[MUSIC] One thing I really enjoy about Medill IMC is that we have specialty groups that are on the cutting edge of research. One of these groups is the Spiegel Research Center led by my guest, Tom Collinger. Tom, welcome. >> Thanks Randy. Thanks for having me. >> Tell me about the Spiegel Research Center. >> So we're very lucky to have the founder, Ted Spiegel, as our inspiration. And Ted was the grandson of the founder of the Spiegel catalog company. Ted runs Spiegel, he grew up in a world where everything that they did was based on looking at the data and looking at consumer changes in their behavior so that they could offer products and services that were more relevant. So of course that inspired us at the center to do research in this case with a lot of big data to look at different ways in which consumers behave and how those behaviors, those engagement behaviors, how the actually drive businesses. >> I really like the fact that you use real research. It's not theory, it's actually seeing how it works in the real world, that is the center of Spiegel Research. Can you tell me a little bit about what you see out there. What's changing as we move into the digital world? >> Right, for over 100 years, marketers have used this notion of managing the funnel. That is getting consumers to become aware, interested, have desire and have taken action, in fact it was called the AIDA model and it's been around since 1902 and it's something that most marketers have used and many still do use but we don't think that it really accurately reflects the way in which consumers move through this stage. In fact, McKinsey in 2009 came out with their version that they called the Loyalty loop and it too basically reflected a consumer who moved through a kind of a linear process. But in their case, they said they would come back after purchase and buy again. We think both of these really have helped marketers over the years, but they don't reflect the way it works now. So instead of us pushing out things and having people go down a linear process how does the world work today? >> So of course marketers are still and brands are still sending out messages. >> Mm-hm. >> And if those messages happen to catch a customer who's motivated. And they may go ahead and make a purchase, and if they make a purchase, then they'll go ahead and own the product, and if they own the product, they're either satisfied or their unsatisfied. Now, that will still happen, but the thing that is fundamentally changed, is this customer engagement behaviour. So that people are no longer waiting for messaging from brands, but rather they're talking to each other. And that's really the engagement that happens because of social media. >> Back in one, we learned that the consumer controls the marketplace. And that peer to peer recommendations are really big. Give us an example of how that's working today that's different than the AIDA model. >> Let's assume I'm looking on Facebook, checking my Facebook messages, and I see my friend has just gone out and bought a brand new Toyota Prius. She's so happy about it, she's posted a picture of herself right on Facebook. So of course I look at it, I comment, but I realize that this car that I used to think was ugly now looks really good. >> Mm-hm. >> It's really nicely designed. And I think to myself well I might consider this car the next time I'm in the market. Well I then go and post a message to her telling her that I'm happy about it and by the way where did she buy it? Offline she lets me know I go and I look at some websites and then of course I'm now getting messages from marketers who are retargeting me because they know that I've gone and followed. Eventually I go in and I might buy the car. I go ahead and I buy the car and what happens to me? Im happy about it, I take a picture of myself, I post it on Facebook and now my friends know about it now when we look at that example. Toyota Prius had nothing to do with alerting me, advertising to me. They didn't even know that I was in the market. I didn't even know that I was in the market. My friend is the advertiser. Because she was a satisfied customer. This is really the power of social media of course, as you know, but it's also a reflection of the big change that the model doesn't indicate. We've got friends, peers, even strangers propose customer reviews who are in most cases, as or more influential than an advertisement. >> What is the new model look like? >> The new model is dynamic. It is constantly in motion. When anyone of these five attributes, gears really in the engine. Anyone of them is moving, all the rest of them are moving. It moves the entire engine. So it might be a customer who's happy with their new car, who's talking about it. That changes their behavior which suddenly causes a motivation in a stranger, in my case me, to change which may result ultimately in a purchase. Where the brand has nothing to do with it. So it's not linear, it's dynamic, it's constantly in motion. >> Okay, so far my consumer point of view What are the different levels of consumer engagement that you see out there? >> Great question. So we've done research and we've actually found that there are three levels of engagement and that those three levels of engagement actually correlate to customer value, which means the more actively and relevantly engaged you are, the more valuable you are to the company, you spend more money. And we found that over a number of different research efforts. Let's start with the first one. The first stage of engagement is just observation, some researchers call this, the advertising effect. I didn't know about something and now suddenly I know about. But in the Prius example, I don't know about it from Prius or Toyota, I know about it from my friends. So anything that has to do with an observation. Observing a post, observing a video. A friend sends something to me, I read it. An email that's about a brand, those are all observing. And we found that people who in fact, observe about a brand are more valuable than those that don't. Okay. >> However, they are not nearly as valuable as those who are actively participating. Participating is where I'm doing more than just reading or watching, but I'm actually sharing myself, I'm posting, I'm tweeting. I'm retweeting, I'm sharing with other people and that level of participation ends up being more than twice as valuable the companies as just observing. >> So you've got the people that are observing and moving to action, but if I get people to actually engage, they are twice as valuable? >> Yes. >> There are more? >> And there are people who are even valuable than them and those are the ones That are actively, what we call, co-creating with the brand. So co-creation is where customers are so actively engaged with the brand that they actually produce new products and services. So, great example Frito Lay has a contest that they've run where they invite their loyal customers to recommend new flavors. And so the way they do it is, they ask them to go ahead and produce a video, put it up on YouTube, and let the world vote on whether or not they are compelled to agree that this particular person's belief in a new flavor is the one that Frito Lay ought to go out and create. And in fact, winning flavor by virtue of votes from other fans is actually created as a new Frito Lay product. So the people that have actually gone and produced a video think about the incredible passion that they feel about this brand that they're going to spend their time doing thing. And we've found from our research that it's the co-creators that are exponentially more valuable than the ones who are just participating. >> Can you quantify the value of co-creation? >> Yes. The best recommendation for our learners is to go onto the Spiegel research center website we've got all of the studies that we've done. We have co-creation demonstrated a couple of them so that they can take a look and see which one is most relevant to them. >> Fantastic. And we'll put the links to that as well as to your other social assets. In the tool kits. Thank you Tom for these great insights. >> Thanks for having me Rick. [MUSIC].
