Social Marketing Economics: Cost of Attention versus Cost of Rejection

February 22nd, 2011 by Matthew Rosenhaft Leave a reply »

What would a world look like where an organization didn’t need marketing? All new sales came via referrals, the sales organization were just focused on order taking, and most of the customer costs were in retention and producing the best experience.

Yes, there are many businesses that look like that, but for most of us; we can never have enough new customers and we have to work for them

The challenge with the traditional marketing approach is that we focus too much on generating attention and interest, but we get lost in the costs. Point in case, email marketing is focused on the conversion rates from a campaign. So, we get a 10% open rate and a 2% conversion from the email campaign. But, if you think about it, 90% didn’t open and 8% rejected the offer.

If you compound that same equation over multiple campaigns over multiple years; you may, in fact, be alienating the market and increasing your cost of acquisition as you shotgun messaging to the market. You are contributing to market noise each campaign that you create and may be possibly even creating negative brand equity.

Compound that message saturation with your competitors and you are setting us a scenario that the customers will reject the market or become hostile. We have seen the commoditization and hostility in a lot of markets that have done exactly this scenario; combining negative customer experiences with message saturation to create a cesspool where purchasing is a necessary evil.

In short, you are contributing to your customer’s cost of attention. Your customer, like all of us, is rapidly becoming inundated with cheap messaging and market noise. We are beginning to place a premium on resources that cut through that noise and really help us with decision support. Think about your own inbox. If you could click a button and eliminate 99 out of 100 emails to get to the one that really is important. Sign me up, right?

What you are seeing is a tipping point in many markets. Where the saturation has reached a threshold of noise and the credibility of vendors is so low that buyers are leaning almost exclusively on peer recommendations. They don’t trust the vendors. Why?

Because the vendors are really marketing to their solutions (features and functionality), but don’t really care about your individual motivation. Either you have to self-service your needs or in complex B-to-B sales, the cost of tailoring is built into the cost of sales since the value is large enough.

What is really going on? Why does everyone “Shotgun” versus “Rifle shot?” Because we have not traditionally been able to ascertain buyer motivation prior to engaging with them:

  • How do you know what they want until you talk with them?
  • How do you influence a sale prior to their self-identification?
  • How do we map what we know about demographics or attributes to their motivation?
  • They are 35 years old males with kids – do all 35 year old dads want the same thing?
  • They are the VP of IT – do all VPs of IT want the same thing? Do they do the same job? Does size of company factor?
  • Even if the motivation is ascertainable and they share the same demographics, do they buy the same way?
  • What influences or influencers create differences?

Traditional marketing does not have a real effective way to engage with customers on a one-to-one basis. Motivational identification has been an indirect or market research driven exercise. Unfortunately, it has to make assumptions about commonalities to execute.

Social media can’t tell you something magical that will close a sale based on the fact they are on Facebook, either.

The bridge is the ability to identify motivational characteristics across a group of potential buyers based upon their common needs. If you can identify a common pain point, you can allow them to opt-in to the solution based upon their affinity to the pain. In short, the buyers decide that they have the same market pain and they decide when to engage with your solution. The customer decides the value and they decide the timing. You just make sure they find when and how they want to engage in the buying process or get educated about that particular pain or problem.

It is a lot easier to sell something to someone who actually wants to buy your solution. This simple statement may be the key to the true disruption of social media. You only market your solution to people who have identified with the pains that you solve.

Social Media has the ability to realign Marketing Economics to become more organic to the way customers purchase. The reduction of market friction represents a huge cost savings in building evangelism programs allowing companies to reinvest back in retention, referral, and customer experience programs.

We are seeing varying stages in every market; customers are leveraging peer-to-peer buying recommendations to lower their cost of decision making. The real challenge for vendors is that you need to either “get on the bus” or “get out of their way.”

Matthew Rosenhaft

Matthew is a Social Marketing Executive and is co-founder of Social Gastronomy, LLC and the Social Executive Council. Prior to founding Social Gastronomy, Matthew has over 18 years’ experience as an executive in marketing, product management, and sales. Matthew has an extensive background in the SaaS Software, Social Media, Mobile, IT Services, and Telecom industries. He has prior entrepreneurial experience as a founder and executive in several early-stage venture-backed technology companies, as well as, holds several US patents for a mobile marketing technology. Matthew is a prominent blogger and regular industry speaker on social marketing and strategy topics. Matthew’s blog can be found at For more information on Matthew, you can check out his LinkedIn profile at or contact him directly at