Friday, 2 August 2013

Customer engagement reinvented through the crowd?


There is a real trend at the moment about empowering the crowd.

Back in 2012, UK Deputy Prime Minister set out his vision for a "John Lewis" economy - making reference to the popular UK department store which is owned by it's employees.  

It was reported that:-

Mr Clegg will demand that the era of “crony capitalism”, in which wealth and economic interests have been “monopolised by the few” comes to an end.  "I want this to be the decade of employee share ownership. We need more individuals to have a real stake in their firms, more of a John Lewis economy."

This aim has been further backed up by the recent announcement that employees at the Royal Mail in the UK will be issued with shares when it is privatised and the governments plan to allow firms to offer reduced employee rights in exchange for giving employees a share in the company.  Whilst all of these plans have their detractors, they do point to an increasing trend to get the individuals, the employees, more closely linked to the fortunes of the business.

Over the pond, there has also been a movement to empowering the individual.  

Google for example announced back in May 2013 that it had taken a $125m stake in crowdfunding firm Lending Club, while at the same time investing in funding startup CircleUp, a crowd funding platform for small businesses to sell equity to investors.  These platforms are linking individuals directly through peer-to-peer lending/investment tools to allow ideas, products and businesses to be more easily funded.

Interestingly, recent changes slated for the US market via the Jumpstart Our Business Startups Act (JOBS) look to introduce this crowd funding ideology wider into the small business investment market.  By enabling small businesses to have a greater number of shareholders before they must be registered with the SEC, allowing these shareholders to be normal people (i.e. non-accredited investors)  and the direct encouragement of equity based crowd-funding platforms, the US government is really trying to break the strangle hold of financial institutions and encourage peer-to-peer lending.

In discussing crowdfunding and its potential impact on financial institutions, the Spanish bank BBVA stated:-

Crowdfunding is a disruptive innovation that commercial banks cannot ignore.[..] They currently serve the “bottom of the market”, but that doesn’t mean they cannot reach upper segments. In fact, by the time crowdfunding platforms appeal to mainstream consumers it will be too late for banks to catch up with the new trend.

So whether its employees gaining a greater stake in the business they work for or consumers having a direct stake in the products they buy or the businesses they frequent, there is definitely an increasing appetite to directly link the beneficiary to the benefactor; taking out the middle-man.

One really great example of empowering the crowd and how this is changing the way people transact and consume is that of Collaborative Consumption which is described as:-

A new economic model [and] named by TIME as one of the "10 Ideas That Will Change the World", collaborative consumption describes the shift in consumer values from ownership to access.

This is about connecting people directly with other people to exchange goods and services, whether it's borrowing a car for the day or a room for the night (think Airbnb).  By cutting out the middle-man in terms of a retailer, these start-ups are providing a way to solve the problem (getting a hole drilled by borrowing a drill) rather than forcing you to actually buy the product in the first place.

So what could this mean for loyalty?

Well I've previously discussed the thought about businesses more directly linking a customers loyalty with a share of the business.  Whether this is a UK Co-Op style share of profits programme or a more direct programme that gives actual shares in exchange for loyalty as done by US hotel chain Jameson Inns.

I do think however that there may be more innovative approaches to loyalty based on these crowd funding models.  Whether it's involving consumers more in product innovation/selection (Kickstarter style product ranging), linking the consumer more directly to the manufacturer (taking out the middle-man), linking consumer spend more tightly to business results or completely changing the way consumers buy (Collaborative Consumption).

Disruptive technologies, solutions and ideas are happening all the time and as BBVA stated, when these become mainstream it's too late to catch up.  Connecting individual consumers more directly to the opportunity, need or product and utilising online, real-time platforms with social tools is going to provide interesting opportunities to create and deepen customer engagement.

What do you think?