Peter Drucker in his book “The Practice of Management” has written that the purpose of a business is to create a customer, then it has only two basic functions— innovation and marketing. Innovation produces the products, and marketing tells the stories that sell them. These two activities drive results, and all the others are costs.
Drucker was ahead of his time, probably in the high production industrial era, his work did not sound that much great so it could reach to factories. Though his thoughts are being discussed and debated in academics.
But in the era of disruption, where we are seeing cutting edge innovation, People again started recalling Peter Drucker’s works and trying to cope up with the situation. Though Ducker’s work did not provide us any methodological framework to deal with it because when he was writing at that time there was no Public Internet, Social Media, Camera in every hand, Online video streaming etc. But his work is a philosophical guide, it helps us to think in the way where all power concentrated in the hand of customers.
The Internet has disrupted the tradition market ecosystem. The story did not stop here, this internet thing invents and reinvent itself in Jupiter velocity. It disrupts its own ecosystem too.
So all innovation created change in consumer behaviors, today’s best customers are no longer consumers or market segments or tiny blips in big data. They’re individuals with hopes, dreams, needs, and emotions. They exercise judgment, indulge in whims, express personal views, and write their own life stories. They’re proactive, skeptical, and creative. They’ve reached the top of Maslow’s Pyramid, where the goals are autonomy, growth, and fulfillment.
An explosion of connectivity, and the power it gives customers is turning companies upside down. The question isn’t whether your industry will be disrupted, but when.
In Industrial market framework, a company could find a hole in the market, fill it with a product, determine a price, and drive the product into people’s lives with heavy advertising and distribution. The only choice customers had was to buy or not to buy. The real power lay with the company and its leaders, who were seen as authority figures.
Today’s customers reject that authority, and at the same time require a measure of control over the products they love. They no longer buy brands. They join brands.
Brand building is not same now, like earlier when you simply spray TV ads and pray for results. In Marty Neumeier’s Book The Brand Flip, he has listed 10 new realities and he suggests, for sustaining your brand in the digital age you require to understand and adopt these in your businesses.
#1. Power has shifted from companies to customers
In the industrial era, companies had the power to control the product, service, and communication. Now we are living in Digital Era where your customers have a voice and network. They want a great experience which they can share.
The product which is produced in factory become an emotion when it reached the hand of customers. It went from totally within the company’s control to partially outside of it.
#2. People are not focused on product but meaning
Today’s customers want more than products, more than features, more than benefits, even more than experiences. They want meaning. They want a sense of belonging. They want creative control over their life stories. And they’re likely to assemble those stories from all the elements they find around them, including products, services, and brands. “If I buy this product,” they seem to say, “what does that make me?”
#3. Customers buy products to build their identities
Alvin Toffler in his 1991 book Powershift. He predicted that the power of immaterial value would extend even to money, calling it nearly a “religious conversion” from “a trust in permanent, tangible things like gold or paper to a belief that even the most intangible, ephemeral electronic blips can be swapped for goods and services. Our wealth,” he said, “is a wealth of symbols,” Both our money and our goods are becoming intangible.
A study of the S& P 500 showed that the monetary value of intangible assets had increased from 17 percent to 80 percent over a 30-year period. The largest of these company assets were brands. What has driven the increase is an improved ability to connect emotionally with customers through qualities such as immediacy, personalization, self-identity, and empowerment.
When a product becomes a symbol, the symbol becomes the product. It can offer tremendous value as a building block in a customer’s personal identity.
#4. They hate being sold but love to buy
Traditional marketing leans more toward selling than branding. While it appreciates the halo that branding brings to sales, it focuses more on short-term results than long-term growth. This bird-in-the-hand approach is still the default position for most companies today. After all, without sales this quarter there may be no next quarter. The result is a more tactical role for marketing managers, rather than the strategic one they enjoyed when advertising was king. Yet selling, whether through personal sales or advertising, can only boost revenues for one or two quarters. Branding creates a flywheel effect that can drive success for decades.
After all, without sales this quarter there may be no next quarter. The result is a more tactical role for marketing managers, rather than the strategic one they enjoyed when advertising was king. Yet selling, whether through personal sales or advertising, can only boost revenues for one or two quarters. Branding creates a flywheel effect that can drive success for decades.
Think from the customer point of view, do they really purchase because you insisted? If there purchasing is not aspirational then the relationship will be close after closing the transaction but lifetime value of a customer is way higher than the closing a push deal.
You should work to invoke aspiration in them, so you can make long-term sustainable transactions.
#5. They buy in tribe to feel safe and successful
Today’s customers are enabled with networking technology, so they connect other customers and make a tribe. They generally share their experiences and solve one and others queries. They make a group of emotionally engaged users, Seth Godin defined it as a tribe.
They assure the new users that they will be safe and successful like them. Eg: Apple Products Users are a Tribe, They keep talking about how great the Apple products are. They don’t only use apple in actual working for the growth of the brand apple by adding or influencing more users.
#6. The battle is no longer between companies but tribe
Companies are no longer fighting with each other. Now it’s their tribe who debate, defend and promote the brand on social and other media platform.
Actually, they are not purchasing the brand anymore, they join them and make them the part of their identity, hence they promote and defend their identities from other’s identities.
#7. The company with strongest tribe wins
The tribe has normal tendency to grow and become the majority. So emotionally connected customers keep trying to add more customers. Hence well inform and well-connected tribe with strongest sentiments win.
#8. Tribes are connected through technologies
Tribe members more than often connect with each other and outsiders. They use social media, public forum and other sorts of digital media to remain connected and organized.
#9. Brands need to flow through multiple technologies
The disruption is not limited to tradition marketplace only. The Digital disruption has been disrupting itself also. Post dot com wave, now we are seeing the social web, We are seeing it on hardware front also, smartphone overtook desktop.
In this situation with every new innovation, your customers start interacting with new touch points and today’s customers expect your presence on that platform also. Now your challenge is to manage the flow without loosing your brand values.
#10. The Most Successful brand is not static but fluid
We are experiencing the ultra-information age. Information flows not only from top to bottom, but from bottom to top, side to side, and a hundred other ways all at once. So if you try to build a static brand in this multi-dimensional information environment then you will fail.
CEO of Liquid Agency Scott Gardner said, “Today’s companies need brands that can touch people wherever they are. Brands need to be adaptive so they can flow like liquid through our lives.”
Flexibility is a great asset in business today. You have to build your business which can walk with the customers. No longer customers are just a consumer, they build their identity through the brand. So, you have to think, will your customer feel special after joining your brand.
As I mentioned first in the first point that customers control the business, not companies. So draw a strategy to convert your business into movement which can be nurtured, grown and carried forward by your customers.
Bonus: I recommend you to read a book Tribes written by Seth Godin, If you find book reading boring then you can hear the audio book, I have embedded below.