Users, Not Customers:
Who Really Determines the Success of Your Business
By Aaron Shapiro
Published by Portfolio
Copyright © 2011 by Aaron Shapiro
FROM THE BOOK JACKET:
If you still think “the customer is king,” you’re probably falling behind. Today’s most powerful growth engine is users–people who interact with a company through digital media and technology even if they have never spent a dime. Become indispensable to users and the profits will follow.
By next year, the Internet will drive the majority of all consumer purchases in the United States–a figure that will only grow as young people who have never lived without the Internet increase their spending power. The result: there’s no longer such a thing as an offline business; every company must have an effective digital strategy to survive.
As CEO of the digital marketing agency HUGE, Aaron Shapiro goes inside blue-chip companies to advise them on how to thrive in this new business reality. To explore the subject further, he led an extensive study of the Fortune 1000. He has found that the most successful companies focus on users first, and look at customers as just one subset of this immense and influential group. Look at Facebook and Google. They built their businesses before they even figured out what they were selling, let alone who their customers were.
Shapiro argues that every business needs to stop obsessing about customers and start creating powerful user experiences. Rather than just trying to get people to buy stuff, the companies that truly excel home in on the user experience at every level:
* They focus on their users’ true needs: Mint.com made the easiest and most effective interface for controlling your personal finances, and once there, you can follow ads that let you improve your financial performance even more.
* They make their technology disposable: Netflix took down Blockbuster by treating its subscribers as users, not customers. It continually changed and improved its technology to create the best possible experience instead of maximizing rental fees and late fees.
* They market themselves in a way that truly inspires their users. Pepsi redirected its Super Bowl advertising budget to the “Pepsi Refresh Project,” a nonprofit, grant-giving program that generated massive free publicity and goodwill.
ABOUT THE AUTHOR:
Aaron Shapiro is the CEO of HUGE, a digital marketing agency that helps global companies reimagine how they interact with their customers and manage their business in the online economy. Prior to HUGE, Shapiro was a technology entrepreneur, venture capitalist, and management consultant. He lives in New York City.
If You’re Not Thinking About Users, You’ll Soon Be Out of Business
My wife loves seltzer water. I can’t stand it, but she will hardly drink water if bubbles aren’t in it. So I thought it’d be great to buy her a soda maker. One afternoon, I passed by a Williams-Sonoma store and decided to stop in. Lo and behold, they had one sitting on the shelf: a SodaStream Genesis drinks maker for $150. But it seemed expensive. I could buy her a pantry full of 150 bottles of premade seltzer for that price. So I decided to shop around.
I opened the RedLaser app on my iPhone and used it to scan the machine’s bar code to find out what other retailers charged. Bed Bath & Beyond carried the same thing for a hundred dollars. Success! Fifty dollars in savings. I waved down a sales clerk and showed her my findings. But she declined to match the price.
So right there, in the middle of a beautiful Williams-Sonoma store in a high-rent location on the Upper East Side of Manhattan, I bought the SodaStream Genesis drinks maker—from Bed Bath & Beyond by using my mobile browser.
Companies such as Williams-Sonoma are in for a rude awakening. One day everyone will shop this way, and companies will either change their ways or be out of business.
Twenty years ago, purchases were driven by television ads, the selection of stores in the local town center or nearby mall, the brands those stores carried and the prices they charged. “Shopping around” meant traveling from store to store or calling down a list of retailers in the Yellow Pages. This is the antiquated environment in which most companies are still built to thrive.
In one short generation, we’ve seen a dramatic shift in how we buy things as well as how we interact with companies, do our jobs, and communicate with each other. Digital technology has quickly become so pervasive that it’s rare for any personal or business interaction to begin anywhere else.
We are often introduced to new people through e-mail or an online community. After a phone call or in-person meeting, we maintain contact through digital channels, whether it’s e-mail, instant messaging, or Facebook. In three years, texting is expected to surpass voice usage on cell phones. The same goes for how we learn about companies. If we’re job hunting, we may find opportunities through a career site such as Monster or a jobs search engine such as Indeed. We maintain our resumes on LinkedIn, because that’s where recruiters go to initiate interactions with us. If we’re shopping, we may be introduced to the product by Googling, by noticing its newest promotion on a Groupon e-mail alert, or by seeing something listed on a product comparison site such as TheFind. Already 41 percent of all offline retail purchases in the U.S. begin with Internet research, and 7 percent of all retail commerce is now transacted online. In 2012, the total of these two figures is expected to reach 50 percent, which is equal to $1.2 trillion of digitally driven consumer spending. We’re entering an economic environment in which the majority of our transactions begin with digital. In this context, there is no such thing as an offline business; everything is a digital business.
Beyond our social lives, careers, and consumer behavior, digital services also power our information gathering: we learn the news from our e-mail accounts, Twitter, Web sites, and apps; we find out the weather by installing a widget on our desktop or by opening The Weather Channel app on our phones. Digital technology helps us figure out where we are on the globe and where we need to go; it’s how we count calories, read books, deposit checks, maintain grocery lists, and listen to the radio. In the always-on environment of the Internet and smart phones, we constantly rely on digital services and products to accomplish our everyday tasks. In a typical day, I use more than a hundred Web sites, apps, and digital services made by at least twenty-five different companies.
Businesses must keep up with these changes or else risk becoming the next Circuit City, Polaroid, or Blockbuster—companies that, thanks to digital technology, are either out of business or just a shadow of their former selves.
At HUGE, the interactive agency I run, we spend a lot of time thinking about these issues, and how companies should respond to this new business reality. When our clients first approach us they’re asking for many different things—a new Web site, a mobile app, a social media campaign—but they’re actually asking for the same thing: digital transformation. They need to renew their company to fully compete in this new economy, and are asking for our help in making the shift. Through my work at HUGE, my colleagues and I have had the privilege of studying the inner workings of many blue-chip companies across a diverse array of industries. We work with their leadership to help formulate the correct strategy, organizational structure, and business processes to compete in the digitally driven marketplace. When looking back at our years of inside access, what’s most striking is that the issues facing companies and the effective solutions are remarkably similar regardless of industry or organizational size. To validate and challenge the patterns we observe in the field, we embarked on a quantitative study to help answer the question: what drives success in today’s digital-centric business environment?”
part two of ‘Users’ will appear here tomorrow