We have written before about the rise of the collaborative economy and the importance of reputation. Unlike traditional economies, with their buying and selling of goods and services, this new economy is all about the sharing of experiences. And that means personalised and unique experiences. Those committed to collaborative consumption would rather stay at a stranger’s house on holiday than in a hotel, and share someone else’s car rather than hire a taxi, because that experience is unique and shared with another person.
A brave new world
Those who aren’t familiar with this world may think that it sounds strange, but it’s here to stay. Forbes has estimated that revenues in the collaborative economy were $3.5 billion in 2013, with growth of 25% expected. Rachel Botsman, author and founder of Collaborative Lab, believes that the peer to peer rental market alone is worth $16 billion. The Economist declared 2013 the year of collaborative consumption. This economy is already worth big money, and is set to grow.
The reason why collaborative consumption is here to stay is that it is firmly rooted in human behaviour. We all like to share; you have only to look at Twitter and Facebook to see that. And collaborative consumption is, in a way, the ultimate in sharing. You’re not just sharing pictures of your life, you’re actually offering to share your life, whether your home, your car, or other belongings, with others. And as Generation Y recoils from mass consumption, people value unique experiences more than any other.
But there’s a problem in all this. If we’re all keen to move to more unique experiences, what about brands? Brands were originally a way for product manufacturers to guarantee the quality of their products. They’re built on an assumption that we all want the same, which is pretty much diametrically the opposite of collaborative consumption. Is this the end of brands?
A new beginning
Ana Andjelic, head of digital strategy at Spring Studios, suggests that far from being the end of brands, collaborative consumption is the next big opportunity for them. Brands need to create or add some new value if they are to continue to attract customers, which, Andjelic suggests, probably needs to be by connecting to customer demand in some way.
She offers the example of a possible partnership between IKEA and TaskRabbit. TaskRabbit supplies individuals to do the tasks that others don’t want to do. Perhaps unsurprisingly, the most requested task for a TaskRabbit to do is assemble IKEA furniture. How would it be, Andjelic asks, if you could book your TaskRabbit at a pre-agreed price at the checkout desk in IKEA, when you bought your furniture? How could this fail to add value to the vast majority of customers?
The key issue for brands is to recognise what their customers are already doing, and supply the means for them to do it, alongside the existing product. Peugeot now provides a car rental/sharing service in 70 European cities, recognising that its customers were going to participate in car-sharing with or without its assistance. Patagonia has an arrangement with eBay, allowing Patagonia customers to sell their used goods under the Patagonia banner on eBay. They were going to do it anyway, but Patagonia has made it easier, and encouraged more transactions around its products.
But perhaps the most compelling way for brands to engage in collaborative consumption is to encourage its customers to get involved in product development, a bit like crowd-sourcing. The US retailer Nordstrom partnered with Toms Shoes, and encouraged its customers to design new Toms. Nordstrom’s affluent customers are looking for something unique, not mass-produced, that will set them apart from everyone else. This allows them to create something that absolutely meets their needs. And because they owned the design, they were even more committed to the brand. Win-win.
What this boils down to is amplifying the customer experience. By making it a more complete experience, with customer convenience at the heart, it becomes much less one-size-fits-all. And by allowing people to share, they bring their own unique aspects to every transaction and to the relationship as a whole. But there’s one crucial aspect. It’s got to be genuine. Brands who are genuinely involved and engaged in real collaborative consumption, for the sake of improving customer experience, will grow. As we have commented before, reputation is all in the collaborative economy. Those who are cynically trying to exploit it to stay in the game will almost certainly be seen through and their reputations will suffer.