Whilst in Singapore this week, I met with Redpill Communications – a Singapore based marketing strategy and customer insight consultancy. They shared a great presentation on how 3 simple customer expectations are fundamentally undermining existing business models and strategies.
The 3 phrases were: “Everything is free”, “Shared Interests” and “Less is more”. Individually these are easy to dismiss as being impractical, but when combined they become compelling, and are the key behaviours that are driving the under 27’s (the Gen Y demographic) ways of working.
Together they are highly disruptive, yet they also provide significant opportunities for companies to adapt their way of thinking, their value propositions and their behaviours.
FREE
Is $0.00 per product the future of business? How can a business make money if its products or services are free? The concept is not recommending zero prices for everything, but it does suggest that value pricing has more impact i.e. the bundling of products and services is where the revenue opportunity sits. Think Gillette razors that give away the razor, yet sell the blades or Hewlett Packard who sell the printer cheap, yet charge a premium for the cartridge. We are all used to mobile phones being a commodity, and paying for the data or media capabilities as a service.
The concept of “Free” is now possible and more expected because of the existence of new distribution and service models. The impact that Myspace, Facebook and Youtube alone have had on how our expectations that sophisticated services should be free. We now have an ecosystem of services: Publishers are no longer selling magazines; they are selling readers to advertisers. The emergence of the Freemium model has fast become the norm. Examples proliferate but to help those unfamiliar with the concept look at flickr. Their basic service for uploading, categorizing and sharing photos is free. The Pro service – with less restrictions and more functionality – is subscription based, yet marketed as the “pro” package.
“Free” changes everything. How we price; the ROI we can expect on key systems; what our value proposition must is; the total cost to serve per customer; how we do fulfilment; how we charge for value added services or high-end customer support. Interestingly Customers do not expect everything for free – but they will only be able to pay if THEY – and not YOU – can determine the value difference.
SHARED INTERESTS
Communities are changing the way people interact with each other. Everyone is a producer or a creator (e.g. flickr or youtube); everyone is a critic or opinion maker (reviews, blogs); everyone is a distributor or a seller (eBay, last.fm etc). With social communities such as Flickr (distribute your pictures) through to Bit Torrent (distribute anything) or eBay (Sell anything), the long tail market of online user generated and peer distributed content has been created and infinitely exposed and no longer limited to your shop front or how you want you product to be perceived.
Everyone is more networked and has typically 4 stages of connectivity, which should be thought of as a ring of concentric circles, with the first of these at the heart:
The result is that the scope of “connectedness” in expanding infinitely.
People are using the power of their network to take control of consumerisation. A recent study by, showed that 76% of people don’t trust advertising yet 68% do trust other people like themselves. 92% cite that advice from others is the best source of products info with 84% finding that advice credible. (Source: Talktrack, Keller Fay Group 2006)
Increasingly brands and companies are responding to this change. Adoption of web 2.0 technologies (RSS, Wiki, Blogs, Web Services,) has grown from 20% to 80%. Companies like Proctor & Gamble, Premier Farnell, Nike, KLM, Unilever etc re looking to crowd outsourcing – collaboration with customers, suppliers for innovation.
Is it working? Certainly there is increasing evidence to support it. Vitrue – an online index for the Social media penetration of brands shows some interesting trends. If you look at a less obvious sector such as High Service Electronics distribution the results show the impact of the companies’ different maturity and comfort with Social media. Vitrue.com shows the following: Farnell (7.91%); Digikey (3.21%), Mouser (5.46%). RS Components (0.425%). With Premier Farnell’s launch of Element 14 last week, their index score is likely to rocket.
Social Media is exploding, led primarily by blogging, and Asia is leading the charge. China has 43m bloggers of which 65% write their own blog; Japan, 14m; South Korea 9.7m and India 8.7m. Compared with USA 26.4 million of whom less than 30% write their own, UK 4.5m, Mexico 4.1m (where about 50% write their won) and Poland. 1.1m (source: Universal McCann social Media tracker)
With the world increasingly highly connected, west to East we are seeing increasing levels of penetration of social media networks. In China this figure is 39m, in India 11.7m and Japan 12.4m. Whilst in Europe the numbers are almost as high, the degree of usage is lower and the rate of growth is flatter. In Asia the growth of these networks continues to outpace the rest of the world. (source: source: Universal McCann social Media tracker)
LESS IS MORE
The “expectation economy” is an economy inhabited by experienced, well-informed consumers from Alaska to Japan who have a long list of high expectations that they apply to each and every product, service and experience on offer.
Information on anything is available -even of the items are not yet available or technically not legal.Intelligence on the best, the most available or the cheapest is readily available and consumers research extensively before making purchasing decisions.
For many years, information on the web filled an “information availability gap”, but now consumers find themselves in a paradox of choice – consumers are moving from not enough choice or information to too many choices or too much information.
Consequently, there is a shift in the burden of decision making – a collapse in the dogma that more choice equals better. Choice is inherently subjective, and thus the optimal level of choice is not “one size fits all”. Often simplicity is the best approach, where “less is more”.
Examples of this approach that have transformed our expectations are Apple’s iPhone and its associated iPhone Apps or Nintendo’s Wii console and how they have extended it into more of a home media device. Where simplicity has been used to support the replication of natural behavior it finds traction and enhances the user’s experience ad loyalty.
We are fast moving into a world where “More is less”…. Compare MSN’s cluttered portal with the simplicity of Google’s Home page which has less confusion and more simplicity….and “Less is More”
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