As more businesses move from Web 1.0 to Web 2.0 and Web 3.0, they can benefit immensely from consumer generated intelligence and insights gained through the newest customer-centric technologies. These developments that are shaping the Internet and creating opportunities for new business models formed the theme of a talk by Andreas Weigend, former Chief Scientist at Amazon.com, at the Singapore Management University’s Shaw Foundation Distinguished Faculty Lecture Series.

In the midst of what he calls a consumer data revolution today, Weigend sees his role as one of “helping clients to leverage on user data to produce innovative products and business models”. He has a diverse client list which includes Nokia, Lufthansa, MySpace and Alibaba.

As Weigend explained, “I help my clients understand the principles underlying the consumer data revolution, and work with them to transform these principles into measurable results. Together, we invent incentives that inspire users to participate and define user-centric metrics of engagement. We create new products and business models anchored in a solid data strategy.”

The Early Web

According to Weigend, Web 1.0 was about page views, clicks on links and users being able to “express intentions” through searching on the Internet. “It marked the first decade of the web where successful companies gained power by collecting, aggregating and analysing customer data, but fell short in using the information to advantage.“

While Web 1.0 marked the first data revolution that made available a wealth of information by website owners, Web 2.0 is about a second data revolution bringing about a new dimension to data creation, he said.

“Because it is engineered to encourage feedback and, consequently, collaboration online, Web 2.0 hands over the creation of data and information to users. Users started to actively contribute explicit data such as information about themselves, their friends, or about items they purchased. Such information goes beyond the clicks and search data that characterised Web 1.0,” Weigend said.

He cited Amazon.com’s online review system as an early example of user-generated content. The company realised that prospective buyers place higher value on recommendations by other users rather than on corporate promotional materials on the web. Allowing users to contribute explicit data online, the company leveraged on knowledge dormant in its huge customer base to help prospective customers with their purchase decisions.

Wikipedia leads the way in facilitating and demonstrating the benefits of online collaboration, said Weigend. Its approach is to relinquish control over this space and allow users to interact and build information with each other. Wikipedia is an example of the power of knowledge sharing among users in a large online community. People learn quickly that because of the absolute numbers, an online user community was likely to be more helpful than a representative of a company, he explained. He also cited Google’s decision to open up access to its codes and tools to the technical community in recognition of that fact that people -- in this case not only end-users but also software developers -- are at the centre of the information flow.

Data Tagging

Along with online collaboration was the need to find relevant data quickly. However, the existing hierarchical system of folders and files at the time had its limitations, he recalled. The Internet has since given rise to different ways to save, store, retrieve, annotate and share information, using what is known as tagging or keywords to label each piece of digital information such as a photo, bookmark or blog.

Tagging has become the norm, said Weigend, and is a significant shift in the way digital data is handled and shared. Users no longer have to remember the file name or folder in which the information is stored, and can simply key in tags to retrieve their data. Several labels can be used to tag a single piece of information.

“Today, the online world has shifted to a model of collaboration and explicit data creation,” he commented. “Successful firms develop systematic ways to encourage and reward users who contribute honest data. A good system does not trick customers into revealing demographics or contact information, and seeks to reward users subsequently with information they find useful.”

Netflix, for example, allows users to contribute ratings for movies for sharing with others. Tripadvisor.com is another site through which customers share hotel ratings and experiences with other travellers around the world.    

“There has been a staggering increase across the board in the quantity and quality of data people contribute on the web and on mobile devices,” said Weigend. As a consequence, the mindset of users has changed from one of expressing intentions to one of expressing opinions and seeking attention.

Businesses which recognise this trend are best equipped to tap into consumer generated information. By gaining insights on what users are looking for, they are able to successfully capture the hearts and wallets of new generation customers, Weigend said. 

Web 3.0 and Social Dialogue

From the one-way communication of Web 1.0, to user-generated content in Web2.0, Web3.0 is all about dialogue. It goes well beyond text to include real-life gestures where one could ‘poke’ and ‘nudge’ another person through social networking websites. The appeal of Web3.0, commented Weigend, is the opportunity for richer and fuller online dialogue that comes close to real-life communication. 

Providing a historical overview of technology development, Weigend compared the 70s --which saw tens of millions of people working on computers in back offices – to the 80s when more than 100 million people used computers in front offices while interacting with the back office. This was followed by the 90s during which about one billion customers interacted online with companies. At the turn of the century, even more people benefited from digitisation and user generated content on the Internet via computers and mobile devices.

“The digital revolution has gone from performing computation to communication with the convergence of telecommunications and computers. Today, the digital network is about user-generated content, social networking and dialogue,” he said.

Conversational Marketing

A company that knows how to capture customer feedback will have a finger on the pulse of the market, emphasised Weigend. Since such feedback comes direct online from customers, the data obtained is genuine and more revealing than a commissioned survey by a market research company, which is lot more expensive as well.

Looking at the possibilities for new business models, Weigend stated that the social networking features offered by Web 2.0 and Web 3.0 provide strong channels for organisations to have direct relationships with prospects and customers. Thus companies could make the transition from an e-business platform a “me-business” or “we-business” model, he said.

The more familiar e-business company is more focused on itself and on maintaining control, whereas “me-business” is customer-centric. As for “we-business”, this is the stage where customers can bypass the company and are in direct dialogue with one another.

This development opens up new opportunities for organisations to get involved in conversational marketing. “We have entered the new era of conversational marketing where the individual is clearly heard through blogs and social networks. In many cases, their credibility and outreach surpass the voices of the companies,” pointed out Weigend.

He also noted that the nature of the `blogosphere’ and search engines is such that critical articles are ranked similar to “official statements”. Companies can now choose to be active and participate in this conversation, or continue to be detached from the platform through which customers interact and share information. Weigend reiterated that companies which understand and capitalise on the consumer data revolution are those which realise and respect the true power of the customer.