Bragging Rights, Not Bitcoins, Are the Newest Currency
Having just heard the "Winklevii" twins try to explain to a very skeptical Dealbook audience the rationale for their Bitcoin investment and what an exciting new form of currency it has become (nothing less than "Gold 2.0," so they say), I still had trouble figuring out exactly how Bitcoins are likely to change the financial instruments and payments world as we know it. But maybe that's just me.
As far as new "currencies" go, I'd rather bet on the best/worst tendencies and reliably consistent behaviors of ordinary people. Some things I know for sure: we all revere status, we all love to keep score, and, most of all, we love to compete with each other (especially with our friends and family). In fact, in many cases, winning isn’t enough; it’s just as important to know that your friends lost.
So I'm staking my claim on "status" in all its forms and flavors as the next great "currency." More important, I see it as the most cost-effective and accessible influencer of change in consumer behavior, and it’s available to smart businesses of every size. Broad-scale, brute force marketing costs too much and returns too little, but status abides. Now is the time for you to learn how to incorporate that fact into your relationships with customers and prospects.
The fact is, we always knew that status mattered. But it’s only with the comprehensive hyper-personalization of the web (thanks principally to Facebook)that we actually have to be who we are, because the days of Internet anonymity are long gone. As a result, it's become possible for any business to:
1. Confer upon and award status to others (particularly its customers).
2. Reliably create, measure and track status, achievements, accomplishments, etc. on a massive scale.
3. Distribute and publish the results in real time to audiences large and small that matter to each and every one of us.
Lists of all kinds, leader boards, badges, rankings, etc. are some of the most obvious incarnations of the status tracking/measurement syndrome now being supercharged by social media. These trends aren’t limited to consumer forums; they’re impacting and sweeping through the business environment as well.
Early aggregations were generally enabled by a set of activities ("friends," "likes," etc.) that consumers could manage and partially influence. If you spent the time, you could up your game and change your position. But today that’s much less true, especially when you compare the old systems to today's tools, like Klout and Kred, which are largely beyond the control of individuals.
I realize that Kred has certain self-reporting activities ("uploadable moments") that give its participants some sway over their rankings and ratings, but essentially these new systems profess to be independent and objective (even while they entice and encourage us to engage in activities that influence their calculation and evaluation processes). Millions of people are taking the bait and changing their behavior in the (most likely vain) hope that their actions will improve their stature and standing.
What does all this have to do with you and your business? Simply this: If you want to keep your customers and, in fact, deepen and extend your connections and relationships with them, you need to understand how these new notions of shared notoriety, and the concept of manufactured addictions (where we repeatedly engage in activities for no real economic benefit or actual purpose other than improving our rankings or status on some utterly arbitrary listing or leader board), can be used to increase customers’ commitment and loyalty to your products and services.
There are basically 3 elements to the status equation that almost any business can implement at little or no cost. The goal is to create levels, tiers, and plateaus (almost as if you were building a typical computer game) that will generate the kind of quasi-competitive environment that triggers and spurs on this kind of compulsive/obsessive behavior and creates Power Users. These Power Users will quickly become not only your most lucrative customers but, far more important, your strongest, most authentic, and most aggressive advocates and promoters.
Here’s a basic outline of what you need to think about and construct:
1. Provide increased recognition for your Power Users.
Develop a simple system to provide, document, and publish the increased status and recognition that you are affording your most important customers. There are several companies already in this space who provide various programs with levels, award schemes, badges, etc. that can be easily adapted to your requirements. Just make sure that you take the time to personalize the offerings so that they don’t seem like a canned incentive program that some consultant sold you.
2. Provide expanded access for your Power Users.
As every restaurant, nightclub, airline, and sports team learned long ago, there’s always a "best" seat in the house, and there are people who will do whatever it takes to sit in it. Depending on your business this could take the form of special service lines, extended hours, credit considerations, concierge services, accelerated processing, etc. The incremental resources required to deliver these kinds of programs are trivial compared to the long-term lifetime value of retaining these high-end and often hyperactive customers.
3. Promote "ownership" by letting Power Users influence the business (or at least let them think they do).
To a very real extent, the smartest companies today are designing programs and incentives that basically "hire" their customers to work for them and encourage them to do significant amounts of work in the name of influence and ownership. Insurance companies are increasingly creating more self-service options, positioning them as conveniences and time-savers for customers rather than as cost savers for the company (which, of course, they are as well). Obviously, Wikipedia’s 70,000 "editors" believe (and rightly so) that they are influencing the end product on a daily basis. And they will continue to do so without any thought of compensation so long as their efforts are acknowledged and they don’t feel anyone is making a buck off their hard work and good will. User groups have been around for a long time, but the difference is the immediacy with which, and the concrete ways in which, the influence of Power Users is leveraged by companies in virtually real time.
Frankly, this approach is just a new riff on the old Tom Sawyer fence-painting scam. As Tom says to Ben: "Does a boy get a chance to whitewash a fence every day?" A bit later, Ben takes the bait: "Say, Tom, let me whitewash a little." And the rest, as they say, is literature. Some things never change.
HOWARD TULLMAN | Columnist
Howard Tullman is the CEO of 1871 in Chicago where, at the moment, 260 digital startups are building their businesses every day. He is also the general managing partner of G2T3V, LLC and Chicago High Tech Investors – both early-stage venture funds; a member of Mayor Emanuel’s ChicagoNEXT Innovation Council; and Governor Quinn’s Illinois Innovation Council. He is an adviser to many technology businesses and an adjunct professor at the Kellogg Graduate School of Management. @tullman