Previous article It was dedicated to the idea that in modern times, businesses are forced to become transparent, which seems like good news for consumers. However, as mentioned at the very beginning of the article, mutual transparency is primarily what the concept of “reconism” entails. The most important thing is that the condition of mutuality does not require any legislative formulations. It just happens. Just as no one has ever signed an international treaty on “guaranteed mutual destruction,” mutual transparency will only be the result of a race for information capabilities between businesses and their customers.
What does the currently emerging one-sided transparency of businesses towards consumers/clients, who for the most part can remain anonymous, mean? It signifies extreme discomfort for businesses. This is the threat described in F. Kotler’s book “Chaotics.” One-sided transparency is unwelcome to anyone. No one is willing to live in a reality show “behind glass” for free. This discomfort is not imagined. The feeling of discomfort arises from a conscious or unconscious sense of danger. If you are walking through a forest and someone is watching you without your knowledge, it has never boded well since the beginning of time. It is much more reassuring when you know for sure whether someone is watching you and who that person is.
Few people realize what a terrifying and inhumane weapon marketers and PR professionals can wield thanks to the evolving social networks, which essentially make producers transparent to consumers. It’s hard to find anyone who would disagree that a series of 10-20 striking and “black” posts in blogs or social media, supposedly based on “personal experience,” can bring any FMCG producer to their knees. If your company has a main competitor and you clearly understand that customers’ rejection of the competitor’s products will boost your sales, then the investments made in social black PR will pay off many times over in the very first season.
The only thing that might prevent businesses from using such competitive strategies is that there are often multiple competitors in the market, and the exit of one player would be a public benefit for the other companies. Consequently, no one will invest in creating this benefit, expecting that someone else will do it.
But aside from simple pragmatism, the manufacturer can really suffer from the fact that a persistent disgruntled consumer may seek revenge. This creates a completely asymmetric confrontation. Ten blog posts may only take a few hours of “enjoyable” time, while addressing the consequences could require measures costing amounts with four or five zeros.
The manufacturer has no tools to prove that the publications are false, to expose the anonymous troublemaker, and to hold them accountable. Consumers are anonymous to the manufacturer. They are a thoughtless crowd, “managed” by marketers. A set of individuals to whom something cheaper can be sold, while trying to extract as much money as possible. Anonymous. Didn’t like it? Next! And a couple of new commercials on TV to make sure “the people buy it.” The sales stimulation system embraced by marketers, which relies on an anonymous crowd of “average” consumers, is now the Achilles’ heel of any manufacturer. After all, understanding and addressing the problem is only possible if there is factual evidence that yes, such a consumer exists, yes – they consumed a certain product that turned out to be of poor quality, and yes, this is a shortcoming of the manufacturer, not the distributor or retailer.
A completely different approach shaped the new market – the online sales market. From the very beginning, online stores dealt with registered users. It was always possible to identify who they were and what the discussion was about. Right from the start, any complaint online could be calmly and appropriately addressed immediately with a follow-up comment, starting the conversation by asking the complainant for their invoice number or registration details. The largest trading platform in Ukraine. hotline.ua They specifically maintain a review system for vendors, where the vendors themselves can communicate with consumers. Meanwhile, consumers are carefully accounted for and tracked. They are tracked to such an extent that some companies don’t even bother issuing warranty cards. Why would they? It’s already recorded who bought what and when.
Practically speaking, the de-anonymization of consumers brings the relationship between merchants and buyers back to a time when both knew each other face-to-face and therefore could not deceive one another. This means that we are talking about establishing not anonymous, but reputational relationships between the consumer and the seller. In such conditions, the seller builds their reputational assessment (that is, a set of expectations) regarding the consumer, while the consumer, being counted and tied to a loyalty program with the seller, develops their own model of expectations towards the seller. Yes, businesses can no longer afford to make mistakes, as discussed in the previous article. However, businesses can now address each consumer directly, even if it is through smart analytical programs that create such “targeted” offers.
Retailers, like any other business, also strive to obtain a tool for “counting” consumers or, as it’s commonly referred to now, to build a loyalty program. Interestingly, the technical capability for this “counting” is not in question for anyone. We take computers and databases for granted. Just a short while ago, maintaining a loyalty program would have been too expensive for a company. However, thanks to IT, there has been a constant decrease in transactional costs, to the point of being negligible.
When retailers build loyalty programs, the issue is no longer about business security, but rather about targeted consumer stimulation. Unfortunately, retailers continue to use the information they collect in a clumsy manner, simply offering bonuses. Few engage in customer analytics, and even fewer focus on CRM in retail (sic!) or sCRM. Hardly anyone thinks to greet a customer by name at the checkout if they present their loyalty card, and few realize that the increase in sales among registered customers is more likely due to all their relatives shopping with the same discount card rather than some magical rise in loyalty and consumption levels. A real example of how poorly marketers assess the effectiveness of a loyalty discount program from one of the home appliance retail chains: they believe, a notion I hastened to correct during a personal meeting, that a customer buying three refrigerators, two washing machines, and five food processors in a single year is perfectly normal. Moreover, they didn’t even attempt to analyze consumer behavior; they simply handed out bonuses, effectively giving discounts for reasons other than what they intended. Of course, the creature resulting from the combination of an IT specialist and a marketer in Ukraine is an extremely rare phenomenon.
But for manufacturers of retail products, things are even worse. They don’t see or know their customers at all. They would like to, but they simply can’t. And customers can not only act anonymously but also cause trouble. That’s only part of the problem. The other part is that manufacturers are simply unable to track customer behavior and offer targeted suggestions, for instance, at those critical moments when it becomes clear that a customer is “switching” to a competitor’s product. All manufacturers have to rely on are expensive surveys and marketing research that don’t provide objective information, BTL promotions, and various kinds of quizzes.
It would be simply magical if we could “count” every consumer in FMCG, just like online stores, telecom operators, or even a children’s police room can. One can imagine a picture similar to what exists for manufacturers of computer hardware. You buy an item, register it on the manufacturer’s website, and… you start receiving spam. Not a great picture. That’s why not everyone rushes to register their purchases. It’s even stranger to think about registering, say, a pack of ice cream or a bottle of beer. Moreover, the very idea of registration would require each product to have its own unique identifier, which hints at a loss of privacy. Of course, those who can compel consumers to register take advantage of it, perhaps out of instinctive motivations—to pull the informational blanket over themselves and create transparency from their side of the mirror. If you have legally installed software, registration is necessary for it to continue working. And we accept this as a given. But, really, by what right has this become the norm? When did consumers become obligated to register their purchases? Firearms, cars—sure, that makes sense. Although… it’s still unclear. This is my item. I am its owner, and it is my right to dispose of it as I wish. It turns out that people no longer have true ownership rights in the full sense of the term.
But that’s all: both symmetrical transparency and the replacement of anonymous relationships with reputational ones, as well as the radical reduction of transaction costs, the blurring of privacy, and the assignment of unique product identifiers – all of this is reconism. This means that the question of implementing unique identifiers as a tool to achieve all the aforementioned goals is merely a matter of time and the fall of ideas that are floating in the air onto a soil enriched with money. And of course, these identifiers will only be necessary until the price of video analytics applications, capable of recognizing specific consumption by specific individuals through a network of cameras, drops to an acceptable minimum, the intellectual capabilities of such analytical systems develop to the required level, and the camera network is established for entirely different applications, say, for security purposes.
This issue can certainly be addressed administratively, for example, for pharmaceuticals, in a number of countries, and soon in Ukraine as well, where the serialization of medications has been positively resolved, despite the erosion of privacy that comes from people using “counted” objects.
However, the essence of the idea of reconism lies not only in the change of the economic structure or political system. The core is that the system of motivation is also changing. Each social order has been characterized by its own set of measures aimed at getting people to do something. Initially, under slavery, there was simply the threat of death. Then it involved physical violence. With the advent of capitalism, a system of motivation emerged based on material rewards and sanctions. Currently, the focus is on motivation. It becomes clear that stimulating and forcing people is simply ineffective. It’s better for individuals to understand why they need to follow rules, take certain actions, vote in elections, make specific purchases, or pay taxes. But the future lies in a new system—a system of mass cooperation, a system that implies participation. The economy is becoming more like a wiki. Politics is becoming more like a wiki. Business must also become more like a wiki.
And if the manufacturer of a mass product is able to “count their consumers,” they can also engage them in the creation of a new product. Why guess what to make dumplings with and whether dumplings with pineapple will sell? After all, the people who have been “counted” can simply be asked. If a few thousand people express interest in buying dumplings with pineapple, then it’s possible to organize a subscription and actually create what these people want. The question of “will it sell” is no longer relevant. It will. And it’s clear who will buy it. Now the question is not about conducting…coffee grounds reading“Surveying focus groups on the topic of what shape our drink’s bottle should have. Let people express their opinions. Moreover, if a new bottle design is proposed by the community, there will be no backlash or negative reviews from them. The story of the ‘mascot’ of the Sochi Olympic Games…” Зойчем showed that what, despite all its awkwardness and paradoxes, is chosen by the community can be embraced with much greater enthusiasm than the official symbols created according to all marketing standards. A recent project Iron Sky The film, created by a community, is enjoying great success despite its absurd plot, and this is happening without any mass advertising, even more so than super high-budget blockbusters. The future of marketing lies in consumer participation in the creation and distribution (recommendations) of the product. To achieve this, consumers need to be counted, but in a way that they actually want to be involved, rather than how it’s imposed in the pharmaceutical market.
How can this be done? It’s unlikely that we can predict all the possible ways manufacturers will seek to register purchases. It’s quite probable that these will be purely voluntary initiatives. It’s impossible to foresee everything. At the same time, there was a project in Ukraine called lgm.ua that offered an elegant and straightforward solution – paying customers for registering each purchase. The payment was enough to make it worthwhile to enter the code from the label into a web form and receive real money in return. Now, registering a purchased beer or chocolate bar becomes an interesting and fun game, as you get back a portion of the money you spent on your purchases. And the manufacturer gains not just a “counted” customer; they also have the opportunity to encourage further actions – such as recommendations on social media, for example. When I came across this project, I immediately thought of the ideas that are floating around. I wrote to Ilya again: “A ghost is haunting.”