Is Gaming Your Customers Okay?

I've had a number of conversations lately with B2B marketers who are becoming concerned with, hmm, let's call it the overzealousness of some B2B marketing practices that are emerging. In the quest to gain what should be earned referrals and testimonials, some companies appear to be pushing the boundaries of ethics and standards by paying for them.

A bit of a disclaimer before I begin. I don't claim to have the answers, but I do think this is a conversation we need to have as an industry. I hope you'll chime in and contribute to the conversation. I'm all ears!

Also, I'm purposely refraining from naming or linking to any examples because my intention is not to reprimand vendors, but to honestly explore the ramifications possible to the industry from a practice that I see gaining traction that may become damaging to brand reputations.

For a bit of background, let's start with the FTC guidelines for endorsements in advertising [PDF]. *Statements below pulled verbatim from the guide linked to above.

• Endorsements must reflect the honest opinions, findings, beliefs, or experience of the endorser. Furthermore, an endorsement may not convey any express or implied representation that would be deceptive if made directly by the advertiser.


• Advertisers are subject to liability for false or unsubstantiated statements made through endorsements, or for failing to disclose material connections between themselves and their endorsers.


• A young man signs up to be part of a “street team” program in which points are awarded each time a team member talks to his or her friends about a particular advertiser’s products. Team members can then exchange their points for prizes, such as concert tickets or electronics. These incentives would materially affect the weight or credibility of the team member’s endorsements. They should be clearly and conspicuously disclosed, and the advertiser should take steps to ensure that these disclosures are being provided.

A situation that has surfaced recently with several vendors is the offering of prizes for the submission of use-case stories to the vendor or testimonials posted on social media in regards to a product or service provided by the vendor. The third bullet above is the closest I can find in the FTC guidelines, but it is essentially the same situation.

My question is, if the testimonials or stories do not disclose the enticement of prizes, is the information reliable, transparent and an honest representation of the experience had with that product or service?

Some vendors have stated that they have a clearly posted disclosure notice and that the people participating in the program or contest should know to follow it. But they don't. After all, 140 characters on Twitter doesn't leave a lot of room for disclosures. But does the posting of the notice absolve the vendor of responsibility? Not according to the FTC.

What if the collection of stories predicated on the opportunity to win a prize is done outside of public view? When the stories are used, if disclosure isn't made the vendor may be at fault, but who will know?

If you were submitting a story and wanted to win the prize (many of them are pricey and very nice), would you submit a critical story or a story about a bad experience?

How much differently would the story or testimonial be told if the person submitted it purely driven by self-motivation, rather than potential prizes or recognition?

Could it be that the desire for recognition from or "kinship" with a vendor or brand motivates people to post things they ordinarily wouldn't without prompting?

Is the offering of prizes actually gaming our customers? I believe can be.

Are vendors under the assumption that this is a form of earned media? In my opinion, that's not true. I see it as more of a form of paid advertising.

Some may argue that the people who participate don't know whether or not they'll win the prize, but this goes back to motivation to participate in the first place. Would they have done so without the incentive of a the possibility to win a desirable prize?

The FTC is very clear that if a product is provided along with a request for a review, that the blogger must disclose the relationship. This also holds true for endorsements.

The Word of Mouth Marketing Association (WOMMA) is also very clear on this subject as you can see in Standard 2 of their code of ethics:

"Disclosure of consideration or compensation received:  A WOMMA member shall require their representatives to disclose meaningfully and prominently all forms of consideration or compensation they received from the member, marketer or sponsor of the product or service.  In other words, WOMMA members shall not engage in marketing practices where the marketer/sponsor or its representative provides goods, services, or compensation to the consumer (or communicator) as consideration for recommendations, reviews, or endorsements, unless full, meaningful, and prominent disclosure is provided."

Are companies so zealous about online engagement that they're willing to pay for it, rather than earn it and mislead their prospects and customers along the way?

Another point to be considered is purpose or use. If companies want to reward customers to participate in  "social" focus groups within a community where opinions are shared and solicited for internal use and product/service improvement - and everyone knows the rules/conditions - that's one thing. It's when the information is used for marketing or advertising purposes or to sway brand opinion without disclosure that the problems arise.

What do you think? Overblown nonsense or a real issue that should be addressed?

Comments

[Jchernov]

Ardath,

Your posts are always great, but you've really nailed it this time. You have identified so many of the essential issues all marketers, including B2B marketers, *should* be aware of, but for some strange reason, many seem to ignore.

While chairing the WOMMA ethics panel, I noticed a few patterns. Most popular of which is this one: A company feels like just requesting that incentivized endorsers disclose their connection to the brand is sufficient. As you correctly point out, it isn't. Here's a parallel that might help clarify why merely requesting disclosure isn't enough. Imagine you have a kid in school. You tell your child to do his homework. He doesn't do the work, despite the fact that you asked. You never enforce the requirement, and he fails to graduate. Who is responsible? Clearly the parent.

That's where some marketers are today. They *think* placing the request is sufficient. But they need to make sure the desirable behavior happens. It's their obligation.

I also think that the "not enough characters" in a tweet is a misconception. There are companies like CMP.LY that facilitate short-form disclosures. Alternatively, instead of advocating a pro-brand hashtag, marketers could instead require a disclosure hashtag (like #contest, or #sponsored) to make sure the material connection is clear to the average consumer. The marketer could also require a link (to a contest rules page or a Facebook page displaying rules) be embedded for eligibility. At Eloqua, we've done both #contest hashtag and hardwired links.

B2B marketers often follow in the wake of their B2C counterparts, especially when it comes to new media. Several B2C companies took their lumps in recent years from the FTC for violating the commission's guides. One of my 2012 predictions is that a B2B marketer is going find itself in the government's crosshairs. If, as a marketer, you think not enough endorsements is a deep hole to climb out of, imagine trying to recover public trust after an FTC investigation?

Again, and as always, great work here.

-Joe Chernov / @jchernov / Eloqua

[VictorCanada]

Hey Ardath, Thanks for bringing this issue up in such a thoughtful manner. First let me say you are right on target here and asking the right questions. Whenever a technology is still young you'll find these types of actions which show a lack of understanding. I love the saying, when you have a nail, everything looks like a hammer.

Companies will eventually learn that Social Media tools are best used to develop rich relationships with customers, build customer loyalty, and increase the lifetime value of a customer. The word of mouth benefit, while extremely effective, is a fabulous secondary benefit.

Endorsements and recommendations are best when achieved organically however, enticed feedback can be sought through Social but directed to their own website/blog for collection. That way all the appropriate disclaimers can be present.

The opportunity for listening to customer feedback is the real treasure that Social Media offers. Not as an advertising medium. The treasure is hidden in plain sight. Those of us in the Social Media profession have our work cut out for us as the medium continues to mature.

I look forward to further comments from you and others here.

Victor

[Ardath Albee]

Thanks to both Joe and Victor for getting the conversation rolling. Great points added from each of you!

[twitter.com/acSellerant]

I think this is the dark side of social media... it offers a shortcut for those willing to cut corners. It's always been true that references, success stories and testimonials are the best sales tools a vendor can have. They lose all value if they don't reflect reality.

Success stories and testimonials are difficult to garner. Not only does the product or service have to produce a significant ROI... the story has to be captured. Sales and service people have to be vigilant, and must take action when a story surfaces. And they need to have a good relationship with the client. One good enough that they feel comfortable in asking the client to go on record.

That's a lot of hoops to jump through, but definitely worth the effort.

[Markorgan]

I agree with Joe Chernov's sentiment here, it's a great post - providing the facts without moralizing. Disclosure is not a black and white issue. B2B marketers have been providing incentives to their customers for ages without disclosing, and still sleep fine at night. Customers who are helpful in promoting the companies they care about often know they will get something in return, whether there is an explicit quid quo pro or not.

When an advocate knows that he/she will likely get a bottle of wine if a reference is provided, based on prior patterns, is that materially biasing? Should this be disclosed on the reference call?

If an advocate votes up a blog post or Like/+1's something that their affiliated company requests, where there is a points structure in place, does this require disclosure?

If the incentive provided is a donation to a favored charity, does this require disclosure?

As I mentioned, this is not a black-and-white issue. Joe's example of the child and his homework is not apples-to-apples. A child's guardian has an obligation to enforce the child's completion of homework - and even here, as any parent would attest, there are limits to a parent's ability to persuade in this situation.

My company provides solutions for automating advocate and reference programs, so this issue is an important one for us. After consideration of many points of view, we have elected to provide companies with range of disclosure options, including making disclosures compulsory where desired. We believe that B2B advocates are not children, and can make their own decisions about how, when and why they disclose their affiliations.

Ultimately we believe (and the data support) that B2B advocates engage in their advocate activity because they genuinely appreciate their affiliated company. Providing non-financial (and in most cases, non-material) incentives is a way to engage advocates, show some appreciation, and provide the extra little bit of energy to encourage the advocate to do what he/she wanted to do anyway.

- Mark Organ ; @markorgan ; Influitive

[Ardath Albee]

Hi Mark,

Thanks very much for your comment! As for the points structure example you cite - yes, according to the third bullet point in my post above, the FTC does see that as a disclosure requirement.

I appreciate all of your examples of other types of dialogue where disclosure could come into play - or not. Definitely something to think about.

I'd also love to see the data you reference in the last paragraph. I'd be interested to know if advocacy increases when rewards are offered prior to the action. I think the difference here is whether an incentive precedes the activity or not.

Great food for thought. Thanks!

[Markorgan]

Hi Ardath

In the points example I provided, specifically I mentioned Like-ing (in facebook) or +1-ing (in Google+) an action. There is no way for the advocate to disclose, unlike in a tweet, blog post or some other social action. Should that mean that marketers not include this type of activity in their advocate programs? My point is that this is a grey zone like the other examples.

My point in the last paragraph is that in our B2B world, it is rare for someone to advocate for company that they would not naturally advocate for anyway. Having some virtual rewards, game elements, charity rewards, or relationship-building rewards (like tickets to a user conference, enhanced service, executive sponsorship) can help provide a little extra motivation for the advocate to prioritize this activity a little higher.

The academic research that I have seen is that product/company advocacy does not increase when financial rewards are offered (see: research of Clay Shirky and Daniel Pink), although clearly in the case of employee candidate referrals, financial incentives are the norm and they definitely work from my experience. Our approach to rewarding is much more subtle, acting on the main reasons for advocacy in the first place - enhanced relationships, a feeling of being part of the team, and a feeling of "moving the meter".

Ultimately I think that a marketers job is provide the tools for advocates to disclose what they want to disclose, in the way that they want to do it. Advocates are adults and should be treated that way.

[Ardath Albee]

Hi Mark,

I see how you're distinguishing the situation you're referring to by focusing the incentive on something that's beneficial for the company to customer relationship, but let's take a different example for fun and conversation.

What's your perspective if the incentive offered is a personally desirable item, such as an iPad or a digital camera or an Amazon gift card? Does that change the game in your opinion?

And I understand that B2B advocates are adults, but that doesn't seem to sway the FTC in situations where disclosure is deemed to be required. So who's responsible if the "adult" doesn't comply? I believe it comes back to the vendor. Which means that defining advocates as adults doesn't meet the responsibility of the vendor in specific situations.

I realize I'm pushing on you, but I think you've brought to light a great distinction to explore based on the type of incentive offered.

And I thank you for participating! Also, thanks for the references to Shirky and Pink - I'll go check out their research.

[Markorgan]

Hi Ardath

I don't mind you pushing - we are all here to learn. I am the first to admit that I don't have all of the answers, and am primarily here as a student, not a teacher.

There is a great body of research in psychology and neuroscience (which was my line of work before I got into the marketing automation business) that shows pretty clearly that once someone is paid to do a task previous enjoyed for its own sake, that task is intrinsically devalued. There appear to be neural pathways related to "job" (tasks I must do to survive) in the brain which are different from "hobby" (tasks which give me pleasure).

The behavioral economists have picked up on the psych/neuro research to delve into the topic with greater depth. Google "Effort for Payment" by Heyman and Ariely, a research paper in Psychological Science, for a particularly well-designed set of experiments which highlight some of the properties of how these pathways may work.

Here is an excerpt from the summary:
Two real-behavior experiments and one hypothetical-behavior experiment were carried out in a general setting of oneshot games, in which payment was granted or credibly promised
before effort was exerted. The results support the two-markets perspective: When payments were given in the form of gifts
(candy) or when payments were not mentioned, effort seemed to stem from altruistic motives and was largely insensitive to the magnitude of the payment. In contrast, when payments were given in the form of cash, effort seemed to stem from reciprocation motives and was sensitive to the magnitude of the payment.

Finally, in mixed markets (payment was in the form of gifts but cost was also mentioned), the mere mention of monetary payment was sufficient to switch the perceived relationship from a social-market relationship to a money-market relationship.
That is, money itself can be a cue to the type of exchange that individuals consider themselves to be in, which in turn
influences their propensity to exert effort.

This is why the type of reward is so important. To me, valued electronic gadgets like iPads are like cash. Even if you already own 4 of them, as I do, you can always give an iPad away as a valued gift. But a charity donation, enhanced service, an executive sponsor on your account - that only enhances the relationship. It activates and/or reinforces the SOCIAL path as opposed to the MONETARY pathway in the brain.

We see providing points, badges, levels and SOCIAL pathway rewards as being an effective way to make advocacy more engaging and enjoyable, without compromising the MONETARY/SOCIAL distinction that advocates make.

The FTC has not once, to my knowledge, made a single citation for lack of disclosure in a B2B advocate setting. The examples that I have seen in the consumer marketing realm have been cases of egregious fraud - astroturfing, sock-puppeting, that sort of thing. In the example you cite, the FTC specifically mentions electronics and cash as rewards. This shows the FTC's intent - to avoid the situation when vendors effectively pay people to override their sense of integrity. And WOMMA's guidelines are self-serving, literally. They are designed to preserve the revenue and reputation of word-of-mouth consulting companies, and in turn, the dues that they pay to WOMMA.

I hope that you see that the issue of disclosure is not black and white, because the incentives and their effects on motivation are in turn complex. By all means, we should make it easy for the advocate to make whatever disclosure he/she is comfortable making, particularly if there is not a financial relationship. As an adult exercising free will, the advocate should make their own decision on how, when and why they disclose their relationship. My prediction is that marketers that take commercially reasonable efforts to enable advocates to make their disclosures, will do just fine.

[Ardath Albee]

Hi Mark,

Thanks very much for the dialogue. I really enjoy Ariely's work. Totally agree that there's nothing black or white about this issue. It will be interesting to see how this plays out as B2B marketers spend more time evolving their social strategies and working to really understand and engage their customers as human beings. :)