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Long Tail Referrals (October 12, 2005) Last week, we started a tutorial on Web2.0 with a short discussion at the top level. While not everyone agrees that there even is such a thing, we're positive that there's a sea change. It's long past begun. Jason Goldberg at jobster offers an interesting summary. The Long Tail, a term coined a year ago in Wired:
Long Tail is a theory that defies our conventional thinking about the Pareto principle. Proponents of long tail theory suggest that the real value of a business, the place for the tightest intersection of profit and customer satisfaction is out in the top 300,000 to 400,000. That's where the niche is small and the customer desires so specific that you can really deliver service. Price is a far less important issue out at the end of the long tail. At the front end, where everything is a commodity, price is the competitive question. Long Tail theory says focus on finding millions of niches of hundreds of people rather than hundreds of niches of millions. This counter-intuitive notion is the foundation of Google's success. The next generation of winners in our business will be Long Tail Players.
So what? Our biggest single concern about the emerging referral business is that the players are not adequately focused on Long Tail realities. As we've been saying so loudly, networks are built on intimacy, trust and honesty, not database entries and email bombardment. Everything we see about the emerging referral toolset looks like mass emailing for the recruiting masses. While everyone talks about keeping the email on a leash, no one, underline that, no one, offers a tool that helps clients avoid obvious mistakes. Clients of referral operations will default to mass emailing. It seems so much easier than real communications. It's like handing out shotguns without a training program. Here's the math. By next year, automated online referral systems will be handling 4% or 5% of total job transactions. The pitch is good, the price generally reasonable and the number of the companies offering the service is astonishing. There are roughly 50 Million employment transactions per month, half already online, the other half, presumably filled by referral. At the low end, 4% would be 2 Million job transactions. Let's make it even more conservative and say that only 1 Million jobs will use the online referral process (That's a tiny 2%) The referral tools we've seen seem to be designed to send between 100 and 2,500 emails per job. Let's pick 300 as a simple guess at the number of emails per referral. That's 300 Million pieces of email, very, very conservatively sent out by referral companies in their first full year of business. But wait a second. Referral theory is that the first players in the network are not useful and that the candidate will come from the people to whom they forward the note. If 5% of the folks who got the original note forward 20 copies of it, that's another 300 Million pieces of email. That's before the third bounce (where the real results of a referral program actually happen) We're guessing that a 2% market share is a Billion pieces of additional email, more or less. If it was distributed evenly across the workforce, it would only be 6 pieces per worker. Of course, the distribution will be skewed towards the 40 Million college educated workers. IN the first year, at 2% penetration, they will each see about 15 pieces of mail. By the time referrals are 5% of the market (in two to three years), they could easily be the primary source of spam for most people. Here's to hoping that the referral companies teach their customers prudent usage. We're doubtful. Effectiveness will be a long tail game, not a high volume shootout. Don't forget to check out the blogs on bert. - John Sumser © TwoColorHat. All Rights Reserved.
Home | ERN | Bugler | The Blogs | Blogroll | Advertise | Archives | Careers interbiznet, Mill Valley, CA 94941 415.377.2255 colleen@interbiznet.com Copyright © 2013 interbiznet. All rights reserved. Materials written by John Sumser © TwoColorHat. All Rights Reserved.
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