Ideal Marketing Company Blog

Who do you know?

I’m a big fan of Malcolm Gladwell’s book ‘The Tipping Point’  which partly talks about how people’s behaviour can lead to large surges in the popularity of a new product.

In 1967 Stanley Milgram performed an experiment called “Six degrees of separation” which showed that average number of personal contacts standing between you and any stranger is six people. Duncan repeated the same experiment in which 60,000 people across 166 countries were asked to forward an e-mail via personal contacts to one of 18 target recipients. The results were astonishing. The majority of cases required only six steps and the message chains “did not rely on a few highly connected individuals”.

This partly goes against Malcolm Gladwell’s theory which states that different types of people have different types of influence: “Mavens” – experts in the field; “Connectors” – widely networked individuals; and “Salesmen” – passionately persuasive people.

Word of Mouth advertising is one of the oldest and most effective ways of communication as borne out by the 1967 Stanley Milgram and Duncan experiment, but I believe in Gladwell’s point that some people are key to making a message travel quickly and efficiency.

What happy customers look like

CRM gives the best ROI Marketers believe. The Chartered Institute of marketing’s latest Marketing Survey revealed that CRM delivers the best ROI. The marketers believe that ROI with advertising is the worst.

Financial services and service firms(31%) give the best ROI , second being technology and telecom sectors (30%) and public relations with half the number of mentions(12%) as listed in a survey conducted for The Institute by Ipsos MORI in the Spring .

About 38% of the marketers rate the ROI for technology and telecom companies as worst, 23% rate advertising excluding online as worst. While 11% consider that sponsorship deliver poor ROI.

Commenting on the findings, David Thorp, director of research and professional development at The Chartered Institute of Marketing said; “As belts tighten it is clear that marketing spend on advertising is under pressure but it’s refreshing to see that investment in ‘knowing your customer’, through CRM systems, marketers are able to wisely concentrate their spend in the most effective activities and, as we move into 2010, I’m convinced this more professional approach will stand them in good stead when the economy recovers.”

CRM gives a much higher ROI than advertising. This is a good reason for companies to focus on their existing customer base.