Market Expansion through Exchange of Gifts within Social Network

Industry Vertical and the Company:
A global publishing house.

The Challenge:
Globally the print media is shrinking (with the exception of those in developing countries). In the face of such threat and intense competition, the company wanted to grow and expand its customer base.

Our Approach:
Companies apply different strategies to acquire new customers. Startlingly, our analysis showed that of these the most effective strategy to acquire new and potentially valuable customers was the one company that has not been using.

We used sophisticated data analysis techniques and developed an integrated approach to study different customer acquisition strategies, and its impact on different products at the same time. This analysis helped us uncover interrelations that a simpler approach would not have.

Our most important finding was that the existing customers of the company inadvertently found new customers for the company when they gave gifts of the product to their friends and relatives within the social network. Any person spends significant time and effort to find the right gift for his or her loved ones. This led to a near perfect match between the gift recipient’s tastes and preferences, and company’s products.

We found that more than due to perfect targeting, 90% of gift recipients so much appreciated what they received as gift that they eventually became loyal customers of company’s products. Significantly, company did not spend any money in getting new customers as the givers paid for the gift.

The Outcome:
We established that gift-giving, a common social practice, could be used as an important channel for customer acquisition, if used strategically. When compared to free samples, a traditional way for reaching out to new customers, gift giving is three-time (3X) more effective.

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