Category Archives: organisations

The Rise of the Indian Online Marketplace

If you are part of/related to the Indian e-commerce scene in any manner or read desi start-up blogs, chances are you might be familiar with the concept of Marketplace.

A “Marketplace” connects buyers and sellers who otherwise have trouble finding each other.

Marketplace(think eBay), is simply a model which has multiple sellers providing various goods/services through a platform. In the context of this discussion, an e-commerce website instead of sourcing and fulfilling the orders just manages the listing of products and passes on the order details to the sellers who then handles them.

Recently, India’s biggest online retailer (Flipkart) made their first move as a part of shift towards the marketplace set up.

To start with, Flipkart has on-board 50 sellers that will sell books, media, and consumer electronics.

Other Indian online retailers on scaled up marketplace model are Snapdeal(which recently raised $ 50 mn from ebay and others), Tradus, Infibeam and Shopclues. Let’s understand how the marketplace model and inventory led model compare in execution

The key components of an e-commerce set up are

  1. Customer Acquisition
  2. Catalog
  3. Technology (Customer facing/related and backend)
  4. Inventory
  5. Fulfillment (Sourcing, Packaging and Delivery)
  6. Payment Processing
  7. Customer Service/Support

Setting everything up for a rookie is quite demanding (capital and effort wise) and will take months to get off the ground, however to signup as a seller on a marketplace and/or opening a shop using SaaS based ecommerce store building platforms like Zepo, Buildabazaar or Martjack is a quickie. So for a newbie it makes perfect sense to open up their own shop (SaaS) and list on various marketplaces as a seller

Based on one’s expertise and priorities there are various ways of building the e-commerce store set up. For eg: while someone will prefer to control the last mile delivery experience, someone would rather let logistics companies take care of that.

The most common model is mix of Inventory led and Marketplace both (think Amazon). Here’s how it works

  1. Inventory Led – Short Tail (Fast moving, Commodity products, Easy to warehouse for ex: best selling books/movies/pendrives etc)
  2. Marketplace – Long Tail (Slow moving, Niche products, Difficult to warehouse for ex: medical books published in hindi/very old foreign language films/Furniture etc)

While it might not very clear from the examples but Inventory led model makes sense for products which aren’t perishable(both utility and demand/vogue), are easily available offline too and move fast enough while the Marketplace model makes sense for products which one doesn’t know exist or even if one knows they don’t have any clue on how to stock them, how to source them etc.

Customer Acquisition,Technology,Payment Processing and Customer Support are done by the e-commerce company.

Here’s how various models are implemented in some of the biggest Indian e-commerce companies.

break_up

A couple questions come to the the curious mind.

  1. Why sudden rush towards Marketplace all across?
  2. Is Marketplace the future of e-commerce in India?

1. Why sudden rush towards Marketplace all across?

The answer to that question (from what I’ve heard) lies in the deep VC pockets. With the Govt of India dillydallying around the FDI regulations for e-commerce, apparently Marketplace is the only way to get external funding needed to sustain the business.

Also, it could be because the bigger e-commerce companies have figured out that

a) they can’t possibly go that strong on increasing the  quality/quantity of the catalog on their own
b) they ran sick and tired of doing everything on their own.

To get a sense, compare how Flipkart was managing these functions in it’s previous avatar and compare it to say Snapdeal

 

break_up1

2. Is that the future of e-commerce in India?

On doing some rough calculations based on the information available Flipkart, Infibeam, Snapdeal, Jabong, Bookadda and Homeshop together would be doing around 1,15,000 orders a day (Flipkart and Snapdeal contributing about 60-70 %).

There are a lot more sites (ending with kart and otherwise) who just might be doing another (20-30,000 transactions or more a day)

As per my guesstimate all independent smaller e-commerce websites and platform powered online shops selling long tail products would be doing not more than 5-10,000 orders a day.These numbers could be significantly different from the mark for all we know but based on these numbers before marketplace became the buzzword, top 5-6 established players were doing about 90,000-95,000 orders a day in total while the others in long tail were about 5-10% of their size.

The balance has started to shift towards the marketplace model transactions. For now their share could be 10-15% of the overall e-commerce transactions.  Going forward we’ll a lot more smaller businesses and niche startups coming online and by 2013 end their share could be upwards of 20-25%(going by the fact that between Flipkart and Snapdeal they are the biggest online retailers).

A couple of factors to speed this up would be

  1. More platforms like Buildabazaar and Zepo
  2. Better payment gateway/cash collection mechanisms (Ghar pay etc)
  3. Better logistics (for end to end fulfillment)
  4. Third party SaaS services for other components like (Catalog, Warehousing, Customer Support)
  5. Some VC investment in 1-2 marketplace companies

The sooner we get to see the above mentioned things rolling the faster we’ll get to the long tail moving online. At some time in the  mid term future(5-7 years) the demand for long tail items (Niche/scarcely available/custom made) products could become comparable if not more than the demand for short tail products.

So the marketplace model and independent shops powered by various sites are here to stay and the current biggies like Flipkart, or maybe Snapdeal will evolve into a mix of (Short tail – Inventory led – Self Fulfilled and Long tail – marketplace – Logistics company) models.

Your thoughts?

Get Big Fast or Get Better Slow?

Get Big Fast, a phrase most commonly attributed to Amazon Phenomenon of acquiring significant market share in your category in very little time but growing extremely fast. The numbers in cases such as these don’t grow linearly but exponentially. The Get Big Fast philosophy requires extreme focus on scaling operations, hiring, aggressive marketing and short product cycles. The targets set for the growth might look unreasonably high to some but that’s the only way this works, Get Big Fast and become the leader in your category before anyone else so that now your Scale also works as a Differentiator.

The other or rather opposite approach that most businesses wittingly or unwittingly end up with is what I call Get Better Slow. This happens in most startups. They have reasonable growth targets and work on a moderate or slow pace to achieve them. Part of the reason is lack of clarity or conviction about the end goal and part is the lack of firepower among other things. Interestingly the Get Better Slow option is the default for most startups and many a times without the founders realizing they approach this with the perspective of doing more groundwork, thinking deep, organic growth and what not.

While I don’t mean to say that a startup growing slowly would stay like that forever but what I really mean is that unless the founders and team consciously choose to set and attain unreasonably high growth targets, their chances of staying in the business as a significant player are quite less. To give you some context, for someone doubling the revenue in six months might be great but for someone doubling revenue in 2 months is the desperate need and unless the need is desperate, ones chances of getting there are a bit less.

Also, in many cases Get Big Fast Vs Get Better Slow turns into Growth Vs Revenue. While one startup might keep focus on revenue/monetization, the other might just do the opposite to make sure that monetization doesn’t distract them from growth. It’s actually one of most crucial decisions for a startup, a HUGE BET which in most cases doesn’t pay off well.

The more I think about it, the more I am inclined to like the Get Big Fast philosophy which involves stretching out to the hilt, tons of small and big experiments and very short learning cycles. On the contrary the Get Better Slow philosophy which appears to be grounded on the thought of making a sustainable, quality/customer centric business actually hurts the startups more because of the comparatively slower iteration cycles which in most cases lead to losing traction or a considerable part of the market to competitors who manage to Get Big Fast, which effectively means that tough you think you are doing a great job for your customers but your customer set is so small that it doesn’t change much in the bigger scheme of things

Get Better Slow:  Get Big Fast:: Passion: Obsession

What do you think?

Business: Scratch your own itch or someone elses?

The easiest, most straightforward way to create a great product or service is to make something you want to use. That lets you design what you know—and you’ll figure out immediately whether or not what you’re making is any good. – Jason Fried & DHH in Rework

(Image courtesy: topnews.in)

“Scratching your own itch(SYOI)” is a popular phrase amongst many startup circles. What it essentially means is to build something that solves a problem you face. The case in point cited by many is the fact that when you are solving your own problem you know what exactly the problem is and how it can be addressed while on the other hand if you are scratching someone else’s itch you are sort of taking blind shots at both the problem and the possible solution(s).

Apart from the obvious fact of knowing the problem a bit better what works for SYOI is

  1. Immediate & Direct Feedback: You can directly feel the impact that your solution creates. If for example one builds a product to manage his food expenses, the utility/futility of the product can be judged directly and immediately. One doesn’t need to do a long trial run/demo to see if the product works.
  2. Extra Incentive: You + Customers > Customers. Working on a problem that benefits oneself directly has additional incentive because of the direct personal impact. Not just this, the beauty of this scenario is that one doesn’t need to think about the customers all the time i.e one can be content by just solving his/her problem. Other customers become secondary and this is a good thing because you don’t have to worry about what they might/might not like and just focus on what works for you, simple.
  3. Passion: SYOI also makes one more passionate about the problem they are working on because they can relate a lot more to the problem and the issues that arise because of it. The direct impact of the solution on you also adds to the passion.

However having said all that, Is ‘Scratching your own itch’ the only way out? or Is ‘Scratching your own itch’ better than ‘Scratching someone else’s itch’?

While SYOI might have it’s own benefits, it certainly isn’t the only way out for entrepreneurs and not every invention/business is born out of it. For ex: A closed social networking platform for Chief Executives (CEO’s, CXO’s etc) of Fortune 500 companies built by 24-25 year olds can still work or a dating platform built by a married man is no less likely to work because he’s not scratching his own itch {assuming he’s not interested in finding himself a date through this platform 🙂 }

Also, not all’s good with SYOI and it also has its fair share of negatives

  1. Small Market: What bothers you which might not be bothering others. Thus some SYOI businesses also stand a risk of solving problems for a very small market segment. For ex: A friend of mine hates to wait in queues for getting CNG for his car and is ready to pay someone extra amount to take his car and get CNG filled in it. So if he were to start a service based just on this then it’s quite likely that there might not be a lot of people willing to pay extra money to get CNG/Petrol.
  2. Financial Feasibility/Business Model: SYOI might work great for Open source where all developers are constantly writing/modifying code to meet their needs and in the process helping scores of other fellow developers it might not work that well when it comes to doing a business. Not all personal itches and their solutions can have business models. This is not to be confused with the previous point on Small Market as having a solution for small market can still be monetized but monetizing something that appears to be a problem to you but no one else might see it as a problem can be an issue.
  3. Domain Knowledge or lack thereof: Needless to say, while starting a business it makes a lot of difference if you have enough domain expertise in your team and it might hurt if you are trying to solve your problem without having enough domain knowledge. For ex: I probably won’t land anywhere if I were to try to solve my itch of building a car that flies instead of crawling on Delhi roads. It’s worth noting that lack of domain knowledge is also likely(a bit more?) to hurt when you are trying to scratch someone else’s itch.

S0 are you scratching your itch or someone else’s? How’s it going?


Links:

  1. http://archipreneur.blogspot.com/2010/03/scratch-your-own-itch-rework-by-37.html
  2. http://gettingreal.37signals.com/ch02_Whats_Your_Problem.php
  3. http://www.instigatorblog.com/scratching-your-own-itch/2010/08/12/

To treat or not to treat different customers differently is the question

This is a classic dilemma that many entrepreneurs(especially the offline one’s) are likely to run into. Customers as we all know come in all shapes and sizes(and mindsets). While there will be some customers who will talk nicely to you and your employees, pay their bills on time and offer you a piece of advice or feedback whenever needed, there’s also a bunch of customers that’ll act as if they are doing you a big favor by using your product or services, they’ll negotiate endlessly on the price and keep getting into endless debates about the most minute(and irrelevant) issues possible.

As an entrepreneur and consultant both I too have run into the thought of segmenting customers into good,bad and ugly but I am not completely convinced if that’s such a good idea. I mean on one hand there’s a thought of optimizing the whole thing for a better ROI on other hand there’s this idealistic thought that customers/clients should be treated fairly and equally irrespective of their spending powers and other behaviors. I for sure would like to get a fair/equal treatment in all the products and services that I use irrespective of the segment I belong to.
If you are committed to offering a delightful customer service the non-segmentation of your customers is highly likely to come in your way. As pointed by Seth Godin here

If you’re going to be obsessed with delighting customers, it’s a lot more efficient to focus on customers that are able to be delighted.

A case in point being if a particular bunch of customers is impossible or way too difficult to delight/please why waste your resources on them when you could focus ’em on some other set of customers that are more likely to be delighted by what you are offering?

A few things I could think of that one needs to keep in mind if such a situation arises are

  1. Is the customer bad or your offering?
    A situation like this can also be a opportunity to give your offering another in-depth look. Maybe the customer is right and there’s indeed a scope for offering a better solution at the same or reduced price or maybe the customer service offered isn’t up to the mark. So before branding a customer as a bad apple, give a second thought to their feedback and see if there’s a genuine problem there.
  2. How would it affect the Word of Mouth?
    While not giving the same time, attention etc to a not so good customer might be a good utilization for your resources it might have a spill over effect. In cases like these it is also pragmatic to ensure that your segmented behaviour will not spiral into a bad WOM loop. To avoid that ensure that this bunch/segment are not influencers/thought leaders or highly connected individuals from your target segment. For ex: If you are targeting a product or service aimed at doctors and for some reason you decide to segment them, try to ensure that your segmentation policy will not spill over to other doctors and doctors as a community tend to be highly connected to each other
  3. Customer Segmentation != Spending power segmentation
    While you’ll find plenty of real life instances in which retailers/suppliers and many more tend to treat customers with high spending powers differently, it’s not the most wise thing to do. When I started this discussion though I included “paying bills on time”  and negotiation I never mentioned spending power as the deciding factor. I strongly feel segmenting your customers based on just their spending power isn’t such a good idea
  4. Do not do unto others as you would expect they should do unto you
    One should always keep “The Golden Rule” in mind before taking any call on customer segmentation. This will most certainly save you from some bad decisions

What do you think about treating different customers differently?

Are you holding your business too tightly to let it grow?

chimaki

Building a brand, product or an idea is like raising a child. You need to nurture and protect it during its early days and slowly set it free to grow. Sounds simple and obvious? Trust it me it’s not, at least for most people.

I’ve seen numerous cases of product(primarily web) founders, small businessmen and more falling into the trap of holding their product/business/idea too close to their hearts to let it grow, grow beyond them. Things are quite easy (in this context) during the initial stages with people putting their blood and sweat into their business and helping it stand on its feet and start walking. The real problem occurs in the next stage in which the business needs to start running not just walking.This is the stage where all sorts of conscious and unconscious forces come into play that tend to prevent the owner(s) to from letting their business/idea take the leap.

During the initial phases the business/idea is known more by the people behind it, both are synonymous with each other and that’s all that there is to it because the business is mostly driven by it’s promoters/founders, it’s known mostly in the promoters’ circle of friends  and is yet to grow and have an independent existence of it’s own. Once the business has firm grounding and more people start nurturing it directly or indirectly the pace and scope of its growth depends on how the core group of promoters loosen their strong ties with it.

Essentially it’s all about loosing the tight control and dependency that once the business had on its promoters because these factors now become the limiting force in its growth. The conflict that thus arises is a peculiar one in which the promoters still want to be involved as much as they were some time back in almost everything related to the business, while the business itself strives to outgrow its promoters. This is the stage where like a growing child the business needs to venture out, meet new people, develop new relationships, try new and different things not necessarily within the scope of its founders, in short this is the stage where the business needs to start getting a life of his own.

For some businesses it might mean raising funds, for some it might mean getting more people on board (not necessarily as employees who merely execute the promoters plans/ideas) and outsourcing a part of your business to someone else. The idea of loosing control is what troubles most promoters but the hard fact is that in order to make your business grow beyond you, you need to loose some control and this is what smart people realize.

The goal rather than trying to have your business as integrated as possible with its founders should be to let it loose as early as possible as only then the business can have a life of its own and it can grow into something big, much bigger than its promoters.

TiEcon Delhi 2009: Of,By and For Entrepreneurs

It isn’t often that you get a chance  to listen to the likes of Alok Mittal and Pramod Bhasin and TiEcon is one of those very few platforms that offers you a chance to not only listen but also to interact with successful entrepreneurs and connect with them.

On 18th and 19th of September I attended my first TiEcon at Delhi’s Taj Palace. Being a first time attendee I wasn’t really sure of what to expect from the event which looks as serious(boring?) to a 26 year old as it can be but thankfully I gave it a try, for it was well worth it.

Five minutes into the registration I happened to bump into Amit Agnihotri (Director-Exchange4media) and there was no stopping to meeting new and interesting people. As mentioned in my previous post I was invited to the conference as a blogger and as it turned out we were to register(and enjoy some privileges) as press which included reserved seats in the second row, dedicated room with continuous beverage supply etc.

press badge

Day 1 had quite a few interesting and relevant panel discussions on

  • Starting Up – Is there ever a right time?
  • Biggest “Marketing” Bang for the Buck
  • Smart Innovation

It helped that the panel members were experienced entrepreneurs and professionals from big brands like Pepsi, Samsung and Microsoft.  The session on Smart Innovation led by Prof Anil Gupta was particularly interesting. It was wonderful to learn about various innovations happening in the country at the grass root level.

In parallel to the main sessions/panel discussions there were small ‘Guru Sessions’ happening in another hall. These sessions had 2-4 VC’s or Successful entrepreneurs answering questions to a small bunch of 25-30 people. These session due to their small size were more personal and gave the attendees a very good chance of networking with the speakers.

If you thought the event was all about successful people sharing entrepreneurship gyan with young entrepreneurs or wannabe entrepreneurs, you couldn’t be more wrong. While learning a thing or two from seasoned entrepreneurs would definitely be on the agenda the real deal was NETWORKING. Acting on the feedback from last TiEcon the TiE folks had smartly booked a separate hall(or two?) for just networking and there were other small sessions happening in parallel to the main panel discussions. So sitting through a session which you aren’t finding interesting for whatever reason is not mandatory and there are about 5 other halls where you can go and randomly bump into someone and get talking.

In just a matter of minutes you can sense the fact that TiEcon 2009 was designed to facilitate networking and to be honest it did the trick. A look around any hall will confirm the same, you could see numerous 2-5 people groups scattered across the Taj Palace(even in the Lobby) interacting and/or exchanging business cards. I too tried a bit to meet some new people and ended up collecting some 40 odd business cards(gave lesser cards than that).

business cards collected at TiEcon

The exchange of follow up mails has begun, let’s see where things  reach eventually.

All in all TiEcon Delhi 2009 was worth every bit of energy and effort spent. Shall look forward to the next years conference.

Social Media Case Study – Charity: Water

Charity: water is a charity started by Scott Harrison that provides clean water to save lives in poor countries. Charity: water has successfully raised $10 million (most of that last year alone) from 50,000 individual donors, thereby providing clean water to nearly one million people in Africa and Asia.

charitywater_1

Here’s how Charity: water is using Social Media to be more effective

  1. Creating Relationships: Charity: water (CW) is using social media tools like Facebook, Twitter and Tumblr to connect with people who share the same concerns as them. CW also adds value by sharing relevant information and content with their friends/followers in these social platforms. Relationships are the key currency for nonprofits and social media is a great way to build and maintain good relationships.
  2. charitywater on facebook (Charity: water on Facebook)

    With social media it’s also relatively easy to ask people for small contributions or motivate them to volunteer for a task or just spread the word by say putting a badge on their blog.

    charitywater on twitter (Charity: water on Twitter)

    2.  Maintaining Transparency: For nonprofits to scale beyond a level, transparency is very important and to some extent the rate of their growth also depends on how transparent they are. In this sense too, social media and nonprofits are made for each other. Charity: water shows donors the specific impact of their  contributions. They post photos and G.P.S. coordinates so that donors can look up their (Charity: water grants naming rights to wells) wells on Google Earth. Come September and they will have a new web site that will match even the smallest donation to a particular project that can be tracked online.

    charitywater transparency
    3.  Experimenting with new things:

    During Twestival (meetup for twitter users in twitter lingo), charity: water raised $250,000 this spring.

    charitywater_6
    Viral video campaigns by charity: water are also a hit among its supporters and play a significant role in motivating people to contribute.

4. High Stakeholder Involvement:

    When was the last time you were asked to by a charity to engage in conversation?
    Hmm…Never?

    But that’s not the case with Charity: water, during Twestival CW invied donors to get involved by

  • Watching four daily short videos of the drilling as charity: water goes from village to village drilling wells.
  • Following the drilling updates via twitter.
  • Asking questions of the local drilling team via email or twitter. Also, The local charity: water drill team answers the top five questions on video

I’d like to end this case study by quoting  “communityorganizer20.com”

Charity: water is giving its donors exactly what they want: success stories, videos of the impact of donations, and  information about financial accountability.

If you know of something else  that Charity: water or some other nonprofit is doing to leverage social media, share with us

Equals in Business ?

Most people start their businesses in partnernships/collaboration with some one they know. It could be a family member, friend, relative or just a known too. Trust is the first thing that people look for before getting into a venture with other things being what the other person brings to the table; money, connections, skill set etc. It’s commonplace to find businesses being run in a fashion where one or more partners put the money(or maybe contacts) and other(s) put skills and effort(or maybe contacts).

Due to inherent nature of the factors in place(time, effort etc), things get a bit difficult at times as contributions start to vary from what they were initially agreed upon. For example: If two people start a business with one person putting the funds and infrastructure and the other bringing in clients and contacts needed to get the job done. Now in this case it’s easy to quantify the funds spent on infrastructure and other activities but it’s a bit difficult to quantify other inputs like efforts, time spent etc. What further makes the puzzle difficult is when both partners feel they are doing their share of the job as initally agreed upon.

A situation like this can easy reach a deadlock with both parties proclaiming to be doing their bit of the business. What further makes matter worse is if both the partners have agreed upon equal share in the profits. The matter gets really complex if  say the guy who was supposed to get business and contacts with his effort isn’t doing his part efficiently but believes he is doing it right and thus deserves and equal share in the profit(which they make due to the efforts of the other partner who was just supposed to put funds for infrastruce etc) as mutually agreed upon initially.

Human Ego is another factor in play in situations like these as even though a person might know that he isn’t putting in the required effort in the job but his ego will prevent him from accepting it and agreeing to get an unequal share in the profits. I’ve had a few direct and indirect experiences in this regard which have forced me to think of a way to reduce the possibility of such situations.

A couple possible solutions that I could think of  are

1) To partner with someone who is as equal as you are

If both partners are equal in most respects like finances, contacts etc then I think the scope of running into situations where  one feels the other isn’t doing enough is reduced. By quantifying one’s contribution in terms of money, contacts or other resources, the factors which could cause confusion/dissatisfaction are reduced. Also, I feel with equal partners it’s a bit easy to find out and accept if one isn’t doing his bit properly

So it’s a good idea to find out in the start what the other person is bringing to the table and ensure that it’s not too high or too low for your contribution.

2)  Decide on a profit sharing model based on one’s contribution:

In case of partners with unequal inputs, it’s a good idea to decide on different profit sharing models based on situations with varying contributions. For ex:

a) For every deal where person X does this and this and person Y does this, X gets 66% of the profit and Y gets 33%
b) For every deal where person X does this and person Y does this and this, Y gets 66%  of the profit and X gets 33%.
c) For every deal where person X does this and this and this and Person Y doesn’t do anything, X gets all the profit and vice-e-versa.

I feel predeciding things like revenue/profit sharing in various situations where there’s a possibility of unequal contributions will serve as a base and reduce the number of potential conflicts.

What do you think?

Social Media in India: Bigger me or Bigger WE ?

This post is a reply/comment to Gaurav Mishra’s post .

Before starting I must admit that Gaurav has done a great job in compiling and categorizing the list. I mean what are the odds that any individual or company/agency mentioned in that post knew about all others ?

All it takes now for any web company to become a social media company is just adding “social media marketing(smm)”  in their list of services offered or probably opening a Twitter account and following everyone mindlessly, but this is just the beginning. These are truely interesting times as we are not only observing but also shaping the growth curve for social media industry(If I can call that) in India. Our approach towards the core domain as well the business and social aspects of it will determine how things take shape.

By observing the figures(25-30 agenices in 2008 and 35-60 in 2009) it’s easy to slip into “The Pie Fallacy“, but as Gaurav rightly points “we haven’t even scraped the surface yet”. Social Media is yet to percolate into the way our organizations work.

While most Indian brands are still apprehensive/unsure about social media, those who’ve taken the plunge are still experimenting and trying to figure out what to make of it. Non Profits and Government are largely untouched by the social media wave. It is quite some time before Corporates start realizing what’s at stake if a social media disaster happens or individuals/govt etc learn how to handle social media with care.

What we face now is a classic “Whether or Which Dilemma”  and we need to pause for a minute and ask ourselves

“Are we trying to make the market bigger, or just grow our share?”

There are two ways to it.

1) Everyone just thinks about themselves and if their share is getting bigger or not(which’ll eventually lead to crab mentality)
2) Everyone tries to make the market bigger and in-effect making every/deserving one’s share bigger.

What’s interesting in the case of Social Media is that it’s about YOU or We and not ME.

The Scope of both individuality and cooperation in this space is immense. All that needs to be figured out is if,

You want to work towards a bigger ME or a bigger WE ?

because  “He who has a strong enough why can bear almost any how.”

Top 5 Reasons why your brand should have a community

Community
People love connecting with others who share the same tastes, goals, beliefs, lifestyle, social status, locality and even dislikes. Essentially (most) people  are on a lookout for new groups to join and satiate their innate desire of belonging, of being a part of something along with others for all sorts of reasons.
Brands are one of the many possible threads that connect people in many ways and it’s not limited to just those who like the same brand of alcohol or the same brand of cigarette but even to kids who like the same brand of candy.

Brands, because of the way they are intertwined in our daily lives offer tremendous ways(even unconsciously) for their customers to connect and luckily for  them, people want to connect with the brands they love. They connect to find like minded people, to know more about the brand and their latest offerings, in hope of availing some offers/discounts or just to broadcast their choices to the world. Since the advent of social software , the grouping  of  people into communities/tribes has peaked a new high.

Ridiculously easy group-forming matters because the desire to be part of a group that shares, cooperates, or acts in concert is a basic human instinct that has always been constrained by transaction costs. Now that group-forming has gone from hard to ridiculously easy, we are seeing an explosion of experiments with new groups and new kinds of groups – Clay Shirky, author of “Here Comes Everybody”

What does all this mean for brands ? Yes, if you are a brand that people love/like and you’d like to take your relationship to the next level then you should also think of  having your community.

Here are the top 5 reasons why your brand should have a community.

1) Feedback:
According to me, the most important thing a brand can get from a community is honest feedback. Be it a new product or a new ad campaign, it’s extremely important to know what your customers feel about what you are doing. Forget market research, a community gives you a direct channel to know more about your customers, what are they like and what they like. This can be immensely helpful in improving the existing products and services and building better ones. This group can also be used to beta test a new product/idea.

2) Audience:
Community, means audience that likes your brand and wants to stay connected. A small but focused audience is a lot better than large but unfocused audience. The difference here is that this audience wants to know more about your brand/products/services as much(if not more) as you want to tell them. This means the conversion rates for any campaign here would be higher than that of a campaign aimed at a randomly chosen lot.

3) Brand Image:
Everyone loves a social brand, a brand that’s closely connected with it’s customers scores better over one that isn’t. Having a community around a brand will better the brand image in general and lend more trust and loyalty to it . If a brand is spending resources to build and foster a community it shows that it cares. Cares for its customers and is willing to give them back some love.

4) Buzz:
Will you feel nice if you get a birthday greeting from your favorite brand ?
Will you feel nice if you get a discount offer on the latest product from your favorite brand ?
Will you feel nice if you get a sneak preview about the upcoming range of products from your favorite brand ?

If the answer to any of the above is yes, you are highly likely to talk to your friends(online and offline) about it and that’s how buzz starts to build and spread.  The way communities work naturally supports word of mouth. In a group even small things aren’t small. Also, there are other factors associated with a brand’s community that add more credibility and virality to the buzz ,which in turn helps it to spread faster and wider.

5) Crisis Aversion/Management:
Think about it, would things have been a bit better had dominos already been on Twitter or Youtube ? I am sure things would be been better(even though slightly). By having an account on any of these services would have helped them in connecting with a small fraction of their customers who spend considerable time online and if there online interactions with the brand had been good, they would have definitely(on their own) taken on the task of dozing the fire and maybe prevented it from snowballing and this is just a small community on a third party tool.

I am by no means suggesting that every brand should have a community, these points are just to share why I feel it’s important for brands to have communities. What do you think ?

Pic Courtesy: http://www.ccfa.org/