My Chapter on Relationships: The R in Social CRM
Michael Wu, Ph.D. is Lithium'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.
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.
- 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.
- How Do People Become Connected? – Basically weak ties can form in communities or through social networks when both parties want to connect.
- From Weak Ties to Strong Ties – Communities, whether online and offline, are where weak ties developed into strong relationships.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
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