Digital (and the) luxury consumers

The web, as I see it, is Ginger Rogers to the world’s Fred Astaire. Just as she did everything he did, but backwards and in high heels, the web does/ has everything the world does/ has but visibly, frictionlessly, faster.

But then those two too were role-playing. In the make-believe world of celluloid. With its own rules, relationships, frictions and language. The web, a virtual world, is no different in that sense.

A vast majority of luxury consumers have, unsurprisingly, taken to the web to consider, evaluate, buy, and well, show-off. They are choosing convenience, breadth, quality, and where available, personalised delivery. They seamlessly move between the physical world of stores, and the online world of discount-retailers, consumer review sites, official brand pages and web properties, secret and public groups discussing shared interests in a brand.

Brands and businesses, however, are slow to catch up. With such fragmentation of the consumer’s journey with the brand, it is hard to demonstrate hard numbers or directly attributable sales gains. So a traditional ROI led case for investing in social and web channels cannot be made easily.

It seems to me however that particular to the luxury and the creative sectors, some challenges are bigger than others.

The face-off between the “democratic” web and the “exclusive” nature of luxury

How do some of the well-established luxury brands deal with it? It is quite simple. They peg their expectations from the members of their various online communities correctly.

Not all fans are customers. In fact, as the Vacheron representative pointed out in Paris last week, most fans aspire to the brand and are therefore very valuable. Vacheron also has an owners’ club where current and future owners of their fine timepieces engage, converse, ask questions, answer questions, and indulge their passion for the brand.

The social media director of another aspirational luxury brand said to me, during the coffee break, that he finds questions about this “divide” offensive. After all, he went on to say, people may start with something small with us and grow with us. Of course, I agreed, having first bought just a belt from the brand when I was a young professional at 26. I have grown to admire the brand for their craft as well as cultural stewardship, over time.

It is safe to say that the democracy-exclusivity divide is short-sighted, parochial and patronizing. It may belong in a debate about sales targets but it certainly does not belong in a discussion about building a brand’s long-term value.

After all, aren’t half the advertising dollars wasted, as John Wanamaker pointed out? Why should luxury and creative brands be daft enough to expect half our social media dollars won’t be?

Finding the authentic voice of the brand

Aka how not to shill, plug, sell, cross-sell, up-sell at every opportunity?

My friend Euan Semple has written a book with a wonderful title – “Organisations don’t tweet, people do”. A succinctly stated, seminal piece of wisdom for all who wish to engage with their fans, prospects and customers on various social media properties or channels.

And people don’t just sell. They gossip, they share their joys, they show off things they bought, they share stories. Sometimes they complain. These are the moments where a brand has a great opportunity not just to be authentic but to showcase its authenticity. How would you feel in the customer’s shoes with a terrible product or service experience? Would you like to be sold-at or dismissed or barred from the community or the store? No? Then don’t do it to the customer! How hard is that?

It is kind of difficult to pick the best story about an authentic brand voice from the ones I heard in Paris. But Kenzo stands out in how it retains the spirit of the brand, while being playful, inventive and engaging all the same.

Finding an authentic voice does require brands to be comfortable with their own identities and their own DNA and their own values.

In others words — what do you stand for? And are you willing to speak up for it?

Influencers and the shades of grey

This is the most fun part. It is an open secret that luxury brands pay well-known faces and people with large social media following considerable sums to promote their products. It is however easy to see the payment dynamic when it is a celebrity talking about an overcoat or a handbag named after her.

What happens when it is a person on whom people rely for expertise and knowledge? Do brands pay her too? If they do, where is the disclosure? And what is her trade-off? Is she willing to trade-off her own brand’s hard-won reputation to build a luxe brand’s reputation? Does a full disclosure hurt or harm her “recommendations” and her influence? How does a consumer trust the “recommendation” of someone who is being paid to say nice things about a brand? What if there is no full disclosure? What about trust?

Then there are the mass influencers. Brands don’t give straight answers about them. Some say they pay these bloggers in kind. All very nice, but when did anyone last pay their rent in perfume bottles, or pay for their grocery by swapping a handbag or a pair of worn-only-once shoes? This is an unreal and unsustainable – and dare I say, arrogant – way for brands to think.

I asked some of these joyful (read: squirm-inducing) questions in Paris last week. Um, no joy. The jury is out, it appears. Brands must consider the hard choices carefully and in my view, plump for full disclosure from influencers.

So here is what I think about this “digital consumer” thing.

In the pre-web world, brands could tell their stories and consumers would listen passively.

Now it is a conversation and like any conversation, there are disagreements, segues, detours, tangents as well as commiserations, empathetic moments, Aha-moments and moments of sheer joy.

I think things have changed for the better, don’t you?

PS: For my full notes from the Luxury Society event in Paris, please see this.

A Passage To India (2010 ed) and the other R-word

When EM Forster wrote A Passage To India, the Indo-British relationship was one of the ruler and the ruled, of imbalances in power. Things are different now in 2010. Britain lags behind and grapples with an economic crisis of monstrous proportions, while India’s economic growth gallops along at 8.5%.

Naturally, all eyes are on David Cameron and his 90-strong high-powered ministerial and CEO delegation to India, billed as a “jobs tour” to which Cameron is bringing a “spirit of humility“.  The delegation led by Mr Cameron confirms how India remains, despite all its frustrations, a potentially strategic customer, partner, supplier and sometimes a competitor to British businesses. As such India’s growth has direct implications for British business, as we in Britain seek growth markets and profits to deal with the continued chill in our home economy.

Earlier this week, the Financial Times, in its editorial, argues that India needs to go for stronger growth (registration required). Among other points, the FT argues for improved infrastructure and productivity, liberalisation in retail sector, furthering liberalisation in the banking sector, and investment in basic health and education.

All valid points indeed.

A fundamental requirement to enable such business is that businesspersons from both countries are able to travel to meet with each other, and not just on high profile trade delegations. Not least because both the UK and India  are nations thriving on the back of the SME sector and their chief executives rarely get to join ministerial trade delegations.

Travel between India and the UK is hamstrung: by the increasingly onerous requirements for an Indian to obtain a British visa in India, and by the sheer volume of visa applications being made by British persons in the UK for travel to India. One area ripe for quick and major reform in both countries is enablement of business travel.

In doing so, the other R-word – reciprocity – is as important as any reform. It would not be remiss of Mr Cameron’s and Dr Singh’s governments to take bold steps to make it easier for British and Indian businesses to travel, and then to trade and collaborate.

Starting with a mutually cooperative visa regime. One that makes it easier for British businesses to find their passage to India in the modern times.

Other links:

Nitin Pai writes: Cameron comes with a different mindset

BBC’s Economics editor Stephanie Flanders: Osborne in India

Dean Nelson on the whys and the what-fors of Indo-British links

Democracy 2.0?

The term ‘Web 2.0′ has been in use for over 5 years now, although there is some – irrelevant in my view – dispute about who first coined it. The web as we knew it in the 1990s is often, retrospectively, described as Web 1.0.

Web 1.0 was about static publishing or ‘brochureware’, about one-way communication from the publisher to the user of the information, about one-size-fits-all style of publishing, and where the publisher’s say-so was probably the only source of trust or legitimacy. Web 2.0 is dynamic and interactive. The published content does not remain static – it morphs and evolves through multi-media broadcast, discussion and link-backs, and these morph-operations, so to speak, are used as a measure of the legitimacy of the publisher. In democratising content this way, Web 2.0 can and does generate a cacophony of noises but the possibility of customisation and personalisation enable a user to experience a higher signal-to-noise ratio.

Although the internet and the web are products of federally funded research programmes in the United States and Europe, the web truly blossomed as commercial organisations brought their creative imagination to it. In addition to technological innovation, new ways of doing work were also made possible, although for many Web 2.0 players,  monetisation, or making money, remains a challenge.

Given the web’s origins, it is great to see Web 2.0 being put to great use in a governance and government context. More specifically, Barack Obama’s transition to taking over as the President of the United States.

An earlier post discussed how Barack Obama was successfully harnessing the community-building aspect of Web 2.0 to orchestrate his victory. Now that he is President-elect, a fully interactive website, Change.gov, has been launched to help his transition.

Upholding the values of transparency and civic involvement, an ‘agenda‘ section outlines the aims of the website. It also outlines the privacy policy, including for children, on the ‘about’ page. The ‘newsroom‘ keeps the American citizens – and other interested people such as me – informed of the developments, complete with video links to public appearances of the members of the transition team. Providing regular updates will not prevent the rumour mills from churning, but it sure can put them to rest pretty quickly. Although the news is listed under ‘blog’, at the time of writing, the blog area is not really interactive, as in readers cannot leave comments etc. Link-backs, such as the many in this post, however can allow the conversation to carry on, in a manner not dissimilar to Seth Godin’s blog. An external link to the transition directory provides information on the people involved in this transition.

The most interesting interactive bits are, of course, the section ‘American Moment‘ where people are invited to share their stories and share their concerns and vision for America, and the section on jobs, where people are invited to express their interest in non-career positions in the Obama administration. Together they balance the emotive or visionary aspects, with the more pragmatic, operational aspects of a building a new administration.

As participatory democracy goes, Change.gov is a pretty interesting development, a first in any democratic country’s history, a sign that the campaign and the transition are being managed by professionals and not career politicians of any kind. It is worth mentioning that federally funded vehicles are prohibited from being used for political fund-raising so this website cannot be used to raise funds for, say, Obama 2012. But, who says that pre-existing communities, who may have funded a prior campaign, cannot participate in new communities to continue their involvement? This website has the potential to harness cleverly the momentum, the positive energy and the goodwill of all those supporters, who helped bring Mr Obama to the Presidency and who helped raise unprecedented sums for his campaign. If things are executed well during this term and if promises are delivered on, the momentum may well carry into the 2012 campaign and boost Obama’s reelection bid.

As this blog features writings at the cusp of strategy, technology, investment and regulation, two sets of natural questions arise from the foregoing.

First, can businesses learn from this manner of running a transparent, informative and participatory web property? What can they gain and more importantly, what can they lose from such an undertaking? Which large businesses are already running their corporate websites to include all their stakeholders?

Why might some businesses prefer to run brand-oriented web properties? Apple.com and of course, Amazon.com are harnessing their communities very effectively. Most other efforts, even from master marketers of Procter and Gamble and others in their league, are brand-focused or just plain poorly run. What is your experience?

Second, do you think Democracy 2.0 is a feasible and a scalable model for other countries and cultures too? What factors apart from the demographics would aid greater transparency in national governance and politics? What factors would hamper it? Is the time of open-source politics upon us?

As the world’s largest democracy, India, goes to the polls in 2009, can this experience be replicated? This question perhaps is worth a whole post or more in itself. Meanwhile do leave your comments below.

Related reading:

GigaOm on Web 2.0 gives birth to Politics 2.0

Robert Hogeboom on Web 2.0 Politics: What brands can learn from the 2008 Presidential campaigns

Jack Welch on Barack Obama’s victory: Three Lessons for business