Science of Social blog

My Chapter on Relationships: The R in Social CRM

By MikeW

My Chapter on Relationships: The R in Social CRM

by Lithium Guru ‎01-20-2011 06:20 AM - edited ‎09-15-2012 12:44 AM

Dr Michael WuMichael Wu, Ph.D. is 927iC9C1FD6224627807Lithium's Principal Scientist of Analytics, digging into the complex dynamics of social interaction and group behavior in online communities and social networks.

 

Michael was voted a 2010 Influential Leader by CRM Magazine for his work on predictive social analytics and its application to Social CRM.He's a regular blogger on the Lithosphere's Building Community blog and previously wrote in the Analytic Science blog. You can follow him on Twitter at mich8elwu.

 


 

In my last post, I wrapped up my initial exploration on the subject of relationships. I can hardly believe I’ve written 13 articles on this topic, ranging from understanding social relationship on social media to interpersonal relationships on Facebook. Throughout this work, I have tried to leverage many scientific findings and principles from social anthropology and sociology in this investigation. However something struck me in the last couple of days, I just realized that I never talked about why I decided to venture into this topic in the first place.

 

Today, I thought it would be a good idea to discuss why this is such an important topic and compile all my writings on relationships into a consolidated chapter.

 

Relationship is Indicative of Influence

The primary reason that I become interested in social relationships is because I wanted to better understand influence. It has been shown that influencers do not fall into any standard demographic or any common segmentation. It is very difficult to find the common traits among those influencers who have specifically influenced someone else. Upon more careful analysis, I’ve found that the common characteristic among the influencer and the “influencee” is not actually an attribute of the influencer themselves. Rather, it is an attribute of the relationship—namely the strength of the relationship between them.

 

The single most predictive factor that determines who will influence who, is the strength of their relationship (i.e. tie strength). The stronger the tie strength, the greater the influence between them. This is consistent with the observation that people trust friends and families (strong ties) the most, and they are influenced most strongly by these strong ties.

 

Relationship is Indicative of True Loyalty

Another key reason why relationship is important for business is that it can be predictive of customer retention and loyalty. Customers who have a stronger relationship with a brand tend to be more loyal. Although academics have debated intensely whether there is really customer relationship or loyalty, what we call it doesn’t matter. What does matter is that the customers’ purchase pattern and behavior is not random, and this non-randomness can be predicted by the strength of a customer’s relationships with the brand.

 

Whether it is truly due to loyalty or other confounding factors (e.g. price, brand, eco-friendliness, etc.) can be determined by a statistical technique called Partial Least Squares Regression. That’s why it is so important to have a good understanding of relationships.

 

The R in CRM is Relationship, not Record

The third reason that I’ve become interested in the metrics and measurement of relationship is because there are currently no good methods for measuring the tie strength (i.e. the strength of the relationship) between two entities. These entities can be persons, brands, customers, suppliers, companies, and even nations. When I look into the data in most CRM system, I can only find customer records: transaction records, contact record, support case records, etc. I can’t seem to find any data on customer relationships. The “R” in CRM is supposed to stand for relationship, not records!

 

This is what actually compelled me to start an in-depth and systematic investigation of relationships, which resulted in this series of articles. As with my chapter on influencers, I created a word cloud (using Wordle) for my articles on relationships. So if the topics in the word cloud look interesting to you, then you should enjoy this collection. I also annotated my posts with key findings. Hopefully this will facilitate your own exploration in this fascinating topic.

 

wc_cyberAnthro+Rel_200wd_GrillCheese_v05_web.gif

 

I began my journey with a social anthropological investigation of relationships. Mainly I wanted to understand how social relationships are formed, developed, and maintained before there were computers. Then I examine what changed with the social media revolution. Surprisingly not much has actually changed.

  1. Community vs. Social Network – This is a very important post that sets the foundation for my future exploration. It describes two very important social structures with respect to relationships and their relational characteristics.
  2. How Do People Become Connected? – Basically weak ties can form in communities or through social networks when both parties want to connect.
  3. From Weak Ties to Strong Ties – Communities, whether online and offline, are where weak ties developed into strong relationships.
  4. Maintaining the Strong Ties – Social networks are where people manage and maintain the strong ties they built in communities as they move from one community to another.
  5. Cyber Anthropology: A Unified View of Communities and Social Networks – Social networks and communities are complementary: social networks develop naturally within communities, and likewise, communities can and often exist within social networks.

I then took a sociology approach and tried to understand what this concept of relationship really is and how can we measure it. These two articles are rather theoretical, but they are the foundation of how relationship works.

  1. Figuring Out the Relationship Puzzle – There are 4 components to relationships: Time, Intensity, Trust, and Reciprocity. Brands can influence trust and reciprocity to build customer relationships.
  2. The Relativity and Economics of Relationship – This is another important post that introduces 2 principles that governs how our relationships work. (a) The perception of tie strength is relative. (b) The attention economy governs who we are likely to engage with, and strong ties will usually win.

Subsequently, I want to apply these social principles of relationships to analyze an interesting phenomenon about the size of human social network: the Dunbar Limit.

  1. Where is the New Dunbar Limit? – There is an inherent tradeoff between the number of ties we maintained and the strength of these ties. So we can have more than 150 friends, but only at the expense of the quality (i.e. strength) of these friendships.
  2. Can Social Technologies Increase Our Dunbar Limit? – The value of social technologies is not that we can increase the number of friends we have. Their value is enabling us to make better use of our limited attention on the 150 people we care most.

What follows is another set of posts on the application of the social principles of relationships.

  1. Virtual vs. in Real Life: The Value of Relationship Perspective – If we use social technologies in addition to face-to-face engagement, then they can definitely help us build stronger relationships. If we use them as a replacement to F2F, we would end up with a weaker relationship.
  2. The Social Dynamics of Facebook Fan Pages – The strong ties (families and friends) on FB will compete with weaker ties (brands) for attention, inhibiting the development of customer relationship with brands.
  3. The True Marketing Power of Facebook: Sociology Perspective – The structure of the Facebook network provides a balance between relevance and rapid reach, which makes FB very effective at driving interest and awareness.
  4. Still Fishing Where the Fish Are? – Facebook operates at the shallow upper layers of the purchase funnel driving awareness and interest. Communities can extend deeper into the bottom layers of purchase funnel and drive actions, but at the expense of narrower reach.

Alright, this is all I have for now. It is only my initial exploration and a very interesting journey. But the subject of relationships is very deep, and there is a large body of academic research out there. I only scraped the surface. So I will continue to do research in this area. My goal is to gain a deep enough understanding of relationship to be able to derive a set of meaningful metrics that quantify the strength of relationships. The ability to accurately measure the different aspects of a relationship will then facilitate the development of a probabilistic framework that enables predictive and actionable analytics on customer relationships.

 

There is much exciting work ahead. So I’m certain that there will be a Chapter 2 on this topic in the near future. Hopefully, it will be on the measurement and analytics of relationship. So stay tuned! In the mean time, I welcome any kudos, comments, or discussions of any form. I’d love to hear you thoughts and your journey if you dabble with the any topic on relationships.

 

 

Comments
by Honored Contributor on ‎01-20-2011 08:07 AM

Michael, your enthusiasm and the quality and depth of your research and writing is simply priceless!  Keep up the great work!  I look forward to much more.

by Frequent Commentator on ‎01-20-2011 10:52 AM

Hi Mike!

Good resume of big job done!

What do you about main direction of WOM and influence studies by Van den Bulte, Aral and similar?

Do you have some to consider and incorporate in your practice from those studies?

Is Lithim also recording actions? :smileyhappy:

Thanks! 

by Lithium Guru on ‎01-20-2011 11:05 AM

Hello Brian,

 

Thank you for the nice comment. I'm so glad to hear that my work is valued so much from my readers.

 

I noticed that you've been contributing some great ideas in the Lithosphere community. I apologize that I've been so busy that I didn't have much time to respond to them yet. I have not forgotten them. I will try to get some time to respond to you posts.

 

And I will have another sieries coming soon. Stay tuned!

 

by Lithium Guru ‎01-20-2011 11:35 AM - edited ‎01-20-2011 12:30 PM

Hello Andrei,

 

Thanks for the comment.

 

I know a lot of WOM research by Van den Bulte, Iyengar as well as other academics. In fact, I blogged about one of Van den Bulte's study in one of my earlier blog post when I was investigating the topic of influencers. See Social Network Insights from Unconventional Graph Metrics. I think you will find it interesting if you into WOM stuff.

 

I don't have to consider using their research, because the truth is that we are always incorporating research results into our practice. First they go into our best practice and get tested. Then we iterate by adjust free parameters and fine tuning the results for our clients. And if there are a lot of demands, then eventually they get build into our product. So a lot of research and science are incorporated into our product and best practice.

 

We do track a lot of user actions in our product. We have over 250 metrics. And as new features gets rolled out, new metrics are being recorded constantly. The nice thing about Lithium is that we have already collected over 10+ years of operational data for over 350 communities, which give us a lot of statistical power and confidence in terms of what works and what doesn't work.

 

Thanks again for the comment, and see you next time.

 

by Spiro Spiliadis(anon) on ‎01-20-2011 12:50 PM

"Upon more careful analysis, I’ve found that the common characteristic among the influencer and the “influencee” is not actually an attribute of the influencer themselves. Rather, it is an attribute of the relationship—namely the strength of the relationship between them."

 

I have a story :-)

 

I see "relationships" as "relational" "ships" for example Tweetdeck is the "ship" and the way I can view tweets in column form lists is the "relational"

 

Though I do agree with you that the attributes may not be solely on the influencer they are in my opinion given the attributes of the penetration... 

 

Let me explain... over a year ago one of my main interests was SCRM, I had nothing formal planned on how to find out more or what i would learn.... but it had to start somewhere and it started with a tweet, then two, then three, all of which I noticed were coming from the same two or three people... 

 

Inside tweetdeck i created a list, in that list were those three people, so first thing (year later) i realized was that the daily penetration of continuous context information kept my attention, the longer it kept my attention, by reading posts, by reading conversations, the better it penetrated.... those three people grew to fifteen all of which were 2nd and third ties to those that I followed. In other words, those two or three people were trusted, because they delivered value information, but it was the "relational" the daily attention to the stream, the mundane, that penetrated my thinking that it eventually stuck.

 

If everyday I have those same people in my point of view, reading what they read, listening on what they say, it will eventually penetrate my thinking, 

 

thus the power of influence is penetration and penetration only works when you keep attention to something.

 

The way "relation" should be looked at is how much attention do you want to give. Tweetdeck may provide the ship, but I provide the "relation" by giving it penetration value. 

 

What does penetration do? It creates trust. but i see trust not by choice but by "transition" it happens over a period of time...

 

Now here's the thing with SCRM... those people in my list may or may not know i am following them closely, does that really matter? Not really, because regardless they are providing value, i'm influenced by value, I'm interested in interests... 

 

my interests turn into influential potential when I make the initiative to keep attention, I keep attention by establishing "relations" within all my "ships" facebook, twitter, etc etc....

 

 

by readziegler(anon) on ‎01-20-2011 01:20 PM

Michael, thank you for sharing this compilation...very valuable information and insights!

 

Another relationship trend we see gaining momentum is the evolution from a focus on "managing" relationships (CRM, etc) to "optimizing" relationships. The point being that Social is driving a new level of customer empowerment which market leading companies are quickly responding to. This requires companies to adopt a new mindset and develop a culture that understands, and is focused on, building high-value customer relationships that grow over time.

 

Thoughts?

by Lithium Guru on ‎01-20-2011 11:10 PM

Hello Spiro,

 

Thank you for commenting and sharing your story.

 

What you described is precisely what happens when a new member joins a new community (see Cyber Anthropology: A Unified View of Communities and Social Networks). And I’m so glad to hear that you acknowledge that attention is needed for relationship building. Ultimately time and attention are needed to build a real and meaningful relationship. That is why the attention economy still govern how many stable relationship we can actually hold – namely, the Dunbar limit.

 

However, I would argue that those 3 people are able to penetrate your world because you are willing to spend time and pay attention to them. And that is what builds the relationship, which consist of 4 components: intensity, time, reciprocity, and trust. And this relationship includes trust, which is what led you to trust them and influence by them.

 

So ultimately, the foundation (the underlying attribute) is still the strength of your relationship with those 3 people. If you build a strong relationship with them, they can penetrate you and influence you. Without the relationship first, it would be hard for them to penetrate/influence you. And you build that relationship by spending the time to read them and paying attention to listen to what they have to say.

 

BTW, I like your Tweet Deck “relations” + “ships” analogy.

 

Thanks again for sharing your thought. See you again next time.

 

by esteban kolsky(anon) on ‎01-20-2011 11:34 PM

Michael,

 

The strength of this article is standing on the shoulder of giants - that is, the other ones you wrote before.  This is more than a chapter, it is a table of contents that points to specific articles that describe in the details all the components necessary for any organization to understand relationship.

 

One suggestion: your top three reasons why relationships matter - what do you think of inverting them? that is the CRM one comes first, the middle remains the middle obviously, and the tie reason becomes the last one? from my perspective, and feel free to ignore me completely - i am getting senile, it reads like a more powerful reason to explore relationships for businesses.

 

Businesses tend to skirt academics for several reasons - but you if tell me this is what my business technology is based on, i am more likely to read it - even if it is academic in nature (although, this is not).  just a suggestion.

 

I went back an re-read your articles while reading this piece (I am a big fan, I read all you produce) and I can tell you that tying it all together as you have done provides a contextual perspective that is incredibly well done.

 

good job!

by Lithium Guru on ‎01-21-2011 12:06 AM

Hello Readziegler

 

Thank you for the nice comment. I'm glad you find my work valuable and insightful.

 

Optimization is a word that scientist don’t like to use, because it really doesn’t mean much. When I was in my PhD days, every time I use this word, people will always ask me optimal with respect to what criteria. So if you really want to optimize relationship, you must specify what it means to be optimal first, which will require you to be able to measure it.

 

But for business, I believe that only and ultimate quantity that they should optimized is long term sustainable profit. If relationship correlates 100% with long term sustainable profit, then sure, you can optimize relationship. But the real world is usually not that simple.

   1. Nothing will correlate 100% with long term sustainable profit except profit itself.

   2. When you optimize one area, you make a trade off in another area, because our resource is not unlimited.

 

Being a statistician. I often like to take the Bayesian approach, which do not always optimize, but take the average case, so you balance the tradeoff between gain and loss.

 

That being said, I do believe that business should focus more on relationship, because it is an important component of long term sustainable profit that has been ignored. As you said social is also empowering customers, which requires companies to focus more on relationship building.

 

Finally, in order to optimize relationship, we need to be able to measure it first. You can optimize something that you cannot measure. This is precisely the reason why I started this research. And it is one of my goal.

 

Thanks for your inquiry. Hope to see you again next time.

 

by Lithium Guru ‎01-21-2011 12:30 AM - edited ‎01-21-2011 12:56 AM

Hello Esteban,

 

It’s a great honor to see your comment here, because I know how busy you are. I’m so glad to have another CRM expert’s approval. (As an academics, I’m trained to doubt myself.)

 

I think you suggestion makes perfect sense. The only reason I present it in that order was because that was really the chronological order of what happen. As you know, before I get on this project, I was doing quite a bit of work on influencers, and that is really what got me started on understanding relationship. It’s more of a narrative history of my own exploration, rather than me arguing for the importance of relationship (even though I am doing that also). But I totally see you point. Someday, when we turn this into a more formal publications, I will definitely make note to reverse the order or those arguments.

 

As you said “Businesses tend to skirt academics for several reasons...” I never know when I’m getting too academic, theoretical, etc. for businesses. That is why it’s so nice to have your affirmation.

 

Thanks again for the comment and suggestion. Hope to see you again on Lithosphere.

 

 

by Frequent Commentator on ‎01-22-2011 11:04 AM

Hi Michael,

As I mentioned before, really good stuff. I also agree with you on the role of relationships and the difficulty in measuring it (of course, coming from analytics I am always for the motto - fact based something is better than nothing :-) ).

 

The one thing I could caution firms on even if we had a great way of measuring relationship strength is that unlike transactional measurements, this one is more like a feedback. Even in our personal lives we are always 'measuring' the impact of our actions, speech etc. and then using that to plan future actions and delivery. Well, businesses are no different. If a firm gets too happy with measuring relationships but does not loop it back then they are in for a rough ride in the long haul :-)

 

Great work.

 

Regards,
Ned

by Lithium Guru on ‎01-22-2011 12:49 PM

Hello Ned,

 

Glad to see you back, and thanks for the nice encouraging comment.

 

Actually, I think what you said is not only true for measuring relationship, it applies to any measurement! Measurement is just one way to provide quantitative feedbacks. If people ignore it and don't do anything with it, then there is no point in having any measurement.

 

Why? Because things that are interesting enough for us to measure are usually things that will changes over time. Whether it is relationship, or my own weight, or height of a child, tomorrow’s weather, the stock market etc., they all change with time. If something never changes, then there is no point to institute a measurement system. You only need to measure it once, then you know it for good, because it never changes. So measurement is just a way to tell us whether these changes are happening in the right direction, at the right speed, etc.

 

Most importantly, if they don’t happen in the right direction and rate, we need to be able to take action and steer it in the right direction, and accelerate or decelerate in order to get the speed we want. That is why most of the measurement frameworks I develop usually have a predictive components and actionability component to it. Telling you that you are going at 100 mph is no good if they don’t provide you with a brake (and accelerator).

 

So, I’m in total agreement. If businesses are not ready to take action, then they are wasting their money in measurement, whether they are measuring social media, relationship, or their corporate finance.

 

Thank you again for pointing out the importance of action. Hope to see you again next time.