A Non-Corporate Model for the Localized Economy: Guilds
(October 23, 2012)
Guilds offer a dynamic, flexible model for relocalizing and reinvigorating local economies.
The primary reason the U.S. economy is stagnating is that it is dominated by an increasingly dysfunctional Central State and the private cartels it protects. The solutions, therefore, cannot come from State central-planning or from global corporate cartels. The solution is to develop alternative models that reinvigorate the local, community-based economy and that leverage the new tools of productivity: the Internet, freely available software tools and new technologies such as desktop fabrication.
Though guilds have been around since ancient times, the Western model developed in the 1200s. The guild model is broadly based on mutual benefit and the conservation and sharing of applied knowledge. According to the Wikipedia entry:
An important result of the guild framework was the emergence of universities at Bologna, Paris, and Oxford around the year 1200; they originated as guilds of students as at Bologna, or of masters as at Paris.
While the Medieval guilds had an income-protection purpose much like a trade union or a cartel, modern incarnations of the model are aimed at serving both members of the guild and customers by establishing trusted information about local small-businesses.
To get a better understanding of the emerging guild movement in the U.S., I interviewed Mike Hartrich, guildmeister of the Santa Cruz Construction Guild (SCCG) in Santa Cruz, California.
1. What inspired you to start the Guild?
"I have always worked by word-of-mouth and never needed advertisement. The 'Great Recession' affected me personally in 2009 when the calls stopped coming in. That was a shock. I had been learning about online marketing so I looked into what was available for contractors to market their services online. I looked at Angie's List, ServiceMagic, Diamond Certified and others. These are all large national companies that use the power of computers to provide online referral services nationwide. Some do this better than others.
The bottom line is that while these companies focus on local business they themselves are not local. Construction is really a local business. You build up your business one job at a time through a growing referral network. Word-of-mouth is the essence of that.
Also, these companies are impersonal, not personal. They are not made up of people who connected through being part of the same community. They are strictly a business, and only secondarily concerned about the local area.
I decided to set up a local online referral site that would use the Internet to draw attention to the members. At the same time the focus would remain strictly local. That's how this adventure started. Little did I know what I got myself into. I had help from a webmaster and selected Wordpress as the platform so I could make changes myself. There was a lot to learn.
The basic principle is a LOCAL online hub for quality builders and constructions pros who are invited by REFERRAL.
The Santa Cruz Construction Guild (SCCG) grew quickly. We had our first meeting in March 2010 at Big Creek Lumber. Ever since then the guild has developed a life of its own. Members are getting leads and work. Not everyone, of course, but the site draws an average of 450 visits/week.
One of the main benefits is the ability for members to meet other good builders, subs and professionals. The members really like that. Our renewal rate is over 90%.
2. Please sketch out the basics of your Guild model for those of us who are unfamiliar with guilds.
Membership is based upon a referral. If the prospective member does not know an existing member then I check him out - contacting three recent clients, checking his status with the Contractors State License Board, look at his current web presence etc - and I refer him. This system has worked really well so far. As a member you get your own member page. This is customized with your text, images, videos logo etc. If you have a web site I usually copy, paste and edit from that. The end result is a custom one-page web site that gives you a real web presence as part of a quality trusted local group. If you have a web site then we link to it. Same for Facebook and Linked-in. Once you have your page you can invite testimonials from your past customers.
You also get signed up to our email list. This simple way of communicating with the members works really well. Members can ask questions, offer tips, look for help , buy/sell items, etc. I forward their email to the general membership. Right now the latest email covered the County of Santa Cruz late-fee structure and penalties for prior unpermitted work. I also got an email from a member who was told that he could not have his over-the-counter permit request approved for at least 52 days.....
These days if you don't have an online presence you get left behind. The guild uses the Internet to connect members with customers, as well as with each other.
I just started our Facebook strategy. This really is the ideal avenue for members to publicize their projects with images and posts, complain about the heavy-handedness of the County etc. I have a hunch that our Facebook strategy will be quite popular with the members.
I just checked the Facebook status of the 163 members of the Santa Cruz Construction Guild (SCCG). 60 have Facebook business pages and over 103 do not. Of the 60, only five or six are actually using them. So this is an area where the Guild can help build their business presence for next to free.
The cost for membership is currently $240/year with a $60 discount in place right now. I intend to keep it as low as possible because even at that it's expensive for some members. Everyone is watching their nickels these days. My intention is to give members the best possible deal for their money.
We also have meetings. These are usually held at Big Creek Lumber, a local family-owned yard. There is a natural alliance between the guild and the local lumberyards. I intend to build on this alliance. Members like these meetings. They are a good way to meet your peers. We also have had meetings held at member offices. The topics of the meetings vary. Recent meetings covered construction financing ( at Lighthouse bank ) waterproofing details at Myles F. Corcoran Construction Consulting, Building Science by Scott Milrod, etc etc.
Over the past three years the guild has taken on a life of its own. We have good local press. We've been featured five or more times in the local paper ( see our media page ). We now have hats with the guild logo, bumper stickers, etc. Members like that.
I set up a member-referral program that rewards members $60 for each new member they bring in. But almost no one has used this. It doesn't seem to be a big driver. Big Creek Lumber used this for our charity drive and is donating these to Second harvest Food Bank.
3.How is the Guild’s model different from the national/commercial “contractor referral/recommendation” services?
We use the Internet & computer to create an online presence. But this presence is a reflection of a very real local presence. That's what makes the guild different. It's all based on real local people, local reputations, local histories. We all need an online presence these days. Customers want to check you out first. That's what all the big online services offer.
Angie's List is good. Yelp is questionable, Diamond Certified is expensive - $7,500/year - SeviceMagic charges for leads, etc etc. They can be useful. It's not an either/or choice. You could subscribe to one or all of these. I want to make the guild so valuable to the members that it becomes the foundation of their online presence.
We also started a Member Recommended Services. These are local companies that provide our members with a 10% discount. This is a new service/feature.
4. Do you see the Guild as part of the “relocalization” movement which seeks to emphasize the local economy rather than the global-corporate economy?
Yes, I certainly do. Members love the LOCAL focus of the guild. That's what makes it work.
5. The risk in any recommendation/referral model that is open to the public such as Yelp is that one customer can unjustifiably damage the reputation of a contractor/service. On the other hand, customers need to be confident that comments from previous customers haven’t been screened to hide legitimate complaints. How does the Guild manage feedback from customers and members?
A customer makes a bad comment on a member's page. I get to see that that before it gets published. I send the comment on to the member and ask for hi s side of the story. So far all three cases have been resolved quickly this way. I published one complaint in order to get a quick response from the member. That happened. Amazingly, we have had only three complaints in three years. Two of them were old grudges - 3-5 years old. Not much you can do about that. They preceded the guild so I did not leave them published. One member did not renew because of that. The third complaint was for a missed appointment. The member contacted the customer and made it right.
Any member who is a bad apple will not remain a member for long. Membership is not a right, it's a privilege. If you mess up seriously you won't be a member for long.
6. Is the Guild model one that you believe can be duplicated elsewhere in the nation?
That's the challenge. Chad Cornette, an architect-builder in Green Bay WI contacted me after our first big newspaper article about two years ago. We started the Green Bay CG a little over a year ago. I quickly realized that any expansion required a huge expenditure of energy and back-end infratructure: Shopping Cart, CRM module, SEO, email, web site replication, etc etc etc. AAAAaaargh.
After a year-plus of working on this I have come full circle to my original assessment, but with a deeper understanding. The key to duplicating this model lies in each community. I can provide the template, the model, the 'business-in-a-box', the back-end IT, etc. But I cannot make the local connections because I'm not a local.
That connection requires a local lumberyard, to act as the hub, AND, primarily, a local 'guildmeister' to build the membership. That is the hurdle. So now I am thinking of how to attract the right kind of guildmeisters who want to do this in their community. They get compensated between $60 - $100 for each member renewal.
150 members x $100 = $1,5000/year or $1,250/month. That is not a full time income, but a comfortable extra income for doing very part-time work in your existing field of business.
I'd like to see guilds
grow in all kinds of places across the country. It's a good model. I'd like to be able
to offer group business and health insurance to the members once we get large enough."
One sure way to improve the local economy is to keep more of the community's income in the
community itself rather than send it to distant corporate cartel headquarters. Guilds can
play a dynamic role in that relocalization movement.
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