How ‘social currency’ is changing the face of the automobile industry

social currency is changing the face of automobile industry roadrave socialcurrency 05
Part of living in the modern world is realizing that you’re being marketed pretty much all the time. If you Google “electric razors,” the next time you sign onto Facebook, you’ll see ads for electric razors. It’s happening constantly, and we’re all getting really good at tuning it out. So naturally, every company with something to sell is looking for new ways to get into your head. Some do it better than others, and some are lagging way behind.

In this brave new world of marketing, automakers in particular are at a huge disadvantage. Because a car is among the biggest-ticket items you can buy, people usually put a little more care into their selection than they do when purchasing a sports drink. And because a new car is something that each person will generally buy only about every five to ten years, the stakes for automakers couldn’t be higher. Yet at the same time, automakers have a tendency towards old-school thinking. To help automotive brands thrive in the new market, Erich Joachimsthaler is framing the challenge in a new way.

Erich Jochimsthaler, Ph.D. - CEO & Founder of Vivaldi Group
Erich Jochimsthaler, Ph.D. – CEO & Founder of Vivaldi Group Vivaldi Group

“Consumers don’t really mind being marketed,” Joachimsthaler says. “They mind when they don’t get anything in return for it.”

Joachimsthaler is the CEO of Vivaldi Group, a marketing consulting firm with offices all over the world. Vivaldi has come up with a new way to slice and dice the soft science of consumer engagement, and you need to know about it.

Seven dimensions of engagement

Joachimsthaler calls the new paradigm Social Currency, and he means that both in the sense of keeping up to date, and as currency that can be spent.

Every company with something to sell is looking for new ways to engage and get into your head.

“Social Currency is leveraging that network effect that already exists,” Joachimsthaler tells Digital Trends. “The car companies have figured out how to optimize the pipeline business. They know how to bend metal and push the cars out to dealers. Their problem is that competitive advantage doesn’t come from the pipeline business, it comes from a direct connection to the customer.”

Vivaldi’s concept of social currency revolves around seven values, or dimensions. The top two are personal identity and social identity. Together, these dimensions reflect how individuals see themselves and their place in a social structure. The fact that such identities have a strong influence on the cars people choose is not news – you wouldn’t get far trying to sell a Prius to a guy who sees himself as a four-wheel-drive truck fan. But you might be able to sway that buyer into a particular brand of truck, if you can engage strongly enough to become part of that guy’s identity.

2017 Toyota Prius Prime
Andrew Hard/Digital Trends
Andrew Hard/Digital Trends

That’s where the other five dimensions come in. Those are expression, or how the brand conveys an identity, conversation, or how the brand communicates with customers, affiliation, or how well the brand helps build a peer community, information, or how well that brand and the peer community help someone become more well-informed, and utility, which is how much all of this actually makes a difference in the customer’s life. Each of those dimensions supports and feeds back to personal and social identity, and that leads to sales.

“These 7 dimensions really describe the social behaviors where companies can be strong or weak,” Joachimsthaler says. “The bottom 5 dimensions are ways that companies can improve and help consumers in their daily lives. Consumers seek conversation, they seek affiliation, and means of expressing themselves. They seek information. That’s what car companies really can do. If they’re weak on affiliation, for example, they can focus on building that dimension.”

What this means to you

New car sales for 2016 are projected to be flat, or even a little bit down from 2015, and it’s not clear when they’ll pick up again. That means automakers will be focusing on keeping their own customers loyal and picking up new customers by luring them away from competing brands. Social Currency helps in both those areas, so be on the lookout for increased opportunities to engage with brands and brand communities.

roadrave_socialcurrency_02

“The way you sell is to build up Social Currency,” Joachimsthaler maintains. “That allows you to have a relationship and a connection to consumers. Car companies, except for Tesla, have not figured out how to tap into that. Four hundred thousand people wouldn’t get in line to make a deposit on a regular car, but they would for a Tesla that they haven’t seen, and they don’t know when it will show up. Tesla has built social currency directly with consumers, while the other car companies still play ad agency bingo.”

Should you be suspicious?

At this point, it bears saying out loud that increased customer interaction is a very good thing for consumers. In contrast to traditional methods of marketing, Social Currency allows unprecedented levels of real-world customer feedback as a direct result of engagement. Joachimsthaler points out Uber as an example of a value-added interaction.

“If you look at Uber, they ask you and me to provide them some information, namely where you are and where you are going,” he relates. “Based on that, they can optimize an algorithm to make sure that the ETA for your car is as short as possible. So, consumers are not worried about becoming ‘currency’ because there’s a value exchange between the data I provide to Uber and what I get in return. It improves my experience over waiting for a taxi to come by or scheduling a limo service.”

So what happens next?

If you look 10 years into the future, the automobile industry is facing a transition to become the mobility services industry. Uber and Lyft are part of that transition, and so are services like Car2Go, ReachNow, ZipCar, and other short-term automated car rental services. Savvy automakers are taking the lead in this industry; Car2Go is owned by Mercedes-Benz/Smart and ReachNow is a project of BMW/MINI. When mobility is a service industry where customers can change their brand loyalty at any moment, positive engagement becomes the most critical value for every business.

“Selling cars in the U.S. is about a $580 billion market, and the total mobility services market is $5.3 trillion, or something like that,” Joachimsthaler points out. “If you ask automakers where they think their market goes in the new world of autonomy and mobility, it’s going down. And if interest rates go up this year, it will be tougher to buy cars. So the point is that Social Currency is a powerful means to build future mobility services.”

As transportation becomes more of a commodity, companies that maintain strong and genuine engagement will be set to take a bigger share of the mobility services market.

“This is a new profit pool that goes way beyond selling cars,” Joachimsthaler says. “Tesla has put themselves into a premium position to also sell mobility services down the line. That’s why it’s so powerful to engage through Social Currency. You’ve got to be where the conversation is.”

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