Last night I shared some of these thoughts with the crowd at The Late Late Breakfast Show (#LLBS), and after a fantastic response I thought I would share them here for all of you!
It all started about 12 months ago, when I started renting parts of my life that previously I had been buying, owning, using and then basically discarding or leaving to collect dust.
It started with Spotify, when I switched to the premium service 12 months ago. The prospect of a near infinate music library and syncing playlists over WiFi to my iPhone for a mere £9.99 greatly outweighed the costs of my iTunes and HMV addiction, of which I have been set free. I haven’t bought a CD in 12 months.
This was swiftly followed by a sign up to LoveFilm, which curbed my DVD fetish, TV series rentals through iTunes or Virgin Media became the norm, and then the biggest of all – ditching my little (beloved) Renault Clio for a Street Car subscription.
Why is this important I hear you cry? Well for as long as people have sold things, bought things, owned things – they have also showed off, paraded, adorned and accessorised things – all in an attempt to show the world the kind of human being they were, or were aspiring to become. Yet in our 21st Century, wired world where so many of these character expressing assets are becoming digital, it is becoming increasingly difficult to show off these purchases. And if we can’t show them off, and if advertising is becoming increasingly background noise, how can we want these things? How will we know about them? Are we on the brink of a marketing Armageddon? (OK – a bit over the top I admit… but gravitas is hard to do in a blog!)
Well maybe not – because there is something else going on, which may be the antidote to this commercial conundrum and it comes in the form of the recommendation. Sites, tools and utilities have been busying away to build social tools into their sites, from Amazon’s Facebook Connect (see Prezi below for more examples), to Levi’s including “Like” buttons on their jeans selector, and people are using them in their droves. So what’s going on here?
I would like to suggest that we are seeing the birth of a new kind of consumerism, with it’s own currency and economy. As more and more of our purchases become digital, or are purchased through digital means, from grocery shopping online with Ocado through to ordering snacks for work through Graze, we are beginning to use socially enabled tools and sites to share our purchasing habits to replace the kudos of seeing that prices shopping bag, or displaying your complete works of Shakespeare on your living room bookshelf. Instead we are using the recommendation, that social share that says “here I am, this is what I like, this is WHO I AM”.
We may well be entering into a time when we begin to identify our friends as different social beings, not through what they own, what we can see, what they display – but by what they share, like, tag, check-into and recommend. This has a massive impact for marketeers and business as a whole. If the recommendation is becoming the new currency then businesses need to get into the “recommendation economy” if they are going to fight for consumer attention.
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Great post and beautifully put but doesn’t RE precede digital – where knowledge and savvy were sources of pride and envy (cheap flights, better deals, great off the track holidays and places as social currency). Maybe the recession is the water in the face wake up we all needed, and as you say digital is just another means in which those behaviours have been made easier?
You are completely right there Louise, of course the recommendation economy has been around since the dawn of the marketplace. However what is fundamentally different is the lingering nature that digital brings to this. For the first time in human history those recommendations are indexed, searchable, collatable and ever present, which brings a whole new dimension RE. Now the recommendation can act as a currency because it can be seen, traded and proactively encouraged, which is far more difficult to do or utilise with offline conversations.
Thanks for your thoughts!
Great stuff. And it reminds me how much I like Prezi
Agreed – recommendation is key. It helps consumers make better decisions and get more value from products and content services. And as you insinuate, brands that provide recommendation can build stronger and more valuable customer relationships. They know what their customers (or audiences) want, AND they deliver it. Brands have the opportunity to provide filters and gateways – allowing them to improve service AND glean insight from user interactions.
I really like that concept of filters and gateways. I think you are going to see a lot more of these over time as brands begin to get the value of facilitating recommendation. It’s going to be key to make sharing purchases and interactions as easy as possible.
Agree with this James, recommendation and word of mouth is the currency of the day, not just for consumer purchase decisions, but also in business. A huge proportion of new businesses comes to me through recommendation and I’ve been thinking recently about how we can harness that in a more strategic way to promote businesses. A new day is dawning my friend.
Intelligent post James. I imagine that part of the rapid expansion of this “recommendation economy” will be in line with Dale Carnagie’s observation that we all want to feel important.
Importance. The feeling that my opinion is valuable, at least for my friends to know what is good – that they can follow me and my life by checking in and noticing my “like” on things I approve.
From the other side, this is becoming the ideal place to become influenced by social proof. If I see many of my friends liking something I am far more likely to take a look than if I see an ad.
Firstly James thanks for doing such a sterling job with this topic last night.
Secondly I think this is topic that could be debated in an event on it’s own.
My initial reaction is that we have entered a ‘paradigm’ where we are more ourselves because it is easier to share. We know more about each other because everything is on line, so when we meet the ‘content’ and ‘emotional’ connection has already been made.
I keep up with my Argentine family & Polish God daughter on facebook for instance – when we meet we talk about what we have shared beforehand.
In the business side WOM mentality has moved B2B to B2C so ‘referral marketing’ has hit the music, car hire and even super markets. So it is not so much about ‘labels’ it is about ‘what do you do?’ ‘what do you understand?’. I can feel a dissertation coming on so I will stop here! I would love to get a conversation going around this!
Once again, great topic!
I agree its the age of the new editors – before we went to the bbc, because we trust their editorial judgement. In the new wired economy we’ll need filters that we can rely on.
more intriguing thought james – reminds me of upgrading my iphone and my mac recently – its no longer the material product you own its the stuff you engage with that moves with you, so why not rent it all.
Despite that I still can’t bear the thought of parting with my books, why is that?
Hi James, Recommendation is the stuff of professional services firms, but many companies haven’t realised how valuable social sites are for their reputation network, so they ban their staff from using even the most staid, like Linkedin. They are missing out on all the added value their staff’s networks could provide to the business – big mistake.
Meanwhile all their employees are using the platforms anyway, on their phones or netbooks, in their lunch hours or on the train. The more savvy are building an online footprint which gives them currency and they will take it with them when they find a firm who will value it.
You’re absolutely right – these tools are changing the way we do business. Sorry I wasn’t able to see your presentation yesterday, sounds like the event was a great success.
Hmm
Interesting stuff. If the market is being increasingly driven by recommendation..then that puts a higher and higher premium on relationships and the way we build them. That said, if I’m too busy listening to spottify…or watching my “love Film” dvd or updating my online status, does my relationship building capacity suffer? Or do I simply build them in another context?
James thanks for posting this its always good to get a chance to review a talk after the event.
I’m with you as regards ‘renting my life’ I think we are past the age of owning and parading our wealth or even levels of indebtedness, there are still people out there that expect a person to wearing the right suit, driving the latest car and they always will be around making their purchasing decisions on a keeping up with the Joneses basis.
Far better from my perspective is a process of renting what you need when you need it and giving it back when you don’t. For a business it’s about keeping overheads low and for the individual you do not end cluttering your life with one or small use items because you return after use.
How comfortable we feel opening up our renting patterns is a topic for debate, how we work for/with others is another issue and how we all develop a reliable system for relating to each other so that recommendations we make are respected is a topic that we could both write on for ever and a day.
The recommendation economy feels like a step in the right direction in terms of communicating what works and doesn’t or how well or otherwise a service or product is doing. It will be interesting to see how big brands shift their spend in this area and how consumers react to that.
Like Bernie I’d be happy to expand the conversation even if that means spending time meeting in the real world.
Great post James and presentation last night…
I believe the market has been driven by recommendations since year dot… first was WoM (family and friends) and now we have WoW (word of web) where, for the most part, we let comments, posts etc influence our purchasing decisions – mainly from people we have never met, spoke, tweeted with …
We also glance at the ‘other people who viewed/bought (x) also viewed/bought (y) … a specific engine that subliminally tells us that a ‘like minded person’ looked at or purchased something else that I might be interested in – which companies like Amazon do exceptionally well… (as Polly tells me every month when the credit card bill hits the doormat…)
In relation to a ‘renting life’ – you’re spot on. But will manufacturers catch on, as there would inevitably be a decline in sales if/when it reached crital mass… Maybe, they might start a ‘rent (z) from us directly’ initiative that would at least see them taking a smaller piece of the pie….?
really enjoyed your talk last night,
I had noticed the trend but you totally articulated ,clarified and “named it”
very interesting
felix x
Like I said James, this is a powerful. Looking forward to see where this goes!
[...] week I shared my thoughts on the “Recommendation Economy” at The Late Late Breakfast Show and here on the blog – and I must say I was a little [...]
[...] talking to James Poulter and reading his exceptional work on The Recommendation Economy, we’ve come to understand that much of what we use Social Media for (and brands have thrived [...]
[...] Remember the recommendation economy [...]
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