- March 3rd, 2014
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Tipping Points in an Economy of One
From one-to-one to peer-to-peer, the relationship between consumer and brand has been tipping over the past few years, and the consumer is the one gaining scale.
I first saw the makings of this transition two years ago, while writing my book “The Loyalty Leap.” In it I shared four forces that were converging to shape the destiny of marketing. They included the rise and fall of the CFO, an evolving scarcity of attention, the burgeoning power of the consumer, and our own abilities and challenges, as marketers, to deliver one-to-one experiences. For some time we marketers have been talking about the customer in ways that now sound almost quaint: put the customer at the center of your purpose; make all decisions from the customer’s point of view. But today, the customer has firmly placed herself at the center of our purpose, thank you very much, and she will gladly remove herself if we do not give her what she expects.
Today, my company LoyaltyOne has provided a timely update to these forces. Let’s see how much has changed in less than 50 months.
The world is at our fingertips: There are no local businesses anymore. Consumers can easily access companies from across the globe, to the point that even micro-businesses can compete with national brands. We coined a term for this in 2013, “Mompopolies.” But regardless of a company’s size, it can only compete if it meets rising expectations about choice, delivery and experience. Consumers today require emotional engagement, and analytics-based decision-making is one of the sharpest tools for putting this at their fingertips – and ours.
The Peer-to-Peer Economy: The rise of online marketplaces such as eBay and Craigslist have fostered a consumer mindset wherein alliances are formed to share and exchange assets such as cars, houses, parking spaces and even money. It isn’t a small movement – Forbes estimated the P2P economy rose 25 percent in 2013, to $3.5 billion. But beyond spending, people also are joining to share their ideas on other economic activities, from research and development to marketing.
Consumer data awareness: When it comes to data, size does not matter. More important than the amount of data collected is how it is collected, how it is used (including storage) and how it is shared. Most consumers –77 percent – do not feel they are receiving any benefit from sharing their personal information, according to a recent LoyaltyOne survey. Yet 63 percent of the same survey respondents said they would give more personal information if companies sent them relevant products and service offers in return. Consumers expect something of value in return for their information – using inaccurate data is worse than using no data at all.
Surprise and delight: Loyalty programs have become so commoditized that the traditional points benefits are seen as entitlements. Aggregators now allow members to openly exchange points between programs, while others let them pool and share – all of which increases redemption rates but also means members interact with the program less. Marketers can distinguish their programs and brands by using the data to create more personalized services and adding relevant benefits that are a surprise, and that are more attractive than what aggregators can offer.
These four trends are converging to create an “economy of one,” where markets will continue to fragment into micro-markets that will shift with needs and trends. These nimble markets will feed consumer expectations for highly personalized experiences, possibly to the point that they demand we pay for their information if we cannot deliver on relevance. The choice is ours to pay or play.
To read the full report, including tips on how to engage in the Economy of One, click here.