dangerouslyawesome

This post is part of a 95 post series discussing the 95 theses of the Cluetrain Manifesto as they relate to business in 2009. Read more about the series in the introduction post. And check out the rest of the series!

Thesis #9: These networked conversations are enabling powerful new forms of social organization and knowledge exchange to emerge.

Service industries traditionally benefited more from referrals than they have from traditional advertising. It’s hard to appropriately advertise things that people don’t necessarily seek out.

When do you go looking for a plumber? When the plumbing is broken.

When do you go looking for an electrician? When the lights are out.

In some cases, a solid advertising campaign (or a catchy jingle) might jog your memory at that moment of need, but more often, you either already “have a guy” that you’ve worked with, or you call around to trusted family/friends for a recommendation. Ever wonder what the “social graph” of a service provider’s clientele looks like?

Service industries have long valued referrals, and many quality service providers have existed an entire career without spending a nickel on advertising. They rely on the fact that their customers talk about their work, and when a need arises, their name will come up.

My father’s (hi dad!) Chiropractic practice thrived for 30+ years on word of mouth, and has never operated with an advertising budget to speak of. At its peak, his solo practice was taking care of 100+ patients per week, 75% of whom knew each other. He’s gone through a bit of a career change mid-life and started a custom carpentry and home remodeling business, with no more than one partner at any given time. In the 10 years of operating, the carpentry business has never spent a penny on advertising, and averages 20 clients per year (which is high for the industry). Of those 20 clients, he estimates that 15-17 are return clients, and every new client can be traced back to the original “trunk” of the customer tree.

Both of these businesses are small, but demonstrate how having community among your customers works to supplement, if not entirely replace, your advertising efforts.

Imagine if the walls of that referral network were blown down. Imagine if every time you were seeking a new service provider you asked every person you passed walking on the street, taking notes on the sampling and averaged the responses.

And imagine that it wasn’t just for services, but it worked nicely for products too.

Welcome to online commerce in 2009. Discovery is no longer as simple as a single “hyperlink”, but consumers are evaluating every single data point they can get their hands on. Entire communities are forming online with the purpose of being what “consumer reports” could only dream of being: an uninhibited discussion surrounding the good, the bad, and the ugly from the perspective of real customer experiences.

Can there be bad data points? A customer who you’ll never please? A lemon from the production line? Of course. But as more and more people congregate around these reports, it becomes easier and easier for the cream to rise to the top.