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.

The social media opportunity in India (1)

My investor and business clients are increasingly interested in investing in India. While many of the conversations are about the less glamorous sectors, the chatter about social media is unavoidable.

A quick Google search on the ‘social media opportunity in India’ brings up over 0.5 million articles, in English alone. This suggests a considerable degree of interest in the topic. This interest is evident in conversations with some investors in London too. Understanding the opportunity however needs more than interest. It needs clear analysis.

Although things are changing for the better and the more efficient, setting up a business in India remains quite challenging for most. Two sets of problems come up instantly – corruption and infrastructure.

The former’s many facets need no explanation. In Transparency International’s 2008 Corruption Perceptions Index report, India has an unflattering 85th position. The legendary ‘Mr Fix-It’, admitted by many executives as being essential to success in India, has recently had his own cover story in a recent issue of Wired magazine, titled The Godfather of Bangalore.

Infrastructure in India is a multi-headed Ladon ‘guarding’ the golden apples of the Indian market. Investors admit to their first-time-in-India shock rather candidly but truly getting over bumpy roads, snarly traffic, unreliable telephony infrastructure and rolling power cuts (although I find it hard to imagine The Taj ever has one) takes a thicker skin and a very deep commitment to cracking the Indian market.

(c) Encyclopedia Mythica at www.pantheon.org
(c) Encyclopedia Mythica at www.pantheon.org

Social media businesses bypass both these bottlenecks with relative ease. An internet-based social media business can be set up with minimal permissions. If the business can find a reliable bandwidth and storage provider, of which there is no paucity in India now, we are in business. Prima facie, the social media scene in India does seem to offer an attractive investment proposition.

In the next post, I shall write about some of the most popular social media businesses in India and what investment opportunities may be around.

Four For Friday (4)

This occasional series appears when the week’s readings have been good and should be shared. The themes are strategy, technology, investment and regulation, but sometimes they just cannot be separated. Sometimes the readings have been so good that I have a hard time picking just four. That is why this issue appears on Saturday this week instead of Friday. This week’s readings are also focused on social media conversations and the changing role of the customer. 

Albert Einstein reportedly said ““If you can’t explain it simply, you don’t understand it well enough”. This week Dina Mehta presents an apparently simple, but quietly powerful, model for measuring the value of social media conversations

JP Rangaswamy’s reflective post on customer participation in business innovation, titled Faster Horses in the Age of Co-creation, generated so much conversation that he followed up with a post that identifies the trends all innovative businesses would do well to heed. This second post is titled Whoa! Reining in the Faster Horses. Both resonated with me because I am involved with a couple of clients at the moment who are doing this right. I get to test the learnings, so to speak. 

Fred Wilson shares his views on Adeo Ressi’s criticisms of the Venture Capital model, and then revisits an old and clear lesson on what makes some VCs greater than others. Both good reads. 

Over at GigaOm, a post that combines technology, innovation and regulation and offers a strategic puzzle: Will 4G networks get sidetracked by patent problems?

It's when you deliver that counts…

The title of this post is a snowclone of the title of a book on investing, published in the late 1990s. Writing before the dot-com crash, the author talked about the importance of, not buying, but selling stocks at the right time, at the right price, so as to realise profits. Amid the dot-com frenzy, he delivered a sanguine message that if you did not sell in time to appropriate the cash, it did not matter how high the stock price went.

Back to the post.

Communities and conversations are at the core of Web 2.0. Profitable businesses are harder to come by. When they do, they do so using principles, which can best be described as Web 1.0 or even pre-Web.

Pre-web, my first post-MBA job was in a cosmetics firm in India. In the summer when I began, the company launched a product, India’s first one to be sold as a ‘sunscreen’. Our competitor, Hindustan Lever, had a similar product, but it was sold as a ‘fairness’ cream. The ‘sunscreen’ position in the consumer’s mind was ours for the taking. The print and TV advertisements were aspirational and sophisticated. The demand sky-rocketed. I was a sales trainee with the unfortunate job of booking wholesale and retail orders week after week. Why unfortunate? Because we could not fulfil those orders! We didn’t have enough product, thanks to a production glitch, resulting from several factors including unanticipated demand and inadequate supplier management; yet the TV ads continued.

That was the most distressing summer of my life. Our wholesalers and retailers weren’t the only ones upset; my friends and family were upset too because they could not get the product. Meanwhile I continued using my supply of Oil of Olay, hoarded in the previous summer as a summer trainee at P&G.

The lesson?

If you want and indeed strive to create a demand, make sure you deliver. A consumer ‘primed’ to purchase a product is easy to lose, and difficult to regain.

But do these old-fashioned things still apply? Very much so.

Pat Phelan writes about how Bank of Ireland’s has failed to close the loop with their marketing partners O2 and CarphoneWarehouse. This has led to not just a lost customer for O2, but also a lost young savers account for Bank Of Ireland and lost commission for Carphone Warehouse. He describes them all as ‘muppets’, a description with which I find hard to disagree.

The lesson?

If you have a complicated product concept, make sure all the parties can deliver. A disappointed, irritated consumer is very difficult to woo back, especially in a competitive market where others are willing and eager to serve him.

Which brings me to Chris Brogan’s post, on promoting one’s book online. Chris writes about how Seth Godin just launched his new book ‘Tribes: We Need You to Lead Us’, using a whole slew of innovative marketing tricks. He gave free copies to some bloggers to give away; he made available a 0.99c audiobook on iTunes; and he built a social community, called Triiibes, ahead of the launch. Readers of his blog were invited to send him the electronic receipts of their advance orders and their snail-mail addresses. A certain number were then invited to register ahead of others on Triiibes. So far, so ideal.

The book was launched on October the 8th. As I write this post, on October the 20th, Amazon-UK tells me I won’t receive my ‘advance-ordered’ copy before November the 6th. I am not alone. Others who ordered with Amazon-UK are also waiting. So much for participating in the conversation about the book on Triiibes and for the advance-ordering hoopla.

Not just that – and I write this to complete the argument – our snail mail addresses were required as something special was to be sent to advance purchasers in October. May be, I am jumping the gun. May be, something will arrive in the next 10 days remaining in October. But when the book itself hasn’t arrived, I wouldn’t be holding my breath for anything else.

The lesson?

If your supplier screws up, it is unlikely you will benefit from the advance community building and promotion. A disappointed customer will not forget the experience.

Not very much unlike my first employer’s fiasco with the sunscreen, is this? Before ‘Tribes’, I had never bought any of Seth Godin’s books. The trend looks set to continue, unless a copy of Tribes somehow arrives, before I give up and cancel my pre-order.

It does not matter how many cycles of awareness-interest-desire-action you take your customer through or how many communities you create. The conversation just won’t start until the customer’s demand – whether of his own realisation of a ‘need’, or a latent need articulated through clever marketing – is fulfilled. Delivering the promises of marketing requires operational excellence. Whatever version of the Web we are at, and however creative our marketing, human expectations don’t change. They get more demanding, not less so.

In other words: it’s when you deliver the promised product/ service that counts.

What are your experiences of good service delivery and bad ones in the Web 2.0 world? Do use the comments link to share your stories.

Interesting reading:

Universal-McCann’s report ‘When did we start trusting strangers?

Authority on the web: Être et Avoir

This is what the Oxford English Dictionary says about the word ‘authority’:

noun 1 the power or right to give orders and enforce obedience. 2 a person or organization having official power. 3 recognized knowledge or expertise. 4 an authoritative person or book.

ORIGIN Old French autorite, from Latin auctor ‘originator’

In a BBC interview, Sir Tim Berners-Lee, the father of the-web-as-we-know-it, expressed concern over how the web was being used to spread disinformation. Not an untimely concern, especially in the week after the Large Hadron Collider was fired and despite CERN’s attempts to communicate clearly about the experiment, fear-mongering was rampant. Sir Tim announced the formation of the World Wide Web Foundation which, amongst its goals to make the web truly global and open, also aims to find ways to help people determine the trustworthiness and reliability of information on websites.

The preceding means that Chris Brogan’s post on how the web defines authority is well-timed. He starts with a reference to the familiar adage about how on the web, nobody knows you are a dog. He then sets out a working definition of authority as “a blog or website or even an individual person and their credibility, knowledge, and reputation on the Web” and presents an overview of some of the tools that can be used to determine a person’s authority on the web. These include, amongst others, Google, Technorati, Alexa and a great new tool called Website Grader. These may also include social networks on websites such as Twitter and LinkedIn. He then asks some pertinent questions about if this is a numbers game, how organisations may begin checking on who’s who on the web and more importantly, if you would trust someone you knew solely from the web.

All good questions indeed.

‘Authority’ on the web is difficult to establish – and even more difficult to maintain – for several reasons.

One needs to be consistently authoritative in one’s views; this suggests that it is, über alles, a game of ‘content‘ or ‘substance‘.

One needs not just to be substantive but regularly substantive; one needs to be not a passive observer and a reporter, but a participant-observer who is not afraid to share knowledge, raise questions, initiate and promote debate, and do all of this gracefully. One’s opinions need to demonstrate one’s ability to ask questions, make connections, dig data and substantiate one’s points of view. This takes up a lot of time and if someone is consistently investing the time, then it can be seen as a proxy measure of that person’s commitment and potentially, his or her authority. This is the ‘être’ aspect of authority.

Further, authority is nothing without a “fan following”, which means that it is also a ‘numbers‘ or ‘marketing/ PR‘ game – but with an additional qualification. This is the ‘avoir’ aspect of authority.

Being present and being active on the web are preconditions to creating this “fan following” and it does not come easily or swiftly. This numbers game can get tricky because it spawns some odd behaviour, which an anthropologist would find interesting. For instance, not too long ago, some people on Twitter referred to themselves as “weblebrities” which tickles my ironic sense of humour but may put clients off. Earlier in the summer, Twitter had a problem and the cries of ‘Dude, where are my followers?’ from otherwise perfectly reasonable people was a tad embarrassing.

The additional qualification is the ‘quality‘ of the interaction, which is trickier to judge for a casual observer. One needs to set one’s own criteria to assess. For instance, I recently culled my ‘following’ list on Twitter to retain only those people who meet at least two of these four criteria: ‘informative’, ‘interesting’, ‘dialectical’, ‘original’. The list rapidly went down but each person is now meaningful for my professional purposes. Such personalisation of preferences on the web also means that Sir Tim’s Foundation will have a hard task setting widely-agreed guidelines for determining reliability.

The ‘numbers’ game is trickier, if one is paying attention to the quality of it. The open dialogue that is possible in the web’s 2.0 avatar means that things chop and change quickly, and even if broad criteria remain the same, quality content may come from unexpected quarters. Remaining engaged, and remaining fluid and flexible are both crucial.

In the end, however, it does not matter how much of an authority one is, nobody likes to deal with an arschloch. Mean streaks are really difficult to hide especially if one participates copiously on the web. On the other hand, it is possible to be perfectly nice and be seen as an ‘authority’ of which Dharmesh Shah (of OnStartups and Website Grader) and Guy Kawasaki are brilliant examples.

So what does all this mean?

Well, like all else, we begin with the end in mind. The eventual goal of being seen as an authority is to be able to help shape discourses in customers, companies and communities. Much life goes on not on the web, but off the web, in the real world. My view is that the real world and the virtual world of the web are not as separate as we like to imagine, and that the statuses of a person in the two worlds should be conflated, not disparate.

Achieving this unity of ‘positioning’, not as an authority but as a person and a professional is a harder trick to master amid the deafening noise on the web. In the end, clients deal with persons, not with personas.

After all, on the web, one could be a dog and remain a dog, but in the real world, one does get found out!

Related reading:

Trust in the internet God, but…