Wake up music industry! Oh, and the movie industry needs to pay attention too.
Over and over we marketers see the advantages of giving customers what they want, and the perils of not meeting their needs.
Think about it. How many times have you heard the horror stories about customers trying to quit? How often does that turn a mildly-dissatisfied customer into a raging anti-customer? I just had an experience trying to quit a music service via an online connection, it took three tries, and it was painful. There was a rumor several years ago that the only way to quit AOL was to use swear words in a chat room and get kicked off; my one experience with AOL was less extreme but still an unpleasant exit, even during the trial period.
As businesses mature this needs to be a higher concern for marketers. Holding customers becomes more important than winning new customers. And having a positive reputation through the entire customer life cycle is even more important.
I lean toward the subscription model for most run-of-the-mill content because (a) I see how much money I have wasted on music and DVDs I enjoyed only once and (b) I like the ability to switch to a new service provider that has a superior offering. In fact I look forward to the day when much PC software (such as Microsoft Office) is sold on a subscription model.
Perhaps it will take time and earned trust for more users to believe that with the subscription model they will always be able to find their favorite things. Or (more likely) we will find that service providers will need to offer both flavors for their customers.
Yahoo! has broken this trend with their release of Yahoo! Music Unlimited. I have become a fan of subscription music, and have tried most of the new services. Listen, from Rhapsody, was doing a good job for me for awhile. Then today I tried Yahoo! and was amazed at how much they got right on the first try. They have an impressive music catalogue. The use interface makes sense. They have some good personalization. And their transfer to other devices is very straight forward, as well as a nice bonus. Note that I like it without even mentioning the category-killer price of $6.99 /month for pay-as-you go.
Although I have signed up for the month-by-month service, I already feel I will stick around a while. Good job Yahoo! marketing and technical teams!
In my view Netflix created the category and has been as zealous as Amazon.com to continuously improve and offer superior value to their customers. They have earned their leadership position by being first and by being the best.
The TLC Group in
With thanks to them, I will apply the same model what I have seen in many companies.
- Denial — What is the first thing you hear? “The reports must be wrong!” Or “the reporting is missing the real data.”
- Anger — Once this reality sets in, many companies blame the sales force or channels for failing to get the story out. Or they blame the customers for being stupid. It is usually someone else’s fault.
- Bargaining — This can consist of begging the channels or sales force to give it one more shot. Or can involve begging management for more advertising money or more time for the product or program to just catch on.
- Depression — In the corporate world, many start to worry about their jobs and look for transfers out of the department. This can be a harsh reality for many people.
- Acceptance — OK, so the product or program is a dud. Let’s either shut it down or reinvent it based on what is working well.
What about your products and services? What stage are you in?
In my conversations with CEOs and General Managers I hear three consistent themes:
a. Top-line growth is vital to the success of the company, now that we are climbing out of the tech recession.
b. Companies need to look for new strategies for products, services, alliances, go-to-market approaches, etc. The business world is different, and same-game strategies are no longer good enough.
c. They want their CMOs to step up to the challenges of the full range of strategy, alliances, product/service development, and lead generation.
At the same time, many leaders say their current marketing teams fall short of this set of challenges and they are wondering what to do. It is possible these companies need to upgrade their marketing leadership and key team members. But it is also possible that CEOs need to demand the most from their marketing team, and give them the latitude and requirement to take the company to new places.
I will share five starter questions for CEOs to discuss with their marketing team that will open the dialog and quite possibly open the team’s horizons:
1. “Why exactly do our customers buy from us?” Many companies are simply happy that their customers are buying, and have lost touch with the real motivations. In my experience, few executive teams can clearly articulate their value proposition, and instead refer to strings of vague PowerPoint bullet-points that could apply to almost any company. Those companies that learn what motivates their customers are best positioned to reinforce those attributes, seek other customers who would value those, and reduce wasted investment in unrelated attributes.
2. “Are we learning everything we can about our customers and how they use our products/services?” It is amazing to see all the useful customer information that companies “spill on the floor.” Every point of contact, even to resolve problems, is an opportunity to learn more about the customer. One leading company set a goal to learn two new things about every customer at every touch point, while avoiding asking the same question twice. For example, has your telephone company ever asked you whether you use cable or satellite TV services? Think of how easy that would be for them to do during one of your calls, and how much it would help them market their new services. Harrah’s is a leader in this effort. Then once you are collecting the data, the question becomes: “What are we doing to properly use the insights?”
3. “Do we provide a complete solution for our customers, and if not then what are we missing?” Many products and services require customers to do some work to create the full solution to meet their needs. For example, people who buy high-end sound systems often need help setting it up, companies who buy software need to install it and need extra hardware to run it. Too many technologies are products in search of a market. If your solution is incomplete, then by what channels and alliances can you complete the solution better than your competitors do?
4. “Are we meeting the needs of our customers across their entire lifecycle?” Many companies are discovering that delivery schedules, customer service, or upgrade ease are proving to be bigger differentiators than the core product/service itself. The CMO should be responsible for defining the entire customer experience.
5. “Do we make appropriate use of new media to increase our market impact at lower cost?” Many realize that the days of mass-media advertising are behind us, and the future lies in narrowcasting, product placements in other media, blogging, podcasting, etc. Netscape built a leading national brand without spending much, if any, on traditional advertising. Check whether your marketing department wants a bigger media budget and wants to win a Clio advertising award, or whether they have new experimental ideas for meeting your marketing targets at half the budget.I encourage CEOs to try these discussions with their marketing groups. They might be surprised by the response.
|Time and time again we see technology companies use the tech terms to try to sell the technology. One good example was ISDN; how many remember what that term means? It failed as a higher-speed access technology for consumers, and partly because of the same mindset that allowed the telcos to call it ISDN. Similarly, what is iDEN, GPRS, 1xRTT, and other catchy consumer phrases? Most people do not know. And they should not care.
We are watching the same trend with VoIP - voice over internet protocol. Phil Harvey makes mention of a mini-survey of VoIP users who did not even know the term VoIP. Watch for AOL to figure out how to make this simple and appealing to customers with their recent announcement. I note that in their press release AOL makes minimal use of the term VoIP. 5:24:01 PM comment 
It seems that Sony has missed the mark once again with the PlayStation Portable. I watched them miss with the Mini Disks, which were a superior technology to the Walkman and cassette tapes, but where Sony failed to realize that the Mini Disk should be a computer peripheral rather than a stand-alone entertainment box.
I have yet to try a PlayStation Portable, but Stephen Wildstrom at BusinessWeek provides great insights into the missed functionality and proprietary fences that Sony has built around this product.
They have created a Universal Media Disk (UMD) that are pre-recorded only, are expensive, and lack a support network of titles and inexpensive rentals. They have a limited form of WiFi but prohibit streaming music and video. They failed to allow easy synchronization for song loading. And they support only two music formats -- MP3 and their own ATRAC.
We all need to learn from the successes and failures of others. Sony would be wise to buy Apple, just to get Steve Jobs and his team to show Sony how to create a new product sensation and break down traditional barriers.
- Prospect: It is so important to know which customers you are targeting, so all the other Ps can align. This is different than a boil-the-ocean segmentation program. And it is important to go beyond "there are two types of customers.. those who will buy our product/service and those who won't".
- Product/Service: Describe the major features of the product or service. Note that I include both products and services because more product companies are getting service components in their business (e.g., warranty and maintenance support) and more service companies are getting into hard products (e.g., telephone companies with DSL modems).
- Price: This one is still important, and it is becoming increasingly important to look at all the "terms" elements of price as part of the equation. For example, with cellular companies, the set-up charge, phone cost, phone-upgrade flexibility, cancellation charges, etc. are all part of the price equation.
- Proposition: With the first three elements defined, it is essential to define the compelling value proposition for why a target customer will want to buy this products/service versus other options, including doing nothing. At the planning stage it is critical to push the envelope on the proposition, to apply superlatives as much as possible (fastest, cheapest, easiest, only, etc.)
- Place: The distribution channels are still important, and it is as important to think about the value proposition for the channel partners as it is for the end consumers.
- Promotion: There are more options for promotions today than there were 10 years ago, and wise companies get creative about exploring those. Seth Godin offers some of the most interesting and compelling ideas on new-age promotion that I have seen.
- Process: It is essential to define the end-to-end, lifetime experience you want your customers to enjoy. Some marketers leave that to others in the organization, such as the shipping department or the customer service team, but it is up to marketers to define this completely.
- Profits: Marketers are primarily responsible for revenue growth and customer growth, but must also understand the economic levers of the business and demonstrate how they are building the profits of the business over the long run.
- Engage the early majority (with thanks to Geoffrey Moore's book, Crossing the Chasm)
- Simplify the Digital Value Chain
- Engineer to an acceptable price point
- Develop "aggregator" channels