Intangible Success Factors of Today

For this one, let’s think about our decision making process as a consumer. How do we decide which product we buy?

Is the “functioning” of a product still a criterium? We expect stuff to work today, don’t we? In most categories, all available products can be expected to offer similar performance at a similar price.

At the same time, our lives have become busier and busier. We have to process more information at the same time, conduct more tasks at the same time.

This leads us quite naturally to opt for the product that offers the easiest handling:

We choose the one with the best User Experience.

There is just too much information to take in, and we don’t really have time or patience to learn to operate complex product.

Across verticals, design, UX and UI have become the key purchase criteria. Form does not only follow function anymore; it has overtaken function.

Data is the oil that fuels many of the other success factors.

USE CASES:

But what does it do? Why is it important?

• Data enables us to customise products for customers. This is done through recommendation systems.
• Data enables us to track and even design the behaviours of customers. This is done through pattern recognition, like Facebook’s social graph does.
• Data helps us improve marketing efficiency by better targeting the right customers.

These use cases make up the customer facing part. But data also helps businesses build greater efficiency of a businesses operations, such as improving inventory management.

MAKING DATA VALUABLE:

Now not all data provides value. Stock market and company data is available to everyone. Yet, only a few investors keep beating the market.

There are two elements that help us use data in a valuable way:

Access to relevant data points and then proper analysis of data are two critical ingredients.

Thanks to sensor technology, and to the ability to track users through browsers and apps, the availability of meaningful data data points has skyrocketed.

At the same time analysis tools have been further developed and are now available at low cost literally to every mom and pop shop. Open source has enabled machine learning at € 0,- starting cost.

Data has become an asset because we can now access more relevant data points and because we have found better ways to make meaning out of these data points.

We have spoken about the disintegration of value chains. Many resources that are required to develop, produce and distribute products and services can now be sourced externally. They don’t need to be built or acquired anymore.

We also have spoken about businesses building more and more on intangible assets.

Both of these have two important implications:

Because of the combination of these two shifts, operating ‘asset-light’ has become a critical competitive advantage.

Asset-light means your balance sheet includes less assets, you need to invest less money in assets.

An asset-light model not only allow us to operate with lower fixed costs, but it also provides flexibility for our operations so that we can adjust the business model more easily when the market or consumer needs change. Furthermore we are now able to focus on those elements of the value chain that we can do best.

Could you imagine a hotel offering city tours? Possibly not. Not only would it be hard for any hotel to get the critical mass of customers necessary to offer profitable tours. Also wouldn’t all customers necessarily trust a hotel to do the best city tours. Enter AirBnB, offering city tours. AirBnB is a good marketer, but not a good hotel operator. The flexibility of their business models has allowed them to use their customer base to now also sell local “experiences”, such as local tours or wine tastings. This only works because their value chain focus lies on marketing, not on hotel operations.

Brand has always been important for users’ purchase decisions. Yet, the basis of what makes up a brand has evolved.

In the early days of consumer society a brand would build trust for example in its reliability and product performance. Volvo cars were safer, the Beetle car was supposed to “run and run and run” (“er läuft und läuft und läuft”). And we remember that “nobody every got fired for choosing IBM”.

Today, as product categories have become commoditised, brand positioning has extended to signifying a personality, that the consumer can resonate with. Brands provide identity. Beats Headphones are not necessarily better than other headphones, but they are for “those who refuse to settle and never back down.” Today, branding turns products into fashion items.

If we think back of the Beetle, which stood up against “competing with the Jones’”, have we come 360° circle back to competing with the Jones’? Yes and no. Brand marketing continues to target our self-esteem, but it tends to do so by telling us how unique we are. More and more products have become fashion items that serve our personality, whether it is the personality we have or the personality we would like to have.

The more cluttered the marketplace, the more desperate businesses become to get into customer’s head. One effective tool to do that is behavioural design.

When we look for examples we can think of the fitness app that helps us change our behaviour towards more consistent workout. It can also be the Facebook feed which provides us with a constant dopamine fuel. In a similar fashion, LinkedIn stalks us with “complete your profile” messages. They know that our need for completion is strong and that having “built” our profile will provide us with a sense of mastery that will incline us to stay active and feed their content machine. 
Another example of behavioural design is tempting copywriting. Good copywriters change our behaviour by playing with our deeper needs. It is hard not to click on “three simple steps to whatever“, or “the number one reason why Google succeeds”.

Behavioural Design has become one of the irreplaceable parts of the marketing toolkit.

This messing with our brains has become so intense that by now even behavioural design has become commoditised in a way. Thanks booking.com, we are fully aware that your “only 2 rooms left” message plays on scarcity. Yet it still seems to work.

There is a fine line between trying to get more clicks and disrespecting the intelligence of the customer. Of course it depends on the level of intelligence of the customer whom you target, but in the long run, it has always paid to provide real value to customers, instead of gimmicks.

Here is my personal favourite.

In a crowded marketplace, before doing anything else, we need to be clear of who we are and what we deliver.

Imagine being in a job interview. What happens when you pretend to offer something that you are not able to provides? Recruiters of good companies are not stupid, they are trained to see through you. Similarly, we are trained as customers. In fact, we train every day with the many marketing messages we are bombarded with. We have learned to understand whether a company is authentic and whether they provide value.

So this is brings us back to where we started. We have to unmodel the business, and this starts with understanding our customers and what we really deliver for them.