Billy's Bakery enjoys a loyal following that keeps both its Manhattan locations buzzing throughout the day. But what really drives a line out the door are the daily "tweets" to its diehard followers on Twitter. Several times a day 300 or so loyal customers receive brief messages ("Lemon tarts are fresh out of the oven in Chelsea; we have snickerdoodles in Tribeca") alerting these insiders to what's hot at the moment -- literally. The growing use of "social media" by businesses large and small -- from florists to computers makers -- is yet another sign of changing behavior brought about by the nagging recession.
The new way of doing business is in many respects a throwback to an earlier time before mass media manufactured mass tastes and drove mass markets. Before supersized warehouse stores, suburban malls and the Internet made shopping an impersonal affair. It is the return of the personal and local, of business with neighbors and advice over the backyard fence. The coin of this realm is trust; reputations matter a lot, referrals are key, and permission is mandatory.
The growing popularity of social media services like Twitter, Facebook and LinkedIn accentuates but doesn't fully explain the trend to the personal. Successful social and economic revolutions throughout history are propelled by a crosscurrent of trends. The personal economy is no different.
It is in part a coping mechanism. Faced with the specter of economic tribulations beyond comprehension -- trillion-dollar deficits, massive unemployment and mindboggling toxic debt -- consumers are both retreating and regrouping. Spending less, but spending differently too. Rather than attempting to get their arms around the enormity of global economic dislocations, consumers are choosing instead to shrink the world down to a manageable size, to forge small order from the exposed raw nerve endings of a hostile macro-economy.
We are using social media to create economies to suit ourselves, narrow circles of friends and trusted associates, small affinity groups and favored local providers.
What are the terms of the personal economy? It is based on trust and reputation. Where the Internet economy is anonymous, the personal economy is hand-to-hand, over the counter. Since we get to know those we deal with, we tend to be more respectful in our dealings; people behave differently in a world where everyone knows you. As such, the personal economy relies on references and testimonials from trusted parties -- rejecting the brain-numbing branding of mass media. In fact, small groups of friends influence the buying choices of the members, making it harder for marketers to insinuate themselves into the process.
The personal economy means the return of loyalty. The word customer is derived from "customary," as in a shared expectation that buyer and seller will see each other frequently. The personal economy hinges on such reciprocity -- it is easier to see the internal logic of small systems.
Organizations have sprouted up, like the 3-50 Project, to encourage consumers to be more conscious of the economic power they wield in a personal economy. 3-50 asks consumers to weekly frequent at least three local brick and mortar merchants that would be missed if they suddenly disappeared; and to spend at least $50 on local, independent providers. The power of the purse, it seems, goes much further in a personal economy.
There is, of course, a buy-local dimension to the Green Movement, as consumers become more aware of the benefits to the earth of buying locally-grown organic products that neither use pesticides nor burn a lot of fuel to transport. Combined with mobile phone applications like Yelp, carbon-conscious consumers can anywhere anytime reach out and get advice from locals on where to find earth-friendly products nearby.
A personal economy need not mean a small one. Mass niches change the traditional marketing landscape, but they can represent vast wealth.
Dell computer recently announced that it had earned $3 million from Twitter-produced customers. Numerous other companies, like Starbucks, JetBlue and Whole Foods are nurturing followers on social services. Even large concerns, it seems, want to be neighborly.
If there is such a thing, let's call the rise of the personal economy a recession dividend; the economic downturn has us all re-evaluating our lives and priorities in search of more meaning and connection. Conspicuous consumption is passé, now conspicuous community is important. While economists fret the lag of traditional economic indicators, perhaps something new and better is taking shape to replace them. It may not reflect the old path to growth, but the emergence of a world where people are connected and committed to a community, and where business is guided by loyalty, civility, shame and pride are causes for optimism and hope in the face of our economic uncertainties.
Tom Hayes is a veteran Silicon Valley marketing executive and the author of Jump Point: How Network Culture is Revolutionizing Business (McGraw-Hill).