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Reputation Currencies


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The first in a series on the Future of Money. Sponsored by The Institute of Customer Experience (ICE).

Today’s world increasingly challenges us to think differently about value and money. Almost everyone agrees that reputation is important. But how important is it? Does it have an impact on your finances? What is the currency of reputation and is it transferable or exchangeable?

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Published in: Economy & Finance

Reputation Currencies

  1. 1. nmfooooo 01 THE FUTURE OF MONEY Sponsored by (ICE) The Institute of Customer Experience Reputation Currencies Today’s world increasingly challenges us to think differently about value and money. Almost everyone agrees that reputation is important. But how important is it? Does it have an impact on your finances? What is the currency of reputation and is it transferable or exchangeable? Author Heather Schlegel
  2. 2. l'/ Iv “[. l/<r'" [I l’t11‘I'l'Irt’}' t’n'u! ('zl In’ (H’'. '[ lliulum In p/ 'rv'm'<x' </ N uxszmz mumu1!. lu, ' mlm'u, Iiu l‘m': '/, -rmk Hkv. Image source: l ‘Vi v. .rHH . . _H. ‘ "‘l, ‘4““‘? ’il . . . I 1 How is reputation created? Reputation is co-created by individuals having experiences. Looking for a great Italian restaurant for dinner tonight? Search Yelp reviews and see what people who have already dined at a place have to say about it. Want to know what it's like to work with a potential hire? Read their Linkedln referrals. Wondering whether or not other people are happy with a product you're about to buy? Amazon reviews will tell you. You’ve probably even shared your own experiences with something you enjoyed or to warn others about a less than positive experience. Your FICO score measures your credit risk, which is really credit reputation, based on your behavior. But reputation is not always clear-cut. You’ve probably read reviews in which equal numbers of people give raves or have had a bad experience. Values, economic ability and taste all factor into someone‘s experience and subsequent review. Reputation can be messy and reviews difficult to differentiate. Reputation is not a fixed asset. Your FICO score, which is your financial reputation, is not set in stone. It changes as your credit habits change. This brings us to a subject that is not often discussed and doesn't have a good technical solution: people change and their reputation does too. However, the way people think about each other’s reputation doesn’t necessarily keep pace with the changes. Outdated stigmas remain attached to individuals, products and services. We don’t have a good ability to forgive mistakes and accept positive change. In the digital world there’s the growing pressure for certain events and information to be forgotten. The recent EU ruling requires Google to remove information when requested. This is a clumsy solution to the problem of changing reputation. We need to have a technical solution that can honestly reflect reputational ebbs and flows.
  3. 3. Reputation is crucial for the new economics of the Sharing Economy in When you need to pay your bills, you can’t go to your Linkedln page and cash out your recommendations like withdrawing money from an ATM. However, your reputation does influence your cash flow. Positive recommendations may increase the kind and amount of work you’re offered and your ability to increase your salary. A better reputation does lead to increased cash flow. Reputation is a requirement of the sharing economy. For AirBnB hosts and Uher and Lyft drivers, positive ratings are paramount to their success. It might seem crazy to stay at a stranger’s house, but on AirBnB, host reviews facilitate trust among strangers. On a recent trip to Madrid, I selected an AirBnB location based on the reviews of the host, Sancho. I wanted to stay with someone who knew the local area and could suggest places to visit. When I met Sancho in person, not only did he tell me the best places to go, we became fast friends. This experience has happened to me many times — whether I was hosting or being hosted. When you know what to expect, you can be more relaxed and focus on the experience. Reviews on AirBnB enable you to select the travel experience you want — thanks to the travelers who stayed there before you. Your AirBnB, Yelp and eBay reviews have immense values outside their immediate platforms. Even though these reputation systems have been created for the specific company — imagine how powerful it would be to have your reputation in one place. L'|3' A 33:»: Image source:
  4. 4. Is reputation transferable? Is it possible for reputation to be exchanged from one platform to another? I was recently told a story that illustrates how reputation can be transferred. Uber and Lyft are both independent operator ride—sharing platforms. Both companies facilitate the connection between driver and passenger. Drivers must be reviewed and approved before giving rides through their system. In a move to gain more drivers and compete with Lyft, Uber offered bonuses to tempt already approved Lyft drivers to the Uber platform. In some cases, it was easier for a new driver to go through the Lyft approval process and then switch companies, than it was to apply directly to Uber. This is an unusual example of the direct immediate transfer of reputation. "Making every Lyft, Uberful"
  5. 5. Reputation and the Future [3 Watch the scenario no. 1 Reputation will be a visible part of our ”, M(, m Uwumm everyday transaction experience. i, ,--_, ,,; :1Hj1_‘'[r[, '[[[[| I.'. lNH: mm'. i:1‘i' N1/‘rill’. / .‘. I r_J S(TlZ. l. »Rl() l: .l. -l'l till (‘K Ill 'ill. in the below scenario four friends are splitting the check through a Smartcheck device. Thought the SmartCheck, they can rate their dining experience right there. The restaurant gathers immediate feedback — and if the restaurant wanted, the server could rate the diners. The Ledbury Roast Chicken Salmon Special Pesto Cream Lamb Skewers Jack & Coke Tiramisu lmiutnhc Ii‘.
  6. 6. Reputation will help peer to peer transactions SCENARIO 2: l()'l‘()l<t. ‘Yt‘l. l‘. l'()l< S. »l l’. Ever try to sell something on a classified service? It’s often hard to tell between scammers and qualified buyers. In the below scenario, a woman is looking at motorcycles for sale. The seller's reputation is shown as a “verification” checkmark on their profile. This helps the buyer judge which seller she wants to deal with. Reputation works both ways. In the same scenario, the buyer can share her reputation when requesting more information about the motorcycle. By sharing her reputation, she signals she is a serious buyer. } Zero S Electric Motorcycle . - Price: $16,000 ‘ Owner: Ben Geode traveler 3 singer 1 Q Verified - Va ate-urea History Dnctuos '7 o Mstoty ‘est Dwe Accrder‘. Reports nclude Rewtatlcn Watch the scenario no. 2 Slices‘ 0fLife / lllps. ’ ‘.1illl‘. ‘()II(lI/ )r'_r‘r)IIl '; iuI<'hi’' ll’/ .»‘qIr! -ilk/ g." While we will continue to create reputation on individual platforms, there will be an increasing demand for fluid exchange of reputation and ratings from one system to another. I believe we’ll see tools to aggregate your reputation in one place. There may develop reputation system APls which would enable you to transfer your reputation to new platforms. These are just a couple ways we can expect to see reputation evolve. Reputation currencies help us make stronger connections and enable new economic models.