Every day we read about the ways technology is changing how we live and shop. For me, the most interesting aspect of digital marketing is the advent of new forms of currency. There have already been discussions about emerging currencies in a digital world.
In the book, The Attention Economy, Herbert Simon, a Nobel Prize-winning economist states: “What information consumes is rather obvious: it consumes the attention of its recipients. Hence a wealth of information creates a poverty of attention.”
We don’t need to cite the number of messages we are bombarded with all day to prove this. Most of us have experienced the increasing “poverty of attention” in our daily lives.
The implication is that if attention is so valuable, brands will pay people to pay attention. Of course, brands have been paying to grab attention since posters, newspaper ads and television have been around. What’s new here is that brands can reward shoppers — personally and immediately — for paying attention.
Virgin Mobile’s Sugar Mama program, which offered free minutes in exchange for viewing ads and completing surveys, is a great case in point. Telcordia in India announced such a program this year. In the United States, Alcatel-Lucent is developing a package to carriers to capitalize on this, too.
However, attention is not the only currency that we can exchange for goods and services. Shoppers today can also barter participation behaviors, access to social networks and, of course, the jewel in the crown: advocacy.
Let’s look at a couple of examples of how brands are using these new currencies:
• Tasti D-Lite is bartering free product for brand advocacy, using the customer’s Twitter account: Every time a brand advocate buys a cone, a swipe of the loyalty card at the register automatically logs into the person’s Twitter account. The transaction sends a tweet informing followers of the purchase and the advocate is rewarded in product.
• McDonald’s used Foursquare, the mobile social-networking site, to increase trip frequency by offering a chance to win a giftcard. This reportedly resulted in a 33 percent increase in foot traffic to stores in a single day, at a cost to McDonald’s of just $1,000.
Ultimately, it is the mobile device that enables the “shopper economy.” Why? Because mobile technology allows for digital deposit and storage of value, as well as redemption across channels. The mobile device enables new currencies to be earned, stored and exchanged. It opens the door to a real new economy.
Overseas, consumers are using their mobile devices to pay for goods and services, while here in the US the trend is just beginning to take hold. In the US, Target and Starbucks have joined forces to allow a pay-by-mobile application. Kroger has had a pay-by-text option. And of course, we have seen Cellfire activate mobile couponing, opening another kind of digital redemption at the cash register.
All this means that we have a new kind of currency besides the dollar. Perhaps we could call this “cognitive currency.” Imagine denominations based on this. For example, “attention” would be a lesser denomination than say “access” to a personal social network. Further, access to my friend Stanley’s network may be worth more than mine, which would mean that his personal exchange rate would be higher than mine. This is one way that our network is part of our real net worth.
In the shopper economy, we will see shoppers empowered with new currencies of exchange, including: attention, participation, advocacy and access to social groups. Mobile devices are making this possible and attractive for both retailers and shoppers.
For retailers and brands, the shopper economy will offer new ways to cultivate loyalty, change behaviors and drive messages. Intelligence will be needed to help guide shoppers to what they want and how to arrange to get the best total value exchange.
In response to this need, brands may offer artificial intelligence to help shoppers navigate these new contexts for their personal best value. Finally, digital payments will enable new currencies to retain value across channels, and into the larger marketplace.
The Shopper’s Journey Evolves
Since the exchange of currencies is evolving, the shopper’s journey no longer culminates in purchase, but in advocacy. Advocacy today is worth more than in the past because consumers have viable means of broadcasting. Opening one’s social network has a real financial value. In this way, shoppers are real media vehicles.
Most shopper-marketing approaches today use a path that culminates in a purchase. Even those shopper-marketing systems that use a cycle of shopping are primarily concerned with conversion along the path. Using a purchase as the culmination of marketing efforts is more suited to an effective campaign than longer-term brand health.
Obviously, a loyal brand user is more financially valuable to the franchise than a buyer who is captured for a single purchase: Lifetime-value models show that the profitability of loyalists account for the lion’s share of the brand’s bottom line.
Marketers today have tools, beyond great product features, to persuade a user to become a loyalist or an advocate. We have participation vehicles in the social space and digital realms that can involve buyers (and prospects) in the brand. So, a buyer with participation behavior is more valuable than a simple buyer, and a loyalist who advocates is more valuable than a simple loyalist. I am proposing five simple brackets of shoppers: prospects, buyers, buyer/participants, loyalists and loyal advocates.
Financially speaking, a buyer represents an annuity. We can evaluate marketing efforts and craft strategy against baskets of annuities — buyers valued by their revenue streams.
In this model, advocacy is the most valuable asset a brand can cultivate. A loyalist who advocates the brand to others, not only has a high lifetime value, but also recruits new users. This in turn drives a greater return-on-investment. In fact, research shows that “… marketing-induced consumer-to-consumer word-of-mouth generates more than twice the sales of paid advertising in categories as diverse as skincare and mobile phones.” (McKinsey Quarterly, April 2010)
Therefore, shopper management can evaluate the financial return (and the marketing strategy) in terms of the number of unique purchasers; the percentage of buyers in each bracket (from buyer to loyal advocate); and the quality of the advocacy itself.
Marketers need to look at the investment in shoppers, instead of the investment in their purchases.
Setting Brand Strategy
From a strategic standpoint, there are goals beyond converting shoppers to buyers. We need to convert buyers to participating buyers, and loyalists to loyal advocates.
To some extent, we already do this as marketers. We are looking to solidify loyalists or help get shoppers to spread the word by recruiting their friends to play or buy. However, there are probably few shopper marketers who set loyalty and advocacy goals in a consistent, systematic way. To be effective, this is an exercise that needs to happen year after year.
Taking the shopper’s journey from prospect to advocate — creating involved brand acolytes — means overcoming different kinds of hurdles. Where hurdles to purchase include things like awareness and relevance, hurdles to participation and advocacy include total value equations and social desirability in a digital space.
Hurdles to brand participation include the total value exchange of my time and effort. Shoppers will assess the brand value equation like this: How much time and effort do I need to expend, in order to get what?
This means that the offer on the vendor’s side needs to meet or exceed the perceived expenditure on the shopper’s side. Valuing brand involvement this way may yield different kinds of price elasticity measures, which could mirror traditional models.
Potential hurdles to advocacy include alignment with self-image and social desirability. To elaborate, the self we create online is a surrogate public face. Or, better yet, it’s our new public face.
People spend inordinate amounts of time managing their digital “image” and reputation. If aligning with, or advocating, a brand doesn’t support a shopper’s online persona, then the brand will be relegated to the private sphere (which is “ordinary” life).
Real obstacles to advocacy would be things like having to admit you have a problem to advocate your brand to my social group (e.g., disease states with social stigma). Another would be that advocating for a low-interest category could make me look “bought,” undermining my credibility among my friends.
The implication here is that the shopper becomes another “brand” with which to align. Shoppers have equities they are trying to protect, and brands need to build that into their attempts to induce a transaction.
The shopper economy demands new approaches to determining brand value, including participation behaviors as a portion of the price-value equation. Marketers will also need to identify and validate specific shopper hurdles to each successively valuable bracket.
And, finally, we will need to refine our tools and measurements to track success.
