How did we get to this point? Most of the emails we receive are useless to us, but paradoxically, that fact may be partly to blame for our feeling compelled to read them. In animal experiments, famed psychologist B. F. Skinner and his colleague C. B. Ferster showed that random reinforcement is far better than regular reinforcement in modifying behaviour. If a pigeon gets food every 100th time it presses a button, it will usually keep pressing. But if the reward comes randomly—sometimes after 50 presses and sometimes after 150—the pigeon will press with much more vigour, even after the rewards are removed entirely. Email does something similar. From time to time we get a very important message, so when we see new mail waiting, we are compelled to read it in the hope it might be something wonderful, even though it usually winds up being unimportant.

We also let ourselves be gamed every day by one of the oldest technologies of all: the calendar. Because it displays our nonscheduled time as empty space, our calendar apps encourage us to pack our days with events. Think how differently we’d interact with our calendars if the default was for time slots not to be empty—if, instead, they were pre-populated with tasks like thinking, writing, and planning. We’d be far less likely to neglect the opportunity costs: Every time we accept an obligation, it would be clear that we are giving something up.

Another calendar problem is related to what behavioural economists Gal Zauberman and John Lynch call “resource slack.” Their research has shown that when people estimate future time and money, we are overly optimistic about how much flexibility (slack) we’ll have. But we’re even more unrealistic about time than money. Lynch, who was my dissertation adviser, used to give me this advice: When someone asks you to do something in a year, ask yourself whether you’d accept if it were happening in the next two weeks. Based on our calendar, it looks as if we will have nothing do a year from now. In reality, though, our typical week next year will look a lot like this week.

But until my calendar starts to simulate that, I’ll likely keep surrendering my days to stuff I never should have scheduled.

Dan Ariely (@danariely) is a professor of psychology and behavioural economics at Duke University. He is the author of Predictably Irrational and The Upside of Irrationality.

The thriving field of behavioural economics has begun to codify these mental weaknesses in terms of social, cognitive and emotional factors. Drawing from the insights of psychology, behavioural economists (such as Dan Ariely, Robert Cialdini, Christopher Chabris and Daniel Simons) have explained why we buy more things at 99p rather than £1 (the left-digit effect), why we commit to memberships of clubs and other organisations that we’ll never use or attend (optimism bias), why we attribute more value to things we own than things we do not (endowment effect) and why we don’t return purchases nearly as often as we perhaps should (post-purchase rationalisation).

Knowledge of human behaviour is now being used by the giants of the web, from Amazon and Apple to Groupon and Zynga, to keep us coming back to their websites, playing their games and buying their products and services.

Amazon

Amazon has mastered eliminating small frictions, which in turn radically alters decisions and behaviour. For millions of people, Amazon is the default purchasing solution because it has all our credit card and address details on file. Amazon has removed the pain of retyping these details each time we make a purchase. This may not sound like much since many other websites also allow us to save our details, but during the few seconds in which we make our buying decisions, when we are not thinking very deeply, the barrier to entering that data seems too forbidding and we default to Amazon.

That’s not the only friction that Amazon has eliminated, they’ve created smart solutions to the problem of shipping, which has always been one of the biggest psychological hurdles to buying online. The first is Super Saver delivery, which is free in the UK if dispatching to UK locations. This option often tempts customers to add an extra item to their order.

The second, more interesting shipping mechanism is Amazon Prime. For an upfront fee of £49 per year, you get free next-day delivery on the majority of items. Knowing that one shop has free shipping compared to another, makes us less likely to shop elsewhere and because the barrier of shipping is removed, we’re more likely to impulse buy. Furthermore, because investment in shipping is essentially made upfront, we try to offset the investment by purchasing more.

Apple

If, like millions of other people, you’re an Apple customer, you may have noticed that email receipts for your purchases don’t arrive immediately after you’ve made the purchase. Whilst the delay could be related to Apple batch-processing transactions, there is an important psychological benefit to the company: the delay reduces the pain of paying and hence the potential for customers to request refunds.

The mechanism of the transaction remains the same, money is still debited from your credit card, but by not receiving a receipt immediately, the payment is decoupled from consumption and the pain of paying, however small the value may be.

It’s not all bad news for the consumer. Apple made the mistake of allowing apps to sell too cheaply or even for free through the AppStore. There’s an economic phenomenon called anchoring, which occurs when people overly rely on a specific piece of information to govern their thought-process. Once the anchor is set, there is a bias toward adjusting or interpreting other information to reflect the “anchored” information. Once a price point is set, it’s extremely difficult to displace the anchor. iPhone and iPad apps take many hours of work to design and build, but on the AppStore, the expectation now is that they can’t cost more than £4.99, whilst most should cost £0.69. The pull of free is just too strong—dragging down what people will pay for everything else.

Facebook

What has become increasingly clear is that the Facebook actively develops features that challenge our limited ability for self-control, since that is what will get us to come back again and again.

Much of Facebook’s genius revolves around the Wall: a public space that we curate but that other people can add to. Within the universe of the site, where everyone is a “friend”, you feel compelled to respond to Wall posts, to comment on others’ posts to yours and to reciprocate by writing on theirs.

We want our Walls to reflect ourselves or certain persona. It’s analogous to the way we curate our belongings, which itself is a window into our personalities.

The psychologist Sam Gosling has shown you can learn more about people from their possessions than from spending time with them. Walls are basically the same—a storefront window to the self.

Groupon

Groupon has not just revolutionised social-buying websites through offering remarkable discounts, but more importantly by removing the embarrassment of coupon shopping.

The stigma of coupon use is real and broad-based. A 2008 paper in the Journal of Consumer Research found that shoppers would describe people standing near coupon users, not to mention the coupon users themselves, as “cheap” or “poor”. With Groupon, by contrast, the social acceptability is baked into the premise – into the name, even. The perception of crowd behaviour can be a powerful motivator when it comes to modifying people’s behaviour.

Groupon also uses time constraints to further influence behaviour. Consumers have one day to decide whether to buy a coupon. Usually, when we don’t buy something, we have the opportunity to go back and buy it later. But with Groupon, our choice becomes explicit. If we don’t buy the coupon now, we’ll never be able to buy it. Presented with that choice, many customers will consider how much they might regret the choice not to buy. And because people hate feeling regret, they become more inclined to buy it now. Amazon do a similar think by alerting the buyer to the fact that there are only n-number of items left, whilst “bricks and mortar” stores such as Zara regularly update their clothes range to drive demand.

Lovefilm

Lovefilm’s business model is based upon the simple premise: people hate late fees. With the traditional video shop model, customers had a simple choice: accumulate late fees or return the unwatched film. Added to this, traditional shops often only stocked a finite amount of “blockbuster” movies. Lovefilm not only resolved the late fee issue by allowing customers to return films whenever they wanted, but also created a long tail of films; and exhaustive collection from which each customer could assemble a queue.

In practice though, Lovefilm customers end up watching fewer films than they might have expected. Why? One reason is that Lovefilm forces us to choose based on what we think we want to see in the future; and we’re bad at predicting our future habits. This isn’t bad for Lovefilm since it is based upon a subscription model, so it saves on postage whilst boosting profits.

The future for Lovefilm will be in the streaming business, much like Netflix does in the US. With streaming, consumers will no longer need to predict what they want to watch in the future. Instead, watching films becomes an on demand service; we’re paying for the right to watch any film at any time, regardless of whether that is what we end up doing.

Twitter

Much like with Facebook, users want to display a self that is somewhere between their real-life self and how they would like to be perceived, which creates a substantial motivation for constant monitoring and updates to their status list and Wall.

Perhaps the most addictive feature for both Twitter and Facebook is that it allows us to enhance our status relatively cheaply, in a way that was not possible 5 years ago, whilst also providing the ability to share; we get tremendous social capital from being seen as generous and as someone whom other people mention.

Zynga

People become emotionally invested in things they’ve built or created. This emotional investment leads people to value their own possessions or creations irrationally high. The longer the emotional investment, the higher the value. Dan Areily dubs this the “Ikea effect” in honour of how your rickety Swedish bookshelf seems perfect after you’ve put hours of frustrating work into assembling it.

This emotional investment is exactly what Zynga uses to great success with FarmVille, CityVille and other social games. Once someone takes a little time to start building a farm, they become invested in maintain it and hence value it more highly. The more complex and time-consuming the task, the more we fall in love with the creation (assuming the appropriate level of reward) and the more we become engrossed in the game.

The compulsion to create is reinforced by social interactions. Much of the action in these games is about reciprocity: people give you useful things and you’re expected to respond in kind. Reciprocity is a powerful motivator. When someone does us good, we want to return the favour; in FarmVille that translates into spending more and more time playing the game.

Further reading:

• Journal of Behavioural Decision Making – Mixing virtue and vice: combining the immediacy effect and the diversification heuristic
• Journal of Consumer Research – Stigma by Association in Coupon Redemption: Looking Cheap because of Others
• Journal of Marketing Science – Zero as a Special Price: The True Value of Free Products
• Snoop: What Your Stuff Says About You by Sam Gosling
• Foundations of Human Sociality – Measuring social norms and preferences using experimental games: A guide for social scientists by Colin Camerer and Ernst Fehr (PDF 150KB, pp.40)

In an economy where the only certainty is uncertainty, the one source of lasting competitive advantage is knowledge. When markets shift, technologies proliferate and products become obsolete almost overnight, successful companies are those that consistently create new knowledge, disseminate it widely throughout the organisation and quickly embody it in new technologies and products.

Define the Objective

Don’t let Nestle’s Facebook Page issues happen to you. Determine how you want to portray your brand socially. You should also develop a plan for engagement in more routine situations. This includes knowing the goals, knowing the business and knowing the voice.

Before beginning anything, the first step is discussing the goals and objectives at the highest level. It may sound simple, but the most important attribute to display here is the ability to listen. Then base the strategy around several big ideas that help solve the challenges unique to each project.

Consider these scenarios: when a blogger raves about your product, how do you turn this goodwill into collaboration that benefits both parties? How do you create customer advocacy programs? How do you internalise and execute on feedback about your, or your competitor’s product? How do you deal with disaffected customers? What about irate bloggers? You need to think through all these scenarios and figure out how you will activate the right resources within the organisation.

Decide Where and What to Monitor

The notion of the social customer should reflect not only your current paying customers, but also potential customers and industry thought leaders. Monitoring can help you figure out where these people are, and therefore what channels are best for you to listen to and engage.

Monitoring is keyword-based, and thus selection of the right keywords is important. At the very least, you should be tracking your company name, brand names, product names, names of key executives, competitor names, competitive product names, industry keywords, and your tagline or most recent marketing efforts (e.g. Did you run a special promotion for St Valentine’s Day, Mother’s day or August Bank Holiday?).

Implement

Even the best plans go unrealised without resources. Implementation is something to think about on the front end. Many people consider social media “free”, but in reality it’s a real commitment and requires a lot of time and attention.

Test and Track

After you implement, you need to make sure you’re paying attention to successes, failures and your brand perception.

Conversations are happening across many channels and social networks all over the world. To make matters even more complicated, the signal-to-noise ratio is not in your favor. This is why your monitoring must be intelligent and actionable. You should be triaging all the social media messages that come across your field of vision, so that you can focus on what’s most important.

Some good tools for keeping track of your brand online include:

• Alterian
• Brandwatch
• Google Analytics
• Radian6
• Sprout Social
• Trackur
• Visible Technologies

This has several implications to the “Twitter ecosystem” as a whole and Jeremiah Owyang has broken down the impacts:

The entire article can be read on Jeremiah Owyang’s Web Strategist blog.

• You can micro-manage your audience (eg. customers only see product release information, and not events aimed at prospects)
• You can task different parts of the organisation with running separate channels
• You may choose different Twitter tools and clients based on the audience (eg. event coverage could be handled through Tweetdeck whereas you might want in-depth social media monitoring tools for crisis management)

(via Delphine Remy-Boutang, Social Media Marketing Manager at IBM)

The important message advocated by the above strategy is this: Twitter isn’t simply a broadcast medium for marketing messages — that is only one facet — it is a medium for user engagement and two-way conversations.

The second aspect regards building ways that enable fans of a brand or company to promote a message themselves in multiple online social media venues. Fan pages in Twitter, MySpace and Facebook follow this model.

The final aspect is based around online conversations. Social media marketing is not controlled by the organisation and it is naive to think it ever could be. Instead it encourages user participation and dialogue. A badly designed social media marketing campaign can potentially backfire on the organisation that created it. To be successful social media marketing campaigns must fully engage and respect the users.

Only recently Nestlé fell foul of trying to control a conversation on Facebook about their alleged use of palm oil, by stating users should not parody the Nestlé or Nestlé-owned brands’ logos.

…we welcome your comments, but please don’t post using an altered version of any of our logos as your profile pic – they will be deleted.

Of course, this contributed to people doing exactly that, whilst Greenpeace also fanned the flames via both Facebook and Twitter!

Social media isn’t just about big networks like Twitter, Facebook and MySpace, it’s about brands having conversations.

(Lloyd Salmons)

How does this all translate into a social media marketing strategy? Here are some thoughts:

1. Listen to Conversations — Tap into the online conversations to find out what people are talking about, where they are talking and with whom they are talking.
2. Establish a Share of Voice — There are a multitude of conversations happening every day, indeed every second. When you join the conversation, what share of the voice do you have, or indeed want to have?
3. Set Goals and Benchmarks — Using the information and insights gained from following and engaging in conversations, you can then set the goals you’d like to pursue in social media.
4. Find Bloggers and Communities — This is really an extension of point 1. You have to know where the conversations and discussions are taking place so that you can allocate time and effort and get the best return on time invested. Finding the conversations isn’t as hard as it sounds; the first stop would clearly be via services such as Twitter and the faithful, yet still important, RSS feeds.
5. Identify Key Influencers — What and who are the key influencers? Where can they be found? What are they saying? Understanding the social graph–the connections between people–will also allow you to identify who the key people and organisations are.
6. Develop a Content Strategy — Success in social media largely depends on the quality of your content, whether this is generated by you or bookmarked or cited on blogs and services such as Twitter.
7. Pick the Right Tools — What tools should be using? Should you be on Facebook, Twitter or LinkedIn? What about MySpace and Bebo? Do you know your target audience and market? If so, what tools are they using? Twitter is fundamentally different from Facebook, which is in turn fundamentally different from LinkedIn. They may all be classed as “social media”, but apart from some cross-over, they have their own target markets.
8. Create and Deliver Compelling Content — This is the difficult part. Once you know where the conversations are happening and what is being talked about, you need a content strategy and bright ideas. These bright ideas need to be compelling and naturally flow. Contrived content won’t pass muster amongst your readers and followers. You need to contribute and enhance the conversation, not repeat it verbatim.
9. Engage and Facilitate Conversations — Social media is all about two-way conversations. The writer is no longer preaching to an audience, the audience is now a fundamental part of the equation. Readers are no longer passive bystanders, their responses to your content serves to enhance the content and your ideas.
10. Measure the Results — With all this social interaction comes a multitude of data; tweet history, web analytics etc. But what does it all means is the crucial question. Social media ROI can be measured, but what you measure is really up to you; whether it is tangible metrics such as sales and website visits, or intangible metrics such as influence and clout.

A well-planned, managed and authentic social media programme, based upon listening and responding to your audience will result in deeper and stronger relationships with your customers and brand stakeholders. By tapping into and implementing the knowledge and ideas of your customers and followers, you will be able to deliver what the customer wants and your products will vastly improve.

The ideas put forward within the manifesto aimed to examine the impact of the Internet on both markets (consumers) and organisations. In addition, as both consumers and organisations were (are) able to utilise the Internet and Intranets to establish a previously unavailable level of communication both within and between these two groups, the manifesto suggested changes that would be required from organisations as they respond to the new marketplace environment.

A powerful global conversation has begun. Through the Internet, people are discovering and inventing new ways to share relevant knowledge with blinding speed. As a direct result, markets are getting smarter—and getting smarter faster than most companies.

Although a reading of the 95 theses can lead to a number of divisions or aggregations, it is possible to make a somewhat arbitrary split of the listed theses as a basis for understanding the content of the printed publication and a simplified structural view of the main suppositions of the authors.

• Theses 1 – 6: Markets are Conversations
  Historically, the authors state, the marketplace was a location where people gathered and talked to each other (thesis 1): they would discuss available products, price, reputation and in doing so connect with others (theses 2-5.) The authors then assert that the internet is providing a means for anyone connected to the internet to re-enter such a virtual marketplace and once again achieve such a level of communication between people. This, prior to the internet, had not been available in the age of mass media (thesis 6.)
• Thesis 7: Hyperlinks Subvert Hierarchy
  The ability of the internet to link to additional information – information which might exist beyond the formal hierarchy of organisational structure or published material from such an organisation – acts as a means of subverting, or bypassing, formal hierarchies.
• Theses 8 – 13: Connection between the new markets and companies
  The same technology connecting people into markets outside of organisations, is also connecting employees within organisations (thesis 8). The authors suggest that these networks create a more informed marketplace/consumer (thesis 9) through the conversations being held. The information available in the marketplace is superior to that available from the organisations themselves (thesis 10-12).

The authors, through the remaining theses, then examine the impact that these changes will have on organisations and how, in turn, organisations will need to respond to the changing marketplace to remain viable.

• Theses 14 – 25: Organisations entering the marketplace
  With the emergence of the virtual marketplace, the authors indicate that the onus will be on organisations to enter the marketplace conversation (thesis 25) and do so in a way that connects with the ‘voice’ of the new marketplace (thesis 14-16) or risk becoming irrelevant (thesis 16).
• Theses 26 – 40: Marketing & organisational Response
  The authors then list a number of theses that deal with the approach that they believe organisations will need to adopt if they are to successfully enter the new marketplace (thesis 26) as it is claimed that those within the new marketplace will no longer respond to the previously issued mass-media communications as such communication is not ‘authentic’ (thesis 33).
• Theses 41 – 52: Intranets and the impact to organisation control and structure
  More fully exploring the impact of the intranet within organisations, theses forty-one through fifty-two elaborate on the subversion of hierarchy initially listed as thesis seven. When implemented correctly (theses 44-46), it is suggested that such intranets re-establish real communication amongst employees in parallel with the impact of the internet to the marketplace (thesis 48) and this will lead to a ‘hyperlinked’ organisational structure within the organisation which will take the place of (or be utilised in place of) the formally documented organisation chart (thesis 50).
• Theses 53 – 71: Connecting the Internet marketplace with corporate Intranets
  The ideal, according to the manifesto, is for the networked marketplace to be connected to the networked intranet so that full communication can exist between those within the marketplace and those within the company itself (thesis 53). Achieving this level of communication is hindered by the imposition of ‘command and control’ structures (thesis 54-58) but, ultimately, organisations will need to allow this level of communication to exist as the new marketplace will no longer respond to the mass-media ‘voice’ of the organisation (theses 59-71).
• Theses 72 – 95: New Market Expectations
  Theses seventy-two through ninety-five aim to identify the expectations (theses 76, 77, 78, 95) and changes (thesis 72) that exist within the new marketplace and how those expectations and changes will require a corresponding change from organisations (theses 79, 84, 91, 92, 94).

You can view the 95 Theses of Conversation on the Cluetrain Manifesto website or you can download a document containing the 95 theses.

• Building a Social Media Team by Amber Naslund. If you’re considering deploying a team to tackle your social media efforts, this is a great read. It discusses why you might need a team, how to assemble one, roles and responsibilities, and more. It includes a look inside Humana’s social media “Chamber Of Commerce” and how their interdisciplinary team is driving social media efforts at their company.
• Content by Cory Doctorow. Doctorow, one of the voices behind the blog Boing-Boing, is well-known for his opinions on technology, DRM, and the future of content. His ebook is a collection of some of his best work and is an insightful read.
• Customer Service — The Art of Listening and Engagement Through Social Media by Brian Solis. Engaging with and empowering your customers as an extension of your marketing efforts isn’t new. However, in the era of social media, there are new tools and philosophies to more effectively listen and engage with customers and cultivate a more significant community, enhance your brand, build relationships, and hopefully create evangelists along the way.
• Fish Where the Fish Are – Mapping Social Media to the Buying Cycle by Chris Brogan. This ebook is meant to get you thinking about how social media ties to the more traditional buying cycle. It’s a quick read that can help introduce you and your team to social media.
• Getting a Foothold in Social Media by Amber Naslund. A rundown of some of the basic, fundamental elements of building a social media plan, especially directed at smaller and medium-sized businesses, but certainly consistent for companies of any size.
• Let’s Talk — Social Media for Small Business by John Jantsch. The latest version of Jantsch’s great book includes a lot more information about Facebook, LinkedIn, and Twitter. He also offers some thoughts on managing the social media beast.
• Social Media and Network Starting Points by Chris Brogan. Organisations have a lot to consider once they decide they want to jump into social networks and social media. There are many opportunities to slide off the rails, or worse, to let the effort fall into disarray. Brogan offers some thoughts based on a question he received about guidelines, a toolbox, and how to grow a community.
• Social Media Time Management by Amber Naslund. If you’re struggling with information overload and how to sort your priorities in social media, this ebook will give you some practical, actionable ideas for managing the firehose. It includes some thoughts on resource allocation and time commitments for social media strategies inside a business, as well as 9 strategies for keeping the social media monster manageable.
• Social Media Tips — Sharing Lessons Learned to Help Your Business Grow by Jeff Hayzlett from Kodak. Hayzlett and his team put this book together to share some of their thoughts and firsthand experiences using social media for their business. Hayzlett takes the time to use social media like Twitter and Facebook because in today’s media landscape it’s vitally important to be where your customers are. Kodak has always embraced this marketing philosophy, and today that means being active in social media.
• The Art of Community by Jono Bacon. Bacon is the Community Manager for Ubuntu, one of the largest open source software projects. In this book he talks about the ins and outs of building, cultivating, and managing a community from the ground up. This is a must-read for anyone interested in community development.
• The Essential Guide to Social Media by Brian Solis. An executive outline of social media tools and resources needed to listen and participate, guiding PR, customer service, product development, and marketing.
• The New Rules of Viral Marketing by David Meerman Scott. The smart marketers profiled in this ebook tell you exactly how they used viral marketing and provide advice in their own words.
• The Simple Web — A Philosophy for Getting What You Want by Skelliewag. As bloggers and Webmasters, we want most or all of these things: more visitors, more subscribers, more comments, more money, more inbound links, and more people saying good things about us. Our wants aren’t in question. It’s the how that gets us. It’s the how that has us reading a dozen blogs a day, trying to find the answer (or at least a little piece of it).
• The Social Media Starter Kit by Amber Naslund. This great book covers some of the most popular social media tools and technologies, including Twitter, LinkedIn, Facebook, and blogging, as well as some productivity and supporting tools to make social media task management easier and more fluid.
• What is Social Media? by Antony Mayfield. This book answers one simple question: What is social media? From iCrossing, this book runs down all the basics, from how social media is being used to providing definitions of the ever-changing jargon that personifies social media.

(via Pamorama)

• Check your assumptions
  Ask yourself why this result feels like a failure. What theory does this contradict? Maybe the hypothesis failed, not the experiment.
• Seek out the ignorant
  Talk to people who are unfamiliar with your experiment. Explaining your work in simple terms may help you see it in a new light.
• Beware of failure blindness
  It’s normal to filter out information that contradicts our preconceptions. The only way to avoid that bias is to be aware of it.
• Encourage diversity
  If everyone working on a problem speaks the same language, then everyone has the same set of assumptions.

Excerpt from February’s UK edition of Wired.