Ben Shoemate's Notebook

Source: "What's Mine Is Yours: The Rise of Collaborative Consumption," Botsman & Rogers

I recently watched Rachel Botsman’s TEDxSydney talk on collaborative consumption (below) and realized how little most marketers are thinking about the impact of crowds on the future of consumption. Instead, they’re focused on the impact of crowds on production (crowdsourcing! co-creation! predictive markets!).

For an in-depth overview of the landscape as Rachel defines it, I recommend her guest post on the Swiss Miss blog (or her book). In the interim, here are her three systems, which she uses as a framework for collaborative consumption:

1. Product Service Systems: Pay for the benefit, not the product (think paying for the hole, not the power drill that makes it)

Example: ZipCar

2. Redistribution Markets: Exchanges that move used goods to where there’s new need (think the stretching of product life cycles for things like DVD’s)

Example: SwapTreasures

3. Collaborative Lifestyles: People with similar interests band together (think co-working)

Example: AirB&B

If you’re in the business of selling goods or services, you should likely spend at least some time thinking about the consequences of such a trend. The following are some initial thoughts on what marketers may want to consider in a world of collaborative consumption. We’d love it to be the beginning of a dialogue on the matter, so please feel free to comment or email us with your thoughts.

Focus less on “influence” and more on “reputation.”

Marketers are obsessed with influencers in the hope they’ll help others make purchase decisions. Yet, if more people are doing business with each other, it’s the commercial reputation of a stranger, not their “influence” that becomes incredibly important. Whether marketers like it or not, these sellers are a part of the product experience (think about that bad online purchase experience you had and the impact on the oblivious product company). Perhaps then they should account for those in their target audience that are likely to be the foundation of the secondary market of their products. It may just open up an entirely new branch of propagation planning (“plan not just for those that buy your products, but for those that will eventually buy your products from them”). The economics just got trickier, but finding a way to make money in secondary markets will be essential, and the best way to create demand is to make sure those re-selling your product are representative of the brand.

Squeeze more dollars out of early adopters

The true value of early adopters is always hard to determine for a brand. However, as collaborative consumption takes off, they’ll become more important across a range of product categories. In those instances that marketers simply cannot monetize re-sale markets (what brands can feasibly make money from people buying each other’s used goods on Craigslist?), they’ll have to find a way to sell more to the same people, even when those people aren’t brand loyal. Those that buy products upon release may need to be catered to in unprecedented ways. Brands could feasibly help them re-sell, conceding the cannibalization such an effort could have on mass audience sales. In fact, it may be in some brand’s best interest to speed up the cycle between sales to an elite few. It’s not dissimilar to how content publishers think about participation platforms and those very elite community members that are incredibly valuable.

Help people loan to help yourself sell

As strangers loan goods to one another, they’re may be an opportunity for brands to differentiate themselves in that regard. Imagine apps that work concurrently with products to help you monetize them when you loan them out. If I loaned my car to strangers for money, I’d prefer one that helps me monitor how much gas that stranger actually cost me in today’s dollars. Or if I lent expensive products like technology, I’d pay a bit more for those that could be located via GPS like the MobileMe “Find My iPhone” feature to deter theft. Such features would be an investment because they would help me monetize my product purchase via collaborative consumption channels, and help such products pay for themselves.

Become an active participant in passion areas

We’ve been discussing how brands need to embrace social media flings, in which they have brief but meaningful relationships with consumers. Brands can bond with people over a shared passion (if the brand can credibly contribute to the dialogue). Rachel’s “collaborative lifestyles” system is full of potential for such flings. If a site like Landshare connects growers with those who have land, the entire community feels ripe (sorry, couldn’t help it) for relevant brands to play a role. Imagine a company like DeWit gardening tools facilitating connections in such a community. Not only does that potentially grow business (ok, I’ll stop), but it also offers a “boring” product category a chance to be human and engage people on a topic they’re passionate about. Social media flings aren’t just for the Red Bulls and Nikes of the world. They can happen in small, but highly passionate communities—even if those communities are circumventing buying more of the brand’s product by sharing. Regardless of flings, passionate communities are doors to social engagement of any kind for a brand, and collaborative consumption may just be a master key.

We’re huge believers in collaboration (it’s perhaps the future of agency business). If consumers are going to collaborate anyway, the bigger impact of crowds on marketer business may be in how products are bought and used, rather than how they’re made or developed (or the growing space in between led by Groupon). Given how many brands are struggling to benefit from crowds, the fact that consumers have taken matters into their own hands (of course) may be a windfall. The economics of how brands make money will certainly become more complicated, but collaborative consumption actually makes things simpler for marketers on some levels. They can stop dealing with crowd dynamics in the production process and instead focus on understanding how crowds change what they know quite well: how they’re products are actually used and valued.