It was early August morning. You could feel the warmth of the sun on the skin, yet the air was still pleasantly fresh for that time of year. The room was big, yet modestly furnished. A bizarre writing on the wall saying “Think differently & always listen to your customer”. A mantra the owner lived by. By the look of the room, you wouldn’t know the guy was a billionaire. The ancient chandelier was dark, the large windows made sure the sunlight was keeping the room lit, beautiful Italian Alps providing the perfect picturesque background.
Suddenly, the door opened. The richest guy in Italy entered the room, sat down, and gave the only interview of his life.
Tracking banned; Biggest shift since the invention of internet?
Business is changing all the time. But nothing has changed how we do business more than the invention of the internet. Because the internet changed the balance of power between the seller and the buyer by making information available to everyone.
Even twenty years ago, a customer would turn to the seller for information about a certain product. And why not? The seller knew the most about the product and could advise the customer on the correct choice. Today, you write “Marshall Monitor Bluetooth Reddit” and in a matter of minutes you know whether the product is worth buying.
Oh, what agony for that seller. Just imagine a dumb fool walking into a store, asking the seller with 20+ years of experience which headphones are better to listen to Justin Bieber songs (or whatever kids these days listen to). The seller gives his recommendation, to which the buyer replies. “But why? They only have a 4.3 rating on Trustpilot compared to that other brand’s 4.5.”
The internet has changed everything.
Today, nearly 20% of all retail sales are done online. The internet has a major role to play in offline sales as well. We drown ourselves in a sea of information found on websites & online reviews before making the purchase in a brick & mortar store.
The internet changed the playground completely, as it gave customers plenty of insight into the product they are buying and into the company they are buying from. A seller today no longer holds all the cards in their hands. The playing field has balanced itself out.
And now, the playing field is bound to shift even more, with companies providing less and less user tracking online. Apple rolled out their privacy update where user can disable tracking which will reportedly cost Facebook $10 billion in 2022. Google is apparently following suit with the next updates, and Google Analytics was deemed illegal in Europe.
Has tracking as we know it run its course? Will organic content win once again? How can a company win back its advantage that it had until the 2000s?
It seems the answer to all of these questions is hidden in the customers. Specifically, in the knowledge, the company has to have on its customers.
Michele Ferrero was the Alpha and Omega of the chocolate empire that produces Nutella. Ferrero is famous for an interview he gave from his secluded home in Alba, just below the Italian Alps in 2015.
»Mr. Ferrero, you are ridiculously successful. Tell me, how do you make business decisions? How do you decide whether to make Nutella sweeter, or change the colors of the packaging, or whether to make a special Christmas edition? What is your secret?” the journalist asked, clenching the pencil that little bit harder.
»Simple,” Ferrero replied. “I ask Valeria what she would do.«
The journalist, visibly perplexed, asked: »Who is this mysterious Valeria?«
»Valeria,” Ferrero started the sentence, looked through the window towards the alps”, is every mother, every wife, every aunt that goes grocery shopping and decides what the family is going to be eating the next days.«
Ferrero summarized it perfectly. He grew his business by knowing who the decision-maker in the family is and appealing to that decision-maker. He knew that if he convinced the decision-maker, he would make the sale. Customer knowledge was everything to him.
Customers don’t come knocking
When we first started the Creative Solutions brand, we put little emphasis on getting to know our customers. We were as green as a marijuana leaf and knew nothing about business or marketing at that point. We knew we had the technical skills and expertise to create great products, so we thought clients would come knocking. All by themselves walking into our office, offering their money in return for awesome VR and AR services. Oh, how wrong we were.
Obviously, that didn’t happen.
So we took matters into our own hands and sent out a cold email campaign to our potential customers (or to people who we thought were our potential customers anyway).
About 450 cold emails left my outbox. That campaign got a 0% success rate. Yup. You read that right. Out of 450 emails, we got 0 clients. We actually only got 3 responses and all of them said the same thing:
“I am not the correct person in my company to contact about this.”
That was a powerful message for us. We were embarrassed. But at least now we knew we had no idea who we were selling to.
Looking back at the campaign, we sent out emails with the wrong content to the wrong employees, who worked for the wrong companies. I am willing to bet our timing was off as well.
So we decided to turn things around. We started collecting data. Researching client profiles on social media, writing down information during phone calls, and generally getting to know our customers better. In time, this helped us get a very good understanding of who is a good client for us and who isn’t. This has sped our workflow considerably and our next cold emailing campaign had a much more sensible 1% conversion rate.
Thanks to that knowledge, the company survived. And yes, it’s still alive & kicking, thanks for asking.
And not only that. Today, I regularly hold workshops for brands. Together we think about their customers & how to position their products so they transition from “nice to have” products to “must-have” solutions in their clients’ eyes. Because it’s these “must-have” products that are not only the most lucrative, but future-proof as well, surviving the big changes in the marketing world.
How big corporations are changing
Interestingly, you could put our failures down to lack of experience, but it turns out, big corporations had similar problems as well.
Apple was “just another” product company just ten years ago. They manufactured and sold iPhones, iPads, iPods. But Apple had one big problem, that could ruin their entire company in a heartbeat. They knew very little about their clients.
This proved to be a major obstacle. How do you plan next year’s features if you have no idea what people want? How do you know whether the customer will return in a year or two to buy a new phone if you don’t even know whether he is happy with your current product? Apple had a massively unpredictable business model. And businessmen don’t like unpredictability.
Apple knew their competition would catch up and pass them if things didn’t change. So they started collecting more data about their customers. They created Apple Music, Apple Arcade, News+, and lots of other subscription services. That trend continues today.
Digital subscriptions to the rescue
Why subscriptions? Because subscriptions renew every month. That means you get monthly data; a monthly confirmation that your customer is happy with your product.
You know how in early stage startups actual transactions to test the potential of your product are really important? With digital subscriptions, you get exactly that. A user makes a purchase every month. And if users start mass cancelling their subscriptions, you will know that something is wrong. Not in two years. You will know immediately. It’s like tracking. But completely legal and not even a little bit shady:)
Getting all that data was a game-changer for Apple at the time. The brand is now worth almost 3 trillion dollars.
Another unexpected positive effect of renewable subscriptions I noticed at KOBI – another company I co-founded, was the increased engagement. At KOBI, we offer both subscription and one time payment options for purchase. And comparing our north star metric, I noticed subscribers use our app much more frequently than one time buyers.
It makes sense. A subscriber who doesn’t use the app feels like he is wasting money. And people hate wasting money.
A one time buyer already made the purchase. He now has to make another sacrifice – put in the effort to use the app. Yet he doesn’t get the same feeling of losing money, since the purchase was made in the past.
If user engagement is important to you, if it’s part of your business plan, subscriptions are possibly the way to go.
The bottom line
Small startups waged war against major corporations and won because they had an awe-inspiring understanding of their customers.
Large corporations fell tragically, because they didn’t have their customers’ best intentions in mind.
Even giants like Apple are changing the way they work in order to better understand their customers and their habits.
A long time ago, product knowledge may have been the best way to sell. But we are way past that stage. And except in certain niches, that time is not returning. Today, customer knowledge is everything. Today, what lives on will be the smart words a chocolate empire giant once said.
“Think differently & always listen to your customer.”
– Michele Ferrero
TL ; DR
Digital marketing is changing once again. With more focus put on privacy and less people allowing tracking across apps, companies will have hard time tracking their user behavior.
Does that mean organic content will win once again?
Probably. Companies will have to know their customers better, get into their good graces to get the information they need to sell their products.
Actually getting to know your clients, listening to their wishes, understanding their needs will once again come to the front. Customer knowledge will be the most important factor in the coming years.
I, personally, am looking forward to a more privacy-focused world, where organic content (like my articles, wink, wink) will have a bigger impact than a cold PPC campaign.
Hey. My name is Andrej, I am a growth marketer talking about positioning a lot. But hey, it’s important. Positioning is the basis of your marketing and sales. Flop that and you will flop your company. That’s why I created a portal of free resources on digital marketing and positioning. Access it here: RESOURCES
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