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Custer, Coke AndConan

BY B. KEVIN THOMPSON

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Every so often, someoneasks me how to set upan effective social mediamarketing program inthe multifamily housingsector. They expect meto tick off a list of

specific activities that have worked for mycompany, AvalonBay Communities. That’senough, they think, to start up a good,effective social media marketing strategy.After all, why not just do the same thingsthat others have already done successfully?It seems like a nice shortcut to success—something we marketing professionalsalways seem to be looking for.

Marketing experts can learn a great deal about social mediastrategy from three examples of strategic failures.

That’s where the 3 C’s—Custer, Cokeand Conan—come in. All are goodexamples of having no strategy, a poorstrategy or a good strategy that was poorlyexecuted. Take Gen. George ArmstrongCuster. He definitely had a vision, but notmuch of a strategic plan. He was acharismatic leader who inspired fierceloyalty and commitment. When he said,“There are not enough Indians in theworld to defeat the Seventh Calvary,” hismen fervently believed it.

Custer is a good example of the mis-take of substituting vision (and a flawedone at that) for strategy. Relying on hisvision of the invincible Seventh, he

refused to bring Gatling guns into battleand declined Gen. Terry’s offer of additional troops. Custer’s fundamentallyflawed assumptions resulted in a cascad-ing series of poor tactical decisions. Weall know how that turned out for himand 268 of his men.

Unlike Custer, who simply had nostrategy, Coca-Cola in 1985 had a strate-gy that was, unfortunately, based uponinsufficient data. With market shareeroding against arch-rival Pepsi, Cokedecided to launch New Coke. A great dealof marketing research went into thedevelopment of New Coke, and blind tastetests indicated that it would be a public

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favorite. But within three months of thenew product launch, the company wasforced to return to the original Coke formula.

What happened? A strategy built pri-marily on blind taste test data simplydidn’t take into consideration the doggedloyalty of traditional Coke drinkers.There just wasn’t enough good data andinformation upon which to build a suc-cessful strategy. We’re still drinkingClassic Coke today.

The Conan O’Brien-Jay Leno-NBC fiasco is an example of a seemingly goodstrategy going bad because it wasn’t

modified in the face of new information.In 2004, with Jay Leno at the top of hisgame in the late-night talk show space,NBC announced a succession plan thatwould take effect in 2009. Based upon thebest demographic information thenavailable, the strategy envisioned Leno’saudience aging and giving way, withinfive years, to Conan’s younger demo-graphic cohort. After all, NBC had suc-cessfully transitioned from Tom Brokawto Brian Williams with this same strategyand was confident it would work withLeno and Conan.

But when 2009 rolled around, the

demographic predictions hadn’t pannedout. Instead, Leno’s audience haddeclined only slightly and Conan’s hadmade no real headway. Rather thanscrapping the strategy that was no longersupported by the data, NBC barreledahead. The only concession to reality was giving Jay Leno a show at 10 p.m. as a lead-in to Conan. In less than twoyears, it all came undone. What wasgood for Brokaw and Williams failedmiserably for Leno and Conan.

So what do the 3 C’s tell us about socialmedia? A lot, I think. Don’t try to imple-ment marketing or business plans without

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M any property management companies wonder whetherinvestments in social media provide a tangible return,

and especially whether those efforts can convert into real dollars. Property management firm Waterton Residential’syear-long, social media-driven resident referral program showsthat apartment providers can harness thepower of social networks to fill apartments,save money and staff time, and improve acommunity’s NOI.

With social media tools, resident refer-ral campaigns have come a long way fromthe days when community managersdesigned resident referral fliers, printedthem and hung them on every door. Theonline tools Waterton used turned thisphysical process into a campaign that isvirtual and trackable by allowing resi-dents to post referral messages to theirnewsfeeds in social networking sites.

Apartment communities have alwayshad resident referral programs because they work. In a 2009Nielsen Online survey, “Recommendations from people I know”scored highest in effectiveness among all forms of marketingcommunications, both traditional and online. Capturing residentreferrals through social media can add legs to a marketing planwithout adding budget dollars.

The Social SellWaterton, a Chicago-based firm with 15,000 apartments in 12

states, found substantial return on investment (ROI) in its one-

year test of the social media-based resident referral program. Thecompany sent five e-mails to each of 7,000 residents for whomthey had a valid e-mail address. Through social media, the cam-paign reached 87,072 of those residents’ online friends, familyand acquaintances.

To use the tool, property manage-ment team members access a Web por-tal and create a customized e-mailcampaign to residents. The e-maildescribes the company’s resident referralprogram and encourages residents toclick on an embedded link within the e-mail to spread the word to their Face-book, MySpace and Twitter contact. Or,if residents prefer, they can forward itvia e-mail.

With a click, residents post a message(also customizable by the property man-ager) to their newsfeed, promoting thecommunity to their online friends.

Interested friends can click on the feed to visit the community’swebsite, where they can learn more and contact a leasing agent.It’s a low-pressure, soft-touch sell among friends, and it reachesa wide audience because the average social media user has morethan 200 Facebook friends and Twitter followers.

Referral ROITracked against a list of all referral bonuses paid across the

21 Waterton communities taking advantage of the socialmedia-based resident referral program, the company reported

Social Media Referrals: We’re FansChicago’s Waterton Residential realizes 324 percent ROI through its online resident-referral program.

BY VIRGINIA LOVE AND ED SPIEGEL

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a strategy. Make sure that your marketingplans are based on a well-thought outand well-researched strategy, not merelymimicking someone else’s effort. Andremember, a strategy is a living and grow-ing approach to business, and it has to bemodified to reflect changing realities.

The Art of PlanningDeveloping the right strategy is key to

an effective social media program, but itis not enough on its own. Sun Tzu, thegreat Chinese thinker, said, “Strategywithout tactics is the slowest route to vic-tory, but tactics without strategy is the

noise before defeat.” An effective socialmedia program requires attention to bothsides of the equation: strategy and tactics.Before marketers in the multifamilyhousing industry decide that social mediais right for their company, they shouldkeep in mind a number of critical points.

1. Strategic marketing is notabout your products anymore. Ifyour marketing approach is designed toonly push product (apartment units)instead of engaging potential renters,you’re in trouble from the get-go. Effec-tive marketing today must be primarilyconcerned with serving customers and

maximizing the lifetime engagement ofcustomers with the company, not withdriving individual transactions. Beingcustomer-centric means that communi-cating with existing and potential cus-tomers is a tailored, two-way street. Itmeans recognizing that the companydoesn’t really “own” the brand—cus-tomers do, and at best we can influencetheir views. Keeping these points in mind,social media’s importance becomesmuch clearer.

2. Think about social media inthe context of your company’s cor-porate culture and business plan.

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446 closed resident referrals. Since referrals are somewhatorganic, not all of those leases can be attributed to the program. However, 22 percent of the residents who successfullyclosed referral leases clicked on the link in the RentMine-Online referral program campaign. Further, 12 percent (or 54)of all Waterton’s resident referral leases in the past year were converted by residents who participated fully through the socialmedia-based online referral process (open, click, sign-in andrefer/endorse online).

Assuming that signed leases prevent about two months ofvacancy, the revenue generated by 54 leases at an averagemonthly rent of $900 yields $97,200 in revenue generated. Thecampaign cost an average of $1,500 per community for a totalcost of $30,000, indicating an ROI of 324 percent.

Waterton also witnessed increased resident referral rates fromusing the social media-based online referral program. The refer-ral rate for the program was 6 percent, two and a half timeshigher than the company’s standard 2.4 percent referral rate.

The company’s largest community, the 2,340-unit PresidentialTowers, had an even more significant ROI. The communityclosed 19 referral leases through the program, generating$34,200 in revenue from filling vacant apartments while spending $2,000.

Positive BuzzDirect referrals weren’t the only benefit Waterton realized

through its social media referral campaign. With many commu-nities still learning how to live in the world of online rants andcriticism, Waterton sees using social media as a cost-effective andsearch engine-friendly way to generate positive buzz that spreadsrapidly in cyberspace. Resident recommendations, though incen-tivized, are credible to those residents’ online contacts.

Further, the tracking and reporting available with socialmedia provides valuable data to better understand the communi-cation preferences of residents. The online tool used by Watertonallowed the company to precisely track resident referral activityand offer early participants a small incentive to increase overallparticipation rates.

With the tracking capability, companies can know exactly who contacted whom and whether they used Facebook, Twitter,MySpace or e-mail. This in-depth information allows companiesto track which residents are top referrers, while the programenables those top referrers to easily reach their friends, co-workersand beyond.

Virginia Love is Vice President, Training and Marketing, Waterton Residential. Ed Spiegel is CEO, Rentmineonline.com.

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Effective social media requires seniormanagement’s understanding and buy-in.Many senior executives don’t understandthe first thing about social media sites,except perhaps that their teenage childrenhave Facebook accounts. Educating topexecutives about the marketing possibili-ties of social media is an important early

step. Further, embarking on a socialmedia program means that senior man-agement and marketing professionalsmust be willing to allow the company to“be social.” This means giving up exclu-sive control of the message; it meanssharing brand control with customers; itmeans “allowing” customers to talk

freely, and not always nicely, about thebrand. Early on, make sure that yourcompany culture and business approachwill support these “listen and engage”elements of social media.

3. Make sure you have the stami-na for the long haul. Don’t confuse asocial media effort with, for example, atraditional print advertising campaign.Once you go down the social media road,you cannot simply and easily go back. Itisn’t like launching an ad campaign, get-ting the market feedback and then decid-ing that you’ll never do that again! Socialmedia is effective because it engagescustomers in a conversation. This verystrength, the interaction between companyand customer, is why it is virtuallyimpossible to simply turn off the spigotwithout potentially serious negative rami-fications among your customer base. Bemindful of the risk: once you create apresence in social media, there’s nogoing back. So, make sure that you havethe support of your management and theappropriate resources to start and pursuefor the long-term social media program.

4. Don’t do social media because“everyone else is doing it.” Apartfrom making sure that a social mediaprogram fits into your corporate cultureand business strategy, be certain that thedemographics, geography, and other factors support your decision. You needan audience in social media, so yourmarketing data should tell you that,once you begin an outreach, you willhave a receptive base of customers whouse and are proficient with Internet toolsand with whom you can build sustainingand engaging relationships. Remember,when it comes to getting your company’sname out in the social community, thegood news is: It’s easy to create a pres-ence. And the bad news is: It’s easy tocreate a presence.

Six Social Media ConsiderationsOnce a company decides that a social

media program is right for them, there are

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Don’t do social media because “everyone else is doing it.” Apart frommaking sure that a social media program fits into your corporate cultureand business strategy, you need to be certain that the demographics,geography and other factors support your decision.

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a number of issues that must be consid-ered as that plan is developed. It’s a recipefor disaster, as we have seen, to mindlesslycharge into the tactical execution of apoorly thought out plan or to implement aseries of activities simply copied from othercompanies. Instead, take some time to sitwith your marketing teams and thinkabout a few important questions.

• Have you maximized youronline strategy? Before determiningyour exact social media approach, makesure that you have maximized all otherelements of your online strategy. Forexample, a company’s website is a funda-mental online marketing tool. It shouldfirst be fully leveraged through a solidSearch Engine Optimization (SEO) cam-paign. Search Engine Marketing(SEM/pay-per-click) should also be aconsideration to follow SEO. Once youhave a solid SEO and SEM foundation,only then should you consider adding aSocial Media Optimization (SMO) pro-gram to your overall marketing strategy.

• Which social media should youfocus on first? All sites are not createdequal, and some are simply more impor-tant to a company’s particular circum-stances than others. Your marketing teamshould have a good understanding andexperience of the various types of socialmedia: networking sites, blogs, micro-blogs, media-sharing sites, video sites andphoto sites. Ask yourself which is impor-tant to your company and why. Somesites are more cost effective than others.Google’s blending/universal search takesinto account a site’s trust reputation,authority and page rank, with video andTwitter showing in the search results.While mobile search accounts for only 3percent of all Internet searches(StatsCounter, June 2010), mobile tech-nology still has great service value formultifamily housing industry customersfor tasks such as online maintenancerequests and rent payment. You just needto decide which social tactics work bestfor your company, your goals, your cus-tomer and your budget.

• Do you have content and howwill you generate it? Building the two-way engagement between customer andcompany that is the hallmark of social

media is dependent on meaningful andrelevant content. Customers will notengage you in conversation if your con-tent is nothing more than corporate spinor propaganda. Be willing to generateuseful information, like the top 10 tipsfor finding an apartment or the latestentertainment options in the local neigh-borhood. To be attractive to customers,content has to be entertaining andengaging, as well as current and fresh.Employing “exclusive” incentives forsocial media use is another tool that dri-

ves customer eyes and maintains “sticki-ness.” Generating good content requiresfocus and resources. Think about whetheryou should assign an internal marketingperson or an outside agency to this task.Both work effectively, and the choicedepends entirely upon the individualcompany’s culture and approach.

• How will you effectively main-tain your social media presence?Apart from generating and posting usefulcontent, companies must determine theirapproach to monitoring and responding to

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customers in a timely manner. Expectations for social mediaresponses make even e-mail look slow, so a rapid reply systemmust be in place. This entails training associates, establishingsocial media protocols and determining whether the responseteam will be internal, external or some combination of both.

• How will you encourage customer participationand interaction? Most Twitter accounts (73 percent) have lessthan 10 tweets, and a substantial percentage of individuals whoregister for Twitter never once return to the site. Naturally, cus-tomer engagement requires good content, but social media isnot just a “build it and they will come” reality. Awareness cam-paigns are critical in driving participation and recognition ofthe existence of your social media sites, and this requires bothinternal and external resources. You should factor this into yoursocial media budget or you may be left with terrific sites that noone knows about.

• How will you measure success? Like most measure-ments of human activity, social media is best viewed both qualitatively and quantitatively. There are several social mediatracking and monitoring companies that provide good reads on the extent and type of social media mentions. In mostinstances, for larger companies, this is a necessary data point.In addition, it can be instructive to analyze customer commentsand interaction, resident referral trends, onsite resident satis-faction surveys, search engine ranks, and correlative trendsbetween social web activity and consumer activity. Takentogether, these approaches can give you a fairly good indicationof whether your social media strategy is working or not.

Lessons LearnedIf Custer, Coke and Conan teach us nothing except that “a

poor strategy will give you the same results as a good strategypoorly executed,” then that would be plenty. As pervasive andcompelling as social media is, no self-respecting marketingprofessional would charge blithely into the ethereal fray withoutcareful consideration. We are well beyond the novelty phase ofsocial media. Whether we like it or not, our brands are beingdefined every day in new ways by participants in this new mediachannel.

Smart brands recognize that to meet this challenge they need an approach that puts decisions about social media into a broad strategic and tactical context. Generations before theInternet even existed, great thinkers and doers like WinstonChurchill recognized the importance of this seamless connec-tion between strategy and tactics. Churchill once said, “No matter how beautiful the strategy, you should occasionally lookat the results.” Not bad advice in the age of social media.

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B. Kevin Thompson is Vice President, Marketingand Communications, at AvalonBay Communities Inc. You can follow him on Twitter (AvalonMarketing) or via e-mail atMarketingGuy@AvalonBay.com.

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