Traditionally demographic and geographic data, such as age, sex, education, and income, have been the primary sources of finding targets. Companies are now adding network based marketing strategies to their searches. In other words, they want to know who you know.



Network based marketing is a process of using customer or members social networks to pinpoint new interested parties for their products. By using the information of a current customer or member, companies can look at who they are speaking to on the telephone, who is e-mailing who, and who is in someone 'social circle' on websites such as MySpace and Facebook. This helps them use non-traditional methods to contact potential clients to gauge the level of interest instead of letting them slip through the cracks.

Word of mouth is a form of network based marketing, probably the oldest. For example, a newly published author is going to tell all his or her friends about their new book, maybe passing a few copied around. The friends in turn tell their friends who tell their friends, etc., until the network has built to inestimable proportions. This is network based marketing. A professional endorsement is another form.

Children want the shoes the NFL player is wearing, they get them, and then their friends get them, and so forth. Word of mouth, though, only works so well and when the word starts to get softer and softer, more and more potential customers fall through the system.

Companies are now looking towards the many databases of information that are available to help target potential customers in their network based marketing endeavors. They want to be able to take advantage of the connections their customers have with everybody else. Studies have shown that customers are more likely to try a product a friend or family member recommends than someone they don't know.

Whether this correlation comes from the fact that existing customer is praising the product or if they are simply talking to like-minded friends companies do not know, but even the poorest of prospects are more likely to try the product if there is an existing connection as compared to someone, say, new in the area.

It is a given that companies could save time and money when using network based marketing strategies. The question, though, then becomes whether or not they are invading a person's privacy by utilizing what could be considered personal information. Companies have to be very careful how they leverage this information in order to provide their existing customers value added service while gaining new ones through network based marketing.

Already companies use their customers and members information in order to protect against fraud detection and they should remind consumers that any information they collect could be used for marketing purposes.

Companies should also be careful when they use information collected from social sites so that they do not inadvertently collect information for later use that was part of personal correspondence. Disclaimer or not, their customers will not be happy about it if they found out.