Trends that are making Brands Re-Think Stakeholder Relationships
Two distinct macro trends have been challenging the way brands market and engage with their customers over the last few years. The first is generally referred to as the sharing or access economy, while the second has no specific title but refers to non-transactional rewards for customer loyalty, such as encouraging gym use or other forms of self-improvement. Although I have described them in discrete terms, they are in practice very much inter-related and part of brands’ attempt to tackle the emerging post-materialistic thinking, which pervades many sections of Western society, challenging industrial unhindered consumerism.
Catalysed by smart phones, the digital medium has unarguably encouraged more consumerism by sheer channel convenience and 24-hour access. There is, however, an important noticeable reaction – people increasingly want to feel good, almost in a Maslowvian manner, based on self-actualization, whatever this really means. This may manifest itself through well-being programmes, encouraging healthy eating and exercise or experiencing rather than consuming per se. This trend has taken a stronger root after the 2008 capital market collapse and the collective rethinking of the meaning of capitalism and the dangers of conspicuous consumption and increasing debt. It is in this context we need to consider how brands have adapted to the market. Behavioural economics has taught much about what makes people happy, and experiences usually win over products. In experiential terms, experience is the product. The shift from ownership and consumption towards access and sharing is largely due to our loss of manufacturing and our economic reliance on a service-based economy.
The Access Economy
Brands such as AirBnB, ZipCar and Bla Bla Car have all become successful in tapping into the collaborative nature of the sharing economy, one which encourages users to reassess their experience with brands and seek alternatives that focus on shared value. The importance of brand models in the sharing economy is really more about the ease of access rather than sharing per se. The use of Zipcar, for example, is based on convenience and not having the burden of physically owning a car, with all the attendant costs and responsibilities that are involved with car ownership. In this regard, convenience and value replace ownership, costs, and responsibilities.
The access economy requires consumers to communicate via peer-to-peer channels, some of which are transactional-based, while others are based on borrowing or sharing. For example:
This is an online site that allows people to post tasks they would like someone to complete for them. In effect, the task is outsourced to peers and a price set and the originator of the task then selects the most suitable person to complete the task
An online platform from which people can sell their services to interested parties at an agreed price.
But the access or sharing economy is more than just dog walking or mowing a lawn, it is now a multi-billion market that has huge potential to grow and is very likely to have disruptive effects on more conventional forms of business transaction and access. In many ways it is a classic form of economic creative destruction, in which many jobs are destroyed, while others new opportunities are created. It is, however, probably the case that in the long term, more jobs will be lost than gained, particularly in the low-skill sector. The sharing economy allows people to be both customer and supplier, depending on their needs. Users are no longer dependent on corporations and fixed prices. Fixura and Zopa, for example, are direct threats to the traditional banking system, although it is too early to say just what real impact peer-to-peer lending will have on traditional banks.
Recently (May 2015), Metro Bank announced a collaboration with peer-to peer lender Zopa, allowing Metro to lend money to Zopa users. People locked out of loans or those who may have poor credit histories or low paid jobs may not be successful in securing a loan from a mainstream bank, or if they do, it may attract a high rate of interest or demand for high security. This point also highlights why many forms of peer-to-peer co-operation can be so attractive. As well allowing access to goods and services at competitive prices or even for free, they also empower customers and create opportunities for access and sharing that may simply not have been possible a decade ago.
Technology is also influencing how people behave. Beacon technology, whereby a person’s precise location is recognised and a beacon communicates with their smart phone using Bluetooth, whether they are in a store or walking past, is a growing trend used by companies such as Urban Outfitters, Walmart and Lord & Taylor.
Non-Transactional Rewards and Self-Improvement
The trend for non-transactional rewards for self-improvement is also a noteworthy one. It encourages customer loyalty by recognising that in a largely post-industrial and materialistic society, people are increasingly interested in self-improvement and experiences rather than conventional goods and services. It boils down to not just what you have – but what you think you are. Branding is delving into the metaphysical world and tackling the complex issues of identity and meaning.
For example, millions of LinkedIn members are highlighting their willingness to join a non-profit board or do skill-based volunteering. Nike has also got into the swing of things. In New York in 2014, it placed a series of vending machines around the city that dished out Nike products, but not for cash. You could only gain access via points on its fuelband. Apple are also adopting similar tactics with their new app, Gympact, which uses money from credit cards to pay those people who go to the gym from those who said they would go, but did not. The idea is catching on.
Experiential purchases are attractive owing to the priceless memories they generate, the excitement and anticipation they create and the inherent difficulty in comparing one experience with another, making people more satisfied than they could be mere material purchases alone. This is best exemplified by the myriad of experiential holidays and trips that one can now obtain to places like the North Pole or remote parts of Asia, Africa or South America. But these are more than just glorified African safaris, whose stealth 5 star accommodation and mod cons juxtapose modernity with the great wilderness. No, many of these experiential trips and holidays involve visiting extremely remote islands, jungles, or deserts, to experience the biodiversity or sheer isolation and remoteness. A trip to the middle of the desert in North Africa for a week or two is never going to be for the fainthearted, but the sheer beauty of the night sky and watching the sun set and rise are so awe inspiring that people flock in their thousands to experience such trips.
Then there is danger; trips to Afghanistan were popular and still are, despite the risks involved for Westerners to travel within such a country. War and disaster tourism are just two examples of extremes of experience that some people are willing to go to in order to satisfy their curiosity and the ever irrepressible human spirit.
The Internet and the world becoming a “global village” has made all these things possible and opened up a Pandora’s Box of opportunity and risk for those involved. All brands must now carefully reassess how they can adjust to this new way of thinking and monetize different areas of their value chain and not just sell – but inspire, improve and educate customers, and in so doing, create new relationships and craft new brand identities and values. For me, the best exponents of this have been Nike and Apple, who have been innovative and championed creative destruction. It is not surprising that that in the latest (2015) BrandZ top 100 brand ranking, Apple is still No. 1, with a 67% rise in brand value to $247bn. Technology is here to stay, and brand managers are going to have become ever more creative in developing strategies for access, sharing and stimulating customer self-improvement.
Director of LSPR