Chapter 8 - The Power of Cool
OCTOBER 31, 2011
Of course, these folks don’t say much about all the technological “bell and whistles”, the commitment to training or the enormous amount of resources needed to make all this “personalized, loyalty-inducing wowing” possible.
Maybe Jack Trout has a better handle on this -
“… if you want it in the simplest terms, the whole “discipline” of customer service is based on two commonsense ideas. You should treat customers so they (1) buy more, and (2) complain less.”
See? That wasn’t too difficult to understand was it?
Trout has another little gem too. “… one aspect of a marketing program that is often overlooked is that of reinforcing the perceptions of your existing customers. Make them feel smart about being your customers.” Jack Trout -The Power of Simplicity
Shouldn’t we all be doing that?
That’s got to be a move in the right direction and it’s far more important than might first appear. We need to be the smart, cool place for client solutions. Could this even be used a strategy to differentiate us from the competition? (always a good thing)
Here’s Trout again on the concept of using customer orientation as a differentiator:
“In simplest terms the trick is to get new customers and hang onto the ones you’ve got. The “differentiating idea” is what you use to attract the new ones.” Jack Trout -The Power of Simplicity
And we shouldn’t underestimate the power of cool either. No less an authority than Gary Hamel, called by Peter Senge (of The Fifth Discipline fame) “the most influential thinker on strategy in the Western world”, was caught sleeping at the wheel in a very personal way.
Here’s the story as told to the executive editor, Martha Stepanek, of CIO Insight, a publication for information professionals:
“We will live in a world where there are no ignorant customers, where there are no local monopolies, where the search costs have gone to zero and the transactions costs have gone to zero. In that world, a lot of companies are going to find their profits under enormous pressure.
… It’s going to take a while, but the Internet will represent the final evolution of bargaining power from producers to consumers. And they are going to use that bargaining power to hammer down prices.
The good news in all of this is that if I have a product or service that is truly cool, unique and differentiated, I can escape that pressure.
A while back, I was looking for a new SUV for my wife. She had thought that she might like a BMW X5. So I did what all auto buyers do today. I went online.
I found the dealer cost, and figured that since it’s a BMW, then maybe they have to make $500 instead of $200 on the deal. I then went to my local dealer ready to do battle. I told the salesman this: Here’s what you paid for this thing – and here’s what I’ll pay over that.
He looked at me as if I was crazy.
He told me that he’d sell it to me for $10,000 over list price. Why? This vehicle is very cool, people love it, it’s a source of pleasure to customers, and that’s the price BMW dealers can get.
And I had a little epiphany at that point.
I understood very clearly that if you’re making a Fort Explorer or a Chevy Blazer or some other product that does not particularly differentiate, all of this power ending up in customer’s hands is going to be quite murderous for you.
On the other hand, if you’re making something that’s differentiated and truly appealing, the Internet is your friend. You’re going to get word of mouth and a buzz going and a user community and whatever else.
For the makers of truly differentiated services and products, the Internet is going to create a world in which there’s no place for mediocrity to hide and in which the only kinds of competitive advantages left are advantages that deliver amazing value to customers.
…The genie is out of the bottle, and consumers are not looking for the cork. I don’t believe for a moment that all margins go to zero. What it does mean is margins go to zero for companies that don’t have cool products and services.”
BMW isn’t the only company to have figured this out - have you checked the capitalization of Apple, lately? Aren’t all the Apple “toys” the coolest on the block?
Think that doesn’t translate into marketplace power?