Wharton Studies Network-based Marketing

Thank you to my friends at Referral Key for posting about a study published by Wharton University.

It was conducted for a telecommunications company. They found that the strongest indicator of whether or not someone adopted a new Internet service was if they had a "network neighbor" (someone they were in communication with) who was already using the service. Other demographic similarities were not as big an influence on the adoption of the product.

In other words, people who know people who already had the service were more likely to buy. To corporate marketing departments, this means selling to the friends of your existing customers is a powerful tool.

Seems to me like those of us who are faithful, devoted in-person and on-line networkers already know this.

Perhaps the most interesting part is that the study wasn't able to pinpoint the reason for the "network neighbor" effect. It speculates that they might be talking to each other (although in the study the consumers' conversations weren't monitored), or that they might be like-minded and therefore purchasing similar products, or that they have some deeper connection that is alluded to by the fact that the communicate with each other.

If you're a major telecommunications company, I guess you'd want the study to engage in this kind of introspection. For the rest of us, isn't it enough to know that our work on building referrals is validated?

1 comment:

  1. "If you're a major telecommunications company, I guess you'd want the study to engage in this kind of introspection. For the rest of us, isn't it enough to know that our work on building referrals is validated?"

    I suppose in retrospect, it's not dire that you understand why your customers are sending you referrals (Although it doesn't hurt) but in practice, good WOM(Word of Mouth) can always be better.

    As I pointed out in my Referral Key comment, different verticals will experience different challenges.

    A veteran attorney may know to leverage their network to create a steady flow of new business but consider contemporary service professions such as freelance programmers, SEO specialists, and various voguish consultants.

    Many of these people are young and just trying their hand at self-employment. They're spending money on Google Ads, Craigslist Posts, and lead lists because the internet is what they know.

    It may never have dawned on them that just a few satisfied clients can be a great source of new business; if leveraged properly.

    best,
    Chris

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