Customer Engagement

The Gustin model is the business model that scores the highest on customer engagement.

Companies using this model actively engage their customers on their website, where they get to decide which products get produced or not, and which fabrics these products will be made from. This is a new way of doing business in the industry that involves the customers to a great extent, and changes the content (new activity that is added to the business model) and the governance (who performs the activities) of the business model, which according to Amit

60 and Zott (2010) is a source to business model innovation. This is likely to create a strong customer relationship, as the customers feel that they are heard and included in the process, and it also results in products that they are more satisfied with. Customers of brands using this model might also feel proud to tell others about wearing clothes from a company that is revolutionizing the industry.

The difference between the Gustin model and the Collection model regarding this dimension, is essentially that the Collection model engages the customers to less of an extent. As

opposed to individual products, they design collections that the customers can decide to support or not. Companies using this model might also offer other products that the

customers have not pre-bought. This model is therefore placed slightly more to the left in the diagram compared to the Gustin model.

In both the Gustin model and the Collection model, the brands ask the customers if they like the products or not before a potential production starts. With crowdfunding this works

differently than when early adopters pre-buys the new iPhone, as the iPhone will be produced even if they don’t have a long list of pre purchases, while the future of the crowdfunded product relies on accumulating sufficient funding. Companies using the Gustin or Collection model are able to find out what their customers prefer. By asking the customers for multiple products they will not just get a “like or don't like”-response, they are better equipped to predict which attributes the customers are looking for over time.

In the Launch model, customers have helped the brand come to life. This naturally creates a strong relationship to the brand. Customers of the Launch model will be able to say that they were the ones that enabled a given product to get produced, which will create an added value for this customer. Nevertheless, the degree of customer involvement in this model is not given. Companies using the Launch model can choose to what extent they wish to include customers in future development of products and the company, as it is not an integrated part of the business model typology. It is likely that customer involvement is beneficial for the company, and the companies claim to be active on social media and email in order to keep in touch with their customers. Compared to the Collection- and the Gustin model, the customer engagement facilitated by this business model is moderate, while it is higher than in the Equity model.

61 In the Gustin-, Collection-, and Launch model, custmers are involved at an earlier stage than in the traditional business model in the fashion industry. Added value is created for the early adopters as they now have the opportunity to back and purchase a product before it goes into production. Value is also created for other customers that wish to follow the early adopters and be updated on the latest trends. Through the different crowdfunding platforms, it gets more visible which products the early adopters like. Crowdfunding enables customers to instantly see what products get the most funding, thus seeing what is popular. Previous literature (Viotto, 2015) has also indicated that the cumulative capital in a crowdfunding campaign has an effect on the decisions of contributors.

The Equity model has the lowest degree of customer engagement of the different business models. Although companies in this model value the needs of their customers highly, customer involvement is not an integrated part of the business model. Companies using this model have products that their customers desire, such as ethical fur or quality basics, but having products that customers desire is an important aspect of every company, as they need people to buy their products. In other words, customer involvement is not a prominent feature of the model. The Equity model does however have a relatively high degree of customer engagement due to other factors. Crowdfunding has opened the doors for a larger amount of people to invest in companies and buy shares of both existing and up-and-coming brands. By giving more people the opportunity to own equity in companies, they open the possibility for these people to wear clothes from a company they actually own a small portion of. The CFO of DSTLD claimed that the opportunity to turn customers into owners and vice versa is one of the biggest upsides of crowdfunding. He also told us that this makes the company more willing to invest in the customers, as some of these customers (5% in their case) will want to invest in the company.

In the business models we have identified, the involvement of customers is higher the more crowdfunding is an integrated part of the business model. All of the models facilitate a sense of attachment to the customers, and the customer engagement is generally strong. This is in line with the general development of business models, which have a tendency of being more customer-oriented than before (Teece, 2010). Although the business models help facilitate a certain engagement of the customers, each individual company also affects the relationship;

the story of the company, the products, and the values they stand for being important factors.

Fair & Square is in the Launch model, which is ranked third in customer engagement.

62 However, the company has a good story in pivoting the way for a more ethical production in the industry. Consequently, a customer of the brand might have strong feelings towards Fair

& Square, because one feels proud to be a responsible customer, or is passionate about the cause and therefore identifies with the brand. This implies that Fair & Square might actually have a stronger customer engagement than illustrated in Diagram 1. Thus, the importance of a good story, and not just a good business model, is enhanced in order to connect with the customers. Our diagram only shows classifications of the typologies of the business models in regards of customer engagement and revenue boost, and are therefore not absolute.