The Socialization of Products & Services #prosperity #good #utility #LBS #Junto
After writing a piece on The Memetic Web & The Internet of Products several weeks ago, I started to think more about the implications products and services would have on the Attention Economy and why the notion of “social” seems to be so often misconstrued in the larger context of the marketing and media worlds.
We talk a lot about social in terms of things like corporate communications, CRM, content development and to a greater extent, sharing behaviors – all of which are great, mind you – but I think what we don’t talk about enough or even build into our subsequent strategies and executions is the very thread of what social is in an empathic and evolutionary sense... Which is to do and propagate good.
It’s interesting because doing good is the underpinning of the behavioral economics movement. One of the criticisms from “traditionalists” of this movement is that behaviors have always been a proxy for understanding value systems, currencies and market dynamics, but I think that misses the point: traditional economists have looked at more binary constructs such as cause-and-effect, rather than speculating over or even creating proactive systems by which people and companies create and compete over value.
To a point that Umair Haque has made many times and in reference to what he has coined as a “betterness model”, this is about relationships, not transactions.
In other words, social commerce endeavors to build a layer of trust, transparency and authenticity that facilitates purchases, and perhaps even expedites them. Back in February of this year, the McKinsey Quarterly published an insightful piece on behavioral economics for marketers that talked about how payments, like all losses, are viscerally unpleasant, yet emotions experienced in the present—now—are especially important.
Trust, transparency and authenticity are of course tenets of communication that we have been discussing since “social media” arrived at the marcom gates, but what we are looking at in the context of now -- the real-time experience -- are means by which these things are actionable and of real value, and ultimately, benefactors of good.
So, if we look at the LBS (location-based services) space, for example, we find ourselves at a very critical intersection; most commonly, check-ins are thought of as gateways for direct purchasing, or at least a funnel to market products directly, when they should be used as a bridge to create relational value. Much in the same way Twitter has been used as a DM funnel, relational value is something that seems to get lost in the barrage of special offers, promotions and price fixes that attract people to the “one-time, one-hit buy”; we simply cannot forget why people get emotional over purchases, or, why they seek emotional support from their peers when making them.
We are talking about relationships to products and services that have special meaning to people in their everyday lives, as defined by them in the context of their own needs and wants. Going a step further, one might argue that the exchange of credits and currencies are duly representative of an emotional bond we have with these experiences. This is, in part, why philosophers and media scholars like Pierre Levy have taken decades of behavioral research to build language systems out of symbolic logic, and to apply those systems to a number of social and economic models.
Microfinance (Kickstarter, Kiva, et al) and virtual currency systems (Habbo, Facebook Credits, etc.), while still very nascent, are just two indicators of this paradigm shift. There is of course, the partnership between Zynga’s Farmville and 7-Eleven that features products that can be redeemed through Farmville credits (disclosure: 7-Eleven is a RAPP client), but there are other retailers like H&M, Best Buy (another RAPP client), Target and Bed, Bath & Beyond who have evolved their own business models to include a transition into utility-based marketing. And by utility, I mean something that people use that helps them improve their daily lives.
In fact, not too long ago, Best Buy acknowledged that in the very near future, it would no longer be a retailer as we know it to be, rather a progenitor of goods and services that would co-create value through utility. This means that commodity products like televisions will be sold as secondary offerings and as a part of bundled services that would feature things like energy efficiency and energy savings as the real value sets in the purchase cycle. Moreover, this cycle will be sustained by virtue of meaningful replenishment, or the need for people to update this utility package through critical information sharing and product development, supported by the brand and co-created through its consumer relationships.
Alex Bogusky spoke about this very transition in a keynote to the Best Buy brass right around this time last year, one that addressed utility in the context and respective dynamics of the “connected world” (BTW, if you haven’t seen this before, I would encourage you to watch the entire series...).
What’s also an interesting point in Bogusky’s address is his reference to the notion of accelerated return, and more specifically, Ray Kurzweil’s prophetic assertion that technology is an offshoot of biology. The larger implication here is that we are literally developing products and marketing them within ecosystems that we must carefully manage and maintain, simply because if we as brands and agencies don’t do this, these ecosystems will move right past us. This is also why the notion of building platforms versus mere campaigns is so vitally important for us to embrace.
Now of course the retail space is just one of many verticals that will soon undergo some very profound shifts in the socialization of products and services, and our new reality as a connected and parity-driven world holds us to an entirely new way of doing business, and it is also likely that very soon we will be seeing some very interesting cross-pollinations of brand utility as well as vertical integration between complementary, or previously less compatible, industries. As I’ve entertained in previous posts and articles, we might even see competing brands play in the same sandbox over a common interest initiative, an educational program or something that builds sentient development within specific youth groups. These days, anything is possible.
So what are the new consideration sets? Here are a few things to chew on.
Scarcity can be redefined & managed better.
Scarcity has been regarded for years as the fundamental economic problem of seemingly unlimited human needs and wants, in a world of limited resources (source: Wikipedia). Scarcity drives these needs and wants into a translation of market value, which then experiences fluctuations in price based on basic supply and demand. But here’s the catch: if we have the ability to (co)create the resources, then market value is no longer restrictive. The core proposition of the connected world and what retailers like Best Buy are advocating is the transference of sustainable goods and services. In other words, the need becomes the product. The layers we build and package on top of that are the new markets, and therefore the utilities of real value. And just as we were able to bridge brick-and-mortar thinking with the Internet Economy, we now have a new opportunity to manage scarcity as a by-product of human resourcefulness.
Value truly begets value.
Looking at value under the lens of human resourcefulness, one of the great intellectual and aspirational challenges of economists in the modern era is the notion of what value can really be. At a more rudimentary level, this is most often talked about in the distinction between transactional value (things we purchase with or for hard currency) and reciprocal value (things we trade or exchange). Where and how we end up on the value chain shouldn’t be of grave concern, after all, just within the last 30 years we’ve built entire economies or micro-economies on products and services that were completely new. Our focus should be on the relationship between reciprocity and how transacting becomes a function of intent, meaning that we share most what can most use as utilities. From there, market opportunities (namely white spaces) abound.
‘Best’ means most connected.
It seems that one of biggest misconceptions about platforms like Groupon is that the ‘best’ offer is one that is shared the most; this may be the case, but the bigger potential lies in how the offer itself scales to fit the needs of people. Just as transacting has been confined to single or a series of like repeat purchases, reciprocity shouldn’t be confined to a single act or series of like acts in which people share. True sharing, as with those experiences characteristic in memes, is a function of evolution, change and adaptation.
Purchases are not only emotional, they are truly relational.
We have known for many years that purchase decisions are made based on emotion. Whether this is a function of brand, product messaging or a simple gut motivation is also becoming more and more irrelevant, and fact is, not only are “consumers” inundated with myriad tag lines and indignant calls-to-action, but arguably they seek out the opinions of their peers just to avoid them. There is good reason why platforms like openIDEO and Quirky have taken off – because what we buy is now a manifestation of what we create, and that co-created value is what will be soon driving the supply chain and predominantly directing our purchase decisions.
Pricing is a mechanism of relational value, not (so much) market value.
One glaring example of this is how Amazon sells books through its Kindle app at a price-point that is well below market value. Why? Because there is more value in what Amazon gives you as a provider of utility. The trust the brand earns with you both in social currency (that which is deemed valuable by you and then passed along to others) and what your social graph then propagates as potential goods and services is invaluable, not only in mitigating supply chain issues (demand sensing) but also in recalibrating demand in a way that is dictated by a healthier balance of reason, emotion and sentience.
These are exciting times, indeed. The question remains as to what we are willing to do right now not only as marketers, but as intermediary businesses.
Thoughts? Opinions? Upheavals?