33. Finding New Value: Part Deux

You now have an idea of the areas prevalent in your industry that are irrelevant or add minimal value. You have also identified the areas where you can create and promote value to customers, and do it in ways that no one else in your industry has yet discovered.

In this chapter, you will map four new areas against the job customers hire your product or service to do for them. You will explore broadening your audience of buyers, adding new experiences, leveraging trends, and looking for new ways to deliver the solution to buyers. The goal of this exercise is to find new ways to study what customers want. The difference between this and what competitors provide is the opportunity to provide new value and compete in an uncontested market. Or the opportunity may have nothing to do with competitors: Perhaps no one is fulfilling an unmet customer need.

Broaden the Buyers

Expand and redefine how you think about the buyers for your product or service. Begin by thinking about current buyers, and then consider all the people who influence the buying decision. In business markets, what people (roles) in what departments influence buying decisions? How much interaction does your company have with these influencers? Do industry experts and gurus influence buying decisions? Do trade and industry associations influence buyers? What about distribution channels?

In consumer markets, women influence 85 percent of all buying decisions. But what other family members contribute to purchasing decisions? What factor do children play in influencing purchases simply by accompanying mom or dad when they make a purchase? Is there an experience you can add so children actually remind their parents to do a rather mundane task like grocery shopping, banking, or shopping at your store just because they like to go there? Some businesses create an area to keep kids busy while parents shop, but could you go beyond this concept to create an experience for dad and son to have fun and bond? Also consider the role the community plays in influencing events and consumer behavior.

As you think about what your solution has to offer, who is buying it, and who influences purchasing decisions, are there buyers you have not yet considered? Do sales and marketing programs consider all buyers and influencers?

This concept can also be applied to a different product development approach. How will different buyers respond if you make it easy for them to understand how your solution applies to a variety of jobs? Arm and Hammer made it easy for consumers to think about using the product as a carpet deodorizer (Arm and Hammer Vacuum Free carpet deodorizer); a kitty litter deodorizer (Arm and Hammer Super Scoop); a detergent to clean and freshen clothes (Arm and Hammer laundry detergent); and a toothpaste to make mouths feel clean (Arm and Hammer Complete Care toothpaste).¹ Arm and Hammer didn’t burden customers with thinking about how to use the product in different ways. They made it easy by creating new products targeted to different uses, and attracted new buyers.

Create Customer Experiences

Logic can sway some purchases, but emotions are the real driver of buyer behavior. When you think about the job that buyers hire your product or service to do, what experiences can add value and excitement? A better customer experience can result in new ways to differentiate your business and attract new buyers. They can also lead to increased revenue and profits because buyers will pay for an experience that provides them with more value.

What is interesting, however, is that often when a business decides to get rid of the things customers really don’t value, it simplifies its offering and the price of their product or service actually becomes lower. When businesses can offer customers a better experience at the same or lower cost than competitive choices, they find new value in an uncontested market place. This is how disruptive innovations are created.

Landmark Theaters has changed the experience of going to a movie theater. Moviegoers can order tickets online and reserve a first-class seat. This lets the buyer walk right into the theater (no waiting in line or risk of driving to a sold-out show), and sit in a large, luxurious leather recliner to watch the movie. And forget paying a ridiculous sum of money for a bucket of popcorn (it’s free at Landmark) or the basic high-calorie candy and soda. Choose from a whole menu of good foods like quiche, a chicken baguette sandwich, and delicious desserts. Order a glass of wine, a beer, a cappuccino, or an exotic tea. And it doesn’t stop there. You can enjoy the food from the café and wine bar in the lobby, or you can have your own personal waiter bring it to your seat. Now you can enjoy a dinner and movie date—in one single experience.

Many predicted that cinemas would be in trouble due to substitute offerings like video stores, Netflix, pay-per-view, and on-demand movies. If you’re like me, you have to look at the simplicity of what Landmark has done and ask: “Why did it take so long for someone to think of this?”

Retailers like REI added experience to several of their flagship stores years ago. In addition to shopping, consumers can rock climb on the indoor wall or try out a kayak in the small river outside the store. Why don’t other retailers do things like this...or something more?

When I was in Paris with my daughter recently, I thought she would enjoy visiting the Louis Vuitton store in the eighth arrondissement. The breathtaking storefront features a huge Louis Vuitton bag that can be seen for blocks away. It’s an attraction for first-time shoppers, but I wonder how many repeat visitors they have? Once inside, the experience is anticlimactic. It’s just a regular store with Louis Vuitton bags. I observed the number of people filing in and out of the store as the clerks and security guards passively stood buy with an air of indifference. There was nothing inviting about the store except the rather unusual architectural building. Shoppers must think, “Okay. Been there, done that.” But what if the shopper had a real experience while shopping?

Perhaps a small section of the store could be devoted to the history of Louis Vuitton. Louis Vuitton aficionados might be thrilled to walk through displays featuring vintage bags and interesting facts about how he influenced fashion. Assuming the shoppers are high-end (bags are $200–$6,000—so it’s a safe assumption), why not pamper them in special ways? The store could feature a wine bar, which is a natural in Paris (not to mention one might cast away all doubt about spending $2,000 on a bag after a glass of wine) or create other ways to pamper discriminating shoppers. And I’m sure businesses in the area could offer dozens of ideas for complementary products or services. Paris is my favorite city in the world because I love the people, the style, the food and wine, the architecture, and the history. In this example, how can a fabulous Parisian lifestyle be integrated into the store environment to enhance the brand and customer experience?

Tap into Trends

Instead of adapting to trends, create and influence them. In the previous chapter, “Disrupt and Innovate,” you researched macro-environmental issues that were shaping your industry. How can you take these trends and use them to your advantage? How can you tap into trends like the abundance of information, the ease of communication through social networks, the ability to reach an expansive number of people globally, use tools like blogs and social networks, support the Green movement, alleviate growing consumer skepticism, or enable individual preference through mass customization? All of these trends can be leveraged to create new business success.

The iPhone changed consumer experiences and expectations of mobile devices. The creation of the iPhone set off a huge wave of entrepreneurs rushing to create mobile applications resulting in dozens of I-can’t-live-without-it tools. More than 100,000 people visited the iTunes Application store in its first weekend alone. Linux created a similar stir with open source computing. New technologies give birth to all kinds of new businesses that in turn inspire other new markets and businesses.

When Ted Turner created a new way of delivering television, he launched an entirely new industry. The industry responded by creating new types of programming we have now come to expect, like HBO. The outcome of HBO series like The Sopranos and Sex in the City influenced television, entertainment, and fashion industries.

Today’s equivalent to Ted Turner might be Kevin Rose, founder of Digg, the new Internet company that has created 30 million raving fans since its launch in late 2004. Company valuation is estimated between $60 million and $300 million. The power of this company and Internet tool is unknown because it’s so new, but like Google and the iPhone, with this much interest and a huge user base, the future will be written by customers. And this in turn will give birth to a new wave of businesses and trends.

Work with your team to create a list of trends. What trends are influencing your customers? How have they impacted what customers want or expect? What trends are changing the way your business, or others like it in your industry, are doing business? Objectively look at the gap between these two areas and identify opportunities for change, growth, or expansion.

Distinctive Delivery

The Internet has created disintermediation between businesses, channels, and consumers. As customer needs and preferences change, they also look for new channels to access and buy products. For example, if the job a customer wants to get done is learning new knowledge, he can access education and training in several ways including books, CDs, seminars, university courses, online resources and articles, consultants, and third-party providers. Depending upon the level of value and price, people buy from these sources for lots of different reasons.

Several years ago, if a business person wanted luxury air transportation, the only way she could get this was to reserve a first-class or business-class seat. The only other option appeared to be buying a corporate jet, but this option is cost prohibitive for most businesses. NetJets examined this market need and how they could deliver a similar outcome to customers who wanted premium air travel service. NetJets invented fractional jet ownership, which allows business executives to use a private jet for a certain number of hours a month. The company offers a simple, affordable solution to business travelers who desire fast, personalized, no-hassle transportation at a reasonable price.

Netflix did the same thing in the entertainment business, disintermediating video stores to sell direct to consumers. The result is entertainment delivered to your doorstep or personal computer. Amazon took a similar approach by selling books, music, and more directly to consumers, and forever changed the way consumers buy books and now many other items. Online retail marketplaces like Amazon Marketplace and eBay allow small businesses access to millions of consumers.

As you examine the job that your customers want done, and the methods of access to get it done, think about whether you deliver it in the best possible way. In what ways can you provide ease of access, or perhaps greater access to your solutions? Examine your current channels and consider other ways you can get your product in the hands of buyers using new distribution channels. Sometimes this is a change in delivery methods or channels, but it can also mean a change to your products and services. Look at the benefits your customers want and figure out different ways to give it to them. Do you need to simplify your solution or add more benefits? Maybe you need to add complementary products that will give you access to new distribution channels, and therefore, new buyers.

Match what customers want to the way they buy and access it. Do buyers want the solution to be:

These are just a few attributes to consider as you look for new ways to create value. As you have progressed through this marketing process, you should now understand what your customers want. Ask yourself, “How is my solution different from what competitors provide?” Is there a gap of unmet customer needs? Or perhaps you are thinking, “It has nothing to do with competitors.” Maybe no one is fulfilling the need—and therein lies the opportunity.

Imagine and Innovate

Let’s look at an example of how these four concepts could be applied to a rather ordinary transportation service: Trains. What if the rail transportation in the U.S. could be completely reinvented? If the goal is to get people from point A to point B in a reasonable time, like Europe and Asia do with high-speed trains, there is a vast array of creative ways in which to do this. A company (it probably won’t be the railroads) could deliver a unique experience by adding capabilities and attributes like wireless and conferencing capabilities, meeting rooms, or a theater. This would allow business travelers to enjoy affordable luxury to work and be productive between cities. Imagine the joy of a commuter who travels weekly between L.A. and San Francisco when she discovers that she has other choices!

Just think of the endless possibilities in consumer trains that carry families from one place to the next. Why not have cars with movie theaters, or other forms of entertainment? A family could actually spend time together without the hassle of stuffing everyone into a car, spending an exorbitant amount of money on plane tickets, or tolerating the hassle and impersonal experience of air travel. What are the possibilities of a “green service?” Imagine a mode of transportation that doesn’t burn gas or coal, doesn’t pollute the environment—maybe it even gives energy back to the environment somehow. Some smart entrepreneur will figure it out.

The next exercise is designed to build upon what you have learned so far during this process. It is designed to help you discover and summarize how you will differentiate your business by creating better customer experiences resulting in deeper relationships with them. This is what will add value to your business. It isn’t about building a better product. Marketing is about delightfully satisfying the wants and needs of your customers, and if you can figure out innovative new ways to do this, you will be far ahead of most companies that still operate with a product mentality.

In the last exercise, “Finding New Value: Part I,” you analyzed how you can eliminate the things most competitors in your industry offer that your customers just don’t value. This may simplify your offerings and make your business more efficient. Now you will expand on the concepts you applied in the “Promote” and “Create” categories.

Finding New Value: Part II

Creatively explore and analyze new approaches to reach a broader market of buyers, create unique customer experiences, leverage growing trends, and find new methods of delivering your solutions.

Buyers

How you can broaden the buyers you sell to, or gain a better understanding of others who influence the buying decision? If you made a change to customer experience or delivery, would this change the number of people you could sell your solutions to?

Experience

What experiences can you add to create new value for your customers? What experiences would people value enough to pay more for? How can these experiences create market differentiation so you no longer compete on price, or you attract new customers?

Trends

What trends are evolving that you can leverage in new and valuable ways to improve customer value and access to more buyers and influencers? What trends impact buyers, customer experience, and delivery?

Distinction

What new channels and attributes can you add to reach new buyers in new markets? How can improvements in efficiency, quality, timing, availability, and other factors improve customer access and preference for your solutions?

Summary

Brainstorm each of these areas with your team to create a list of ideas in each category that are unique and create differentiation. Summarize the recommendations and next steps, then experiment and test the ideas with your customers.