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THE NATION’S NEWSPAPER

Collegiate
Case
Study
www.usatodaycollege.com

Ads mobilize for social


media
Social Media’s Effects on Marketing
By Jon Swartz 5-6 In this case study, we will investigate how social media is being used by
businesses and consumers. We will consider how the relationship be-
Penny-pinching shoppers tween businesses and consumers is being transformed by the instant,
look for coupons online two-way communication social media affords both large corporations
and web-savvy consumers. Selected articles will demonstrate recent
By Jon Swartz 7 trends in social media from a business and consumer standpoint, plus
provide specific examples of how businesses have altered their mar-
Businesses get cheap help keting activities by using social media.
from a little birdie
By Jon Swartz 8-10 More marketers sign on to
Twitter helps customer ser-
vice but some companies
social media
are still getting a handle on They’re going where many of their customers hang out
social media
By Jon Swartz 11-12 By Jon Swartz holds barred — about the Fiesta on
USA TODAY their blogs, Facebook and Twitter.
Are retailers going too far
tracking our Web habits? SAN FRANCISCO — Ford Motor has “It’s extremely important to this
high hopes for Fiesta, a popular company’s history,” says Scott
By Jayne O’Donnell 13-15 model abroad launching in the U.S. Monty, whose job as head of social
next year. media at Ford was created about a
Critical inquiry year ago to take advantage of the
So how does it introduce the sub- growing social-networking wave.
Discussion and future implications 16-20 compact car to Americans? A mas- “It’s about culture change and
sive ad blitz on TV? In-house pro- adapting to this ongoing way of
motions at dealers nationwide? communicating. The bloggers are
Nope. fully free to say what they want.”

In April, Ford tapped 100 top blog- Social-media services, such as


gers and gave them a Fiesta for six Facebook, Twitter, YouTube and
months. The catch: Once a month, countless other websites, have had
they’re required to upload a vid- a profound effect on how millions
eo on YouTube about the car, and of Americans — especially those
they’re encouraged to talk — no under 35 — interact with others

© Copyright 2010 USA TODAY, a division of Gannett Co., Inc. All rights reserved.
As seen in USA TODAY MONEY Section, Friday, August 28, 2009, Page 1B
(or don’t), shop and view brands. It’s a real-time digi- use social networking to communicate, bank, com-
tal lifestyle, powered by smartphones and netbooks, parison shop, everything.”
that often colors what products they purchase, how
they view brands and where they spend most of their Facebook is up to 250 million members, 50 million
waking hours. of whom joined in the past three months. In April,
they spent 13.9 billion minutes on Facebook, up 700%
Marketers have noticed. Social-networking services from April 2008, says Nielsen NetView.
increasingly are indispensable business tools, says
Forrester Research. According to its survey of 1,217 More than 300,000 businesses — one-third of them
business decision makers worldwide late last year, small businesses — have a presence on Facebook.
95% use social networks to some extent. Members of its fastest-growing demographic -- those
35 and older — have enormous purchasing power, a
And 53% of more than 300 marketers planned to in- powerful incentive to marketers.
crease social-media marketing spending this year, ac-
cording to a Forrester presentation in April. Twitter has about 40 million users who each day pro-
duce a staggering amount of tweets, Twitter’s quaint
Some of the biggest companies — Ford, Levi Strauss word to describe short messages. Its users spent
and Chevron, to name a few — are reengineering nearly 300 million minutes on the site in April, 3,712%
marketing operations to embrace digital tools to more than in April 2008, Nielsen says.
more nimbly brand products, support customers and
cash in on the social-media wave. In doing so, they Increasingly, consumers don’t search for products and
are creating online communities and aggressive out- services. Rather, services come to their attention via
reach programs, and being brutally honest in talking social media, says Erik Qualman, author of Social-
directly to their customers/followers/fans/friends. nomics, a new book that explains how social media
have changed how companies do business.
“It was an easy call. This is where our customers are,”
says Megan O’Connor, director of digital marketing Social-networking-savvy businesses have appointed
at Levi’s. The more-than-150-year-old company last social-media directors to help:
month launched a social-media program on Face-
book and Twitter along with a larger “Go Forth” tra- uAdd customers quickly. When software maker In-
ditional marketing campaign. Its goal is to burnish its tuit built a site for small businesses in late January, it
brand name among young men. integrated elements of Facebook, Twitter and Linke-
dIn, the social network for business professionals. Af-
Grown up digital ter 12 weeks, it generated more than 1 million visits
and helped spike QuickBooks unit shipments 57% in
At their core, social networks are fostering a blistering June, year-over-year.
number of personal connections and chatter online.
The share of Americans 18 and over online who use a “Social (media) is one of the key trends driving our
social-networking service more than quadrupled to business,” says Kira Wampler, social-media market-
35% in 2008 from 8% in 2005, according to Pew Inter- ing leader at Intuit. “It’s more than pure marketing.
net & American Life Project. It’s about fast connections with customers and build-
ing an ongoing relationship.”
“It’s the modern-day version of knitting — to kill
downtime,” says Kaitlin Villanova, 26, a social-media National pizza chain Papa John’s added 148,000 fans
strategist in Brooklyn who is an avid iPhone user. “I on Nov. 17 through a guerrilla marketing campaign

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As seen in USA TODAY MONEY Section, Friday, August 28, 2009, Page 1B
on Facebook. It offered a free medium pizza to any- Besides being instant, such feedback is cheap. Typi-
one who signed up to be its fan on Facebook. The cally, companies have relied on third-party focus
promotion gained it thousands of customers and groups that let them observe the reactions of cus-
drove its Web traffic up 253%. It now has more than tomers during a two-hour session that can cost
300,000 fans and hopes to top 1 million by the end $10,000 to $15,000, says Natalie L. Petouhoff, an ana-
of the year. lyst at Forrester Research.

uWord-of-mouth marketing. Sometimes a compa- Lenovo has seen a 20% reduction in call-center activ-
ny’s best advocates are its customers. Just ask Best ity in the U.S. over six months because nearly 50,000
Buy and MyFICO, the consumer division of Fair Isaac, customers go to its community website for informa-
which invented the FICO credit-risk score used by tion about laptops.
lenders. They’ve built specialized online communi-
ties where their customers freely evaluate products uSpeak directly to customers. Blogs, Twitter or Fa-
and services. cebook can be an ideal forum for CEOs to offer cus-
tomers a candid viewpoint.
Those who visit MyFICO’s community website are
spending 41% more than other customers, says Lyle When a hack attack disabled Twitter’s service for
Fong, CEO of software Lithium, which helps build hours this month, co-founder Biz Stone gave up-to-
online communities for more than 150 companies, the-minute updates on the company’s blog.
including MyFICO.
The Carphone Warehouse, Europe’s leading inde-
Nine in 10 consumers trust their peers more than pendent retailer of mobile phones and services, has
marketers, according to a recent survey of 25,000 by a simple credo: It says, “I’m sorry” when necessary
Nielsen. on its Twitter page for customer support.

The Federal Trade Commission is in the process of “There is no gap between the CEO and customer.
amending guidelines that would require bloggers to They now talk directly to each other,” says Promise
disclose their relationships with marketers whose Phelon, CEO of UpMo, a career-management web-
products they endorse, says Mary Engle, associate site. “The network is so connected, there’s no need
director of advertising practices for the FTC. for a middleman.”

uEnhance customer service. For more than a year, “These customers want honesty, and quickly,” says
Comcast has pioneered the use of Twitter to talk di- Shiv Singh, who wrote a report on social-media mar-
rectly to customers. Its Twitter page, @comcastcares, keting for ad agency Razorfish.
has 28,000 followers.
Challenges ahead
Comcast’s blueprint for unfettered customer sup-
port — no more waiting on hold on the phone — fo- But with rewards come risks.
mented a movement. Software maker Sage North
America, to cite another example, routinely receives Reaching out to millions of consumers who thrive
instant feedback from hundreds of people within an online around the clock requires an investment, a
hour on specific products and services. “It is a living, different type of thinking and some courage, says
breathing, 24/7 think tank of users and employees,” Petouhoff. She spent six months on a just-released
says Ryan Zuk, a company spokesman. report on monetization of social-media tools at 20
companies, including Lenovo and Intuit.

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As seen in USA TODAY MONEY Section, Friday, August 28, 2009, Page 1B

Many companies — reflecting the general public’s “Social media is not the messiah,” says Michael Brito,
sentiment toward social media — fall into two camps: social-media strategist at Intel. “It is one of several
Those who embrace it and those who eschew it. tools.”
“Those that don’t know how to get their arms around
it seem to be held back by worrying about the le- Still, a growing number of marketers can’t afford to
gal implications of customers helping customers, and ignore millions of potential customers who are con-
about being too honest with customers,” Petouhoff suming media in new ways.
says.
Three-fourths of men ages 18 to 34 say they spend
Most corporations are still wedded to a traditional most of their time in front of a computer screen vs.
marketing approach, based on TV, radio and print 18% in front of a TV screen, according to a survey of
ads, says Charlene Li, partner at technology consult- 50,000 by AskMen.com, a lifestyle website. Those
ing firm Altimeter Group. “Ford and Levi’s are at the who don’t have a social-media plan don’t at their own
avant-garde of social-media use, but they are not typ- risk, say marketing experts.
ical,” she says.
“Companies have no choice. This is where their cus-
A social-media plan is hardly a guarantee of success, tomers are going,” says Shel Israel, author of the
Li and others say. While some companies — especially forthcoming Twitterville: How Businesses Can Thrive
market leaders such as Starbucks and Nike with con- in the New Global Neighborhoods. “Companies have
sumer products — are predisposed to the medium, no choice. This is where their customers are going.”
others aren’t. Tightly regulated health care provid-
ers, for example, may think twice about making the
public’s comments readily available on Facebook or
Twitter.

Many use social media


Marketers who closely follow social media can find some enticing statistics to justify their online strategies:

Facebook LinkedIn

uMore than 10,000 websites use Facebook Con- uLinkedIn has more than 365,000 company pro-
nect, a service that lets Facebook users log in to files. More than 12 million small-business profes-
affiliated sites using their Facebook account and sionals are members of LinkedIn.
share information from those sites with their Face-
book friends. MySpace

uAbout 30 million Facebook members access it uMore than 1 million small businesses and in-
through mobile devices. dividuals promote their goods and services on
MySpace.
Twitter

uTwitter users spend 66% more dollars on the


Internet than non-Twitter users, says market re-
searcher ComScore.

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As seen in USA TODAY MONEY Section, Wednesday, October 21, 2009 Page 6B

Ads mobilize for social media


Marketers salivate over Smartphone potential’
By Jon Swartz
USA TODAY With so many eyeballs increasingly fixated on mo-
bile devices, opportunities for advertisers abound.
SAN FRANCISCO — Jeff Smith is a diligent social-net- Visiongain Research predicts mobile-social-network-
working user, but he doesn’t own a PC. related revenue will reach about $60 billion in 2012.
Gobs of money is to be made from consumers buying
“I prefer a cellphone and a service for a cellphone,” virtual gifts when playing mobile games, for example,
says Smith, 40, a postal worker in Detroit who served says Doug Bewsher, Mig33’s chief marketing officer.
as an Army Ranger in Desert Storm and Somalia.
A potentially fertile opportunity is with users of iP-
For about a year, Smith has used MocoSpace (for hones and Google Android-enabled devices, who have
“mobile community space”) to chat, meet people, shown an affinity to view ads from large screens.
search the Web and play games. “Anything else feels
like too much.” “There is an enormous opportunity” for display and
banner ads promoting movies, TV shows, autos and
The majority of people who participate on social net- restaurants in specific areas, says Jason Spero, gen-
works do so from their PCs. Yet a growing number eral manager of North America for AdMob, a mobile-
— many of whom can’t afford a PC or would rather advertising network.
not use one — are using mobile devices to tell their
friends where they are and what they’re up to and for Advertisers are smitten by the prospect of reach-
sharing pictures. ing millions of twentysomethings worldwide who
are Smartphone devotees. Many of those users have
Mobile users are an important part of the mix for be- shown a willingness to view online ads.
hemoths Facebook, Twitter and MySpace. But many
folks are migrating to a new crop of mobile-only so- These users tend to be more tech savvy and younger,
cial networks such as MocoSpace, Mig33 and Pep- says David Berkowitz, senior director of emerging
eronity. MocoSpace has emerged as a favorite in the media and innovation at digital-marketing agency
U.S., where it is available in 22 cities, including New 360i. He predicts that as all-you-can-eat data plans
York, Seattle and Los Angeles. It offers chat, instant become more widespread and affordable, mobile
messaging, photo- and video-sharing, and games. Internet use will explode, especially for social net-
working.
The number of people who use social networks from
their smartphones skyrocketed 187%, to 18.3 mil- “It’s more convenient: My cellphone is always with
lion unique users, in July, compared with the same me. It’s part of my lifestyle,” says Courtney Collins,
month a year earlier, says Nielsen. Social networking a 23-year-old hair stylist who lives near Detroit.
is among the fastest-growing activities on mobile de- She does not own a PC but is a religious user of Mo-
vices, along with search and checking news, says Jon coSpace and Facebook from her cellphone.
Stewart, Nielsen’s research director for technology
and search.

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As seen in USA TODAY MONEY Section, Wednesday, October 21, 2009 Page 6B

Social games mobile devices instead. The free service is also popu-
lar among military members.
About 65 million of Facebook’s 300 million members
are mobile users. Eight months ago, it was 20 million. Often, it is a lifestyle choice. According to a Sprint
Of MySpace’s estimated 125 million members world- survey, 80% of young adults (18-34) cite their wire-
wide, about 25 million use mobile devices. A year less phone as their “lifeline” to others.
ago, it was 6 million.
“Lots of people, particularly younger ones, don’t want
A significant slice of the growth is taking place in ur- to be tethered to a desktop or even a netbook,” says
ban settings and developing countries, among young Michael Osterman, an independent analyst.
people who cannot afford PCs. “Mobile social net-
works have become a way of life for young people, Kevin Lomax, a 29-year-old singer/songwriter/pro-
especially for those who like to play social games,” ducer in New York, notes, “These days, who carries
says Mig33’s Bewsher. He says Mig33 is adding more a laptop unless you are a businessman?” He uses an
than 500,000 users a month in Asia, Africa and the iPhone and Palm Pre to post songs on his MocoSpace
Middle East. The international service, with 25 mil- page, where he has 4,000 fans.
lion members, blends free and low-cost services, in-
cluding VoIP calls, chat and instant messaging, e-mail, But with any nascent technology, promise doesn’t
text messaging, photo sharing and social-networking necessarily guarantee profitability, venture capital-
features. ists and executives caution.

Forrester Research analyst Charles Golvin predicts Actual ad revenue has been fleeting, says Tim Chang,
that the next huge wave of Internet users — poten- a partner at venture-capital firm Norwest Venture
tially billions of people in developing countries — will Partners: “It has been a failure until now.”
predominately use smartphones instead of PCs. In
the USA, younger, economically challenged people in “Ads on small cellphone screens can be a turnoff,” says
urban areas will “follow the same pattern,” he says. Frank Meehan, CEO of INQ, a London-based maker
of handsets for social-networking use in Europe and
“This might be the best way to bridge the digital di- Asia. He thinks search-related ads hold more prom-
vide,” says Justin Siegel, CEO of MocoSpace, a 4-year- ise.
old start-up that has a large following of young, non-
white city dwellers who cannot afford PCs and use

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As seen in USA TODAY LIFE Section, Wednesday, June 10, 2009 Page 1D

Penny-pinching shoppers look for


coupons online
Smartphones and social media add to the trend
By Jon Swartz One-third of all U.S. Internet users in October visited
USA TODAY a deal-oriented site such as RetailMeNot and Cool-
Savings.com.
The wobbly economy is contributing to a rush by mil-
lions of online shoppers to a decidedly low-tech busi- It’s not just the recession driving the growth of on-
ness: coupons. line coupons. Internet use continues to grow. Smart-
phones in particular are booming and adding a high-
The number of people scouring the Internet in search tech dimension to the phenomenon.
of coupons that they can print and present to retail-
ers, or codes that provide them with discounts on re- Shoppers can use their phone cameras to scan a
tail sites such as Amazon.com, is up sharply. product’s bar code and instantly find and retrieve a
coupon to lower the price.
Leading coupon websites reported record traffic on
Cyber Monday. RetailMeNot had 1.1 million visitors, And social-networking sites including Facebook and
up 57% from a year ago. CouponCabin was visited Twitter are joining the ranks of destinations that offer
400,000 times, up 65% from a year ago. And Brads- coupons.
Deals.com said traffic was up 174%, to 16,000 visitors
per hour. Coupons.com, the largest Internet coupon distribu-
tor, is available on Facebook and Twitter, as well as
The growth has picked up since summer, when 44.1 5,000 sites — most of them for grocers and manufac-
million adults printed coupons they found on web- turers — and through iPhone apps.
sites. That’s a 21% increase from the same period last
year, says market researcher Experian Simmons. The confluence of trends raises the possibility that
shoppers will continue to depend on coupons after
What’s driving coupon use is not surprising: 42% of the economy recovers.
consumers intend to spend less online this Christ-
mas than they did in 2008, says Nielsen analyst Maya “It’s like those who lived through the Depression and
Swedowsky, who surveys shopper attitudes. always saved after that,” says Darren Waddell, vice
president of marketing at MerchantCircle, a social
“Any merchant without an aggressive coupon strat- network for more than 1 million local business own-
egy is at a clear disadvantage,” says Loren Bendele, ers in the U.S. “People will be counting their pennies
CEO of Savings.com, which works with more than for a long time.”
4,000 major retailers, including Apple, Gap and Home
Depot. Coupon-related purchases at his site have
doubled to $136 million this year vs. the same period
in 2008.

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As seen in USA TODAY MONEY Section, Friday, June 26, 2009, Page 1B

Businesses get cheap help from a


little birdie
Twitter bridges the gap with consumers quickly and inexpensively
By Jon Swartz service, retain users and gain a competitive advan-
USA TODAY tage.

When a Stanley Cup broadcast suddenly went black “If you’re trying to hide from your customers, don’t
in late April, many Comcast subscribers simply scoot- use Twitter,” says Demian Sellfors, CEO of Media Tem-
ed to Twitter to find out why. ple, a Web-hosting service. “We want to know what
our customers think, both good and bad. That’s a
It was there — not on a phone system with multiple good thing.”
options — they discovered that a lightning storm in
Atlanta had caused a power outage during the Phila- As more companies effectively use social-media tools
delphia Flyers-Pittsburgh Penguins hockey playoff for customer care, it also is becoming easier to shift
game, and that the transmission would be restored customer-relations resources to the U.S. and feed
soon. into the fledgling “homeshoring” trend. Home-based
workers have become de rigueur among employers
“I did a search on Twitter as soon as the game went to take advantage of better technology, gain produc-
off the air,” says Dave Decker, 31, a Web developer tivity from employees no longer tied to long com-
in Pittsburgh who regularly tweets while watching mutes and leverage the expertise of local workers.
sporting events. “The mystery was resolved in min-
utes. Before Twitter, it would have been a nightmare There are about 200,000 so-called homeshored jobs
trying to find out what happened on the phone.” — most of them in the U.S. — and more than 300,000
are expected by 2012, says Stephen Loynd, program
Comcast’s deft use of Twitter underscores what is be- manager for contact center services research at mar-
coming a staple in modern-day customer service. In- ket researcher IDC.
creasingly, corporate giants such as Comcast, PepsiCo,
JetBlue Airways, Whole Foods Market and others are “The competitive landscape for customer care is
beefing up direct communications with customers subtly changing because of technology like Twitter,”
through social-media tools such as Twitter, Facebook Loynd says.
and YouTube.
Changing with their users
The popular communications technology has helped
companies quickly and inexpensively respond to cus- As Americans — especially younger ones — flock
tomer complaints, answer questions and tailor prod- to Twitter, the companies that sell them goods and
ucts and services. It has supplemented current cus- services are following them. Those companies view
tomer services, easing the load on call centers and social-media services as the ideal vehicle to air com-
expensive mailers that most consumers abhor. Twit- ments, gripes and suggestions.
ter, Facebook, YouTube and online software services
such as LiveOps, Salesforce.com and RightNow Tech- “It’s where a lot of our younger customers are,” says
nologies are all are being used to improve customer Bonin Bough, PepsiCo’s global director of digital and
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As seen in USA TODAY MONEY Section, Friday, June 26, 2009, Page 1B
social media. His position and title changed eight (over 710,000 followers) on Twitter since 2007.
months ago, reflecting the changing face of customer
service. uUp-to-the-minute service details. Twitter can func-
tion like a real-time search for airlines and others. For
In this emerging world, Frank Eliason is something of example, JetBlue (@jetBlue; over 730,000 followers)
a legend. For more than a year, he has helped pioneer assiduously answers traveler queries about flight
the use of Twitter as a customer-service resource at times, delays and weather updates. “It’s like an early-
Comcast. “We can see in real time what our custom- warning system,” says spokesman Morgan Johnston.
ers think, and learn from them,” says Eliason, direc-
tor of digital care at Comcast. He leads a team of 10 uCustomer feedback that leads to enhanced servic-
people for @comcastcares, which has nearly 24,000 es. Starbucks is using a blend of social media via Twit-
followers. ter (@Starbucks; over 230,000 followers), Facebook
(3.2 million fans) and its own social-networking site
“Social media is a natural extension of customer ser- (MyStarbucksIdea.com) for product ideas and feed-
vice,” says Bill Tolany, global coordinator of integrated back. Splash sticks, the company’s new plastic plugs
media at Whole Foods Market. It has more than 50 for sip holes, were created in part through feedback.
Twitter accounts, tweeting on topics as specialized as Through social-media forums on Facebook and Ya-
cheese. hoo, PepsiCo asked customers to visit its DEWmoc-
racy website and vote on one of three choices for a
“The more ways you provide customers to contact new Mountain Dew flavor. More than 350,000 voted
you, you’re more likely to satisfy them,” says Elissa last year.
Fink, vice president of marketing at Tableau Software,
a business-software maker that began using Twitter uOnline communities to exchange comments. Fa-
to improve customer service. “It shows you’re listen- cebook and MySpace, through their respective ser-
ing to them.” vices, offer massive bulletin boards for consumers to
weigh in on major brands.
For many, call centers are out of the question — too
frustrating, with long waits — and e-mail is too slow Dunkin’ Donuts actively manages a fan page on Face-
in an era of instantaneous online communications. book with more than 825,000 fans. It used the page
extensively to complement advertising and e-mail to
In some cases, Twitter is nurturing relationships be- inform customers on a new line of healthy foods and
tween retailers and customers. Consider Shelley Risk, an iced coffee day event in April.
a 29-year-old public-relations rep in San Francisco.
When she ordered a designer sweater that proved to Harley-Davidson’s corporate profiles on MySpace
be defective, she tried to contact ideeli, the online re- (36,000 friends) and Facebook (175,000 fans) let it
tailer from whom she bought it. But she couldn’t find solicit comments from fiercely loyal customers. Har-
a phone number on the company’s website, and an ley also uses Twitter (@harleydavidson; 4,000 follow-
e-mail message was not answered immediately. So ers) and produces videos of its motorcycles on You-
she reached out to ideeli’s Twitter profile. Within 24 Tube.
hours, the problem was resolved.
The creation of online communities extends to sophis-
Social-media tools are fostering customer service ticated software programs. Salesforce.com is helping
through: 6,800 companies — including Comcast, Dell and Star-
bucks — build online communities to solicit customer
uDirect sales. Dell says it has sold more than $2 mil- suggestions on how to improve operations.
lion worth of PCs through its @DellOutlet account

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RightNow Technologies has created a social-media That hasn’t stopped some companies, however, from
tracking service, dubbed Cloud Monitor, to monitor exploring new ways to ease their dependence on off-
what customers are saying about brands and their shore call centers. New technology could usher in
products on Twitter and YouTube; a later version, specialized customer service.
scheduled for August, will add Facebook, MySpace
and LinkedIn. Several companies with vast call-center operations
overseas plan to shift some jobs back to U.S. soil be-
Whither call centers? cause of advances in technology, says LiveOps Presi-
dent Wes Hayden. LiveOps manages home-based
With so many social-media tools available, and con- contract workers who staff virtual call centers. The
sumers increasingly using them, this raises the ques- remote workforce approach is similar to eBay’s army
tion: Are call centers, direct mailers — even e-mail of specialized sellers — most of whom work at home
— things of the past for customer care? Hardly, say and are graded on their performance. Among its cus-
marketing experts and companies. tomers are Kodak and Colonial Penn Life Insurance.

Though invaluable, social media is just a fraction of a “I am my own boss, and I have the flexibility to work
company’s customer-service arsenal, says Peter Kim, my schedule around my farm and family,” says Lisa
a blogger who covers the topic. Hammond, 41, a home-based agent who takes sales
calls for infomercials at a 20-acre farm in Goessel,
For perspective, consider the size of call-center oper- Kan.
ations for major brands. Comcast says it is unlikely to
uproot its operations, which employ 25,000 — most New technology also lets some companies plop cus-
of them in the U.S. — in favor of Twitter. “A majority of tomer-service reps at special facilities in the U.S. to
our customers prefer to contact us by phone,” Eliason handle calls. Contact Centers of America is readying
says. a 32,000-square-foot facility with 270 workstations
in Orlando that will mostly hire veterans, the unem-
JetBlue has more than 1,500 call-center employees in ployed, college graduates and retirees, says CCA CEO
the Salt Lake City area, most of whom work at home. Joe Jacoboni.
“Twitter is for basic troubleshooting,” says Zsolt Ka-
tona, a marketing professor at the University of Cali- “Brands aren’t about ‘messages’ anymore,” says Sales-
fornia-Berkeley’s Haas School of Business. “Be careful force.com CEO Marc Benioff. “Brands today are con-
not to ignore those who rely on the phone for cus- versations — and today the most important conver-
tomer support.” sations are happening ... through social media such as
Twitter, Facebook and MySpace.”

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As seen in USA TODAY MONEY Section, Wednesday, November 18, 2009, Page 3B

Twitter helps customer service but some com-


panies are still getting a handle on social media
By Jon Swartz improve customer service in the digital age.”
USA TODAY
More than half of the Fortune 100 companies are
SAN FRANCISCO — When Wes Harper’s high-defini- using Twitter for customer service, recruiting em-
tion cable service went on the fritz a few months ago, ployees, blasting news and announcing promotions,
he hopped on Twitter and tried to reach Comcast’s according to the study by public relations firm Bur-
customer service reps. son-Marsteller and its digital-media unit, Proof. Yet a
recent Deloitte survey concludes that organizations
At the time, it seemed the best course of action, giv- continue to struggle to harness social media’s full po-
en Comcast’s sterling reputation on the social-media tential.
service.
The “instant gratification” trap
But Comcast ignored him, pushing Harper, a 26-year-
old digital-media strategist in Naples, Fla., to take ex- “Companies go in with expectations too high, and
treme measures. He began a campaign of “flaming” they risk disappointing customers who don’t get
Comcast with withering tweets. prompt replies,” says Lloyd Trufelman, president of
Trylon SMR, a public relations firm for media com-
Eventually, he got Comcast’s attention, and the issue panies.
was resolved.
Twitter should augment customer service, not be
Leyl Master Black had quite a different experience. some magic bullet, he says. “If a company’s DNA is
Instead of looking for a Dell rep after her PC’s hard not truly dedicated to listening and responding to
drive died, Black got the rep to come to her. customers in a genuine and timely manner, no tech-
nology will provide a solution.”
After Black griped on Twitter, a blogger friend put
Black in touch with a Dell expert. Problem solved. “It Michael Brito, who left Intel as director of social me-
was so quick,” says Black, 39, of San Francisco. dia this month to take a similar job at Edelman Digi-
tal, acknowledges it is “impossible to respond to ev-
Such are the vagaries of customer support on Twit- eryone on the social Web unless you have an army of
ter. Hailed as the Next Big Thing, customer service thousands of people on your staff.”
through tweets is a work in progress, says Pete Black-
shaw, executive vice president of digital strategic ser- There is also the misperception among many Twitter
vices at Nielsen. The performance of many compa- users that they have higher priority for help.
nies has been uneven as they try to handle a crush of
customer queries, integrate Twitter into their overall “Twitter is like a tragically hip New York night club,”
strategy and manage the heightened expectations of says Bob Warfield, CEO of Helpstream, which pro-
consumers. vides customer service technology to companies. “It
is a cool, easy way for companies to engage custom-
“Social media is not a panacea,” says Blackshaw. “It ers in social media. But the experience can be loud
is a catalyst for fresh thinking on how companies can and crowded.”

Reprinted with permission. All rights reserved. Page 11


As seen in USA TODAY MONEY Section, Wednesday, November 18, 2009, Page 3B

Companies are spending millions of dollars on their He has 11 people working under him to handle que-
Twitter operations, a fraction of the multibillion-dol- ries from 33,500 followers. He points out that Com-
lar customer service industry. cast uses Facebook, YouTube, blogs and help forums
in addition to Twitter.
Consumers certainly are looking for help on Twitter.
In one recent survey, 58% of respondents said if they “Solving a technical issue in 140 characters is hard,”
had tweeted about a bad experience, they would like says Toby Richards, head of Microsoft’s community
the company to respond to their comment. and online support. Its @MicrosoftHelps, devoted
to Windows 7, has 3,500 followers. There are plans
Easier said than done, customer service experts say. to beef up support for non-Windows 7 products as
There are simply not enough resources to handle the well.
avalanche of tweets, says Jason Mittelstaedt, chief
marketing officer at RightNow Technologies, a pro- “It’s like being a high-tech concierge,” he says of @
vider of customer service software that oversaw the MicrosoftHelps’ seven full-time employees and much
survey. larger support staff. “Our tweets have links to solu-
tions. The essence is for followers to help one anoth-
That’s especially true, he and others say, when so er.”
many consumers use the Internet day and night, ex-
pecting immediate results. “They want instant grati- Ideally, Twitter should be one of several solutions. A
fication,” Mittelstaedt says. small and manageable operation smartly augments
strong phone, e-mail and online chat support, says
Often, results depend on the scope of the problem, Rich Buchanan, chief marketing officer at home
the availability of support staff online and the time of phone service Ooma. Its five-person team serves
day. Getting a prompt answer at 3 a.m. isn’t likely. about 1,000 followers.

“Twitter is not perfect, but there are a lot of benefits With such a large ratio of Twitter followers to com-
that outweigh some of these hiccups,” says Frank pany reps, it is likely the customer service experienc-
Eliason, director of digital care at Comcast. Above all, es of consumers will continue to run hot and cold,
Twitter has made Comcast “more transparent and Nielsen’s Blackshaw says.
showed the benefits of listening to our customers
through all communications channels.” “Twitter is raising the bar, but anyone who oversells it
is succumbing to digital hype.”

Reprinted with permission. All rights reserved. Page 12


As seen in USA TODAY MONEY Section, Monday, October 26, 2009, Page 1B

Are retailers going too far tracking our


Web habits?
By Jayne O-Donnell Macy’s CEO Terry Lundgren said recently that for
USA TODAY every dollar its customers spend online, they spend
an additional $5.77 in its Macy’s and Bloomingdale’s
Sherry Natoli is followed everywhere she goes while stores. Online sales made up only 6 percent of all re-
shopping online, but she doesn’t mind at all. tail commerce last year, but store operators believe
that if their Web sites help capture customers’ wants
Natoli, who owns a seashell business in Tampa, does and needs, they will do better on and offline.
all but her grocery shopping on the Internet and even
opts in whenever she’s asked whether she’s willing to By monitoring the browsing and buying behavior of
have her online movements tracked by Web sites. consumers who visit their Web sites, stores are able
to better target online and e-mailed promotions to
Companies have been monitoring our online behav- what consumers are most likely to buy. They occa-
ior for almost as long as there’s been an Internet, of- sionally adapt their home pages to the shopper. And
ten using our online footsteps (cookies) whenever as Amazon has been doing for years, they also can
we search, browse or buy online. Tracking technol- use what products other shoppers have purchased to
ogy has advanced so much that everything from how knowledgeably recommend additional purchases.
long we linger over a product description to whether
we are searching for sexual-dysfunction drugs can be The e-commerce marketing company Coremetrics
collected and stored on individual profiles. Our pro- says consumers are 50 percent more likely to open
files are numeric descriptions, not our real names, and click through a targeted e-mail than a generic
but in some cases, it’s not hard to determine personal one. And targeted e-mails generate 50 percent more
information behind the numbers. revenue than generic e-mails, the company has
found.
Privacy concerns abound, and several privacy and
consumer groups are urging Congress to enact laws So it’s all very successful but still controversial.
on what can and can’t be collected and for how long.
But the tracking continues in earnest, in few places “It’s a very touchy subject,” says Joseph Davis, CEO
more avidly than among retailers. With the approach of Coremetrics, which counts Macy’s, Petco and REI
of a holiday season that even the most hopeful of in- among its clients. “It’s a double-edged sword: The
dustry analysts think will see only a 1 percent sales more granular data you can get about the person, the
increase, retailers are increasingly turning to the Web more successful you will be, (but) some don’t want
for answers - and sales. Even retailers beating the the data to be used.”
odds, such as thriving teen retailer Aeropostale, find
their online growth far surpasses that in their brick- Tracking can help
and-mortar stores.
Jessica Rich, the Federal Trade Commission’s act-
Aeropostale has been among the few chains to post ing director of privacy and identity protection, says
monthly sales increases, typically less than 15 per- the agency recognizes behavioral tracking can help
cent, but online-only sales were up 85 percent last consumers when promotions are tailored to different
year. shoppers. The agency has been studying the issue for
years and issued voluntary guidelines for marketers

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As seen in USA TODAY MONEY Section, Monday, October 26, 2009, Page 1B

in February. But if Congress were to act on the issue worries about “online tracking” were named by only
as they are being urged to, the FTC could make its 0.1 percent of shoppers, the smallest factor. The cost
guidelines mandatory. of shipping, on the other hand, was the biggest con-
cern, with almost 23 percent citing it.
“Our concern here isn’t so much that you’ll be served
an ad based on where you are on the site,” says Rich. Critics argue that people aren’t more worried be-
“It’s that profiles are developed that will follow you cause they don’t understand how sweeping the
around on the Web and potentially could fall into the tracking can be, while industry officials argue those
wrong hands.” who worry often don’t recognize the upside.

Jeff Chester, executive director of the Center for “Retailers could do a better job explaining the ben-
Digital Democracy, hesitates before noting there are efits of letting them capture some information about
some benefits to consumers when stores send adver- you,” says Davis. “If people say, ‘I just want to opt out,’
tisements for products they might want - as long as they don’t find out about the sale and don’t get cou-
“individuals have more control.” But Chester says it’s pons for discounts.”
all part of a slippery slope.
Victoria Thornton of Dayton, Ohio, says she appre-
“We don’t know what data is being shared or sold,” ciates getting ads based on what she’s searched for
he says. Retailers and the consultants who work on online, but she is concerned about “personal infor-
their online marketing insist most use the informa- mation being stored and rerouted.” Her mother feels
tion they collect on their sites - or their Facebook even more strongly, she says: “The thought of some-
fan pages - only for advertising and other pitches for thing documenting and then anticipating her inter-
the site it was gathered from. That’s unlike the net- ests unnerves her.”
works of advertisers and other marketers that share
data across sites. Under pressure from government Natoli, who has an eBay store, isn’t worried.
officials and privacy groups, retailers are also increas-
ingly disclosing what they are doing and letting con- She likes it when Ann Taylor and Victoria’s Secret
sumers opt in or out. suggest other things she might like to buy and has
bought more from both stores because of the feature.
A survey of 1,000 consumers released last month by She gets e-mail only from Ann Taylor when it has a
professors from the University of Pennsylvania and sale, which is the only time she buys, so she appreci-
the University of California-Berkeley found almost 70 ates that, too.
percent were opposed to online behavioral tracking
by advertisers, and even more were opposed after And the targeted promotions she gets from book-
they were told how the tracking was done. sellers Barnes & Noble and Borders really can reso-
nate. She says one of them recently sent her an e-
But the National Retail Federation says that whatever mail saying, “What’s the matter? You don’t like books
concerns shoppers may have, they’re not avoiding anymore?” It included an offer for $20 off her next
online shopping because of them. In a survey of 2,600 purchase.
consumers released last week, NRF asked for the pri-
mary reasons why shoppers might not be increasing “So of course, I had to order,” she says, laughing.
their online spending this year. Privacy concerns and

Reprinted with permission. All rights reserved. Page 14


How retailers will shop for customers
Ways behavioral research will be used more often this holiday season:

E-mail promotions. Despite the increasing interest by marketers in social media, e-mail pitches remain a
favorite. But how to stand out amid all the clutter? By targeting promotions to what people have bought or
are likely to buy. “What doesn’t work is to send lots and lots of e-mails to people, and they click the ‘report
spam’ and weld their mailboxes shut,” says Stephen Webster, co-founder of the e-mail marketing company
iPost. “But when you send the right thing at the right time, they are absolutely delighted to get it.” What’s
wrong is typically deals that aren’t customer-specific, Webster says.

Product recommendations. L’Occitane, the French skin care and home products retailer, has found its
customer information is far more helpful in honing in on what its customers are likely to buy than the sug-
gestions its internal buyers come up with. Matt Kritzer, L’Occitane’s e-commerce director, says its buyers
tend to recommend only the products that they are most familiar with, while its customers tend to scour
the site for just the right items. It’s changed the creams and lotions that the site suggests with certain pur-
chases.

Cathy Haustein of Pella, Iowa, says she realizes there isn’t much privacy online and enjoys getting “these
tailored-to-me offers.” Like gift givers themselves, however, the programs are hardly infallible. “Sometimes
what the computer programs think I might like amuses me,” she says.

Targeted home pages. When Joseph Davis, CEO of the e-commerce marketing company Coremetrics,
drives to a shopping mall, he always parks outside the store and department he wants to enter. He thinks
retailers should offer online shoppers the same. A few, including Orvis, do. Behavioral tracking allows retail-
ers to provide home pages that let consumers start the shopping process, say, in children’s apparel or even
kids’ jeans if that’s all they ever buy on a site. It can save several click thoughts to children’s clothing and
then the gender, age and type of clothes they’re looking for.

Gift cards. Along with possible counterfeiting, one of the challenges plastic gift cards have presented to
retailers is that they know little if anything about the people they are purchased for. But online gift cards
hold benefits: The “cards” come with identifiable information about the buyer and the receiver, says David
Stone, CEO of the online gift card company CashStar, which helps retailers and restaurants “remarket” to
both.’

Reprinted with permission. All rights reserved. Page 15


Discussion Questions

1. Marketers are using social media to engage consumers directly in the process of building a brand’s image.
From the perspective of marketers, consider the pros and cons of giving consumers more control to de-
velop a brand’s image.

• If you were consulting with a marketer, what would you recommend are the most important differ-
ences between building a brand using only traditional one-way communication channels (e.g., print
newspaper, broadcast television commercials) versus relying heavily on social media?
• What factors make it more (or less) appropriate for a marketer to rely on social media to build a
brand?

2. Ads mobilize for social media; Marketers salivate over Smartphone potential (Swartz, Oct. 21, 2009) dis-
cusses advertising using social media for mobile devices. Compare and contrast social media mobile ad-
vertising to other traditional forms of advertising. In particular, compare social media advertising and
traditional advertising in terms of:

• Reaching the intended audience;


• Measuring the success/failure of an advertising campaign;
• Developing advertising content that is perceived as useful vs. annoying.

3. Penny-pinching shoppers look for coupons online; Smartphones and social media add to the trend (Swartz,
Dec. 2, 2009) discusses using social media to deliver online coupons and promotions.

• Promotions, discounts, and coupons are a fundamental marketing tool – how have they been changed
by social media?
• How are coupons available through social media similar and different from, say, coupons found in a
print newspaper circular?
• For businesses, what makes for a successful social media coupon campaign versus a traditional me-
dia coupon campaign?
• Some consumers use mainly traditional coupons, while others use mostly coupons accessed through
social media. Others avoid coupons entirely. How are the characteristics and behaviors of these
consumer groups different (aside from coupon usage)? What sort of implications might that have for
businesses that are considering launching social media coupons?

4. Some brand managers have characterized brand management prior to social media as a process of “selling
& telling” or “telling your story.” However, many brand managers today have voiced the opinion that brand
management in today’s world is about “creating a conversation.”

• What do these brand managers mean by “selling & telling” vs. “creating a conversation”?
• How has the role of brand managers been changed by this new approach to brand management?
What is the new role of consumers? Where does social media fit into this new branding paradigm?

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5. Several of the articles discuss how consumers are using social media technologies to circumvent traditional
forms of customer service (such as call centers).

• How are social media technologies changing the function of customer service?
• Can social media technologies replace traditional customer service? Does it depend on the type of
product, service, or company? Does it depend on the type of customer?
• Consider both the short-term consequences and long-term consequences of customers using social
media as their first choice for resolving service issues. What are the implications from the stand-
point of (1) the companies’ costs for providing customer service, (2) the companies’ revenue stream,
and (3) customer satisfaction?

6. Based on these articles, do you believe social media technologies will eventually replace traditional adver-
tising, or do you think social media will be used to compliment traditional advertising? What businesses
are likely to replace their advertising with social media? What businesses may be better suited to using
traditional media?

7. Fast forward to ten years into the future. Consider how current social media technologies will be used in
the future, and speculate on what sort of social media technologies will emerge and be used by marketers
and consumers. How do you think the use of social media in marketing will stay the same ten years in the
future, and how do you think it will be different?

8. One of the most important areas of marketing innovation has been in the monitoring and measurement
of customer response to advertising efforts. Based on your readings, consider how different social media
technologies can be used to track important marketing performance variables like:

• Customer satisfaction
• Product / Service quality perceptions
• Customer loyalty
• Brand image
• Attitude toward advertising
• Response to promotional coupons and offers
• Positive/negative word-of-mouth
• Intention to buy / Actual purchases

In many cases, social media is an imperfect tool at measuring these types of marketing variables. Discuss
the advantages, and the weaknesses, of using various social media technologies to monitor these different
variables. You may want to conduct additional research to understand the way marketers define terms
like satisfaction, loyalty, brand image, etc. compared to common-language definitions of these terms. The
American Marketing Association’s website (see Additional Resources) has a dictionary of many marketing
terms.

9. Think about the last time you researched a product or service before you made your purchase.
• Did you use any social media content to inform your choice?
• If so, what kind of social media did you use and how did you use it?
• If you didn’t use social media, what other information sources did you use?

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10. Think about Are retailers going too far tracking our Web habits? ( O’Donnell, Oct. 25, 2009).

• What do you think are appropriate and inappropriate uses of your online personal information?
• What responsibilities do you think (a) individual consumers, (b) businesses, and (c) the government
has in regards to managing online personal information?
• Think about children born today who have been exposed to social media since their birth. Do you
think their attitude toward managing online privacy will be different than adult consumers today?

Critical Inquiry

1. Many of these articles emphasize how medium to large businesses are using social media, but social media
is being used extensively by small and local businesses as well. Get into a small group and identify a small
local business that you think could utilize social media as part of their promotions, advertising, branding,
and/or customer service. Provide specific recommendations, and explain why your social media sugges-
tions are appropriate considering the type of business (e.g. credit union, restaurant, auto repair, etc.) and
the needs of current or potential customers. Develop a brief (three to five minute) presentation that de-
scribes the business, your social media recommendations, and why you believe your recommendations
are appropriate.

Alternatively, identify a local business that is interested in developing a social media presence based on
your analysis and guidance. Meet with the local business manager or owner to understand the business,
their customers, competitors, and current advertising practices. Then, build a social media marketing plan
for the business, and develop a brief three- to five-page report of your recommendations and rationale.

2. Some of the articles mention how consumers used social media to spread their dissatisfaction with a par-
ticular business. Do you think that such activities really have an influence on other consumers’ decisions?
Design a brief survey (using an online tool or a paper-based survey) to assess if consumers have been
influenced to not make a purchase or to avoid a brand based on information spread across a social media
platform like Facebook, Yelp, etc. As a basis of comparison, also survey if consumers have been influenced
to avoid a product or brand based on: (1) their own personal experience, (2) reviews from professional
sources (such as Consumer Reports), and (3) recommendations of close friends or relatives. You may want
to select a particular type of product or service (such as digital cameras or high speed internet service),
and be sure to also capture critical consumer characteristics (gender, age, etc.). After collecting the data,
tabulate the results and interpret your findings. Based on your research, how important of an issue do you
think it is for businesses to monitor negative consumer sentiment on social media platforms?

3. Identify two major brands that compete against one another (for example, Apple and Microsoft), and con-
duct an audit of the brands’ social media presence. By searching news articles and various social media
sites, create a list of the different social media used by each brand. Then, compare and contrast the two
brands’ social media presence. Imagine you were hired as a business consultant for one of the companies,
and create either a brief report or presentation with your research process, findings, and recommenda-
tions. The website www.engagementdb.com (by strategy consultants The Altimeter Group) illustrates one
way brands are being evaluated by social media presence.

• How are the brands similar in use of social media? How are they different?

• Based on your audit, what conclusions might you draw for each of the two brands?

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4. Imagine you own a local, independent book store in your neighborhood. You plan on using a promotional
coupon to entice brand new customers to experience your store and make a purchase. First, design a coupon
that will be used in local newspapers. Then, design a coupon that you will place on a social media website
and be easily accessible with a mobile device. For each coupon, think carefully how to: (a) reach the intended
audience, (b) motivate the intended audience to make a purchase, and (c) track the performance of your pro-
motional coupon. In what ways would the promotional coupons be similar or different?

With a small team, design a brief presentation or report than illustrates (1) the two promotional coupons, (2)
where the promotions will be placed (exactly which newspaper and social media site), (3) the target audi-
ence for each coupon, (4) your budget for each coupon, and (5) how you will track the relative performance
of each coupon.

5. Several articles suggest that the challenging economic climate for many American consumers is changing
their expectations for businesses, products, and brands. Do you agree with this? Search USATODAY.com for
evidence that either supports or challenges the effect the current economic climate has on consumer expec-
tations and behaviors.

• Based on your research, what are the exact short-term changes you have identified?
• Do you think these consequences will persist in the long-term?
• Based on your conclusions, what role do you think social media will play in businesses adapting to
these new consumer expectations? Provide specific examples of how you think a business could
adapt to changing consumer sentiment.

Additional Resources

Word of Mouth Marketing Association


u
http://womma.org/main
 ord-of-mouth marketing frequently uses social media technologies as part or all of a marketing cam-
W
paign. Best practices, case studies, webinars and other research about word-of-mouth marketing and
social media are available through the WOMMA. WOMMA is a non-profit association formed in 2004.

uBrandweek Magazine
http://www.brandweek.com
 randweek Magazine is published by Nielsen Business Media and covers a wide array of marketing issues.
B
The online edition regularly provides news articles covering how business are utilizing social media, the
challenges facing marketers with social media, and innovations in social media technologies.

uAmerican Marketing Association


http://www.marketingpower.com
 he American Marketing Association (AMA) was created in 1937 and is the largest marketing association
T
in North America. The AMA provides numerous seminars (both virtual and real) about social media best
practices. In addition, the AMA publishes industry and academic literature on the topic of social media.
A great deal of social media information is freely available from marketingpower.com or the AMA’s print

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publications, while some is only available to registered members (highly discounted annual memberships
are available to students).

Groundswell: Winning in a World Transformed by Social Technologies (2008) by Charlene Li and


u
Josh Bernoff
http://blogs.forrester.com/groundswell/
 onsidered to be one of the most important books (among other honors, winning a 2008 Strategy+Business
C
Best Marketing Book honor) about social media and its impact from a business standpoint. The accompa-
nying blogs compliments and extends the material discussed in Groundswell.

uThe Altimeter Group


www.engagementdb.com

Case study expert: Andrew M. Baker

Andrew Baker is a Ph.D. candidate in the department of marketing in the J. Mack Rob-
inson College of Business at Georgia State University in Atlanta, Georgia. His disserta-
tion investigates how social media and word-of-mouth communications affect the
marketing performance of brands and firms.

Andrew earned his MBA and graduated Magna cum Laude from Oakland University in
Rochester, Michigan.

Reprinted with permission. All rights reserved. Page 20

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