Monday, October 4, 2010

Note To Marketers: Remember 150, Dunbar's number

While I was listening to Tech Nation on NPR this evening, I heard interesting ideas discussed by Dr. Moira Gunn, the host of Tech Nation, and two guests, Tom Hayes and Michael S. Malone, co-authors of No Size Fits All. Among them I wanted to present a couple of interesting ideas that Hayes and Malone discussed during the show.

1. Future of marketing is about earning trust of small groups

First one is this notion that our brains are physiologically designed to maintain meaningful relationship with about 150 people. Also known as Dunbar's number, this number dictates how we are able to engage in personal relationship with around 150 people at a time. If you have read Malcolm Gladwell's Tipping Point, you'll remember he also talks about Dunbar's number coming up in different situations from maximum informal corporate team size to largest efficient military unit size.

This is because trust without rigid formality is only possible with small group of people. People tend to trust and reciprocate the trust given to them when the size of group is small. We see this in Facebook as well. In Facebook, average user has about 130 friends. Although there is no systematic limit to number of friends you can have in Facebook, people gravitate towards about 150 friends where trust can be mutually shared.

Hayes and Malone contends that these small groups of 150-or-so people present unique challenge to marketers because the members of group tend to influence each other's decision. Unless marketer can establish the trust with these small groups of people, it will be difficult to penetrate these member's market. But on the other hand, if group's trust is won once, it will be far easier for marketer to sell to these members subsequently.

They mentions Apple as a success story in this regard. Apple has successfully created small groups of loyalists who will buy any Apple product that comes on the market. Whenever new Apple product comes out, these loyal customers become early adopters, and make any Apple product a million seller in matter of weeks. I would argue that these loyal customers also generates lot of free press for Apple as Pew Research Center reported last week.

2. Because of dense connectivity, information as well as misinformation can travel fast

Although we belong to small groups, we are highly connected in social network. This dense connectivity allows news to spread in just a few hops with out much filtering. Traditionally marketing messages are controlled by marketer and filtered by broadcasting news media reviewers. But with social network, there is no such filter available. Anyone can put up status update, and that can become news. Whether it is correct or incorrect, any news has potential to spread to many thousands of users, if not millions.

We are already beginning to see enterprises starting to invest heavily on Facebook advertising. Rumors have been around that Facebook's 2010 revenue will be in the neighborhood of $2 billion, and it doesn't look like it will slow down if trend continues.

That means Hayes and Malone's theory can be tested in the field now. It will be interesting to see how marketer starts to implement their insights. It will surely have Dunbar's number somewhere.

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