No matter if they are called Virtual Worlds, eCommerce, Search Engines, Social Networking/Social Media, the virtual worlds mix with and shape people’s existence in ways never conceived just one decade ago.

People already have a digital identity and act in the Digital Economy probably even more than they do in their physical reality but the way people relate to their communities is changing along with technological innovation.

Over the past ten years, large and small companies across all industries have invested in their digital strategies. Further developing these strategies for enriched online connectivity is essential to the future success of both existing, traditional businesses and new companies entering the digital economy. But for all the hype and enthusiasm, few have figured out the right business model to succeed in the digital era.

The first digital decade (1994-2004) was characterized by innovation in the form of new technology that provided increased functionality to consumers and businesses.

The second digital decade is all about personalization and connectivity in ways previously not possible or imaginable.

The shift from innovation to humanization has led to a new Web 2.0 business model that feature both attractive and disruptive characteristics: low cost of entry, massive reach, ability to easily target customers with attractive demographics and widely dispersed around the world, ability to have meaningful interaction between participants, as well as possibility of replacing existing physical goods and services (newspapers, books, etc).

KPMG emphasizes that to understand the opportunities and generate revenue from them, companies need to view their target customers in a new way – as members of Digital Tribe that expect focused and personalized services.

As KPMG notes, these companies also need to look beyond the traditional value propositions of ‘content’ and ‘distribution’ to consider the full range of benefits they might provide to end-consumers.

“We all witness every day the tremendous changes that technology brings to the way we live and do business. The digital economy is no longer a virtual concept but the reality that shapes us and our relationships, be it personal or in business. KPMG has recognized that consultants should guide customers through these rapid and chaotic changes of our ecosystem and defined a structured approach to help them choose the right way to create value for end-users. We believe that the proposed concept of Digital Tribes and the Digital Convergence Equalizer as part of a complete analysis framework will help companies better understand digital communities and how to further ride the digital wave,” said Aurelia Costache (photo), Advisory Partner KPMG Romania.

People are no longer constrained by physical boundaries and can almost instantly expand their real life relationships by connecting in personal and tailored ways with hundreds of people across the world, forming “Digital Tribes” that hold common interests and beliefs.

From Digital Masons (large groups of people that have string loyalty to one another, have impressive collective wealth and can afford spending premiums on relevant services) to Digital Itinerants (individuals that wander around sites but neither adhere to a larger group of interests nor are they willing to spend on specific digital services) KPMG identified seven types of Digital Tribes based on a mix of relevant characteristics (e.g loyalty, size of group, collective wealth): Digital Masons, Digital Clubbers, Digital Marines, Digital Nations, Digital Moms, Digital Nomads, Digital Itinerants.

But identifying the right tribe to address is not in itself a way to building successful businesses unless the companies understand how to provide value to these tribes and wrap their value propositions within a profitable business model.

By supporting the tribe’s passions, as well as facilitating dialogue and interaction between members of the digital ecosystem, companies can create digital propositions that will attract Digital Tribes and build much deeper connection with the targets, driving their engagement with the brand.

KPMG has identified 20 ways for a company to provide value to its Digital Tribe and introduced the Digital Convergence Equalizer as a tool to evaluate the digital value proposition.

Together, the concept of Digital Tribe and the framework that provides insight for choosing an appropriate revenue model to reach them offer a structured approach to help refine an organization’s digital strategy.

The Emerging Business Model to Help serve Tomorrow’s Digital Tribes paper also features interviews with executives driving the digital strategy of leading-edge companies: Google, Universal Music Group and Fairfax Digital.