Leveraging surplus, status and the gift economy – Chapter 5

[Over the coming weeks I’ll be sharing excerpts as we work towards completing the manuscript for ‘What’s Your Purple Goldfish?’. Yesterday was Chapter 4 and today is peek at Chapter 5]

Exploring the ideas of surplus (added value) and status

I’m fascinated by a concept called the gift economy and how it relates to marketing lagniappe.

So – what is a gift economy?

According to Wikipedia:

“In the social sciences, a gift economy (or gift culture) is a society where valuable goods and services are regularly given without any explicit agreement for immediate or future rewards. Ideally, simultaneous or recurring giving serves to circulate and redistribute valuables within the community.”

A gift economy is opposite of a market economy. In a market economy there is an exact exchange of values (quid pro quo). It is my theory that there is a hybrid called the lagniappe economy that can sit between the two:

Can marketing lagniappe live in the middle?

Here is a great analysis from a post by Kevin von Duuglass-ittu of Tonner Doll on gift economies:

“This does not mean that the Gift Economy … and the Market Economy of business are incompatible, not in the least. In fact many if not most of our business exchanges are grounded in Gift-based relationships whose “gift” nature we simply are unconscious of and just assume. If you develop a keen eye for the gift-giving environment, and think about all the things that gift-giving in those environments signal, 1. a surplus others want to attach themselves to, 2. a magnanimous respect for the relationship beyond all else, 3. a debt structure that is “positive”

Let’s examine each of the three through the lens of a lagniappe economy:

1. Surplus – the idea of surplus is grounded in giving extra or creating an inequality. Lagniappe comes from the spanish ‘la napa’ or the Quechan ‘yapay’ both meaning ‘something that is added’. Lagniappe is the practice by the business of throwing in little extras at the time of purchase.
2. Respect – The gift or little extra is about the respect for the relationship. It becomes a beacon, a sign that shows you care. It’s a physical sign of goodwill and customer appreciation.
3. Positive – A debt structure that is positive. This speaks to exceeding expectations by giving extra. The idea of an equal exchange (market exchange) is a myth in marketing. You either exceed or fall short of customer expectations. Providing that extra value provides an inequality that is positive. The positive effect leads to a sort of indebtedness or reciprocity on behalf of the customer.

The Benefit of Surplus is Status

As a business why would you want to incorporate gift economy principles into your market exchanges? I believe there are 3 distinct reasons and corresponding benefits of the status gained through marketing lagniappe:

1. Positioning – stand out from your competition. If everyone is providing x, the fact that you provide x + y (gift) differentiates your offering. Less than 30% of consumers buy on price. You want to tap into the 70+% who are looking for value and a strong customer experience. Benefit: Differentiation
2. Loyalty – giving the little extra (gift) enhances the customer experience. It creates a bond between the business and the customer. The benefit of that bond include increased loyalty and ultimately patronage as a form of repayment. Benefit: Retention
3. Reciprocity – Part of giving extra is to create goodwill (inequality). That inequality is repaid by positive word of mouth or word of mouse. The best form of marketing is via positive word of mouth. By giving a signature extra (gift) you provide something for your customers to talk, tweet, blog, Yelp or Facebook about. Benefit: Referrals

Case Study: Chocolate Chip Cookie

Flour, eggs, butter and chocolate chips and . . .

I recently visited a quick business lunch at the Port Chester Coach Diner in Port Chester, NY. Upon paying at the counter I noticed a bowl of miniature chocolate chip cookies.

Here is the recap of the experience from Tim Heath:

“I recently enjoyed a business lunch on the fly with a colleague. We were pleased with the rapid and attentive service and quality of food. I walked away from the table content; but you guessed it, I was seeking a little something more from the dessert to satisfy my appetite. Much to our pleasure, there was a container of complimentary small chocolate chip cookies morsels next to the cash register. My colleague and I looked at each other simultaneously with a smile and then enjoyed. We both consumed two free cookies and we shared our pleasure with the owner/manager who was observing our enthusiastic response to his offering. A pleasant ending to a fine lunch. I look forward to my next meal at the Port Chester Coach Diner”

The chocolate chip cookie has been a thread throughout the Purple Goldfish Project. The very first submission from Tom Haidinger was the DoubleTree Chocolate Chip Cookie.

DoubleTree and their signature chocolate cookie was named so many times they own the distinction of being the first brand inducted into the Purple Goldfish Hall of Fame.

The Hotel has built a reputation on a unique treat that keeps leisure and business travelers coming back for more: its legendary chocolate chip cookie presented to each guest at check-in. Their signature Doubletree chocolate cookies are baked fresh daily providing a warm welcome and refreshing hospitality for travelers around the world.

Here are a few fun facts about the cookie:

• Doubletree gives out approximately 30,000 chocolate chip cookies each day. That’s more than 10,500,000 each year!
• Doubletree began giving out chocolate chip cookies in the early 1980s, when many hotels across the country used them as treats for VIPs.
• In 1995, Doubletree enlisted the services of Nashville, Tenn.-based Christie Cookie Company to hold the brand’s secret recipe, which ensures that the same, delicious cookie is delivered consistently at every Doubletree hotel and resort.
• Every Doubletree chocolate chip cookie is baked fresh daily at each hotel.
• Each cookie weighs more than 2 ounces and has an average of 20 chocolate chips.
• The Christie Cookie Company uses more than 580,000 pounds of chocolate chips each year for Doubletree’s cookies.
• In June 2002, Doubletree presented its 100,000,000th cookie!
• To date, more than 200,000,000 cookies have been served to delighted guests and customers.
• More than 1,000,000 chocolate chip cookies have been donated by Doubletree hotels to celebrate and thank deserving members of the community from doctors and nurses to police and firefighters as well as non-profit groups such as orphanages, food banks and homeless shelters.
• From the United Kingdom to Canada and Italy to China, the signature chocolate chip cookie welcome is now being presented to travelers at Doubletree by Hilton hotel locations around the world.

DoubleTree was followed by Midwest Airlines (now Frontier) and Fort Wayne International Airport. The trio has given away more than 250 million chocolate chip cookies collectively.

Recent entries have included Pot Belly Sandwiches and now the Port Chester Coach Diner.

It begs the question . . .what’s so special about a chocolate cookie?

DoubleTree offers an explanation right on the brown paper bag the cookie comes in. “Why a cookie?” the headline asks. “Cookies are warm, personal and inviting, much like our hotels and the staff here that serves you.”

Quoted in an article by the NY Times, Erich Joachimsthaler, chief executive of Vivaldi Partners said,

“when consumers don’t know how to judge the benefits or the differentiation of a product — I don’t know the difference between Midwest and JetBlue and United — then a meaningless attribute like cookies can create meaningful differentiation . . .The giveaway creates buzz, it creates differentiation, it increases a purchase decision.”

I’m not sure if I agree with meaningless, especially if that little extra is a signature element. I subscribe to the philosophy that Malcolm Gladwell offered in The Tipping Point,”The little things can make the biggest difference.” The chocolate chip cookie is not just a chocolate chip cookie. It’s much more than that.

[Next Up Chapter 6 – Word of Mouse]