Tribe vs. market segment“Argh, please stop calling us consumers (or worse, users)—you’ll miss the boat on what we are all about if you insist on doing that.”
—People
The next four chapters will discuss the Four Pillars of Hyper-Sociality:
Tribe vs. market segment
Human-centricity vs. company-centricity
Network vs. channel
Social messiness vs. process and hierarchy
Let’s start off by looking at the way companies think about the people whom they depend on to stay in business. If they keep thinking of these people as consumers, companies will develop such a narrow view—one limited to people’s context only as it relates to brand equity—that they will miss the opportunity to increase the public’s love for their company and its products. If, on the other hand, companies could expand their view and think of people as humans—social beings with needs and wants that go beyond what any company has to offer—they could get a much larger share of most people’s wallets (for a very long time).
Who is going to be the more loyal customer: the apartment-renting “consumer” to whom you’ve just recommended a 1,000-square-foot apartment with two bedrooms and two baths based on his requirements or the “human,” with his rich ethnic background, family configuration, and love of dogs, to whom you’ve recommended a duplex in a neighborhood of pet lovers and with the right school system? We are all humans, and we are influenced by our social context when we make decisions. By calling people consumers, you are stripping away that rich context and missing the true reasons why we buy things.
If companies can think of their patrons as human and consider the rich social context of those patrons, they may be in for some surprises. A good example of such a surprise is that people are not just a herding species; we are, as Dan Ariely puts it, a self-herding species, one that keeps buying the same brands, even if there was no good reason for buying those brands in the first place—that is, until a company screws it up.1 Some companies have known this for years, even though they may not have been able to pinpoint the reason why. A senior executive from the HP Inkjet Printer division told one of us many years ago that his company (and other vendors in the space) was enjoying almost perfect customer loyalty, with people continuing to upgrade to the same brand of printer, until one of the manufacturers screwed it up—e.g., by being late to market with a new release when competitors already had theirs available.
OK, so now that we’ve passed that hurdle, let’s dwell on this issue some more. Seriously, language is a very important factor in how we evaluate things and how we make decisions. Using the wrong language can limit our thinking. Using the right language can expand our horizons tremendously. And language happens to be something that, as humans, we have not had enough time to adapt to. As Gary Marcus, the author of Kludge: The Haphazard Construction of the Human Mind, concludes,2
The linguistic world is much less trustworthy than the visual world. If something looks like a duck and quacks like a duck, we are licensed to think it’s a duck. But if some guy in a trenchcoat tells us he wants to sell us a duck, that’s a different story. Especially in this era of blogs, focus groups, and spin doctors, language is not always a reliable source of truth.
Are we getting too academic here? Does anyone really care about all this stuff?
You should. If your team is thinking about building a new product to meet people’s needs, and it thinks of the problem it is addressing as a “calendaring issue” instead of a “meeting facilitation issue,” your team will build a different product. You should care about language in everything you do. Another confusing term that gets bandied around the corporate world is markets. By definition, a market is a place where the sellers of goods or services can meet with the buyers, and where there is a potential for a transaction to take place. The sellers must have something that buyers want in order for there to be a transaction. So by thinking about markets, we are automatically focusing on the transactions and losing sight of the human behaviors that cause people to buy products and services in the first place.
Tribes have their own language and their own terms, and it’s important to understand and speak their language and meet them on their own terms. If you want to succeed in engaging tribes, you will need to listen for how they talk, and adjust everything that you do with them accordingly. Companies need to stop thinking about consumers, stop thinking about markets and market segments, and instead start thinking about humans and their tribes. Tribes are based on group behavioral characteristics, while market segments are based on individual “consumer” traits. People in market segments do not necessarily want to hang out together, but those in tribes do, and if you want to leverage the Hyper-Social shift in your business, that is how you will have to look at your markets from this point forward.
Most businesspeople have been trained to use market segmentation as the basis for their strategy development. Unfortunately, in this Hyper-Social era, markets and market segments are no longer where buying decisions get made. In a Hyper-Social environment, you need to reach the tribes whose members influence one another—not the market segments that can be targeted with direct mail and ad campaigns.
In this chapter, we will also tackle some of the business world’s sacred cows. Some might be instinctively inclined to disagree with us, but we are confident that when you see the business world through the Hyper-Social lens, you will also see the limitations of certain business fads. They are the one-to-one marketing and product customization wave that never was, the end of market research (aka “market deception”) as we know it, and the long tail niche strategy, which never became profitable for anyone.
Classic market segmentation is based on people’s individual characteristics, not their social behavioral characteristics. Unfortunately, these individual characteristics about people do not tell companies much about whom people like to hang out with and what they are likely to buy.
Knowing that a person owns a small business may be an indicator that she will subscribe to a small business magazine or belong to the local chamber of commerce, but it will tell you little about the tribes that influence her buying decisions or with whom she discusses her frustrations, which could lead to the design of better products and services. When we spoke with Mark Colombo, senior vice president of digital access marketing at FedEx,3 he described how his department uncovered two tribes within the small business market segment: women and people who live near the Canadian border. First, the department found that two-thirds of its small business clients are owned by women. Now, don’t you think that the conversations in a community of women-owned small businesses will be much more vibrant than those in a generic small business community? For instance, women who own small businesses likely share a common set of issues and pains and may experience a strong sense of duty to help other women, which you would not find in a more broad-based small business community.
FedEx also found that most of its small business customers have shipping areas that look like circles around their physical location—for some, the circle is 50 miles; for others, 400. When it started looking at companies that are right by the Canadian border, however, it found that most of those companies had half-circles, with the shipping circles cut off right at the border. The reason? Not enough understanding of the export regulations. If you could create a community for the half-circle tribe that is sharing a common pain point, that too would lead to more vibrant exchanges and value creation than you could create in a generic small business community.
Let’s take Jeep owners as another example.4 The company could have used classic market segmentation methods to find the right target market segments to advertise its Wrangler or its Cherokee—much the same way that Nissan and Honda did. Nissan marketed its Nextera to single, 32-year-old, outdoorsy males who enjoy mountain climbing, biking, and surfing. After the launch, the company found that more than half of the buyers were women. The same thing happened to the Honda Element; the firm targeted it at active, suburban twentysomethings,5 only to find out that most buyers turned out to be baby boomers. Instead, Jeep found a tribe—a tribe with a shared passion for adventure, which tribal members express by “off-roading” their vehicles. The tribe has young people and old people; mechanics, teachers, lawyers, and doctors; women, men, couples, and whole families—all sharing that same passion. The people who participate in Camp Jeep, Jeep Jamboree, and Jeep 101 events form a tribe, and it would have never surfaced in classic market segmentation research. Not only did Jeep uncover a real tribe, but it had the foresight to create an environment, in the form of company-sponsored events, in which the tribe could operate as a Hyper-Social group.
There are other such examples, including the Harley-Davidson riders and their HOGs (Harley Owner’s Group), the MINI Cooper owners, and the Fiskateers, to name just a few. While many people would call these “brand communities,” we will refrain; in fact, we believe that using that term is very misleading for marketers, as it leads them to think that they can build brand communities, whereas in fact they cannot. Brand communities imply that the brand is at the center of the activity—which it is not. In order for communities to work, the members need to be at the center of the community, and so the motivations have to be different from the pure hedonistic pleasure of owning a brand or product. The Fiskateers may be the people who come up with most of the new Fiskars product ideas, and they may be the firm’s staunchest defenders when the brand comes under attack. But the reason they form a tight-knit community, one that some members say has changed their lives,6 is that they share a passion for scrapbooking. The reason that Harley owners get together is that they share a common passion for a riding lifestyle. Jeep owners have a shared aspiration for adventure by off-roading their cars. What about MINI Cooper owners, though? The reason they form a community is that they share a sense of humor and have an intense desire to express their creativity, not for the car, since according to ethnographic research,7 even people who no longer own a MINI Cooper stay with the community.
As we saw in Chapter 2, people use the Jeep, the MINI, the Fiskars scissors, or the Harley as symbols to associate with others who share their passion. In some cases, they take that a step further and create rituals around those brands, which make the brands even stickier. But at the end of the day, these are not brand communities; they are passionate rider communities, scrapbooker communities, and adventure seeker communities. Professor Bernard Cova, who is also the coauthor of Consumer Tribes,8 says it best: “We can hypothesize that consumers value the goods and services which, through their linking value, permit and support social interaction of the tribal part, products or services that support AB and not the fact of being A or B.”9
So why Jeep, why Fiskars, why MINI, why Harley? Because in each of those cases, the company has provided an environment in which the member community can operate and thrive. Jeep marketers are providing training camps for off-roading and are organizing barbecues at which members can share their passion. Fiskars provides an online environment in which its members can thrive and connect, and it provides offline events as well. In all cases, the brand marketers act as enablers of a shared passion that exists within a tribe or community. And while these are not brand communities, when they are done right, they obviously affect the brand in more ways than one—such as increasing sales by 300 percent for Fiskars.
Analyzing people based on their individual characteristics is not a good predictor of what they will buy. So market segmentation will be of limited use in helping you market, sell, and develop new products. Buying is an inherently social process, and that is true not just in the Business-to-Consumer world, but also in the Business-to-Business world and the Consumer-to-Consumer world. As Dan Ariely found, “The decisions and judgments of individuals in a group are dependent upon the decisions and judgments of other group members such that choice or opinion shifts are induced.”10 People tend to herd, and that affects their buying behavior—they buy the music that gets the most downloads, see the most popular movies playing, and vie for reservations at the restaurant with the longest wait time.
Depending on the tribes that you want to interact with, you will need to define an appropriate engagement model, including where and how to engage with them. Some tribes will prefer to contact one another primarily online, while others might want to add a hyperlocal, face-to-face component to their community. For example, if there is such a tribe as frugal moms who love the art of the deal and cannot stop talking about it when they find one, they may best be served by a Twitter-like environment with an SMS component to send one another alerts about those good deals.
In some cases, you will be able to engage tribes on your own platform (your own e-commerce site or your hosted community), and in other cases, you won’t. That is what happened to TiVo, where a strong independent community of TiVo enthusiasts had already formed by the time TiVo decided to leverage communities. Instead of trying to lure those people to its own platform, TiVo wisely decided to engage them where they already were—an online forum set up by passionate users that attracted thousands of enthusiasts. That probably meant forgoing the detailed monthly reports with all the stats about the community and other goodies that corporate executives are used to. But at the end of the day, it’s the best place to get support and one of the best sources of new ideas for the TiVo new product development team. In most cases, companies will have to embrace a federated model of tribal engagement, as people wander around cyberspace and have discussions about the things that you care about in multiple places.
All tribes have their leaders. Once you find the tribes that will help you with your business, you will also have to find their leaders and decide how to engage them. Leaders can be fans, employees, associates, contributors, customers, bloggers, or other independent content providers. They can be detractors or the real captains of their industry. But they are out there, and unless you know how to find them and to tap into their power, you will have limited success with your Hyper-Social efforts. That is why it’s surprising that barely 20 percent of all the companies that participated in our 2009 Tribalization of Business Study have tapped into the leaders of their tribes. For each of the tribes you engage with, you will need to develop a leader strategy that includes where and how to recruit them, if and how to compensate them, whether or not to have a tiered leadership model, expectations (e.g., for content) for the various leader models, and whether leaders from one tribe can be used for other programs. In some cases you can start communities and wait until the leaders emerge, but in most cases it is well worth the effort to identify and engage them before you launch your Hyper-Social tribal initiatives.
Last, you will need to tie the various tribal engagement models to your strategic objectives—e.g., amplifying word of mouth, gaining product insights, improving customer service, and so on. Doing so includes setting expectations for which part of the company can expect to benefit from these initiatives, and how the company should measure progress and success.
So stop thinking markets and consumers, and instead focus on humans and their tribes—they are the ones who will help you market, sell, and design better products.
Now on to debunking some of the sacred cows that are out there—we hope you will still be with us at the end of this chapter.
One-to-one marketing was supposed to be the holy grail of customer relationship management. Companies would no longer have to isolate us from the rest of the world as a group to sell to us; they could actually do it on an individual basis. The problem is that we are Hyper-Social beings who prefer to operate within our tribes. We do not want to be isolated from our group so that salespeople who know more about us than we feel comfortable with can give us the hard sell. We want the buying process to be a social process. We don’t trust companies to be on our side, and so we prefer looking to our peers for the information that will let us make sound buying decisions. The good news is that those Hyper-Social tribal peers cannot wait to help us and warn us about bad products and services.
As a team, we may want to customize our group workspace, the tools we use, or the T-shirts we wear, but we don’t want one-on-one product customization. In fact, we do not like having too many choices. Research has shown that an overabundance of options significantly reduces our willingness to actually buy something11—it’s as if mass customization leads to mass confusion.12 Now, wait—don’t throw that customer relationship management system out just yet. While people may not like to have companies try to sell to them on a one-on-one basis based on all that rich marketing data they’ve accumulated, people love actually being ready to buy a product, and people love it when a call center recognizes them and treats them as if they were a long-lost relative. Think of the CIO who made his buying decision based on his peers’ recommendations, and is now ready to buy that solution from your company. How do you think he would feel if, during the ordering process, someone from your company decided to warn him that what he wants to buy is actually incompatible with some other applications that his organization relies on, rather than just push the sale? He would stay with you forever, or at least until you had a major screw-up—and even then, he would probably be more forgiving.
People also like it when “the system” (an e-commerce site or an online community) recommends other content that is highly valuable because it’s based on what is known about them—much like Amazon recommending books or the Apple Genius recommending music. If companies leverage communities or social networks, they can make a big impact without one-to-one marketing. People love it when the software they are using enables them to help others; it makes them look great, and they also feel warm and fuzzy inside for having helped someone. Think of it as the next generation “refer a friend” program, one for the Hyper-Social times. The old “refer a friend” programs were very lopsided in terms of who was getting the most value from them. Almost all the value went to the company. A “refer a friend to valuable information to help her make a good decision” program (granted, we need a pithier title) is much more reciprocal in nature, and has a much higher likelihood of becoming viral among your customer tribes.
Remember this: When people are ready to buy or when they have a problem with a product or service, they want to be treated as individuals. When people are in the process of making a buying decision, they want to be treated as a member of their tribe. And yes, the logical extension of that thinking is that a company’s behavioral and contextual targeting campaigns may in fact be a colossal waste of time and money now that we are undergoing the Hyper-Social shift. During the sales cycle, it’s important to target tribes!
We have already seen that market segmentation research is not a good predictor of what Hyper-Social beings will buy, because it does not tell you anything about the group behavioral characteristics that make people want to hang with one another. On top of that, there is also evidence that the data that companies are collecting as part of that process may actually be flawed. According to a major neuro-marketing research project led by Martin Lindstrom,13 we humans tend to lie to market researchers. It’s not a conscious decision to lie; it’s just that our unconscious minds are better at interpreting our behavior (including why we buy) than our conscious minds. Dan Ariely adds that he is “very suspicious of focus groups because of the research on irrationality and because people have very bad intuitions about their own behaviors.”14 Taken together, we would say that these findings spell new challenges for the market research industry, on which companies spent $12 billion in 2007 in the United States alone.
One of the biggest problems with classic market research is that it assumes that people make buying decisions on their own and does not compensate for the fact that most such decisions are in fact influenced by groups or tribes. Another problem with traditional market research and focus groups is that they do not account for the fact that most of the time people deceive themselves by making up a socially acceptable story for the reasons they bought the product or service after the purchasing decision. And that story can be vastly different from the real reason they bought that product. Another problem, this one more specific to focus groups, is that people are often paid to participate in those efforts. The result is that they will evaluate everything they do during that session in their market framework instead of their social framework, meaning that they will evaluate the value of what they give you in monetary terms rather than in social terms, as we saw in Chapter 1. That could lead them to focus on quantity of feedback rather than quality, or to tell you what they think you might want to hear just because you pay them.
With this much uncertainty around market segmentation research, it’s no wonder that CMOs like Simon Clift from Unilever profess that they just don’t believe in predictive research and don’t use it.15
Again, don’t close down your market research department just yet. There are things that market research, especially ethnographically based research, can help you uncover, including information about tribal behavior. Let’s take the example of a global clothing manufacturer. When the company decided to relaunch a women-based brand of jeans, it decided to center the launch around a worldwide tribe—a community to which they expected to attract 3 million young women. The theory was that they needed to find one commonality among all young women worldwide to attract them to the community in the first place, and then allow subtribes to form in order to keep the members of the community engaged. It turned to ethnographic-based market research to find that one common trait and discovered one that is very counterintuitive, especially for classic market researchers. The emerging common trait among all young women worldwide is the process of individuating—getting out from under the influence of parents and masculine dominance. The counterintuitive part is that even though the thing that binds these women together is their becoming individuals, they experience this process as part of a tribe.
Other useful things that can be gleaned from classic market research are trends involving pricing or usage, and even root cause analysis of why certain things turned out the way they did. But these are mostly trailing indicators and should not be used to predict the future—especially as it relates to buying decisions!
Interestingly, many of the markets that were predicted to be “long-tail” opportunities (think media and entertainment content, for instance) turned out to be much more hit-driven than logic might have led us to believe. The long tail, a principle articulated by Chris Anderson of Wired, suggests that deep catalogs of songs, movies, and the like will be highly valuable in a world of cheap digital storage and search engines because consumers can browse and purchase entertainment that is precisely interesting to them (rather than settling for mainstream fare). Curiously, people seem to be intensely interested in “hits,” however, there are very few songs or movies that enjoy broad success. One key reason for this is that humans enjoy consuming and talking about the content that others are consuming and talking about. The majority are not consuming large amounts of obscure music, films, or novels; rather, they rush in droves to see the movie that opened that weekend or the television show that everyone is talking about, and they tend to spend their valuable time consuming hits as opposed to more unpopular long-tail content. Google’s CEO, Eric Schmidt, nicely sums up the business import of this fact when he observes,
While the tail is very interesting, the vast majority of revenue remains in the head. And this is a lesson that businesses have to learn. While you can have a long tail strategy, you better have a head, because that’s where all the revenue is.
And, in fact, it’s probable that the Internet will lead to larger blockbusters and more concentration of brands. Which, again, doesn’t make sense to most people, because it’s a larger distribution medium. But when you get everybody together they still like to have one superstar. It’s no longer a US superstar, it’s a global superstar. So that means global brands, global businesses, global sports figures, global celebrities, global scandals, global politicians.16
Forgetting market segments and embracing tribes instead is a big cultural shift. As you guide your team through the changes, keep asking yourself and your team the hard questions. Why would the members of our target audience want to hang out together? Is there any way that we can play a role in increasing their Hyper-Sociality? Are we relying on faulty market research in making our business decisions? If we could rethink our go-to-market strategy, would we go after our customers? Do we have a tribal mindset? Have we identified the leaders of our tribes? Have we found ways to engage them? Have we looked at what platforms we will need to engage our tribes on? Are we trying to chase the one-to-one marketing myth? Do we make proper use of our CRM system? Are we chasing the long tail for no good reason? Should we instead be focusing on the head of the curve instead of the tail, and do we know which members of our tribes consistently can identify the head?