Three Reasons Why Owners are Better Customers

Every company needs customers. Our job is to help profitable locally owned businesses take their customer base and transform those people into owners through the power of crowdfunding.

Customers are the engine that creates value to a business. First, they spend money in the business. Obviously step one toward profitability is sales! Second, customers are service and quality (and value) sensitive. These customers help business managers shape their service offering to respond to the market; successful adjustments create more and more customers. Third, customers spread good experiences through word of mouth (and social media), generating additional customers. Of course, a dissatisfied customer can also sound off to the world about a bad experience, costing the business customers in the future with a bad Yelp review or Facebook post.

However, we know three things about owners which make them so much more valuable as customers:

1) They spend more money.

Even if an owner has a very small percentage stake in the business, they feel more comfortable buying just a little bit extra. And all those little bit extras can really add up. Do you want fries with that? Owners do.

2) They visit more frequently.

An owner, when faced with a choice between visiting their own business and a competitor will almost invariably choose their own business even if that means waiting until later to make a purchase. Or they may deal with inconvenience, going out of their way to make a purchase. Increasing the frequency of customer visits is a key component to increased profitability.

3) They become evangelicals for the business.

Instead of passively sharing information about their purchasing habits as part of a conversation with their friends, owners go out of their way to preach about the great products and services provided by their company. Great Yelp reviews and glowing social media posts become commonplace.

But perhaps the most powerful part is that the occasional bad customer experience is much less likely to make it out to the public square. While a customer may want to blast the shortcomings of a failed experience, an owner wants to make sure that management fixes the problem. So while a poor sales clerk may receive extra skills training, that issue won’t make its way onto social media. And while a good review is worthwhile in this social media age, a bad review is like kryptonite. A crowd of owners protects a business when things go wrong.

Crowdfunding is about a lot more than “funding”. It is really about the crowd. And having the crowd own your business is soon going to become the key component to a successful marketing strategy.

Jonathan Frutkin is an attorney at The Frutkin Law Firm, PLC in Phoenix, AZ. He’s written a new book called “Equity Crowdfunding: Transforming Customers into Loyal Owners” which was published in May, 2013.

July 22, 2013 0

The Brand of “Me”

Online blogs and social media have allowed individuals to define themselves in a way that was impossible decades ago. While joining professional organizations or writing an article for a business periodical was a possible way to establish your credentials, the more likely way that someone would learn about the type of person you were was through other people. If their opinion of you was positive, it was called “word of mouth”. If their opinion was negative, it was called “gossip”.

But now, because of online tools, there is a much easier way to promote yourself (and to have your network promote you too). The emergence of social networks has been the story of the last five years, but the real interesting development to me is the expansion of the FourSquare check-in phenomenon.

Rather than being limited to status updates and photographs, online users are now defined by where they “check-in”. After all, where you visit usually tells more about a person than anything else. What do you think of a person who visits the bookstore, the tea store and the stationery store? What do you think of someone who checks-in on the top of a mountain and then later checks-in from a lake? The new metric is “where” rather than “who”. Because you can tell a lot more about a person based on where they are located than what they say about themselves.

FourSquare has taken that an extra step further by creating “badges” which are virtual rewards for visiting specific locations. An online visitor can see what different locations that user has been, and can quickly glance at the types of badges that user has earned.

A person’s behavior always has defined their true character more than the words that they use to describe themselves. If someone says “I’m honest” but is caught stealing three times, what type of person are they? The same could be said about the places that you choose to own.

Equity crowdfunding is going to be the opportunity for people in the community to choose to invest in the places they eat, the places they shop and with the people that provide them with the services they need to get through their daily life. But instead of being something that is hidden away like an investor’s choice in 401(k) portfolio, a choice to invest in a business is something that will truly define an individual’s connection to their local community.

Once your choice to invest in a company is displayed along with the badges that show where you visited, business ownership will be used to define your brand. Rather than being defined by your hairstyle, you can bet that people will find it at least as interesting to know which hair salon you own.

June 12, 2013 1

Doing the Wave

Back in the early 1980, there was a cheer made popular by University of Michigan students during their football games. Entire sections of students would stand and cheer while raising their hands, sit down, and then the next section would do the same thing. The effect was what looked like waves of people moving throughout the stadium. This gave a great visual effect and engaged the crowd every time that it started. Wave leaders would get a couple of the most raucous student sections (usually those including the band) and after a few tries, the rest of the sections would pick up on the wave and it would take off through the stadium.

The Wave grew very popular after it caught on during Detroit Tigers games as they won the world championship in 1984. By that point, everyone in America had learned the Wave, and it became common at sporting events. By 1986, the Wave was being done at the World Cup and it became a global phenomenon.

The reason that the Wave was popular is the same reason that the Internet has spawned so many popular memes. A meme is an action that spreads throughout a society. In the Internet age, most “memes” are Internet phenomenons that have users joining strange activities, just to be part of the crowd. Flash mobs were “the” meme a few years ago. During the 2012 London Olympics, it seemed like every athletic team in the world went online and did the same dance to the Carly Rae Jepsen song “Call me Maybe”. And recently, the Internet has lit up with tens of thousands of videos of people copying a jump-cut YouTube video done by a group of Queensland, Australia teenagers to the song “Harlem Shake”.

So why? People like to stand out from the crowd. But more importantly, they like to be part of the crowd. In a new world where relationships are created and maintained online, these bonding experiences are important. Memes are way in which a virtual Waves can be created online. It allows people to participate in crowd will not even leaving the safety of their computer.

I am a close observer of the crowdfunding space. Memes are proof that the power of crowds is the coming attraction of Web 3.0. Marketing is not about messaging anymore. It is about engaging. And soon businesses are going to have to learn to leverage the latest memes to ride the newest virtual Waves.

The University of Michigan does the “advanced” wave. Counter-clockwise twice, once in slow motion, once at double speed, once clockwise and then split into two counter-waves. Don’t try this at home!