There is a new economic model - one that rewards the consumer for behaving a certain way that has far-reaching repercussions for your brand online. Companies that understand this new method of currency, value, and reward can reap the benefits of higher recall and increased consumer loyalty. Liz Crawford provides an analysis of this new model in The Shopper Economy: The New Way to Achieve Marketplace Success by Turning Behavior into Currency. With 20 years of experience as a brand manager and consultant focused on strategic innovation, Liz is uniquely qualified to identify this new shopper behavior-driven economic phenomenon. In anticipation of our Shopper Economy webinar next week, we sat down with Liz for some Q and A.
Your book, The Shopper Economy, describes an emerging economy where behavior is currency. What led you to investigate this topic?
I thought it was fascinating that digital technology, especially mobile technology, was enabling new kinds of transactions between buyers and sellers. In addition to shoppers purchasing brands, brands were purchasing shopper behavior. I believe this is a relatively new phenomenon.
In the book, I try to make clear that I am not referring to a conventional buy-more-get-more promotion. And I don't mean a deferred discount, like a cents-off-next-purchase.
Instead, I am pointing out a new dynamic where a shopper can actually earn value in exchange for one of four behaviors: paying attention, participating, advocating, or committing. None of these behaviors directly involve purchase. The shopper can earn value by simply behaving.
This earned value can come in various forms - Shopkick Kicks, Facebook Credits, miles, points, etc. You will notice that this value is digital scrip (not straightforward fiat currency in most cases). The digital scrip is currency in that it is - 1. recorded, 2. stored and banked, and 3. redeemable at the discretion of the shopper, across channels. Shoppers can aggregate all manner of scrip in a clearinghouse website like www.points.com. This website allows shoppers to exchange hundreds of forms of scrip for fiat currency (dollars and cents), which may be deposited into a Paypal account.
Which industries are leading the way in understanding this new activity-based marketplace?
At this point, I believe that retailers are leading the way, along with financial services.
Retailers who are rewarding behavior are reaping the benefits. There are various platforms which effectively use shopper participation to drive traffic and conversion. These platforms include: http://www.scvngr.com/ , www.checkpoints.com/, http://shopkick.com/ among others. These are platforms, which shoppers download onto their smartphones as apps.
American Express, of course, is a leader in the area. Their points system is both the granddaddy of digital scrip, as well as the continued frontrunner. One of the big reasons for their massive success is their extensive network of partners. Shoppers who acquire points can redeem them in virtually any way they please, including simply using points to supplement/replace payments at a digital point of sale (www.americanexpress.com). I believe that with Google Wallet or ISIS type technologies, we will see frictionless, fungible exchanges of scrip with fiat currency, for everything. This really opens the door to the Shopper Economy.
How can small businesses take advantage of the concepts in The Shopper Economy?
Many smaller or independent retailers can begin to experiment with incenting behaviors by signing up with one of the platforms already mentioned (Checkpoints, Shopkick, SCVNGR, etc). These mechanisms are used by hundreds of local merchants to drive traffic. In some cases the rewards are simply deferred discounts, like Foursquare rewards ("free coffee next visit" for example). In other cases, the earned value is scrip which is redeemable at the discretion of the shopper.
For small business, advocacy is an important behavior to reward. Groupon and Living Social both reward shopper-to-shopper advocacy, and of course are used extensively by local merchants, like salons and restaurants.
In this new economy where shopper behaviors create units of value, how can marketers quantify a specific value to a shopper behavior?
This is a detailed subject. The book devotes a chapter on valuation for each of the four shopper behaviors. Some behaviors like Attention and Participation should be evaluated in comparison to more traditional communication and promotional expenditures, respectively. So, if a shopper is watching an ad in exchange for scrip, does that shopper score higher on recall and persuasion scores? It is the effectiveness of these efforts that need to be assessed. It is a trade-off of investment dollars.
The same evaluation process can be used to assess Participation programs. For example, how effective is a SCVNGR game at driving store traffic, in comparison to other efforts? This will help a business owner optimize marketing investments. Participation also usually has a conversion component. That will help with understanding the financial return of the program.
The book also cites specific formulae to quantify some behaviors such as Advocacy.
What does the future look like in the shopper economy?
Shoppers will become increasingly sophisticated in understanding the worth of their labor. This means that they will evaluate transactions with brands and retailers with a sharper eye to their own advantage.