By John Auckland, TribeFirst.
We are entering a world where people will feel insulted if you call them ‘consumers’. We are seeing the emergence of a new movement of what I call ‘post-consumers’. The individuals driving change are the generation that’s growing up now. For entrepreneurs building companies for the future, now is the time to be developing relationships and turn these potential customers into loyal stakeholders.
As post-consumers they will take great offence by the very notion that they might be taking more than they give. They will choose to make eco-friendly buying decisions, to demand to know the supply chain provenance of their food and their clothes. They will buy from companies that refuse to engage in unsustainable practices such as planned obsolescence. They will be sustainers rather than consumers, stakeholders rather than customers, tribes rather than crowds. Post-consumers will trust the word of influencers and friends while dismissing marketing and advertising. It’s a paradigm in which churn rate is a significantly more relevant statistic than cost per acquisition.
In this changing world how can entreprenuers build relationships and create stakeholders for the long-term?
It’s about tribes
First and foremost, the brands of the future will be communities, and to be even more specific, tribes. Two of my favourite community-focused brands are GiffGaff and Monzo, who have built democratisation into their marketing strategies by involving their customers in major decisions.
GiffGaff has used its customers to write, direct and appear in its TV ads, and the company provides discounts and rewards in return for providing customer service support. In doing so, GiffGaff has essentially crowdsourced their business model, building one of the UK’s major mobile companies with only a handful of true employees. I remember hearing a talk from their CMO, who described her role as a ‘brand custodian’ as opposed to a ‘brand guardian’. Essentially, she’s saying the company doesn’t own its own brand, it’s just looking after it. They’ve built their brand from an ethos of their customers being the true owners.
Monzo, the challenger bank, has taken this a step further in many respects, by opening up a number of crowdfunding rounds specifically for their customers, allowing them to become part owners in the brand. They also involve their community in every major decision they make, such as changing their name and choosing what parts of their service they should charge fees on. As such, they have democratised their decision-making.
Brands like this are leading the way, but I predict this will become the norm after the death of the consumer.
One in 10 of us has invested in small UK private companies through equity crowdfunding, and this number is growing. It’s also becoming more common for growth companies and medium enterprises to offer shares to their customers. Big tech companies are riding high on the stock exchange, offering their shares via public exchanges far sooner than many historical corporations could have dreamed of. Challenger stock brokers such as Freetrade are being supported by retailer investor insight platforms like Genuine Impact, allowing DIY investors to make informed and instant decisions about which investments they make. It’s easier than ever for customers to own a slice of their favourite brands, so they can be financially rewarded for their faith and loyalty.
If you’re a startup or growth company, the best way to get your customers to invest is through an equity crowdfunding campaign. If you have no idea where to start, there are a whole host of crowdfunding support partners and workshop programmes out there to take you through the process, which will also increase your chances of a successful campaign. Check out Virgin StartUp’s Crowdboost, Crowdcube and Grant Thornton’s Crowdfund Bootcampor TribeFirst, where we offer a managed service to help companies raise.
If you’d rather just sell shares direct to your customers rather than run a public campaign, then you can either facilitate this through SeedLegals, or we recommend setting up your own fully licenced, FSA-compliant platform on Envestry.
Open for investment – every day
Obviously as a crowdfunding expert I am a huge proponent of equity crowdfunding. However, I do find it quite limiting for companies that wish to be always-open to investment from their customers. You could list your company on a small cap public exchange like AIM or NEX Exchange, but that means a lot of additional cost and admin that comes from being a public company. BrewDog solved this problem by running multiple concurrent campaigns across rewards and equity platforms; they built crowdfunding into their DNA. But that’s a lot of effort.
However, there is an easier way to allow your customers to invest at any stage. One of the reasons I’m a big fan of Envestry’s white label solution is that it allows a company to be ‘always on’ for investment, 365 days a year. No time limited campaigns, just an ability for any brand to be available for their tribe to invest whenever they feel the relationship has reached that stage.
Use soft dividends
Somewhat counterintuitively, most equity crowdfunding investors aren’t actually expecting to see a return on their investment. They want to be rewarded in experiences and ‘stuff’. The Financial Times recently ran a feature on crowdfunders searching for the next Facebook or Apple, and they concluded that most investors expected to lose their money. If they win, they win big, however that’s not the primary incentive. Feeling part of something was more of a driver.
This can be evidenced with Crowdcube alumni Wool and the Gang, where investors were given the option of receiving store credit or their original investment returned. Most crowdfunding investors opted to receive the credit.
So, if you do decide to sell shares to your customers, take into consideration that perhaps the post-consumer will want to receive ‘soft dividends’ (exclusive stuff/ insider knowledge/ experiences) instead of just a financial return.
Provide bragging rights
Reward your investors and best customers with exclusive merchandise or early access. Monzo built the fastest growing bank in history by simply giving their early adopters and investors a Golden Ticket that allowed them to jump the queue in getting a zero commission/ fees pre-payment card that they could use abroad. Then when they ran a crowdfunding round, they gave their investors a sense of status by providing them with an exclusive ‘investor’ debit card. Sometimes the gestures don’t even need to be grand or expensive. But ultimately a post-consumer wants to be able to tell their mates they were part of something. By giving them the tools to brag, you’re enabling a culture of word of mouth, authentic marketing, which is pretty much the only kind of marketing that will be trusted in a post-consumer age.
From the start of your company through its development stages you need a strategy of regular communication with customers. Our pos- consumers will want transparency and to hear about the good and the bad, to experience the highs and the lows. With communication you’ll build a culture of trust which will enrich and deepen your customer /stakeholder relationships. It needs to be in your organisation’s DNA.
ABOUT THE AUTHOR
John Auckland is a crowdfunding specialist and founder of TribeFirst, a global equity crowdfunding communications agency that has helped raise in excess of £17m for over 50 companies on major equity crowdfunding platforms, with a greater than 90% success rate. John is also Virgin StartUp’s crowdfunding trainer and consultant, helping them to run branded workshops, webinars and programmes on crowdfunding.