How Much Whuffie Do You Have In The Bank?

November 24, 2009

Whuffie is a concept that was developed by Corey Doctorow is his sci-fi book Down and Out in the Magic Kingdom.  Doctorow created a world where the economy has grown beyond cash currency as we know it today.  Instead of money, the currency of his world is Whuffie, a “reputation currency”, similar to what we sometimes call social capital.  You earn Whuffie by being nice, helping people, and adding value by providing access to ideas, talent, and resources. I believe that, in the world of ecommerce, Whuffie drives business.

Down and Out in the Magic Kingdom by Cory DoctorowCharles Andres introduced me to this book in a comment on my blog last week.  The book is available as a free download or free podcast, costing only Whuffie.  You can also buy it in the traditional form from Amazon if you aren’t quite there yet.

Tara Hunt has built a following by developing a guidebook of how Whuffie applies to the world of social media marketing, called the The Whuffie Factor.   Tara breaks down the process of earning Whuffie into 5 basic steps.

  1. Stop talking and start listening to your customers.  (I might add that you must also prove to them that you are listening by providing feedback and adding value to their thoughts).
  2. Become part of the community that you serve.
  3. Create amazing customer experiences
  4. Embrace the Chaos!  Entropy is growing, so you better learn how to ride the chaos wave!
  5. Find your higher purpose.  Figure out how to give to the community and still be profitable.

The more I read about the Whuffie economy, the more I recognize that embodies the raison d’être for web-based marketing for ecommerce success.  Historically, retailers were successful by becoming an integral part of the local economy.  Merchants were known and trusted as part of their neighborhood, and merchandising was done to accent the best features of products for sale.  Whuffie was transparent: We knew the seller, we touched the product, and buying was a great experience.   Alternatively, if none of the above was true, say the store was run by a grumpy sales person that we didn’t trust, the business never survived.

The Grateful Dead foreverFor successful marketing online, the challenge, as we know, is how to scale that hands-on reputation and value beyond the local neighborhood.  The concept of Whuffie embodies this goal. Cory Doctorow gives away access to his books, making profit on his higher purpose of explaining his philosophy in live talks and future book sales.  The Grateful Dead figured this out long ago by listening to the fans’ desire to tape and trade their concerts (an amazing customer experience), thus creating a aura and community that has transcended well past the death of Jerry, selling more tickets and albums along the way, and spawning an entire genre of music (a higher purpose) that rides on the chaos of musical improvisation.

Traditional marketing and advertising can drive great short term results.  Well developed TV and radio, or paid placement ads, can drive short term business, and are valuable to jumpstart awareness of your brand.  But once you gain this awareness, the only sustainable way to keep it is to rapidly move to a Whuffie currency.  You need to think about how to engage that customer, add value, and keep them involved with your product.  In other words, scale with Whuffie.  Thus, the challenge becomes:

  • How do you listen to your customers, and encourage them to listen to you?
  • How do you engage them in a community which serves both you and their purpose?
  • How do you engage them to make them enjoy visiting and buying on your site?
  • How do you move that relationship to serve a higher purpose while earning profit?

The good news is that today, with Twitter, Facebook, and other social media forums, we now finally have the tools to implement these efforts.  We can talk and share with our customers and community.  But these tools do not replace or embody the underlying Whuffie, they’re just the checkbooks and credit cards of this new economy.  The Whuffie itself has to be earned, and that can only happen with hard work and genuine focus on your business.

The formula is simple… 5 easy steps described above. The tools are available, Twitter, Facebook, and other forums.  All you need is the awareness of your business’s value, the passion to involve your customer community, the dedication to make it work for you, and some serious investment of Whuffie to drive great sales results.

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Ring in the New, and Bring out the Old

October 30, 2009

 

Years ago, before the dawn of the Internet, I was the regional manager of a consumer electronics company.  I sold products to merchants throughout the Northeastern US.  I sold to some interesting companies, many of whom were as creative at buying than they were at merchandising.  Some of these people are now in jail (Crazy Eddie), many were left behind and went out of business (Lechmere, Caldor, Ames), and some learned to embrace the changing environment and thrive (Staples, CVS).  I have to say, one of my favorite retailers of the time was Spag’s.

Spag's Store

Spag's Store

Spag’s was a one store wonder, the original “mass merchant” which sold everything you needed, with no frills, at a great price.  It was founded by, of course, Spag, Anthony Borgatti, who opened the store in 1934.  Spag was the ultimate merchant of his day.  (Does anyone know if there was even a “Mr. Caldor”?) He believed in a simple principle: give the best value to your customers, build trust with your employees, and treat your vendors fairly. 

Spag’s was know as “no bags Spags”, offering boxes to customers to carry out their merchandise to save overhead.  They didn’t take credit cards, there were no frills in their displays, and they remained closed on Sundays so employees could be with their families.  Spag’s was an integral part of the Shrewsbury/Worcester Mass community.  As a customer, you always knew that you would get the best price at Spag’s. More interestingly though Spag always got the best prices from his vendors, without any wild buying tricks, Why?  Because as a vendor, you were as much a part of his community as his customers.  Spag always paid vendors on time, asked for minimal “market development funds”, and made selling to them enjoyable.  Generally, as a vendor, you sold product to the the salesman on the floor of the store, as there were no formal buying efforts, no games, just fair deals. And if you had a chance to interact with Spag himself, it made everything you gave them worthwhile. I have a vivid memory of Spag walking into a meeting that I was having with my buyer one afternoon and starting to tell stories about his store and his life.  Next thing I knew, it was 7pm on Friday night, and I was learning so much from his experience that I still didn’t want to leave.

Spag made a fortune in his store, much of which he gave back to his community through various foundations and grants. One would also often hear stories about how a family in need would see Spag himself drive up to their house in his old station wagon, leaving a crate of food and household goods at their doorstep, as anonymously as he could.  He took care of his customers, community, and vendors. He was truly an amazing man.

Spag was successful because he embraced his community, developed a great reputation, gave great value, treated his employees and vendors well, all the time running a profitable business.  His store was part of him, and he was a part of the community.  This is the attitude that we need to be truly successful in business.  With social media tools, we now have the ability to interact with our larger community just as Spag did with the Worcester community.  It’s up to us to use these tools correctly

Spag's Website

Spag's Website, 1997

Spag himself passed away in 1996, before he had a chance to bring his community online.   His daughters took over the business, and made a noble attempt at continuing the business.  I even built them a website in 1997.  They weren’t ready to consider eCommerce, but they used it as a means to try and communicate their values with the community. Our strategy was to leverage the Internet to allow people outside of the local newspaper area to see what was on sale each week. They had all the good intentions, but they could not make the leap as to how to extend their value and community to the web. They lost their uniqueness:  They began having bags, taking credit cards, and opening the store on Sundays. The business was ultimately sold to Building 19 in 2004 and faded into the history books.  If only…!!!

Spag knew how to build community the old fashioned way.  Can you imagine what he could have done if he had lived to embrace the web?  All the blogging and tweeting in the world can’t replace those core values of community building, but boy can they leverage it.  In some ways you can argue that building an Internet Retail site and community is easier than building a retail store.  All you need to do is buy some key words, do some tweeting, and put optimize your site for SEO, right?  No!  If you want to survive, you need to be more than the ad or the tweet of the day.  While you need these tools to build awareness, you also need to build and embrace your community. You need to build trust, legitimacy, and unique values.  You need to make it easy and fun to shop on your site and do business with you.  You need to build a loyal following that will think of you first, turn to you for advice, and tell their friends to visit your site.  Ultimately it becomes a matter of brilliant use of all you have at your disposal.  Spag knew how to merchandise in unorthodox ways.  But he most importantly he knew how to build the confidence of his community, and keep people coming back for more.

There is so much that can be learned from the principles that made Spag’s store successful. On the Internet, everything you do is much more transparent than before.  You can learn how to use the new social media tools pretty quickly, with no instruction, and become pretty effective at it.  You can implement software to have a shopping cart in a matter of hours.  But you can’t replace the lessons that you can learn from a man with 60 years of success.  Neither the experience, or knowing how to use the tools on their own will survive in today’s ecommerce environment.  But figure out how to bring them together the old and the new… and you will most definitely succeed.


The Ecommerce Expertise Blog

October 24, 2009

Ecommerce Expertise Blog

Welcome to the Ecommerce Expertise Blog.

My professional focus is on helping companies improve their eCommerce presence and sales results.  I have expertise in the technical aspects of eCommerce implementation, site optimization to improve conversion, and the application of 20+ years of marketing experience to new social media tools and processes.  That said there are plenty of blogs and articles that talk about how to do this.  From time to time, I’ll post links to articles or write about tips to improve your site.  But I’d rather use this blog to discuss the more esoteric applications of life and business experience to improving web presence and results.  So here we go!

Steps to an Ecology of Ecommerce (with apologies to Gregory Bateson)

Throughout my career, I have been struck by the challenge how to embody proven experience to innovate into the future.   One of the most enlightening books I ever read during my teen-twenty self discovery years was Gregory Bateson’s Steps to an Ecology of the Mind.  It was there that I first internalized the concept of embracing entropy, or evolving disorder and change,  as the way of the world.  Bateson argues that probability favors disorder.  To me, success in business (and life for that matter) is the ability to find patterns to build on the growing disorder and complexity, view every change as an opportunity, and thrive on the edge of innovation.

This doesn’t mean that you can’t survive if you ignore the entropy and the exploding connections that surround you.  Here’s a simple analogy. Think about operating a car (and I am careful to use the word “operating” rather than “driving”).  At its most basic, operating a car today is the same as it was driving a  Model T Ford.  You push the gas to go, the brake to stop, and use the steering wheel to direct where you want to go.   I drive a Mini Cooper S.  The Mini is a retro design based on the original British Car first developed in 1959.  In its original incarnation, the Cooper was a British response to the Volkswagen, a basic box with minimal features, and one simple gauge in the middle of the dash to tell you how fast you are going.  Today’s Mini looks similar, and someone who drove a 1959 Cooper would have no problems acclimating to the new car.  BUT…think about what’s in this new car:

The Old and The New

The Old and The New

That one gauge in the middle now has a speedometer, gas gauge, indicators for the traction control, maintenance indicators, a thermometer, a readout of my fuel economy, and little lights to warn me that I haven’t paid attention to the gauge that tells me I’m out of gas.  It’s surrounded by buttons for the electric doors, electric windows, automatic air conditioning, 3 airbags (which we never want to use), even an “openometer” to tell me how long the convertible has been open.  So what’s the point?  I can drive without any of these features, but to fully operate the car and maximize the experience, I need to manage all of these instruments and features.  Only then can I gain full utilization of the machine.  Someone who drove a Cooper in 1959 would absolutely feel at home in the new car, with its familiar features.  But in many ways, that familiarity would blind him to the marvels of the new technology, and prevent him from recognizing the capabilities of the newer tools.  They would only realize half of the experience.

So how does this relate to eCommerce business?  As the operator of a store, all you really need are the basics that merchants have had forever:  merchandise to sell, a way to take money, and a way to deliver the goods.  Eventually, with the assistance of big brother Google, you will be found, and you will probably sell something.  But how do you truly optimize your efforts?  You need to become aware of all the instruments and tools which surround you, and how to use them.  You need to learn both the internal widgits, such as comparison features, add-ons etc., but also all of the tools that can extend your reach into the internet.  You need to grow beyond the familiar, and embrace the entropy of all the new tools that your competitors are using to be found!  But you also need to take a holistic approach, and build on your own skills.  The ultimate winner is the merchant who can leverage  the “best practices” of the new social media tools and eCommerce techniques to build on what their years of experience has taught them in their gut.  To do this successfully often requires some coaching, passionate debates on what might work, but ultimately taking calculated risks based on the expertise that you surround yourself with.  Often, you need a guide or coach to help you see what’s new around you.  Don’t be afraid of what they can show you.  Only by embracing these new capabilities, but still keeping your hand on the wheel, can you hope to explore new ways to grow your business, and become the best in your field.