May 13, 2013
StorefrontBacktalk: Should Retailers Favor Customers With High Social Influence?
Through a special arrangement, presented here for discussion is a summary of a current article from StorefrontBacktalk, a site tracking retail technology, e-commerce and mobile commerce.
American Airlines last week announced that it was going to offer people who have a high social influence free access to its airport lounges. Under the program, passengers with a Klout Score of 55 or higher qualify for a one-day pass to American Airlines’ Admirals Club at nearly 40 worldwide lounge locations.
Klout comes up with each user’s social influence ratings through a proprietary algorithm that weighs follower count, tweet engagement and other social outreach measures. The lounge perk is given regardless of whether the passenger is booked on an American Airlines flight.
On the plus side, this is one of the first major programs to offer shoppers a concrete item of value (people pay a lot to join airline clubs) in exchange for having a high social influence number.
The downside is that Klout simply counts up the Twitter followers and Facebook friends (and other social media stats) and looks at forwarded Tweets. The logical step would be determining actual purchasing clout, for example, how many dollars of purchases that shopper’s Tweets generated.
But this American Airlines program is the first step on setting up special benefits for a small group of people who at least have a lot of followers.
The intriguing part of the American Airlines promotion is that it can deliver three things. First, it will bring more people into the American Airlines club, which will encourage those people to fly American. Secondly, American Airlines customers are incentivized to use Klout. Third, it will encourage them to do anything they can to inflate — artificially or otherwise — their social numbers.
From a retailer’s perspective, someone with a million Twitter followers is a great low cost way to publicize your products. If you’re confident in the quality of your merchandise, getting the people with the largest numbers in with the incentive of discounts or better return rules or longer hours (the one-time Costco trick of letting corporate card holders come in an hour earlier than anyone else) is a nice way to potentially get more of the word out.
Then there is the chain effect on social influence. Maybe Customer 104 only has 200 followers, but you’ve determined that many of those followers are huge influencers. The deeper you dive into the data, the more potential it has. But if the system you’re relying on just counts numbers, the ROI on these kinds of social-to-in-store programs is going to be really dicey.
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Should retailers offer incentives to shoppers with high social media influence? Should social influence become a component in store rewards programs? What do you see as challenges making such programs work effectively?
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Perks such as the Admirals Club are intended for loyal AA customers who pay extra for the privilege or have earned entry to the lounges through accumulation of frequent-flyer points. The Klout promotion may create some short-term “buzz” for the Admirals Clubs, but also has the potential to backfire if it puts a sudden strain on the clubs’ seating capacity, food availability, and so on. Yes, it’s cost-efficient for retailers to imitate this tactic, but they had better offer “best in class” products or store experience.
Is it just me or is American Airlines’ program a sign of desperation? It’s frustrating enough to sit next to someone on an airplane who paid half the price you did for that seat. To allow someone entry into a club others have to pay for because they are “popular”…I have no words.
Social media points as the new currency gives me pause. I can’t wait until all those teens, tweens, aliases and alter egos with a following and Klout experience the Admiral’s Club.
This promotion just rubs me the wrong way. I’ll leave it to others to have a more coherent response.
I’m willing to suppose there might be something positive to say. I just don’t see it.
Sounds like a very cost effective way to promote your product. Half the fun of going into the Admirals Club in Los Angeles is to see the celebs hanging out. The downside is they have their own private club inside the club that most members can’t get into. Restaurants have often given celebs free meals because it brings people into the restaurant. Or free clothes with the logo of a sponsor. Just good business sense.
Conceptually this is a terrific idea: customers with great value—whether measured directly through their purchasing, or indirectly through their social influence—should be treated differently than the more ordinary ones. Retailers are slowly but surely waking up to this new reality.
But it’s not clear that this concept is “ready for prime time”: the validity of Klout scores has not been well-established yet (and there’s plenty of reason to be highly skeptical). There is a real danger of failing to execute this idea properly. Not only can it backfire in a myriad different ways, but it can potentially kill this promising idea before it ever has a chance to flourish.
So I’m glad to see this kind of experiment, and I hope that other firms will try similar programs (perhaps using different kinds of social media valuation metrics). But keep in mind that it’s still very early in the game, so let’s view this more as a modest (and risky) learning exercise rather than a game-changing one.
First, the article misstates how Klout score is calculated. While Klout doesn’t share it’s actual algorithm, it’s more complex than simply number of followers and amplification. It factors in the influence of your followers, level of engagements, activity on numerous networks, etc. All that said, It’s really difficult to quantify actual influence, and I’m not a huge fan of Klout, but it’s not fair to say it’s a simple total of followers, or that’s it’s easily artificially gamed.
Klout-specific issues aside, I do think it’s reasonable for a business to reward highly influential customers, but there are pitfalls. Businesses have always given preferential treatment to high influence individuals (closing the store to give an interview to an influential reporter, opening the store early for a popular celebrity to shop privately, etc.). Giving special treatment to people with a high social influence is no different.
Businesses need to be careful that the special treatment influential customers receive isn’t perceived as being at the expense of other customers experience. Giving away so many free passes to the American Club that the experience is worse for paid members would be a bad practice. This is a tricky balance that businesses have struggled with long before social media became popular, like customers who can’t get in a store while a celebrity shops may be justifiably upset, and airline passengers who can’t get an upgrade because a politician was offered a first class seat could well be upset.
The balance is giving the best possible treatment to your most influential customers and prospects, while still being perceived as “Fair.” Few customers have an issue with treating more frequent/higher spending customers preferentially, but offering perks to “influential” people can more easily be perceived as “unfair.” Extra perks are probably okay, but things that negatively effect other customers are usually not okay.
Disclaimer: I did get a free pass from American in the promotion mentioned.
In the case of AA, it would be interesting to see how they manage the inventory of space and balance the access of high Klout score access versus the frequent flyer access. As a short-term program, I can see it working (assuming those who used the day pass has a positive experience) to drive awareness of the lounges.
Current research has shown that this principle of “mega-influencers”—that Malcolm Gladwell wrote about in “The Tipping Point”—is really not how influence works. In reality, it’s your much closer-in networks of people that actually influence your behavior. There is an aspect of influence success with “temporary networks” (like event staffers), given that context is so important for influence.
Great reading on this topic can be found in the book “Grouped” by Paul Adams.
It’s just not real to think that a person with a million followers in social media is more influential to the masses. When is the last time you took a recommendation in a tweet from someone you don’t know directly to the store and bought something? Even known celebrity marketing isn’t as effective as your office cohort that you mix with every day, or even your social group at the gym.
No. These scores are too easily manipulated, i.e., anyone can have a high Klout score if they want one and there is no reasonable expectation that free cookies and coffee will make you switch airlines—or anything else.
Eventually the answer to this question might be yes, but it will require a great deal more nuancing and some rigorous metrics and tracking measures to make it work.
Really? Have you been in an American Airlines lounge? A “One Day” pass is going to convince you to sing the praises of one of the world’s worst airlines to everyone you know? No wonder “media whore” gets over 23 million hits on Google and you can actually look it up in Wikipedia. For gosh sakes at least make it a year’s membership!
Personally I find this obsession with scheming manipulation by corporate America to be vile, like wading through a garbage dump. Sickening. Dishonest. Desperate. If flying with American (or almost any airline) was actually a pleasure, we’d all be singing its praises…for free!
Give American Airlines a B+ for searching for new ways to attract customers. Give them an A for finding new ways to upset their loyal flying/paying customers. Those loyal customers spent thousands of dollars each year flying AA to earn the right to membership. I am not sure, but there might also be a cost other than flying for membership. Nonetheless, the loyal flying customers deserve better.
Like Anne Howe said, it’s really about your closer-in network. Alec Baldwin has a huge number of followers, but I don’t hink he could influence many people to do and buy anything outside the small circle that really know him.
Could this strategy work? I think it would, but needs to be targeted even more finely than shopper segments.
Be careful for what you ask for.
I think the lesson that may be learned from an American Airline program like this is that if you don’t have something of quality to offer, you may not want to give it to someone with KLOUT.
Based on the service be given by most of the Airlines, there is a good chance the comment they will get will not be positive.
Over the past 30 years of sitting in airline clubs I’ve only seen perhaps 10-12 famous people such as athletes, movies stars and politicians. A person with a big Klout score might not even register with people over 45, often the demographic inside the clubs. I really don’t see too many young people in their 20s and 30s in the clubs, who I would think would be more into social media.
So that’s the challenge there, merging the club’s demographics with those with high Klout scores.
As a frequent flyer, I have noticed a steady declining value put on me as a customer. Now anyone can buy their way into a seat with more room or early boarding. At least with the airline clubs, their cost of entry was high so those that did not fly a lot saw cost as a barrier.
While I didn’t like the airlines selling access to what I and others had earned by spending too much money and too much time flying, at least the airlines got a direct benefit—money. Now AA wants to provide access to someone because they have KLOUT. That’s too much.
This is a slippery slope that just rubs me the wrong way for all the reasons already listed in other posts. I’d be interested to see how long this program lasts (not long, I’ll bet), and if other airlines follow with similar programs (doubtful).
Wha?? My Klout score is nothing to brag about (I don’t tweet a lot about current events and I don’t check in to Starbucks) but I have 2370 contacts on LinkedIn…that doesn’t count?
I seriously doubt that this will improve AA’s business, either in the Club or in selling seats.
I am 100% certain that it aggravates the h*ll out of me as a 3 Million Miler who has regularly ponied up the required price of admission to the Clubs for over 20 years.
Dumb move.
Can this be for real? A really elitist concept that will turn off a lot of people, especially as people game the system to get “Klout” and free passes. And if I were ever in line at a store and saw someone get cheaper prices because of their “Klout,” I’d leave the store without buying anything. And I’d tell all my friends, and keep telling them for a very long time. But that’s just me, and my own personal brand of “Klout.”
Wow! Teenagers can now take their parents to the club this summer! Has American done research to determine the match between those with high Klout scores and their current market or their proposed market? Since these scores are so easily manipulated, this might be easier than paying the money to join? This might be a good experiment to announce for a month but is premature as a policy change.
I think it’s a great idea. Good way to draw a younger crowd as well. But what AA better get ready for is an onslaught of criticism if they don’t upgrade not only their facilities, but the amenities they offer. If you fly Singapore into the U.S., then jump on AA…you’re in for a pretty rough transition!
Broadly speaking, attaching some value to social media influence may present some value for marketers. It’s an innovative idea on its face, and I expect someone will soon figure out a workable formula.
AA’s program with Klout wins points for its novelty, but it suffers from two major shortcomings: AA and Klout.
I’m not that thrilled about spending time in airport lounges anyway, but the thought that I’d be sitting next to a wannabe whose talent is accumulating Facebook followers makes me airsick in anticipation.
I would agree that a high Klout score alone is not the best singular index for propensity to add profitable growth to a company. Klout is a simple, easy-to-understand metric, however, I believe merchants and service providers would want to know whom the most likely customers are to target and woo with special offers.
I know there are millions of very well-traveled people whom haven’t begun to dive into social media activities.
Targeting shoppers with high social media influence is not different than targeting any other demographic; geographical, financial, etc. It’s that simple. Keep in mind that any promotion you do, be it a discount, a free product, etc., can have both positive and negative impact to existing and new customers, so be sure to think out the promotion carefully and consider the possible outcomes.
Yes. This is a temporary reward to highly influential contacts. This is exactly how social media and ranking should be used. American isn’t going to give them a free flight, so this is the next best thing. They just need to make sure the ranking requirement is high and that it is temporary so the “fake” influencers don’t take advantage. This can definitely be managed and it is exactly what companies should be doing to reward positive, loyal customers.
No. There is no direct connection here that these high social media shoppers purchase more than anyone else. Because they are different doesn’t make them better. Just different.
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Perks such as the Admirals Club are intended for loyal AA customers who pay extra for the privilege or have earned entry to the lounges through accumulation of frequent-flyer points. The Klout promotion may create some short-term “buzz” for the Admirals Clubs, but also has the potential to backfire if it puts a sudden strain on the clubs’ seating capacity, food availability, and so on. Yes, it’s cost-efficient for retailers to imitate this tactic, but they had better offer “best in class” products or store experience.
Is it just me or is American Airlines’ program a sign of desperation? It’s frustrating enough to sit next to someone on an airplane who paid half the price you did for that seat. To allow someone entry into a club others have to pay for because they are “popular”…I have no words.
Social media points as the new currency gives me pause. I can’t wait until all those teens, tweens, aliases and alter egos with a following and Klout experience the Admiral’s Club.
This promotion just rubs me the wrong way. I’ll leave it to others to have a more coherent response.
I’m willing to suppose there might be something positive to say. I just don’t see it.
Sounds like a very cost effective way to promote your product. Half the fun of going into the Admirals Club in Los Angeles is to see the celebs hanging out. The downside is they have their own private club inside the club that most members can’t get into. Restaurants have often given celebs free meals because it brings people into the restaurant. Or free clothes with the logo of a sponsor. Just good business sense.
Conceptually this is a terrific idea: customers with great value—whether measured directly through their purchasing, or indirectly through their social influence—should be treated differently than the more ordinary ones. Retailers are slowly but surely waking up to this new reality.
But it’s not clear that this concept is “ready for prime time”: the validity of Klout scores has not been well-established yet (and there’s plenty of reason to be highly skeptical). There is a real danger of failing to execute this idea properly. Not only can it backfire in a myriad different ways, but it can potentially kill this promising idea before it ever has a chance to flourish.
So I’m glad to see this kind of experiment, and I hope that other firms will try similar programs (perhaps using different kinds of social media valuation metrics). But keep in mind that it’s still very early in the game, so let’s view this more as a modest (and risky) learning exercise rather than a game-changing one.
First, the article misstates how Klout score is calculated. While Klout doesn’t share it’s actual algorithm, it’s more complex than simply number of followers and amplification. It factors in the influence of your followers, level of engagements, activity on numerous networks, etc. All that said, It’s really difficult to quantify actual influence, and I’m not a huge fan of Klout, but it’s not fair to say it’s a simple total of followers, or that’s it’s easily artificially gamed.
Klout-specific issues aside, I do think it’s reasonable for a business to reward highly influential customers, but there are pitfalls. Businesses have always given preferential treatment to high influence individuals (closing the store to give an interview to an influential reporter, opening the store early for a popular celebrity to shop privately, etc.). Giving special treatment to people with a high social influence is no different.
Businesses need to be careful that the special treatment influential customers receive isn’t perceived as being at the expense of other customers experience. Giving away so many free passes to the American Club that the experience is worse for paid members would be a bad practice. This is a tricky balance that businesses have struggled with long before social media became popular, like customers who can’t get in a store while a celebrity shops may be justifiably upset, and airline passengers who can’t get an upgrade because a politician was offered a first class seat could well be upset.
The balance is giving the best possible treatment to your most influential customers and prospects, while still being perceived as “Fair.” Few customers have an issue with treating more frequent/higher spending customers preferentially, but offering perks to “influential” people can more easily be perceived as “unfair.” Extra perks are probably okay, but things that negatively effect other customers are usually not okay.
Disclaimer: I did get a free pass from American in the promotion mentioned.
In the case of AA, it would be interesting to see how they manage the inventory of space and balance the access of high Klout score access versus the frequent flyer access. As a short-term program, I can see it working (assuming those who used the day pass has a positive experience) to drive awareness of the lounges.
Current research has shown that this principle of “mega-influencers”—that Malcolm Gladwell wrote about in “The Tipping Point”—is really not how influence works. In reality, it’s your much closer-in networks of people that actually influence your behavior. There is an aspect of influence success with “temporary networks” (like event staffers), given that context is so important for influence.
Great reading on this topic can be found in the book “Grouped” by Paul Adams.
It’s just not real to think that a person with a million followers in social media is more influential to the masses. When is the last time you took a recommendation in a tweet from someone you don’t know directly to the store and bought something? Even known celebrity marketing isn’t as effective as your office cohort that you mix with every day, or even your social group at the gym.
No. These scores are too easily manipulated, i.e., anyone can have a high Klout score if they want one and there is no reasonable expectation that free cookies and coffee will make you switch airlines—or anything else.
Eventually the answer to this question might be yes, but it will require a great deal more nuancing and some rigorous metrics and tracking measures to make it work.
Really? Have you been in an American Airlines lounge? A “One Day” pass is going to convince you to sing the praises of one of the world’s worst airlines to everyone you know? No wonder “media whore” gets over 23 million hits on Google and you can actually look it up in Wikipedia. For gosh sakes at least make it a year’s membership!
Personally I find this obsession with scheming manipulation by corporate America to be vile, like wading through a garbage dump. Sickening. Dishonest. Desperate. If flying with American (or almost any airline) was actually a pleasure, we’d all be singing its praises…for free!
Give American Airlines a B+ for searching for new ways to attract customers. Give them an A for finding new ways to upset their loyal flying/paying customers. Those loyal customers spent thousands of dollars each year flying AA to earn the right to membership. I am not sure, but there might also be a cost other than flying for membership. Nonetheless, the loyal flying customers deserve better.
Like Anne Howe said, it’s really about your closer-in network. Alec Baldwin has a huge number of followers, but I don’t hink he could influence many people to do and buy anything outside the small circle that really know him.
Could this strategy work? I think it would, but needs to be targeted even more finely than shopper segments.
Be careful for what you ask for.
I think the lesson that may be learned from an American Airline program like this is that if you don’t have something of quality to offer, you may not want to give it to someone with KLOUT.
Based on the service be given by most of the Airlines, there is a good chance the comment they will get will not be positive.
Over the past 30 years of sitting in airline clubs I’ve only seen perhaps 10-12 famous people such as athletes, movies stars and politicians. A person with a big Klout score might not even register with people over 45, often the demographic inside the clubs. I really don’t see too many young people in their 20s and 30s in the clubs, who I would think would be more into social media.
So that’s the challenge there, merging the club’s demographics with those with high Klout scores.
As a frequent flyer, I have noticed a steady declining value put on me as a customer. Now anyone can buy their way into a seat with more room or early boarding. At least with the airline clubs, their cost of entry was high so those that did not fly a lot saw cost as a barrier.
While I didn’t like the airlines selling access to what I and others had earned by spending too much money and too much time flying, at least the airlines got a direct benefit—money. Now AA wants to provide access to someone because they have KLOUT. That’s too much.
This is a slippery slope that just rubs me the wrong way for all the reasons already listed in other posts. I’d be interested to see how long this program lasts (not long, I’ll bet), and if other airlines follow with similar programs (doubtful).
Wha?? My Klout score is nothing to brag about (I don’t tweet a lot about current events and I don’t check in to Starbucks) but I have 2370 contacts on LinkedIn…that doesn’t count?
I seriously doubt that this will improve AA’s business, either in the Club or in selling seats.
I am 100% certain that it aggravates the h*ll out of me as a 3 Million Miler who has regularly ponied up the required price of admission to the Clubs for over 20 years.
Dumb move.
Can this be for real? A really elitist concept that will turn off a lot of people, especially as people game the system to get “Klout” and free passes. And if I were ever in line at a store and saw someone get cheaper prices because of their “Klout,” I’d leave the store without buying anything. And I’d tell all my friends, and keep telling them for a very long time. But that’s just me, and my own personal brand of “Klout.”
Wow! Teenagers can now take their parents to the club this summer! Has American done research to determine the match between those with high Klout scores and their current market or their proposed market? Since these scores are so easily manipulated, this might be easier than paying the money to join? This might be a good experiment to announce for a month but is premature as a policy change.
I think it’s a great idea. Good way to draw a younger crowd as well. But what AA better get ready for is an onslaught of criticism if they don’t upgrade not only their facilities, but the amenities they offer. If you fly Singapore into the U.S., then jump on AA…you’re in for a pretty rough transition!
Broadly speaking, attaching some value to social media influence may present some value for marketers. It’s an innovative idea on its face, and I expect someone will soon figure out a workable formula.
AA’s program with Klout wins points for its novelty, but it suffers from two major shortcomings: AA and Klout.
I’m not that thrilled about spending time in airport lounges anyway, but the thought that I’d be sitting next to a wannabe whose talent is accumulating Facebook followers makes me airsick in anticipation.
I would agree that a high Klout score alone is not the best singular index for propensity to add profitable growth to a company. Klout is a simple, easy-to-understand metric, however, I believe merchants and service providers would want to know whom the most likely customers are to target and woo with special offers.
I know there are millions of very well-traveled people whom haven’t begun to dive into social media activities.
Targeting shoppers with high social media influence is not different than targeting any other demographic; geographical, financial, etc. It’s that simple. Keep in mind that any promotion you do, be it a discount, a free product, etc., can have both positive and negative impact to existing and new customers, so be sure to think out the promotion carefully and consider the possible outcomes.
Yes. This is a temporary reward to highly influential contacts. This is exactly how social media and ranking should be used. American isn’t going to give them a free flight, so this is the next best thing. They just need to make sure the ranking requirement is high and that it is temporary so the “fake” influencers don’t take advantage. This can definitely be managed and it is exactly what companies should be doing to reward positive, loyal customers.
No. There is no direct connection here that these high social media shoppers purchase more than anyone else. Because they are different doesn’t make them better. Just different.