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The Way Business Is Moving

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Issue Date: March 2003

Viral marketing - can you keep control?

1 March 2003

Peer group marketing (also known as viral marketing) has become a highly controversial part of the Internet landscape, but as André Zitzke, solutions architect at SAS Institute argues, ensuring you have the supply to meet the demand created by such campaigns is essential before the campaign even begins.
Peer group or viral marketing is a relatively new phenomenon created by the ability to use the Internet, e-mail and short text messaging to reach a larger market than is perhaps stored in a company database.
The key element this activity relies on is that the campaign makes a significant impact on the recipient so he/she continues to distribute the collateral to friends and colleagues. Some companies have embraced this method as a relatively low cost component of their marketing strategy while other organisations seem to be staying well away.
Using viral marketing techniques raises two issues. Firstly, which segment of your market will embrace these approaches, and secondly, when you hit that send button, how can you predict the scope of reach of the campaign to ensure you can satisfy the demand?
Let us first tackle the issue of market segmentation - like any campaign, the messages have to strike the right audience. However, the very nature of viral marketing, relies on individuals within that target group forwarding the messages on and making the campaign a success. Tapping into this benefit requires an understanding of the role of the customer as a sales channel as well as a focus on aligning the marketing process with the marketing message. Behavioural, attitudinal and demographic data can all be used as the basis for analytic customer relationship management to profile customers who meet the requirements for a successful peer group campaign.
Secondly, let us look at the issue of building a viable statistical model to forecast potential ranges of demand from the campaign. There is a clear need for a partner with domain expertise and the ability to take historical data and create predictive models that can feed back into supply chain processes and CRM models, ensuring demand is met. By continually optimising the original target list through tracking which customers forwarded the campaign and more accurately forecasting for subsequent campaigns, a 'new' phenomenon will quickly become an essential part of the marketing mix.
When things go wrong, the organisation has a lot to lose. Take the Internet company that sends out free registration details to a database of 5000 and suffers a server crash when demand tops 500 000 users in the first day; or the FMCG company that runs out of stock of sale products, or the call centre that is flooded with complaint calls due to lack of delivery. These have negative results that impact not only the customer relations department, but also the brand and the reputation of the company - neither of which is cheap nor easy to restore.
For more information contact SAS Institute, 011 713 3400.


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