photo credit: on strike via photopin (license)

There are times you simply need to destroy what exists in order to replace it with something better. Such is the case for social media. The past seven years have been so full of mistaken beliefs, poor assumptions and outright misinformation that the time has come to reassess completely what social media is, how it works, how consumers use it and what it means for brands.

The fact is that much of the social media dogma we take as gospel has been wrong from the start. As a result, brands are wasting good money to chase irrelevant or even damaging social media outcomes, and the required improvements are not minor adjustments. In many cases, the wrong departments have hired the wrong people to do the wrong things evaluated with the wrong measures.

Together we will burn social media to the ground and rebuild it from scratch. We will do this with data. Data will provide the spark and accelerant that destroys today's social media strategies, and data will also be the bricks and mortar to build a credible and accurate understanding of consumers' social behaviors and the legitimate opportunities available to business.

Destroying Social Media Marketing Myths With Data

Every social media marketer and pundit knows case studies that tease the promise of organic content success. They share and reference the same ones time and again, building false hope that marketers' next social campaign will be Oreo Dunk, #LikeAGirl or Real Beauty. But tear yourself away from the rare and apocryphal stories of success and focus instead on broad, unbiased data, and a different picture emerges.

"Organic social media stopped working." Those words are from the latest Forrester report, "It's Time to Separate the 'Social' From the 'Media.'" This is the same Forrester that in the 1990s counseled IT leaders to pay attention to "Social Computing" and whose 2008 book, Groundswell, introduced many business executives to the ways social media was changing consumers and the marketplace. Today, Forrester is again ahead of the curve, making the case that brand organic opportunities have disappeared and social media marketing has become entirely a paid game. As a result, the research firm recommends that marketing leaders assign their social budgets not to the social team but the media team because, as Forrester notes, "Social ads aren’t social; they’re just ads."

The report states a simple fact that too many content marketers ignore in 2015: "If you can’t get a message to your audience, you can’t very well market to them" Facebook reach for top brands' posts was just 2% of their fans in 2014, and that number will only decrease further this year.

Evidence of social media's remarkably poor reach is all around, and many social media marketers are simply ignoring it (or hoping their bosses do). For all of its brand strength, Coca-Cola's Facebook page this past weekend had a People Talking About This figure--which includes every page like, post like, comment, check-in, share and mention the brand earned in seven days--of just 37,700 people. The world's largest consumer brand (which sells 1.8 billion drinks a day) on the world's largest social network (with 1.5 billion monthly active users) engages fewer people in a week than can fit in one MLB stadium--and not even Dodger Stadium but Kansas City's modest Kauffman Stadium.

Source: Custora Pulse

Not only is reach falling but social has never succeeded in delivering reliable marketing scale, no matter how many case studies suggest otherwise. Social does not deliver purchasers (accounting for 1% of e-commerce sales, compared to 16% for email and 17% for CPC). Social delivers poor conversions (with a conversion rate of 1.17% compared to 2.04% for search and 2.18% for email). Social fails to deliver trust (with B2B buyers rating social media posts among the least important for establishing credibility and just 15% of consumers trusting social posts by companies or brands.) Nor is Social media a major factor in search engine rankings (placing dead last among the nine major factors affecting SEO according to MoZ's 2015 Search Engine Ranking Factors report.)

Rather than hit the brakes, social media marketers are trying to keep their shaky strategies together with wishes and duct tape. For example, marketers are desperately trying to overcome declining organic reach by posting more frequently, but that is not a long-term solution (nor much of a short-term one, either). Another tactic is to chase consumers from one social network to the next for brief windows of organic opportunity. Instagram is the latest social network hyped for delivering higher engagement, but the social platform is busy adding and growing its advertising programs, which means organic reach will rapidly decline on Instagram as it has elsewhere.

Social media marketing has become a house of cards, teetering with lies stacked high since the dawn of the social media era. Entire corporate social media strategies are crafted on baseless assumptions that presume brands can reach prospects and customers in social networks, consumers want and trust brand content, all engagement matters, likes are marketing KPIs and fans and followers are advocates. The best thing social media professionals can do now is to burn down that tower of cards and start from scratch by studying the data, creating new and realistic proof points and producing more effective social media strategies.

Building Social Media Strategies With Data

Starting from square one, please allow me to introduce you to social media and the opportunities available to your company, one fact at a time:

FACT: People take social media seriously, and so should business. 
The numbers are impressive--1.5 billion people use Facebook, 316 million use Twitter, 300 million Instagram and 200 million are on Snapchat. And social media behavior is still growing, with the average usage time rising from 1.66 hours per day in 2013 to 1.72 hours last year. Despite some spurious headlines suggesting Facebook's demise, that social network continues to dominate, with 59% of users accessing the social network two or more times a day (which is two-thirds more than Snapchat or Twitter and 1000% more than Pinterest). What these data points tell us is that social media is important to consumers, and brands should find ways to meet consumers' needs and expectations in the channel. While numbers like these typically tempt marketers into believing social media is a fertile content marketing opportunity, this is not the case because...

Source:  PageFair

FACT: Consumers work hard to block and ignore brand messaging.
Use of adblocking software is on the rise in 2015, having gone up by 41% since last year. Of people who view time-shifted TV, 37% do so because it permits them to skip ads, and 56% skip every commercial when viewing from a DVR. Of those who have seen online pre-roll ads, 94% have skipped them. And 57% of consumers are actively taking steps to avoid brands that bombard them with irrelevant communications, with 69% having unfollowed brands on social channels, closed accounts and cancelled subscriptions. The reason people do this is that...

FACT: Consumers do not trust brand content.
In the latest Edelman Trust Barometer Study, the majority of countries now sit below 50% with regard to trust in business, and this past year trust in business dropped in 16 out of 27 countries. In the US, consumers do not trust text messages, social media posts or ads from brands. Millennials are an especially tough crowd, with only 1 in 100 saying that a compelling advertisement would make them trust a brand more and they place sales and advertising at the bottom of their trust rankings. So, if organic reach is continually declining toward zero and consumers do not welcome or trust brand messaging, should brands abandon their social profiles? Of course not, because...

FACT: Consumers count on brands to be present in social media, particularly on Facebook.
Consumers indicate they expect brands to be available in an average of 3.5 social media channels, and around 80% of consumers expect brands to be present on Facebook. But if we have established consumers do not want or trust brand messaging in social media (or pretty much any other channel), why do consumers want brands on social networks? It isn't for brands to fill their news feeds with a stream of promotional messaging but...

FACT: Consumers expect brands to engage on consumers' terms.
62% of Millennials say that if a brand engages with them on social networks, they are more likely to become a loyal customer. It is not as if brands have no opportunity to listen and engage with consumers one-to-one, considering nearly 50% of people have used social media to praise or complain about a brand in the past month. On the B2B side, 75% of B2B buyers want brands to furnish content of "substance," that helps them to research business ideas, but 93% of brands focus their content on "marketing" their own products and services. Of course, while too many marketers believe broadcasting messages is a way to engage consumers, people do not consider marketing content to be "engagement." Instead, they want brands to treat them individually, listen and respond. For example...

FACT: Consumers want fast, responsive customer care in social media. 
63% expect companies to offer customer service on social media, and one in three social media users prefer to reach out to a brand on social media for customer service. 75% of consumers using social media for customer service expect to hear back in an hour or less; half want a response in real time. But despite the demand for customer care in social media, brands fail to meet expectations; one study found that 33% of consumers who reach out to brands for customer service get no response, while another recent study found four out of five inquiries go unanswered on social media. The stakes are high for brands to get this right. Econsultancy asked consumers how brands performed to resolve recent issues, and of those who said the brand was very ineffective, 46% are still customers (compared to 71% for very effective brands) and 13% shop at the same level (compared to 46% for very effective brands).

FACT: Consumers want to collaborate with brands to develop better products.
42% of Millennials say they are interested in helping companies develop future products and services, and studies have shown, not surprisingly, that customers are more likely to buy products they helped to create. The secret isn't merely to offer a database into which people can dump their product ideas; once again, people want true bilateral engagement with brands. A recent study of ten co-creation projects found that the largest percentage of participants (28 percent) was driven by curiosity and a desire to learn, and another 26% had an interest in building skills.

FACT: Consumers want brands to stand for something, not simply push products and generate profit.
People want more from brands. Consumers do not see a conflict between businesses being profitable and being good for the world--81% agree that a company can take actions that both increase profits and improve the economic and social conditions in the community where it operates. Edelman's 2015 Trust Barometer study also found that half of respondents attribute increased trust in business to the fact that a business enabled them to be a more productive member of society. Edelman found the biggest gap between business importance and business performance on 16 trust attributes was not products and services or even purpose--it was integrity and engagement. The Nielsen Global Survey on Corporate Social Responsibility found much the same, with 55% of global online consumers across 60 countries saying they are willing to pay more for products and services provided by companies that are committed to positive social and environmental impact. Millennials have even higher expectations--three-quarters say that it is either fairly or very important that a company gives back to society instead of just making a profit.
In the US, 70% of consumers trust brand and product recommendations from friends and family, which is almost 400% greater than the trust they have in brand posts in social media. Millennials do not trust traditional media and advertising, so they look for the opinions of their friends (37%) and parents (36%) before making purchases. However, marketers continue to struggle with Word of Mouth (WOM)--64% of marketing executives indicated that they believe WOM is the most effective form of marketing but only 6% claim to have mastered it.

Doing Social Media Right

Most companies are doing social wrong and have done it wrong from the beginning. The key to success is to stop most of what today passes for social media strategy and rebuild social plans from the ground up:

• First, create and measure a new definition of WOM. An individual who recommends your brand based on their actual customer experience is gold; a customer who clicks the "heart" button on a pretty photo posted by your brand isn't even tin (and a like that is bought is a stain on the soul of your brand). Now is the time to recognize that not all consumer interactions are equal and to succeed, brands must generate the WOM that matters--not the activities that are easy to manipulate and tabulate but the ones that are difficult and meaningful. Discard the fake WOM strategies created with brand-to-consumer content broadcasted in social channels and focus on the real WOM forged peer-to-peer with customer stories, recommendations and advocacy. Fake WOM gets people to click "like" on something the brand posted; real WOM gets people to tell others why they should trust, try and buy your product or service.
     
• Toss out your social media scorecard immediately. The first step to refocus social activities on what matters is to change what is measured. Stop rewarding employees or agencies for generating engagement that fails to deliver business benefit and start measuring what matters--changes in customer loyalty or consideration, positive and authentic Word of Mouth, inbound traffic that converts, quality lead acquisition and customer satisfaction.
   
• Reconsider what department should lead your social media efforts. Once you have reconsidered the metrics that matter, the next question is who within the organization is best equipped and staffed to deliver on those metrics. If organic social media is not proving an effective marketing channel, should your marketing team be responsible for content creation and managing social media calendars? If one-to-one engagement and responsiveness are the new goals, which department is best staffed to provide what the brand needs and consumers expect in social media? These are vital questions, because whichever department funds and manages social media will expect the outcomes and use the metrics about which they most care. A recent report from Econsultancy makes the case: Among Financial Service firms, just 38% see social media as a channel for retention; the majority sees it geared for acquisition and cross-sell. That means most of these firms are using social media to chase marketing strategies to drive sales (an approach we now know will fail) while the minority have social media strategies designed to improve customer satisfaction, reputation, loyalty and retention--goals generally not associated with Marketing but with Public Relations and Customer Care departments.
        
• Objectively assess the return your brand generates with content marketing in social channels, and stop what is not working. If you are not today validating positive return on marketing content posted to social channels, you certainly will not do so in the future as organic reach crumbles to nothing. Marketers continue to act as if content marketing is destined to work and they have simply failed yet to find the right content marketing strategy. Data tells us otherwise; customers and prospects inundated with marketing messages, distrustful of brand content and protected behind social paywalls and adblocking software are not interested in or available to your content marketing output. Content is essential and has a place in Marketing strategies, but now is the time to rebalance the investment the brand is making to match the return it receives and can expect.
     
• Stop talking at consumers and telling them what you want them to hear. Start listening to customers and responding with what they want and need. Your brand's intent is more evident than your content, and actions speak louder than words. If the best thing your company can think to do with this wonderful one-to-one relationship channel is to talk about itself, you have no right to be disappointed when consumers perceive and punish your company for its self-interest. Brands that win in the social era will not be better at storytelling but in using social media to hear, help, educate, encourage, empower, connect and respond to their customers and prospects as individuals.
    
• Get social customer care right. There is no excuse for failing to staff a customer care team properly, secure the right social media management platform, listen for customer needs in every appropriate social channel, manage inbound messages, answer every question, address every complaint and help every prospect or customer in a timely manner. Self-service and peer-to-peer support are valuable tools, but they are no substitute for getting responsive one-to-one customer care right in a growing (and very public) channel of preference for many of your customers.
    
• Get people talking to each other. Your brand is disappearing from consumers' news feeds (if it has not already), but friends will always see content from the people they know, care and trust. Stop trying to spark engagement using funny, clever, hip, edgy or inspirational content, and stop acting as if authentic peer-to-peer engagement can be bought by paying influencers to tweet about your brand. Find ways to get people talking to each other about their real experiences with your company and its offerings. Engage your happy customers and help them to share their experiences; intercept customers at moments of truth to encourage sharing; build P2P ratings and assistance into every mobile and web experience; connect people to each other in meaningful ways; and more than anything, provide the sorts of product and service experiences people will want to talk about and their friends will find worthy of attention and consideration.

Here is a place to start as you rebuild your company's social media strategies: If your brand never posted another piece of marketing content to Facebook, Twitter or Instagram, how would you demonstrate your firm's values in social channels? If the ability to post promotional messages were taken away, what social media strategies would your company execute to create awareness, attention, consideration, trial and loyalty? If you could no longer rely on your brand journalists, paid influencers, social designers and marketing agencies to create content for social channels, what one-to-one, peer-to-peer, responsive, collaborative, integrated, authentic and meaningful strategies would your brand execute? (Why isn't it doing those things effectively today?)

The question is no longer if the tired, failed strategies of the past seven years will miraculously yield success; it is if your social media leaders are willing to admit the mistakes of the past, throw out what is not working and chart a new course. The data to build practical and potent social media strategies is not hard to find, but it easy to ignore.

The idea of borrowing a strangers’ car or taking a ride with an unfamiliar person would have seemed unimaginable just a few years ago. Today, many of us are doing this regularly via collaborative economy transportation services such as Zipcar, Uber, Lyft, Sidecar and RelayRides.

I have plenty of experience as a consumer of this new category of service, but I wanted to get a view from the inside of one of these companies. I had the chance to do an email interview with Steve Webb, Director of Community and Communications at RelayRides, and we covered topics ranging from rising competition to differentiation to risk protection to the future of car- and ride-sharing.

RelayRides is a bit like Zipcar but differs in a couple of key ways. Unlike Zipcar, RelayRides is not just a collective consumption model but is truly peer-to-peer. While Zipcar rents its own cars, RelayRides connects people who own cars with those who need transportation. Car owners can earn a bit of money from their automobile during periods it is idle, and those without cars can get access to their neighbors’ vehicles.

Another way RelayRides differs from Zipcar is that, although the company started as a competitor to Zipcar’s rent-by-the-hour business, RelayRides tweaked its business model last year to offer daily rather than hourly rentals. As a result, the company is now focusing more on airport rentals, where people arriving on trips may make arrangements to meet someone who is making their car available to rent. In San Francisco, RelayRides even operates its own parking lot where local residents may leave their car as they depart so that arriving travelers can rent it, thus saving car owners from parking fees and converting their unused car into cash.

The competition is heating up among transportation companies in the peer-to-peer economy. This is quite evident, as Uber and Lyft snipe at each other about unethical business practices and San Francisco reports the number of taxi rides has plummeted 65% in just 15 months.

In this crowded space, RelayRides competes by being “the only nationwide peer-to-peer car rental marketplace,” says Webb. “We are in 2,300 cities nationwide, including every major metro area besides NYC--we had to halt business there because of certain unique aspects of NY State insurance law.”  In one of many legal challenges to the P2P car- and ride-sharing industry, New York’s Department of Financial Services demanded that RelayRides suspend operations in the state until the company submits a business plan to the DFS that is consistent with state law.

RelayRides is striving to compete with others by making trust and safety a focus.  “If our members are not completely safe and protected, our marketplace doesn't work,” notes Webb. “This is why from the very beginning we have provided members with a $1 million insurance policy. Additionally, we have put great emphasis on pre-screening drivers to ensure only the best drivers are on the marketplace."

As with others in this space, RelayRides is growing.  “We have grown from being in just two cities and zero airports in 2012 to being in 2,300 cities and 300 airports this year.”  Its biggest challenge right now is awareness, notes Webb; “We will continue to raise awareness about the marketplace and continue to work on increasing customer delight.”

The benefits to car owners are evident, but I was surprised to hear how much money RelayRide owners are making. “Our average owner earned $360 last month, “ says Webb. He adds that renters are also enjoying benefits: “The average renter saves 35 percent versus traditional rental companies”

RelayRides is also proud of the benefits the company is bringing to the environment. According to Web, “We are helping to reduce people's carbon footprint--each shared car takes 13 off of the road, encourages more biking, walking and use of public transportation." The company recently produced an infographic to spread the word on RelayRide’s positive impact on the planet (see below).

The future will bring many changes, challenging traditional auto manufacturing and sales and changing the collaborative transportation market.  I speculate that self-driving cars may undermine many transportation companies in the decade or two to come, but Webb feels “It is impossible to speculate what these technologies changes will bring.” Whatever happens, Webb says that RelayRides “looks forward to innovation and feel strongly positioned to evolve with technology.”

Tools like Facebook, Twitter, Yelp and Flickr have taught people the power of sharing more widely and have begun to alter attitudes about privacy. Today, you live more transparently and share more information than you ever would have been able (or willing) to in the past.

Opinions, experiences, likes and dislikes that we used to share verbally to a handful of trusted friends and family today are captured, indexed and aggregated for all to see. The places you visit, the jobs you have held, the people you know, the food you eat, the teams you cheer, the hobbies you enjoy and the entertainment you love have become data points in a great pool of public information, permitting new ways to connect, commune, play, work, discover, complain, praise, influence and learn.

Too often, people think of social media only as the immediate and ephemeral information Twitter or Facebook presents in their news feeds. These real-time social feeds demand attention and can be at once enjoyable, distracting and annoying, but there is another way to think of social media, and that is as a persistent data layer. Social networks do not simply share your data in the moment but retain it so that tools and applications (and marketers) can later access, recall, combine, process and convert that data into useful information.

Foursquare's new Swarm app, alerts you to nearby friends.

Here is an example of how the social data layer works: No one wants to be informed of every place that every friend visits, but when you are deciding where to eat, you may find it valuable to know where your friends are dining at the moment or which restaurants they frequent most often. What is noisy data in your news feed can be transformed into useful, relevant information when aggregated and presented at just the right time and right situation.

Photos are another example of how the information we share becomes part of the social data layer and enhances our lives. Images that we used to mount into forgotten photo albums are today posted online and tagged with dates, locations and people’s names for easy access and retrieval. This meta-data transforms the half a billion photos uploaded each day to Flickr, Instagram and Facebook from mere pictures to vital pieces of information that can be recalled at just the right instant. (Because I tag my Flickr photos and upload them with an Attribution-NonCommercial Creative Commons license, my photos can be found and used by others, such as the Indiana Public Media website.)

Facebook’s vision for the future is that you will check into a beach and discover that your parents visited that same spot two decades earlier—and look, they posted a picture! The social data layer can take something that seems meaningless at one time (old family photos) and make it available at another when that information will be pertinent and valuable (your parents sharing the same moment you are, separated by decades).

Photo: Roadsidepictures

Of course, social media is not just about sharing pictures and status updates; it is also increasingly about the way consumers make purchase decisions. Take for example information you use to make choices about travel. When is the last time you purchased a Mobil Travel Guide? Once the indispensable travel bible for selecting hotels and attractions, the Mobil book series has been replaced by ratings and reviews collected by online travel agencies (such as Orbitz and Expedia) and ratings sites (like TripAdvisor and Yelp). In 2011, Forbes Travel Guide, which licenses the Mobile Guide, published its last set of guidebooks and launched its own Yelp-like site, Startle.com (which has since been retired and replaced with ForbesTravelGuide.com.)

It is one thing for social data to inform and influence your purchase decisions, but increasingly social is furnishing new ways to procure goods and services. The next wave of change is not just peer-to-peer (P2P) information but P2P commerce. A new collaborative economy is growing with a shift away from traditional ownership and toward “peering,” offering new methods of sharing or renting goods and services that permit consumers to gain economic power, increase income, and save money.

Why purchase an expensive item when you can more economically rent or borrow it, instead? Why let the things you own sit unused when they can easily be converted into cash flow? Why drive anywhere with empty seats in your car when someone nearby is willing to pay you for a lift near your destination? Why rent a car overnight when you really only need it for an hour? Why spend your time doing chores you do not enjoy when you can easily find and pay someone to do those tasks? And now that you have more free time, why not offer your own talents and skills to neighbors willing to pay for what you have to offer?

Thanks to new technologies and new consumer attitudes, there today are different answers to these questions than in the past. This is the collaborative economy—new methods for people to collectively consume resources for mutual economic benefit.

We can illustrate the difference between the traditional ownership economy and the sharing economy by examining the old, new and newer way of procuring an automobile.

The Old Way is Selling, Buying and Owning

We are all well acquainted with the old way in the automotive business. One party (and its supply chain partners) manufactures, transports, inventories and sells the cars, while consumers buy, maintain, insure and own them.

The old way: Lots of underutilized cars

The problem with this business model is that it is wasteful and expensive. The average car owner in the United States, Canada and Western Europe uses his or her car just 8% of the time, which means that an expensive and depreciating household asset goes underutilized the vast majority of time.

Buying, financing, maintaining and insuring cars devours a substantial portion of people’s  income—transportation is the second highest category of household expenditure, according to the US Bureau of Labor Statistics. Automobile ownership also ties up large portions of our available assets; Pew Research Center found that equity in motor vehicles is the third largest non-retirement category of net worth for households worth $499,000 or less. In addition, the old ownership model in the auto business is also hard on the environment, as enormous amounts of energy go into producing, distributing and disposing of cars that mostly sit idle.

The old way will not die, at least not quickly. Just as ecommerce has not replaced physical malls, neither will the traditional auto dealership disappear as the sharing economy grows. Of course, while malls still exist, many struggle to survive and stay relevant, and their trials are hardly over; analysts estimate that one in seven malls will fail in the next decade as retail continues to transition online. Auto dealerships will face the same squeeze. The soft economy has meant difficult times for auto dealerships in recent years—over 4,500 disappeared (almost 20% of the industry) between 2005 and 2012—and consumers’ changing social consumption habits spell more trouble for the future.

The New Way is Business-to-Consumer Real-Time Rental

Zipcar represents the new way of conducting business. In this business model, Zipcar owns, maintains and distributes vehicles over a wide geographic area, and consumers rent only the car they need when they need it. Cars are utilized a greater percentage of the time, so waste is lessened and the impact on the environment is reduced. At the same time, Zipcar customers increase their liquidity and decrease expenses.

The New Way: Zipcar owns cars; fewer cars are needed or used

I can use my household as a perfect example. When we sold our car and embraced a car-free lifestyle, my wife and I expected we would need to rent a Zipcar on at least a weekly basis; instead, we found we need one less than once every month or two. This experience is not unusual; research has found that consumers who carshare have 27% fewer vehicle miles traveled and make fewer trips.

For my household, the cost of Zipcar rentals, mass transit and grocery deliveries is far less than the expense of owning a devaluing car, interest payments, insurance, parking, gas and maintenance. We estimate we are saving approximately $800 a month by engaging in the sharing economy, thanks to Zipcar. (My wife and I live in the New York metro area, which is somewhat more expensive than most other locales, so the average savings per month enjoyed by ZipCar members is a bit less--Zipcar reports that members save an average of $600 per month compared to owning a car.)

Of course, Zipcar is not available in every neighborhood, nor is it feasible for Zipcar to scale into every suburban or rural nook and cranny. If Zipcar spreads itself too wide and thin, it may have automobile assets that do not get appropriately utilized. This is why a newer form of sharing economy model shows promise.

The Newer Way is Person-to-Person Rental

There is an even newer way of transacting business—a more peer-to-peer way—as represented by companies like RelayRides, Getaround, Hubber and JustShareIt. Unlike Zipcar, RelayRides does not own and maintain vehicles; it merely connects people who own cars with those who need transportation and wish to rent cars.

In this “newer” P2P commerce method, renters enjoy the same benefits as they would with Zipcar—access to nearby cars for short periods at a modest cost. This much is the same as the “new” form of social business, but this “newer” form also offers benefits to car owners. Automobile owners no longer need to let their expensive asset sit unused in the driveway but can, with little effort, increase the use of that asset and enhance their income.

According to RelayRides, the average car owner renting his or her vehicle is making $250 a month using the RelayRides platform. Some make less and others make more; one recent Yahoo article profiled a woman who has made $12,000 since 2012 renting out her Prius on RelayRides.

While Zipcar would lose money if a car it owned were only rented for $100 in a month, the same is not true for RelayRides' car owners; for them, that $100 is a terrific benefit that increases income and puts an otherwise underused asset to work. This is why the newer P2P business model can scale in ways Zipcar cannot. Zipcar needs to place cars in limited areas with sufficient population density, while RelayRide owners are happy to rent their car a day or two a month to people in their less-populated rural or suburban neighborhood.

The Newer New Way--On Demand and Automated

While the "new" way--a company owning and renting out cars--does not easily scale today, the future may be quite different as self-driving cars and carsharing converge to offer a "newer new" way. Ten or 15 years from now, services like Zipcar will not need to spread cars every few blocks in order to place them within walking distance of customers; instead, the car you want will arrive wherever you are and whenever you need it, delivering itself to your front door--the transportation you need on demand.

Want a private drive? Of course! Want to split trip costs but make an extra stop? The service is aware of someone nearby who needs a lift to a destination close to yours. Care to pick up a friend? The service can access your friend list and alert him or her that you are on the way. Late to your dinner reservation? No worries, the restaurant has been automatically informed of your delay and new ETA. Technology, transportation, peering behaviors and the social data layer will combine to offer services that were previously (and are presently) impossible.

The impact of this Newer New way will be profound, bringing substantial and difficult changes to the entire automotive value chain. No part of the auto business will be left untouched, from automaker (fewer and different cars to produce) to dealer (fewer customers to sell to) to consumer (less ownership, more real-time rental, lower cost and risk) to maintenance (larger and more efficient facilities where driverless cars deliver themselves rather than neighborhood service centers scattered every flew blocks for the convenience of car owners.)

Today, it is estimated that each shared car under the "new" approach takes between nine and thirteen cars off the road. The "newer new" way will have an even greater impact, taking more cars off the road and bringing the advantages of carsharing to much wider areas. The benefits to consumers and the environment will be substantial, but the difficulties faced by the auto industry will only mount in the next decade or two. Much like the the rail business of the early 20th Century (that did not adjust for trucks, cars, planes and highways) or the retail business of the last decade (that struggled to adjust to online commerce), the collaborative economy will leave the car industry a much, much different business. And the auto industry is not alone.

How Will the Collaborative Economy Change Your Business?

• Offer your services or find someone to complete a chore on TaskRabbit
• Rent a night on your sofa or secure a place to sleep on Couchsurfing
• Rent a designer dress on Rent the Runway; 
• Be a guest at someone's home for dinner or share your culinary talents with like-minded people on EatWith; 
• Rent a bike for an hour or a day using B Cycle
• Buy or sell used kids' clothes on Swap.com
• Host a strangers’ dog in your home through DogVacay
• Borrow or lend money to others using Lending Club
• Rent Lego playsets on Pley
• Find a space to work or rent out unused office space on PivotDesk

Each of these could further develop into their own "newer new" business model. Might a hotel chain, that today owns one property in a city with 300 identical rooms tomorrow offer 300 different rooms scattered across dozens of small locations, matching you to exactly the room you would most prefer? (You love shaker style furniture, a shower, a large desk, a small bed, healthy snacks and tea service downtown while your traveling peer prefers retro 50s decor with a tub, no TV, a king-sized bed, junk food and a coffee percolator uptown? No problem--everyone gets exactly what they want!) Might your money account automatically loan cash to trusted friends and collect interest without bothering you for approval, since your financial institution knows whom you trust and acts to maximize your return? Might drones deliver your hot and delicious meal at the moment you arrive home from work, created by a famed chef a continent away who beamed his creation to a culinary 3D printer near you?

Comparing the old, new, newer and future ways of commerce not only illustrates how the sharing economy works, it also demonstrates the changes that are coming to business. Just as the adoption of the Internet brought about a significant wave of disintermediation and reintermediation (with Amazon replacing Borders, Apple iTunes replacing Tower Records and Netflix replacing Blockbuster), the sharing economy will bring another such wave. Companies that offer the new products and services in the ways that consumers desire can acquire and retain customers, while the companies that fail to satisfy new consumer demand risk losing customers.

RelayRides will not replace Chrysler or Hertz, but it can have a significant impact on the marketplace without supplanting traditional competitors. As noted in my blog post, even a small shift in consumer behaviors can bring about a significant change in margins and profitability for businesses. As noted by Umair Haque, author of The New Capitalist Manifesto, “If the people formerly known as consumers begin consuming 10% less and peering 10% more, the effect on margins of traditional corporations is going to be disproportionately greater, which means certain industries have to rewire themselves, or prepare to sink into the quicksand of the past.”

There is no corner of the economy that e-business has not meaningfully affected, and now the burgeoning sharing economy is bringing still more change to the business environment. In future blog posts, we will explore the collaborative or sharing economy in more detail and study how traditional firms can explore, adjust and flourish in this new, emerging economy.

Everyone knows the sad tale of Borders Group. It failed to see the world changing and did not adapt to the Internet age, so the successful company quickly failed.

But while the story of Borders Group is well know, I do not believe the lessons of the company's history are understood. It may be a well-known tale, but it is worth revisiting 2001 with fresh eyes, because it can teach us something important about 2014. The company's mistakes occurred in the early part of the Internet era, and as we are now in the early days of the collaborative economy era, it is the perfect time to reconsider Borders' story and learn from it.

Borders' leaders lacked the foresight of their peers at Amazon and even Barnes and Noble, but that isn't terribly unusual. Many of us fail to see important revolutions until it is too late. We humans are good at recognizing evolutions (no one questioned if the iPhone was an obvious improvement on the  Blackberry), but we are less successful at seeing revolutions until they are upon us.

In 1995 (if you are of a certain age), you heard about the “Information Superhighway” and thought, “I’ll never waste my time on the Internet.” In 2000, when some acquaintance raved about his or her first online purchase, your reaction was, “I will never trust a website with my credit card.” And in 2005, as the first “Crackberry” addicts were distractedly walking into lampposts, you promised, “I will never be that tethered to a cell phone!” It is important we recognize our recurrent inability to see revolutions in their infancy, or else we cannot explore today's prevalent (and frequently dubious) attitudes towards the fledgling collaborative revolution.

Failing To Foresee Revolutions Hurts People But Can Be Fatal to Organizations

When individuals fail to see the world changing before their eyes, it can have ramifications--they may disregard the effect on their careers and fail to keep their skills current. In many ways, however, people can adjust quickly once they see the benefits of innovative technologies and approaches. Many mocked the first folks with their Commodore 64s and Atari STs, but a couple years later everyone was clearing a space for a PC in their home.

Courtesy of Crowd Companies

For business, however, the implications of failing to see the future are far more profound. A company that does not anticipate or prepare for impending threats and opportunities cannot simply retool overnight once it discovers the oversight. While we humans can overcome our inability to recognize technology revolutions with a single trip to Best Buy, companies that miss out can spend years trying to catch up. Today, there are successful companies that will become the future Borders, Kodaks and Blockbusters of the collaborative economy era, but they can no more see it than could Borders, Kodak and Blockbuster could at the dawn of the digital era.

Certainly, Borders failed to see the future, but what did they miss that others did not? And why did they fail where others succeeded? The answers to these questions are essential to prepare your company as it enters yet another revolutionary business era. Sharing is no longer just for memes and selfies; increasingly, it is also for the way people acquire and use products and services. Is your company setting itself up to be the Borders or Amazon of the collaborative economy era?

What Borders Did Wrong

They key is to explore the conditions that led to Border's fatal decisions. For example, many assume that the error made by Borders was that it failed to launch ecommerce, but the company had an ecommerce operation and chose to shutter it. In May 1998, Borders launched its first online book store. Few consumers were buying online at that time, and three years later, the bookseller decided its unprofitable ecommerce operation was unnecessary to its core business of selling books in retail stores. In April 2001, the company announced an ecommerce agreement with Amazon, shuttered its own online sales function and dismissed seventy digital employees.

It is easy to judge the decision in retrospect, but this deal made logical sense to many. Morningstar analyst David Kathman told E-Commerce Times, "Both companies need this" and Scott Smallman with U.S. Bancorp Piper Jaffray said, "We think it is good stuff." The reason was that Amazon (although it was losing money) was flourishing online, while Borders (although it was profitable) was failing in the digital realm. In 2001, Amazon sold $1.7 billion worth of books, music, and videos online while Borders.com sold just $27 million.

Today, many seem to feel Borders' execs were merely stupid, but the company's leaders made what they thought were smart decisions that many analysts applauded. The error of their ways became evident a few short years later, but by the time Borders realized that digital business was not a sidelight but a vital revolution in the way people shop for, purchase and consume media, the opportunity had passed. Borders dissolved the partnership with Amazon in 2007 and attempted to resurrect its own online business. It was too little too late; just four years later, the company applied for Chapter 11 bankruptcy protection and began liquidating its final stores.

Why Borders Did Wrong

That Borders' leadership made epic mistakes is certainly obvious, but hindsight is 20/20. Why did they make those decisions, and how can your company avoid the same mistakes today? Here is how Borders came to this decision and what it may mean today as your company considers (or ignores) the emerging collaborative economy:

• Borders failed to see how digital wasn't just a change in marketing and communications but a change in business and consumer models: Marketers are quick to adapt to changes in consumer behavior, while product and customer service folks always lag. Marketers launched web sites and started online advertising years before their customer care peers thought of offering web-based service. And while some brands were happy to offer their traditional products for sale online in their "web store," few companies considered how digital distribution would fundamentally alter the products themselves. Borders saw the web as a marketing and sales channel; Amazon saw it a new way to distribute and consume media.
  
  In social media, marketers were able to find money to invest in social media while their peers in customer care acted like it was an insurmountable challenge to find the budget for customer care in the same channel. (Even now, companies like Spirit Airlines are opting for auto-bots in social media because "a social media team costs money." Damn those needy customers, expecting us to pay salaries for people to answer their annoying questions!)  Today's collaborative companies don't see social as just a communications channel or an expense but a significant shift in consumer behavior.
  
  Collaborative Economy Lesson: Social will change business itself, not just marketing. Is your company like Borders, seeing social primarily as a channel for acquisition and reputation? Or is your company Amazon, thinking of social for new ways to collaborate with consumers on product development, encourage peer-to-peer consumption to otherwise empower your customers? If you aren't thinking of new P2P and collaborative business models, rest assured someone else is!
    
• Borders failed to understand that digital benefits would be embraced by the mainstream.  In 2001, it was easy for Borders to see the web as something not well aligned to its audience. A year before, Pew found that 61% of 18- to 29-year-olds were using the Internet compared to just 12% of those over 65.  Since book buying typically skews a bit older, it seemed the Internet was a weak opportunity for Borders. Making it even more difficult to see the digital future was that the dot-com bubble had burst in 2000 and was still deflating in 2001, giving momentary encouragement to those who still claimed the Internet was a fad, not a serious trend.
  
  How times have changed. Digital businesses are now at the top of the Fortune 500 (with Apple, Microsoft, Hewlett-Packard, Google and Amazon among the 50 largest firms in the nation.) Generational gaps still exist but are nowhere near as pronounced as they once were; in 2013, Pew reported that 59% of seniors go online. In the course of 13 years, the percentage of seniors online skyrocketed nearly 400%.
  
  Collaborative Economy Lesson: (Almost) everyone will adopt collaborative business concepts in the years to come.  It is by now a familiar trend that has been repeated with online adoption, ecommerce, mobile adoption and social networking: New behaviors are introduced, tested and adopted by younger consumers, and once the benefits are clear and risks are minimized, older folks follow. Today, is your company looking at Lyft, TaskRabbit and Uber as something better aligned to younger people, or are you thinking like Amazon and foreseeing the demographics for collaborative behaviors broadening rapidly?
     
• Borders underestimated the importance of small changes: There is a sad tendency to think that business models are stable and can be undermined only with profound changes in the market. Perhaps that was once the case, but the pace and hyper-competitiveness of today's business world means that even small changes in the environment matter.
  
  In 2001, online retail was a mere one percent of total retail sales in the US, so it was easy for Borders to dismiss ecommerce as a distraction. But even today--after ecommerce has upended several well-known retailers and is challenging the survival of malls--the percentage of US retail that occurs online is just 6.2%.  That's it--just one of every 16 retail dollars are spent online, and that has been enough to create a painful metamorphosis in retail, not just for Border's but the entire industry. In the last ten years, the stock prices of Barnes and Noble, Sears and JCPenney are down 35% to 75% while the Dow has risen 67%.
  
  Collaborative Economy Lesson: A small shift away from traditional ownership and towards collaborative models can have a significant impact on your company's financial outcomes. Look at the profit margin for your firm. What would a change of three or four points in your revenue mean to your bottom line? For many industries, that is the difference between profitability and failure. Borders saw ecommerce as a small and minor trend that could be farmed out to a third party rather than a significant business revolution that should affect business decisions across the enterprise. Is your firm considering the collaborative economy in one tiny corner of the enterprise, or do your leaders see it as a major trend that will impact the development and delivery of your products and services?
    
• Borders focused on short-term profitability rather than investing for the future: Who can blame a company for jettisoning an unprofitable venture? After all, every publicly held company must furnish quarterly financial improvements or suffer the wrath of investors and analysts.
  
  
  
  Certainly, that was what Borders thought. It was losing money on ecommerce, and at the time, so was everyone else. Even Amazon was hemorrhaging cash--close to $3 billion of losses in the first five years after its 1997 IPO. By ignoring the cash-draining money pit of ecommerce, Borders kept their income statement looking good for another five years, with consistent profitability through 2006. The Street wasn't rewarding Borders with better stock prices, but neither did the company's shares suffer like that of so many dot-com firms.
  
  Everyone was reasonably happy--until 2007 when the wheels came off. Borders could no longer deliver revenue and margin due to its reliance on an increasingly threatened distribution model, and the company and its stock price never recovered. Meanwhile, Amazon thrived--it's stock is up an incredible 3,067% since it signed the deal with Borders. Today, Amazon is repeating its history, making decisions that diminish current performance in the hope of strong financial rewards in the future; the company is warning the market to expect deep losses this year as it attempts to launch the Fire Phone against mobile leaders Apple and Google.
  
  Are today's collaborative startups subject to the same financial challenges as the dot-com startups of fifteen years ago? Some say no--the buzz is that many of the collaborative startups are turning early profits, but we ought to be cautious with such claims. Thus far, many collaborative startups have ignored such niggling details as tax collection and regulation. In the last two years, Airbnb, Lyft, Uber and others have begun to work through the maze of regulations, legal requirements and tax issues, and it may take many years to work out a set of stable and legal business models that can be applied in every state and locale.
  
  Collaborative Economy Lesson: Gaining an understanding of the new forms of collaborative commerce will not be easy or provide an immediate return, but the time is now to begin making smart investments.  Companies cannot build a future simply by focusing on efficiency, productivity and cost containment; they also must invest in the future. The unwillingness to cannibalize one's own business model is a serious problem in today's fast-paced quarter-to-quarter world, because if companies won't challenge their own business, someone else will. Significant changes are coming, and firms unwilling to explore alternative business models will suffer consequences. Now is a time to make strategic investments and experiment with innovative collaborative business models. 

For a host of reasons, Borders’ leaders made decisions that set in motion the problems that would swamp the company just ten years later. These leaders were not dumb, but they were mistaken.

I trust this blog post is unnecessary and that company leaders are smart enough to know they must maintain a presence on Facebook, regardless of the marketing challenges on the platform. But given that a small brand abandoning Facebook has been big news this week, a gentle caution may be in order.

In a shot heard round the social media world, food delivery company Eat24 lambasted Facebook for lying about brands' marketing opportunities, then deleted its Facebook fan page. I am sure a lot of frustrated and sympathetic marketers were jealous of Eat24's move. With organic reach getting harder to achieve, some marketers have been left wondering what the point is on Facebook.

The point is that your customers are there, and they have expectations, needs and questions. By deleting its fan page, Eat24 thought it was striking a blow against the Facebook "man," but the company sent an even more powerful and damning message to its customers. The company's actions were not a shot against Facebook (because the social network does not actually make money off of fan pages and organic posts) but against those 71,000 people who had liked the brand, as well as all future customers who might have wanted to interact with the company on Facebook.

Eat24 left a bitter and humorous post for Facebook before deleting its fan page, but here is what it really said to customers:

Dear Customers, 

We were not on Facebook for you but for us. Did you think we maintained our Facebook profile to listen or furnish value to you? Don't be silly--we were there to acquire new customers, and when you failed to help us do that, we decided you were no longer worth the effort. Your likes, shares and comments were of interest only to the extent we could exploit them for marketing gain, and frankly, you didn't help us very much, did you?

Did you expect to reach us with inquiries here on Facebook? We don't care--we were here for the free marketing, not to listen to your whiny requests, ideas, complaints or needs. Is Facebook a preferred channel for you to contact brands? Who cares--chase us to the platforms we prefer.

And to think we wasted all that time coming up uninteresting posts for you to ignore! Really, we expected so much better of you. Our Facebook fans have been a real disappointment, and we hope Twitter users will remember the one important thing about Eat24: We're not here for you; you're here for us! So get retweeting... or else!

Disrespectfully.

Eat24

The funny thing is that Eat24 thinks it has deleted its presence on Facebook, but it is still easy to find--only now the company is absent and unable to manage or protect its brand on the world's largest and most active social network. The primary brand page may be gone, but not this page. It was launched two weeks ago and looks like an Eat24 page, but is it? Customers are confused--one posted "Nice to see you back" and another added "I knew you'd be back"--but are fans liking an official company page or a page launched by a spammer? Who knows?

Of course, that is not the only Eat24 page. There's this page, also launched two weeks and looking quite official. And this one, apparently launched by a fan. And this one. And this one. Consumers expect brands to be on Facebook, and now when a customer goes searching for the company, there is no telling what they will find or to which pages they will connect.

If your brand is disappointed in the shrinking opportunities for earned media on Facebook, it ought to reconsider its options, but deleting the company page is not one of them. If you are investing too much in organic content that is not delivering the value desired, post less. (Problem solved!) Or reconsider if Facebook is really a marketing channel aside from the opportunities offered by its paid media offerings. Now is the right time to reassess if your Facebook page might be better suited for customer care, advocate programs and reputation management rather than for acquisition, awareness and conversion.

Does this look like abandoning customer care on Twitter?

My prediction is that Eat24 will be back; it would not be the first brand to make a big show of abandoning a social network, only to return with its tail between its legs. A year and a half ago, Charter Communications announced it would cease customer care on Twitter. At the time, I predicted Charter would reverse course, and it has. While the company has not relaunched a customer service profile, it is actively answering customer complaints and requests via its @Charter Twitter presence. Charter found it could not ignore customers' preferred channels, and Eat24 will likely learn the same lesson.

There was a time when companies threatened to abandon their early websites because the sites failed to drive the marketing value expected. Today, brand websites are less about marketing than sales, service, recruiting, education, investor relations and other business objectives. So, too, will it go with Facebook and other social platforms. Smart brands will find the right way to create value, both for the company and its customers.

I do not believe brands will follow Eat24's lead, because smarter and cooler heads will prevail. Eat24 has cut off its nose to spite its face, but smarter brands will sniff around for other ways to create value.
 

Photo courtesy of @EmeraldIslePR

Yesterday I furnished a keynote presentation at the PR and Social Media Summit. My speech was about the power of asking "Why?," a question that leads to success in both business and social media.

In my five years of research, consulting and managing social media, I have been asked thousands of questions. Where? (Where do I post?  Where do I engage?), How? (How do I listen?  How do I measure?  How do I find influencers?) and today's hot topic, given the need for content to feed the social media beast, What? (What do I say?  Do I post pictures, videos, text? Am I funny or serious? Am I professional or casual? Should I offer discounts and contests to lure new fans?)

"People don’t buy what you do, they buy why you do it.”