Giles Powdrill writes:
“A powerful global conversation has begun. Through the Internet, people are discovering and inventing new ways to share relevant knowledge with blinding speed. As a direct result, markets are getting smarter-and getting smarter faster than most companies.” So said the Cluetrain Manifesto almost exactly a decade ago. The prescience of the work lay in the authors’ clear understanding of the connective potential of the web and the shift in power from companies to individuals which would accompany its growth.
However, despite witnessing this shift in power, the majority of organisations still haven’t adapted their business practices to embrace the internet. They are not making use of the networks, the empowerment or the easy conversation and collaboration made possible through the social media technologies broadly described as ‘Web 2.0’ to help create new types of relationships with their customers. For many, the internet is still just another channel.
But maybe this is beginning to change: perhaps the current recession, the first of the truly digital age, will be looked back upon as being the spur to growth of new types of online commerce. We are already witnessing the growing success of online shopping, price comparison websites and digital advertising in the downturn, but these are only first steps – doing old things in a new way. The real challenge is about greater engagement; working with and for consumers in an open way. It is about companies demonstrating that they know enough about customers and their behaviours to deliver a benefit. Combining transparency with networked data and new technological infrastructure can create situations where all gain, customers and companies alike, but if companies don’t work out how to use these new networks, they may find themselves bypassed as people decide to do it for themselves instead.
A good example of a company getting it right is Zopa, the social lending site set up by banking professionals on which people lend directly to borrowers online. Borrowers bid for funds, and lenders choose whether to respond. Lenders get good returns, and borrowers get lower cost loans. Zopa makes its margin by charging both parties a fee. Default rates are low and lenders can see their borrowers and follow the progress of the their loan. Zopa has disintermediated the banking business by adding social networking and a human touch. In terms of Recession 2.0 it’s a sign of the times. As the Cluetrain Manifesto said: markets are conversations.
The picture, ‘the garden of Zopa’, is from a digital campaign by the social lending site to demonstrate the benefits of personal involvement and mutual help.