new! Human have been social since they were caveman#scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 6

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Social anthropology perspective of social Tech  relationship 1. Social network 2. Community#scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 7

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Social anthropology perspective of social Tech  relationship 1. Social network 2. Community#scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 7

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how do social networks form?A story of how Bob’s social Emeryville network was built = community weak ties Bob strong ties old members new / casual members #scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 8

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how do social networks form? Emeryvillecollege = community Social networks form naturally within communities as people establishes relationships Social network maintains relationships as people move work between communities #scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 9

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what do real social network data look like?#scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 10

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communities vs. social networks (on/offline)▪ Social Network ▪ Community • Held together by pre-existing • Held together by some common interpersonal relationships interests of a large group of between individuals people • You know everyone in your • Most people, especially new network (ego-network), people members, do not know majority of who are connected to you directly the members in the community • Each person has only one social • Any one person may be part of network, despite there are many many communities at any given social network platforms time • Structure: Network • Structure: Hierarchical, overlapping & nested #scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 11

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communities vs. social networks (on/offline)▪ Social Networks ▪ Community #scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 12

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lifecycle of relationships disconnected Easy! do 1. creating All it takes issomething a weak tie an “hello” bad weak tie 2. building do tie strength nothing strong tie 3. maintaining relationship #scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 13

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But what is relationship?#scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 14

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the components of a relationship▪ Relationship: sociology perspective • A tie or a connection between two entities (e.g. people, companies, cities, or even nations) • Tie strength = strength of the relationship▪ Granovetter: components of tie strength • Time: amount of time spent together • Intensity: emotional intensity & sense of closeness • Trust: intimacy or mutual confiding (transparency) • Reciprocity: amount of reciprocal services▪ Strong relationships requires more time & attention #scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 15

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the attention economy▪ We only have 24 hours a day▪ We only have fixed amount of attention▪ How many meaningful relationship can we have? via nielsen #scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 16

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~150: the Dunbar number (or Dunbar limit)▪ Prof. Robin Dunbar found a relationship between brain size of primate species and their group size 148▪ Extrapolate data from 38 primate species to human neocortex ratio  Dunbar number = 148 (~150)▪ Verified by surveying pre- we know the human neocortical ratio industrial villages/tribes #scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 17

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does Dunbar limit still applies in modern society?▪ Order our relationship from wife children the strongest (immediate parents family) to the weakest (acquaintance) siblings tie strength▪ This creates a relationship close friends profiles for each person acquaintance▪ In pre-industrial villages & tribes, people only know ………… ~150 people on average 16 ~150 # of relationships #scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 18

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does Dunbar limit still applies in modern society?▪ Dunbar’s limit may not wife children apply in modern society b/c parents • necessity for social cohesion is substantially lower • communication (an important part siblings tie strength of socializing) is much more close friends efficient acquaintance▪ But our brain hasn’t ………… changed for millennia… 16 ~150 # of relationships #scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 19

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we can have more than 150 friends if have fewer strong tiestie strength attention shift from stronger ties to weaker ties strong ties ~150 weak ties # of relationships #scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 20

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we can have more than 150 friends We can shift our time/attention around, but the total amount of time/attention remain roughly the same if have weaker strong ties area under the area under thetie strength yellow relationship profile = blue relationship profile attention shift from stronger ties to weaker ties strong ties ~150 weak ties # of relationships #scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 21

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What about the relationship between customers & brands? customer relationship < personal relationship (with brands) (with people) always weaker#scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 22

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the Facebook irony▪ Facebook contains a lot of our strong ties • By definition, these stronger ties will demand more attention, and will win more of your limited time/attention▪ Irony: because Facebook is “too good” at maintaining our strong ties, it created problems for itself: • In the presence of strong ties, weaker ties are harder to develop into strong ones but it’s too fast for your dog • If you already have strong relationship with your customers. Great! maintain them with Facebook is the way to go • Otherwise, the strong ties on Facebook will hinder the development of weak ties #scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 23

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How can brands build stronger relationships with their customers?#scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 24

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component #1: time▪ “time” = time spent together desire = mutual ≠ duration of relationship▪ “time” increases tie strength trust if the desires to spend time together is mutual time LOVE reciprocity intensity #scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 25

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component #1: time▪ “time” = time spent together desire = non-mutual ≠ duration of relationship▪ “time” increases tie strength trust if the desires to spend time together is mutual time▪ Key: know when your reciprocity customers want to spend time with you, and be there intensity HATE for them #scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 26

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component #2: intensity▪ Customers’ intensity for brands is much lower than their intensity for friends trust▪ It is genetic! We have no control over it time▪ Tactic: appeal to greater reciprocity causes that customers have strong emotions for intensity▪ Key: don’t try too hard on this component #scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 27

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component #3: trust▪ Transparency creates an environment that’s more conducive for building trust trust▪ 2 types of transparency • brand–customer time • blog, twitter, etc reciprocity • customer–customer • community discussion forum intensity #scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 28

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component #3: trust▪ People trust themselves, so trust they tend to trust brands that co-create with them▪ 2 types of co-creation • passive: listening + collect customer input time • active: crowdsourced ideation + filtering reciprocity▪ Key: 1. Create transparent & authentic intensity communication channels to customers & among customers 2. Co-create with your customers #scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 29

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component #4: reciprocity▪ Reciprocity = 2 way reciprocal services▪ Customer Brands trust • Make it easy for them to help other customers of yours • Reward them properly and serve time right reciprocity▪ Create a sustainable cycle of reciprocity by co-creation intensity▪ Key: don’t forget to let your customer help you #scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 30

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building customer relationship▪ Customer community • Opt-in: it’s there when the customers want it • May have a great cause trust • Transparent channel • Platform for co-creation time • Enables reciprocity reciprocity▪ Customer relationship are build the same way as intensity inter-personal relationships, in a community #scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 31

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Now we know how relationships are built, can we measure it?#scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 32

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not yet, but each pillar is ~quantifiable~ how transparent is your how deep are the at what rate arehow much time spent in engagements brand to your customers? reciprocal andyour brand community? with your brand? how responsive you are mutual serviceshow much time spent sentiment ratio, to your customers? being carriedengaging & participating emotions out? how many inter-customeron your fan page, discussion do you enable?youtube channel, etc.? hard to measure. But that’s OK, b/c it’s hard at what rate are content to influence too being co-created w/ your customers? #scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 33

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future CRM Big challenges: Combining the metrics for the 4 pillars into a single metric that quantifies the strength of relationship. There are nonlinear dependencies between the 4 pillars of a relationship, so a simple linear model, such a weighted average, won’t be sufficient. Hopefully, future CRM will not only have data on your customers’ relationship with your brand, but also the strength of relationships among your customers.#scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 34

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Thank you Q&A + discussion @mich8elwu#scon12 twitter: mich8elwu linkedin.com/in/MichaelWuPhD 35

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