Yet, the Dutch seem to participate in another successful persuasion strategy which includes messages which are not completely positive. I call it the ‘Ultimate Transparency Strategy’. This strategy includes showing bad events, errors, risks and doubts about continuity to the audience, possibly exposing the company to criticism and public humiliation, since public opinion can follow unpredictable routes.

The first case in this trend that I’ll discuss is American. Air BnB, the successful online P2P location exchange facilitator, was hit hard by a case in which a house of one of its customers was completely ransacked by a visitor. The example went all over the internet and dramatically displayed the flaws in the AirBnB model. Turnover dropped sharply and AirBnB responded defensive initially, doing exactly the wrong thing according to many PR experts. The incident brought the thriving company on its knees in just a few weeks. Then they changed their strategy, offering complete transparency about what had happened and about their mistakes. They paid out the victim, dialogued openly with their customers about solutions and found an insurance product which brought back the customers. Ultimate Transparancy saved the day for AirBnB.

Droam, a small Dutch start-up renting out mifi-devices (create a personal hotspot when traveling, saving money and allowing for peace of mind connectivity (very handy in the above mentioned hostel)) recently improved the Ultimate Transparency Strategy. The Gordon Ramsey-like CEO already had already built a reputation of delivering straight in-your-face comments through Twitter and his foodie blog, but when Droam recently got into financial trouble, he extended this with a campaign unheard of in European Internet history.
The firm ran out of working capital due to a risky business model allowing customers to make costly mistakes and some of those customers not paying their bills after discovering multi-thousand euro disaster invoices. Liquidity was running out quickly for the fragile start-up, operators wanted their bills to be paid and Droam seemed to go down the drain in just a few days. The response of Philip Actor (@attore) was to post every detail of his misery on Twitter and ask people for help to solve the situation. He didn’t do that by going on his knees, but stayed consistent in his mix of sharing all intimate details of the company and his state of being and at the same time conveying ruthless negative comments about anybody not agreeing with his approach. Minute-by-minute, his Twitter followers could see the company getting into deeper financial trouble. Actor not only shared the company’s financial details, but his personal emotions and heavily opinionated views on individual customers, partners and competitors in a dramatic 48 hour long session in which he discussed, begged, demanded, cursed and thought out loud on how to solve the problem at hand. The audience could see the solution getting closer… and then slip away again. Critics stood up blaming the issues to bad management, all opposed by Actor showing each detail of the comments and his defense to whomever wanted to read and listen. Important detail was that Droam encouraged people to put money in a small company that was about to go bankrupt, and not for a single moment hid that there was a significant risk that people would lose their pledge the next day.

To make a long story short: Droam made it so far. The ‘Ultimate Transparency Strategy’ which Actor followed created trust and empathy so many customers pre-ordered devices. Enough for a larger investor to step in to keep Droam alive. The very high risk on losing money did not win from the trust in the message and beliefs that Actor managed to communicate to his followers. A large group proved to be true followers and created accumulated power of the type which fuels crowd funding projects into success, but this time it took Droam from the cliffs edges, fueled by ultimate transparency.

Will this strategy work for less dramatic situations? Can it be ‘used’ as a robust persuasion strategy by companies?

I think the ‘Ultimate Transparency Strategy’ can form part of the DNA of a company and therefore it can be part of an effective strategy. However, it seems ineffective for companies choosing for this strategy whenever it seems appropriate, since ‘Ultimate Transparency’ does not work if used without continuous transparency. The AirBnB and Droam cases provide enough material for companies to increase their awareness that transparency can persuade customers in a compelling way, allowing for successful strategies.

Do I get the money back that I have put in Droam? Do I trust it to function sustainable enough to increase its working capital towards healthy levels again? We’ll see, but at least I know where it went and how it was used, unlike some other money I lost in the last 4 years of crisis.

Now…who’s the winner? A real life example of a high conversion strategy for retailers.

An overview of the basics for loyalty.

Persuade with customer reviews.

From Persuasion and Passion to Action. What matters are results.

Customer Loyalty and Advocacy: What Can We Learn From Jonathan Ive and Zappos?

Behavioral biases. Quite a list of them, actually.

Daniel Kahneman on the Trap of ‘Thinking That We Know’

The title is Real-Time Interaction Management. But it’s only a list.

Reflections on what influence actually is.

Solis about the 5 pillars of social media strategy.

Homophily makes you choose…the same. Really.

Review of Peppers and Rogers’ book: Extreme Trust.

Series of 3 articles worth reading. Conversion and visitors.

The Game Mechanics of Customer Loyalty.

Customer experience shapes loyalty, not price.

Mary Meeker Re-Imagines Nearly Everything (again).

Morality and design; what is persuading you and how far do you go? (video)

That’s it for this week! Let me know when you have more links through Twitter or Google+ or add your comments under here!

Organizing a lottery (the word might be different in various countries: raffle, sweep-stake, jackpot, etc.) is a campaign in which your customers receive a chance on a prize through a ticket with numbers or icons. The specific prize for them can be checked by scratching off a layer of the surface which reveals the ‘winning numbers’, or by checking numbers on a list or website or by listening live to a draw (‘bingo’). Unless they pay for the tickets, people generally know that you are trying to seduce them into doing things they might not want to do, but the outlook on winning a prize might seduce them to check their possible price anyway.

The strategy entails giving out prices in such a way that the participants feel the price is too good to ignore, and they will use it (as a discount) to purchase our products. Let’s look at the practical example: a retailer handed out 350.000 tickets. There was only 1 dream prize of EUR 1.000,-. The rest was divided in prizes of EUR 5,-, 10,- and 25,-, each as a discount on products to be purchased at the retailer who organized this campaign. The retailer distributed almost exclusively prizes of EUR 10,-. This had the effect that nobody either lost or got the ‘lowest’ possible price of EUR 5,-. This caused all participating consumers to think they were ‘lucky enough’ to win at least a reasonable prize, which would be a waste not to use. Conversion rates were significantly higher compared with a regular ‘EUR 10,- discount coupon’ sent to the same group before.

Now, who’s the winner?

Influencing styles; which one are you? And your company?

A checklist, nicely summarized: 9 Things to Know About Influencing Purchasing Decisions

Starbucks and loyalty: an evolving file. This time about mobile payments/loyalty.

The ‘other side’ of persuasion marketing. A (very) critical perspective on what we do. Very interesting read! Read the comments as well. By Alexander Furnas.

Research Theme from The Altimeter Group: The Dynamic Customer Journey.

Bit braggy in its language, but a project with nice results from Tier 10 Marketing: How they reached a high level of engagement.

Reflections on persuasion marketing and the empowered consumer.

This week, it seemed that IBM was all over the place with thir Smarter Commerce. They also presented the new 4Ps of marketing: persuasion, personalization, presence, & permission. We couldn’t agree more….

Behavior Change as Value Proposition. With very interesting graphs.

Interesting lessons to learn from Persuasion in Health: Conference Persuasive 2012.

The Power of Persuasion in Forbes, an article about PeerIndex.  There’s a White Paper with the same title, published by PeerIndex itself on Scribd.

How transparant are you? How transparant are your customers to you? What do you base your profile on? On what they say?

Ready for some deep reading? Personalized Persuasion in Ambient Intelligence in a PDF.

A PDF article from a loyalty veteran about how to build trust. Do you know how to do that?

Interesting list of persuasion picks.

That’s it for this week! Let me know when you have more links through Twitter or Google+ or add your comments under here!

Sympathetic story about a spoiled child and a great company.

Are less choices more persuasive? HBR provides an answer.

Enterprise loyalty, 3 principles.

When persuasion doesn’t work: JCPenny’s pricing strategy is not clear.

Not updated frequently, but an interesting newsfeed

Does your company spend more time on tracking financials, or more on tracking customers? Veteran Reichheld speaks again.

Testing persuasive strategies; necessary, but it can lead to dead ends...

Persuasion Marketing Tips by Susan Bratton

Chinwag sheets about the Psychology of Online Influence

A golden oldie (2007) in persuasion marketing

List of ‘must use’ design words: how would we score in persuasion marketing?

The Behavioral Targeting Blog has put pro’s and con’s in a list.

Contagious ideas can be persuasive. Or not?

NY start up Brouha (what’s in a name?) uses RFID to measure behavior.

LA Times found Cialdini’s book persuasive enough to write about it

That’s it for this week! Let me know when you have more links or add your comments under here!

Still, apart from the biggest web retailers or the big advertising networks, many retailers fail yet to make use of this persuasive technology. Now the distance starts to grow even larger when retailers with experience in behavioral targeting start making use of Behavioral Group Targeting (BGT).

First let me define Behavioral Group Targeting: It is a strategy to create a model of the behavioral dynamics and beliefs of a distinct group so it can be used to successfully offer tailored products/services to the group, such with the goal of realizing significantly higher conversion rates than offers to individual consumers would deliver. If a brand understands who are the Key Group Influencers (KGI’s) and how and when they are capable of influencing other group members in their buying decisions, then making use of this knowledge can cause multiple sales in a relatively short time. On top of that, it generates group loyalty to brands ‘endorsed’ by the group, enabling ‘safe choices’ for group members looking for group recognition. Behavioral Group Targeting is so new that I did not find a lot of cases yet. Yet, my own experiences are very promising. I’ll share a particularly interesting case with you: ‘Follow the Queen Bee’.

Essentially, (female) shoppers searching for fashion/luxury items are social shoppers. For many of them, group approval and confirmation about shared beliefs are crucial in the selection process of which brands and which products to purchase. The dynamics of members influencing each other in such a group is quite complex however. Yet, some groups of (young female) shoppers seem to have an (implicit) leader who leads in brand selection and product approval: the Queen Bee. The presence of a Queen Bee provides specific opportunities, since dynamics follow more predictable patterns. My case describes two steps for companies or brands on how to profit from the Queen Bee-model: a specific application of Behavioral Group Targeting.