A few weeks ago, I saw AOL co-founder Steve Case give an interview on The Colbert Report about his company Revolution, which is investing in people and businesses that disrupt the traditional concept of consumer ownership with a more practical and efficient consumer-sharing model.
The consumer-sharing concept as a revolution that will impact the way we do business in the future (and now) has been mulling around in my mind ever since. Then on Feb 9, Cynthia Boris at Marketing Pilgrim wrote an interesting piece called The Sharing Economy: Could It Be the Next Big Thing? Well, I think that yes, it is the next big thing (dare I say it is already here?) and here's why marketers and business owners shouldn't ignore the sharing revolution.
What Is the Sharing Revolution?
Also called collaborative consumption, the sharing revolution refers to the shift away from an ownership economy in which consumers want to, well, own things, to one in which people are happy to rent items from a larger group of people with whom they simply share access to those things.
It's not exactly a new idea, at least in internet years. The idea to build a company around the sharing concept started with Case's interest in sharing vacation home rentals. After doing some research, he found out the average cost of owning a summer home was more than $100,000 a year, but it was only in use an average of 17 days a year. He soon discovered Exclusive Resorts, a club that shared luxury homes with its members, and bought it to try out his sharing theory. Membership grew 100-fold in 3 years. (Source: The Atlantic) Turns out, consumers were into this sharing idea.
"There's a generational shift away from ownership to use and experience," Case said between wise cracks on The Colbert Report. "The last 50 years or so, people moved around, moved cities, didn't really know their neighbors. But now with the internet, you're able to reconnect some of those communities and build some trust and some reputation tools that make it easier now to share things."
And companies have responded to this shift. Check out just some of the brands whose entire business revolves around buy-in to the sharing economy -- granted, some more successfully than others.
- Zipcar: With an inexpensive yearly membership, consumers can rent a car at any time for a low hourly rate instead of dealing with the cost of car ownership.
- Netflix: You don't have to own movies and TV shows if you have Netflix; you can stream them instantly, or get DVDs in the mail that you return when you're done watching.
- Rent the Runway: Instead of paying top dollar for designer fashions, rent your outfit, wear it once, and return it.
- HomeExchange: Similar in concept to Exclusive Resorts, with HomeExchange consumers from anywhere in the world can swap their homes instead of paying for a hotel when on vacation.
- Groupon and Living Social: These companies apply the sharing concept to any products, services, and experiences you can sell -- think house cleaning, vacations, meals, and clothes.
Can the Sharing Revolution Take Hold?
The sharing revolution is more popular right now with Generation X than it is with Generation Y, and that will need to change for this revolution to have longevity. Generation Y is, after all, poised to be the largest consumer market in US history in just a few short years. But as Cynthis Boris at Marketing Pilgrim points out, that might simply be because Generation X is in a different phase of life. They have families, which means they're more cautious with their expenditures and use of disposable income. But Generation Y will soon grow to be in this phase, too -- not to mention almost everyone is trying to stretch a dollar in this economy. In fact, as we move out of the recession, I expect many consumers to remain cautious spenders, especially for the luxury items and non-necessities around which many of these types of companies are based.
We should also consider that Generation Y was raised quite used to the online group mentality. They're savvy online researchers. They consult other people for their purchasing decisions, whether they know those people or not. They seek advice from their networks before making major life decisions. This interconnectedness has been integrated into their daily activities -- especially with the dawn of mobile devices that lets everyone stay connected at all times -- and has laid the perfect groundwork for the sharing revolution to grow and thrive. You can read more about how Generation Y consults its network in this blog post about the importance of user-generated content in Millennials' purchasing decisions.
The argument for this movement taking hold is made stronger when you consider how easy it is to overcome the biggest reasons people don't want to partake in this sharing concept: trust issues.
Turns out, people are reticent about the privacy issues associated with sharing, and express concern over items being lost, stolen, or damaged. But with Millennials who grew up sharing information about themselves online, I think this privacy issue is easily overcome as Gen Y grows into the sharing revolution's target market. And concern over items being lost, damaged, or stolen is something the companies themselves often mediate, so there's little or no liability for the user.
Generational identity aside, the strength of the sharing revolution is rooted in the fact that people love feeling connected. Take a look at the Facebook-commissioned neuroscience study that shows the positive feelings associated with participation in community sites like, well, Facebook. We're all getting more community oriented nowadays, but we want it with the convenience that comes with global resources and infrastructure. A sharing revolution driven by online companies solves for that dichotomy.
How Can You Leverage Sharing in Your Marketing Strategies?
Instead of redirecting your business model to one like Zipcar or Groupon (yikes) to take part in the sharing revolution, leverage the reasons sharing is emotionally appealing to consumers in your marketing. Campbell Mithun's study on why the sharing revolution is attractive found peoples' top 5 emotional benefits were:
- Generosity, or being able to help themselves and others
- Being a valued part of a community
- Feeling smart
- Feeling more responsible
- Feeling part of a larger cultural movement
The easiest way for your business to leverage these feelings is maintaining a powerful social media presence. Not only does social media let your business have strong online connections with people you don't know, it also has the ability to be segmented so the conversations you have with folks on- and offline are more personalized. If you haven't already, grow your community by incorporating social sharing and following into everything you do -- your blog posts, your emails, your offline campaigns, your website's home page, and even your other social media accounts.
Then create a strong community by doing things like engaging in one-on-one conversations with fans and followers, or soliciting and following up on community feedback about your company, product, or service. These behaviors make your social media followers feel like they're a valued member of a tight-knit community, two of the emotional benefits described of the sharing revolution. You can find more ways to engage your followers in Rachel Sprung's blog post on the subject.
You should also take time to think of some amazing referral programs that let your current customers get in on the sharing action while you reap the benefits of free marketing and a larger customer base. Everyone loves being in the know, and when people refer something to someone in their network, they gain value and status for being the first to know about a great thing -- your business.
The sharing revolution is also very mobile-centric. The Atlantic put it well when they said, "Thirty years ago after launching AOL to bring people to the internet to read things, Case is focused on bringing the internet to people so they can get out and do things." What marketers should take away from that statement is the importance of mobility to consumers. Case followed up by saying, "These companies are part of the second internet revolution. For example, Zipcar is not an internet business per se, but it is enabled and powered and animated by the internet. You can have your smartphone and see there's a car a block from here, book it, walk up, push a button, and drive away." You're probably well aware that 2012 is the year to go mobile, but if you haven't optimized your website and emails to be mobile friendly, it should be on the top of your priority list -- regardless of how much you want to leverage the sharing revolution. We've created a mobile marketing kit that can walk you through the process if you're not sure where to get started.
Finally, let's extend the sharing concept beyond ownership. People like to share ideas, too. Being the first to know and break information is more and more important for online credibility -- just look at Google's freshness update that rewards the first and best publishers of a news story. The first ones to do something well reap the most benefit. Make your company the one that shares the best information with your network, even (or especially) if it's not about your products and services. Your business' network will grow organically with this approach as your research and responsibility enables other people to become a thought leader within their own communities.
How important is sharing to your business model today? Can you see it playing a role in your marketing campaigns in the future?
Image credit: krissen