online technologies | The Age of the Customer

Crowd funding is not new, but crowdfunding is

Crowd funding is not new, but crowdfunding is. Completely intuitive, both terms mean funds conveyed by a crowd to a solicitor.

It’s largely due to those two words, innumerable and anonymous, that crowdfunding has caught on to the point where several online platforms now aggregate funds seekers with funding crowds. Now with crowdfunding, the Internet simultaneously facilitates and disrupts our experiences with what I call the Four Cs of Modern Society: Connect, Communicate, Communities and Commerce.

So far, crowdfunding fits primarily into two categories:

Contributions/Fundraising

This is where an emotional connection motivates members of a crowd to give to a cause, project, idea, ideal, etc. Besides the emotional motivation, merchandise like a T-shirt or first album, for example, are likely to be involved as a token of thanks. This crowdfunding form is nothing more than donations.

Business funding

This money goes to a commercial venture, often a startup, with the expectation of receiving a first-of-its-kind product or future discount. The crowd knows the funds partially pay for the merchandise and partly capitalize the venture to which this crowd also has an emotional connection. This is business funding in the form of a commercial transaction, not investment.

Recently, crowdfunding has nudged closer to debt and equity capitalization. Peer-to-peer lending is an emerging form of crowdfunding, while the investment model still has legal and practical hurdles.

It’s clear that the future of small business capitalization will look a lot different than it does today. But for most small businesses the jury is still out on how the crowdfunding options will be part of their capitalization future.

In my next column I’ll use a practical approach and some tough love to reveal the challenges facing both the debt and equity sides of crowdfunding. Ironically, those two advantages of crowdfunding mentioned earlier, innumerable and anonymous, will manifest as potential barriers as we discuss the more sophisticated forms of crowdfunding.

Write this on a rock…

Crowdfunding is just new tools to accomplish traditional fundraising and capitalization.

Disregard the “Nu-uh!” Effect at your own peril

Once upon a time, but not that long ago, a brand message could be successful even if it was close to a work of fiction.

Created by Madison Avenue wordsmiths, copy for an ad or brochure was crafted to manipulate and motivate using puffery, a legal term referring to acceptable marketing exaggeration. And most of the time it worked.

In fact, generations of consumers allowed themselves to be manipulated by puffery that became part of the sound track of our lives. For examples:

“Plop, plop, fizz, fizz, oh, what a relief it is.”

“Put a tiger in your tank.”

“The best part of waking up is Folgers in your cup.”

Here’s a local example:

“Largest inventory in the tri-state area.”

In the past, I’ve revealed how the 10,000-year-old Age of the Seller paradigm has shifted in favor of the Age of the Customer. The differentiator is control of the information, and your customer now owns that advantage, including the truth about your products, services, and marketplace behavior. This control is derived in part from something called user generated content, or UGC.

UGC is word-of-mouth on digital steroids; the commercial equivalent of political fact-checking. Today a successful brand message will look less like Madison Avenue manipulation and more like the good, the bad, and the ugly of your business discussed by customers in online communities, like Facebook, Twitter, or YouTube. You’ll benefit from good UGC one day and try to recover from negative UGC the next.

Negative UGC produces what I call the “Nu-uh!” Effect. It’s what someone posts online when your brand message doesn’t meet their expectations. If you say you have the freshest salad bar in town and one person writes “Nu-uh!” on Facebook or Yelp, that’s your new brand message until you find a way to redeem yourself.

A “Nu-uh!” could refute your claim in any number of ways, from a well-written critique to “Dude! Seriously?!” Either way, if you’re getting responses like this to your brand messaging, anyone who gives you a “Nu-uh!” raspberry is, at that moment, the co-owner of your brand.

Since no business, product, service, or relationship is perfect, the over-arching goal of your brand strategy in the Age of the Customer is to have more positive UGC than negative and, if possible, leave no ”Nu-uh!” unresolved.

UGC represents the two-edged sword by which brands large and small will either flourish or die.

Disregard the power of UGC and the “Nu-uh!” effect at your own peril.