Community, Consumer Loyalty, and Word-of-Mouth Marketing

When a company creates community around its products, it ensures customer loyalty. When engaged in a community, consumers no longer feel like they’re consumers. Rather, they see themselves as guests, members, and participants congregating around a common goal or belief. That change in mindset plays an integral role in up-keeping consumer commitment and in encouraging word-of-mouth marketing.

But why stop there? If community cultivating can serve as a marketing strategy and as the best possible customer care model available, shouldn’t it be able to do more?

Well, it can. A business’s community of fans, clients, followers, subscribers, guests…whatever you want to call them… can also take care of product design.

Peering and Linux

The idea of outsourcing product design to the public has become much more popular with the invention of the internet. It is the internet that has allowed businesses to source the intellect of people all over the world. What we’re seeing, as the Wikinomics authors Don Tapscott and Anthony D. Williams describe it, is a “new form of horizontal organization [that] is emerging [to rival] the hierarchical firm in its capacity to create information-based products and services, and in some cases, physical things” (22).

Tapscott and Williams call this new form of organization ‘peering,’ but the act of increasing corporate transparency and bringing in the public to help design and create a product is also becoming known under different vocabulary such as ‘open sourcing,’ ‘crowd sourcing,’ ‘peer-to-peer production,’ and ‘community-based design.’

One of the most familiar cases of outsourcing product design to the public is the example of the Linux computer operating system. Linux was started by a man named Linus Torvalds in 1991. Torvalds took the existing Unix operating system, created a simpler version of it, and then posted that version online for other programmers to view and modify. Some of the programmers made changes, for free, Torvalds ended up licensing the program under a general public license, and Linux as an open source operating system was born (Tapscott and Williams, 24).

Today, thousands of volunteer programmers make modifications to Linux on a daily basis, and because it’s reliable and more importantly, free, Linux is considered an important “enterprise software keystone” for many companies (Tapscott and Williams, 24).

Linux represents the perfect example of an organization or a business sourcing the public to help design a product. With the internet, especially the onset of Web 2.0, with our still sour economy, more and more companies are adopting the open source model. It’s cheaper than supporting a bulky design team; it can be quicker than using traditional design methods; and perhaps most importantly, the transparency and trust inherent in peering and open source strategies are incredibly effective at cultivating that longed-for sense of community and customer loyalty around a product.

Of course, with that sense of community and loyalty centering around a product, businesses are rewarded with increased word-of-mouth marketing and increased participation in product design. It’s a virtuous circle. Open up to the public, allow them an opinion on the product design, secure their loyalties and their powers of advocacy, garner more interest in the product, and ultimately receive more input in product design!

I want to go into more detail on different businesses and companies that operate on the open source model, but I think a separate blog post should be dedicated to exploring those distinct examples. Look for it next week!

Collaboration = Wealth

For now, I would like to close out with a Ted Talk by Howard Rheingold on the history of human collaboration, current economic thought on human collaboration, and the future of human collaboration. In particular, I want to draw attention to the last six minutes of Rheingold’s talk where Rheingold starts to talk about how open sourcing, peer-production, and cooperation, can transform into wealth.

*Tapscott, Don and Anthony D. Willilams. Wikinomics: How Mass Collaboration Changes Everything. USA: Portfolio, 2008.

How is social media changing the world? Check out this week’s hottest hits in the realm of global development!

1. http://blogs.cgdev.org/globalhealth/2009/09/value-added-communication-pepfar-now-on-twitter-and-facebook.php

PEPFAR (President’s Emergency Plan for AIDS Relief) has launched both Twitter and Facebook accounts to keep the public informed on their activities in participating countries and invites questions about two-way communication with social media.

2. http://www.crisscrossed.net/2009/10/07/combing-open-innovation-and-crowdsourcing/

This blog post highlights organizations and web platforms that take advantage of crowdsourcing for the greater global good. Collaboration knows no boundaries and we love it!

3. http://think-social.org/message-first-medium-second.htm

A success story illustrating the importance of message, storytelling and appropriate use of social media. Charity : water continues to raise the bar!

 4. http://blogs.cgdev.org/open_book/2009/10/kiva-is-not-quite-what-it-seems.php

A comprehensive critique of the microfinance phenomenon Kiva. It asks readers to assess the importance of absolute transparency in any organization.

5. http://beth.typepad.com/beths_blog/2009/09/dancefloor-and-balacony-what-i-learned-about-selforganizing-groups-online-from-eugene-eric-kim.html

Great tips on international community organizing and the appropriate use of social media!

Founding Partner at Re-Vision Labs

Who would have thought General Motors could conceivably come up with a convincing case that they’re re-inventing themselves? In a post a few weeks back (So You’re Buying a Car Company), I posited that the best chance for GM to reinvent themselves successfully is to seek a new, deeper understanding of their core stakeholder: the car-buying public. Well, maybe they listened.

Such is the conclusion to which one arrives after a story in this weekend’s paper, in which GM CEO Fritz Henderson declared “Business as usual is over at GM.” Of course, time will tell. However, initial signs are promising.

While the streamlining includes some typical moves – streamlining management by reducing by 35% the number of US executives, and halving top-level management – there are also signs of a new awareness of the power of community.

Of more interest, though, are the company’s stated new priorities: customers, cars, and changing GM’s culture. CEO Henderson noted, “At the new GM, we need to make the customer the center of everything.” Does that include product design? I’ll be curious to watch. An interesting move that, if accomplished effectively, would seem to support this new vision is the creation of a new website. Not yet launched, “Tell Fritz” is designed to enable people to share suggestions with the CEO. While a clunky method for community engagement, this is a step in the right direction. Likewise, Vice Chairman of Global Product Development Bob Lutz has already hosted a web chat (which you can see here)

The company also launched some other initiatives that gained a good deal of press, including a new plan to enable dealers in California to allow people to buy GM vehicles on eBay.

If I were Fritz Henderson, I’d undertake an aggressive online and offline community organizing project, in which I’d re-engage with the American people through channels that matter to them. I’d further seek to engage some of the country’s incredible minds in re-thinking the automobile. Not in terms of short-term design twists, but in terms of a systemic, “how would we do this if we were starting anew today” kind of way. I’d listen. A lot. To the people who actually might buy my vehicles.

Good luck, GM.

Crowdsourcing has proved to be an effective method for supporting ideas, political movements, and businesses.  Whether a crowd gathers energy around a political campaign, or gathers together to run a Carrot Mob – encouraging local businesses to turn their dollars into energy-savings programs – the power of the people in these realms has been incredibly successful.

But here’s a new thought: what about crowdsourced business models?

After reading a recent post about a crowdsourced art space + coffeehouse + lounge on one of my favorite blogs, I got to thinking: crowdsourcing is not just for supporting an already existing idea or business, but it is also useful in forming a great idea.  When a crowd speaks their needs, businesses can rise up and meet them. That’s what Raw Canvas did – by listening to the crowd around them, they opened up a collaborative “art + social” space.

There are other crowdsource-based models like this out there: coworking is a great example.  Coworking was born from a group of independent professionals who were sick of attempting to be productive in isolation at home or in busy coffee shops.  Once there were enough voices, once the crowd amassed, coworking spaces began opening up all over the US and throughout the world to respond to the call of the crowd.  Office Nomads does this for independent professionals in Seattle – even before opening our doors we had a crowd of independents who were calling for our space to open (full disclosure: I am one of the owners & founders of Office Nomads, so I tend to speak pretty highly of us).

You could call this simply responding to demand.  But these examples prove a slightly different model than just one of simple demand.  This is not a group of people looking for a better low-calorie cola option.  These business examples arise from the desire of a crowd to have a dynamic, collaborative, and responsive new business that taps into the crowd itself in order to function.  The crowd is calling for a business that the crowd gets to be a part of. 

This is beyond just responding to the call of a group customers.  Because crowdsourced business models are not about customers, they’re about the crowd.  These models ask the crowd to continue to participate.  They require the crowd to become the community.

What other crowdsourced business models exist out there?  What models are soon to come?

In his landmark exposé on the food industry, Fast Food Nation author Eric Schlosser stated in 2001: “The history of the twentieth century was dominated by the struggle against totalitarian systems of state power. The twenty-first will no doubt be marked by a struggle to curtail excessive corporate power.”

Schlosser was dismayed at the expansion of the industrial food system that limited consumers to increasingly unsustainable choices, despite its impact on our health and on nature. I remember feeling concerned and helpless as I read these words.

I never imagined that, less than a decade later, we would be entering an age where technology can restore the balance of power between producers and consumer. Social and collaborative technologies now empower individuals to speak, buy, and boycott in overwhelming numbers.

For example, a few weeks ago, Facebook changed its format. The changes were not altogether enlightened; perhaps they were perfectly aligned with Facebook’s business goals, but many of their customers didn’t like them. They immediately formed a Facebook group of over 700,000 members who “want the old Facebook back.” It worked. A few days ago, CNN reported that Facebook will make changes in response to user complaints.

For producers, the bad news is: you no longer control your own destiny. However, the good news is: your customers are now your partners, and you have an unprecedented opportunity to satisfy their needs.

Carrotmob

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Crowdsourcing

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Local Business

Last night Seattle Greendrinks put on its first Local Green Stimulus Package, an attempt to help a struggling local business that has given significant support to the Seattle Greendrinks community. In essence, the idea was to connect the community with the space: get people in there, and let the quality of the venue, the food, and the vibe do the selling.

The venue in this case was a restaurant full of recycled materials, serving organic foods & drinks, etc. They’re a restaurant that opened in November, 2008, just as the country’s economy was tanking. To survive, they need a crowd, a customer base, people to know – and care – that they exist.  Helping establish that crowd was our goal.

It worked.

Pizza Fusion was mobbed; they couldn’t hold us all, and had a 45 minute wait for a while. I overheard and directly had conversations with numerous people who explained about how great the venue, the pizza, the beer, and the vibe were. Kevin, the amiable owner, told me that it may have been their busiest night since opening in November.

Whether it’ll enable them to stay in business long-term is yet to be determined, of course.  But it was a beginning.

The idea sprang from thinking I’ve been doing about how to actualize crowds to benefit good things. At the base of the thought process: Carrotmob and Crowdsourcing.  We will continue to explore these ideas, as Seattle Greendrinks will soon be producing Seattle’s first all-out Carrotmob at the Pike Pub. The Pike has committed to take 25% of their revenues on Earth Day – 22 April – and put them back into the restaurant in the form of energy retrofits, operable windows (to reduce their air conditioner use), etc.

I’m excited to see how the community can work together to help foster significant change by doing things they might’ve done anyway, like grabbing a pint. Think of all the other businesses, as well as other community organizations, who could be helped through the power of crowds…