Are you familiar with AirBnB, Lyft, Etsy or Rent the Runway? These are all examples of the collaborative economy, a fast-growing market fueled by social technologies, defined by people buying, selling and sharing products amongst each other. In other words, “buy and share” is the new “buy and sell.”
And, today, Jeremiah Owyang and The Altimeter Group released a new analysis on this next phase of the digital economy, emphasizing the need for businesses to understand and adopt to this new consumer mindset. As the report notes, “Companies risk becoming disintermediated by customers who connect with each other. The Collaborative Economy Value Chain illustrates how companies can rethink their business models by becoming a Company-as-a-Service, Motivating a Marketplace, or Providing a Platform.”
In PR, we’ve experienced the impact of technology on businesses in many ways, including marketing and customer service. Now, it seems like a layer of social is being added to everything, from HR to product development. Some call this social business … others see it as the natural evolution of technology and business. Regardless of the semantics, we know businesses can’t ignore disruptive economic models. (Case in point: Kodak went bankrupt. Instagram sold for a billion dollars.)
At this crossroads, PR pros find ourselves in an interesting position. While we typically have limited control over product development or the buying cycle, we can still play a critical role in helping brands navigate and thrive during this time of transition. For starters, we possess an in-depth understanding of a company’s target market. We understand the importance of reputation and how to build trust (which Jeremiah equates to “currency” in this new economic model). Plus, we know how to leverage social communication tools to listen, monitor, respond, educate and incite action. As brands begin to reevaluate their business models to align with consumers’ collaborative consumption preferences, all of these skills will be necessary in building and cultivating these new relationships with an expanded customer base. And, yes, your company’s customer base now includes people who are part of the sharing economy, not just the initial purchaser.
Still not convinced? Here are five takeaways that directly impact how we think about PR in this new model:
- Customers are redefining the buyer-seller relationship. A core tenant of public relations centers on building sustainable relationships with key audiences (aka, our “publics”). The collaborative model has the potential to expand a company’s customer base, meaning we have that many more people to support, interact with, respond to and care for. At the same time, customers will have a new sense of empowerment as they become accustomed to setting transaction terms. How will that impact their interactions with companies and the overall buying cycle when they do decide to purchase something new?
- Tech-enabled startups are changing how business gets done. From Fab to AirBnb, there’s a new crop of startups emerging that leverage “innovative business models backed by existing technology as their competitive advantage.” As consumers become more comfortable with this tech-enabled, self-service model currently permeating the collaborative space, this mindset will spill over to other market sectors. For example, we’re already seeing it, to some extent, in the financial industry. Startup Wealthfront seeks to provide “the same kind of high-quality financial advice offered by the best financial institutions and private wealth managers, without the high account minimums or costs.” And, they’re onto something, as evidenced by the fact that they’re already managing a quarter-billion dollars in assets, up 150% in 2013 alone. For PR people, that means we have an opportunity to help companies — from startups to established brands — reposition themselves as a “company as a service,” a business model suggested in Altimeter’s report.
- “People want to rely on people, not just companies.” If I can buy or borrow something from my neighbor or a local merchant, I’d prefer that shopping experience over a “big box” transaction any day. Perhaps this is an extension of buying local … or perhaps it’s just a desire to support the people we know. Regardless, public relations can help companies in this transition as well. In fact, the companies who really do social well have already begun incorporating that human element. Instead of a nameless, faceless corporation, PR pros can leverage communication channels to show the people behind the logo. In other words, “humanize to monetize.” At the same time, communicators can create a new opportunity for themselves as facilitators of trust between buyers and sellers.
- Scale the act of good. The report cites a study that indicates today’s college students possess record-high levels of altruism. In fact, 75% of incoming freshman at UCLA believe it’s essential or very important to help others in difficulty. We’ve seen countless examples of social media scaling the act of good. Thanks in part to the Internet, individuals have experienced what happens when large groups of people work together for a good cause. And now, this desire to collaborate is spilling over into other parts of our lives, including our buying/selling habits. Companies that want to compete in this new economic era need to understand this desire to collaborate and seek opportunities to incorporate opportunities into their economic model. PR and social media should play a key role in bridging the gap between the company and its constituents, many of whom want to do well by doing good.
- New communities will emerge. As one of the report’s sources noted, people trust people more than they trust brands. This is a key ingredient fueling the collaborative economy. That said, brands are ultimately responsible for the products they create and put into the marketplace. And, now, this responsibility may include multiple “buyers.” Influencers will take on a whole new meaning as a new crop of advocates begin to emerge, some of whom never actually paid your company a dime. But, that shouldn’t diminish their perspective or value as a customer. We’re just redefining today’s customer, which also means we have to take a new approach to customer service. How will you answer questions or respond to people who are using your product/service, but aren’t the people who made the initial purchase?
You can access the full report on Slideshare (and I’ve embedded it below for your reading pleasure).