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It Is All About the Consumer

The great part about case histories is they give you the opportunity to study what is going right or in many cases is not.  They allow you to consider the basic imperatives to growing a business which so often get ignored.  There is also much to be learned from what I like to call a case history in progress.  Most people who have studied the principles that lead to success all agree there are basic imperatives for success.  Lists can vary in the importance of individual imperatives and do get debated but the basic list tends to be similar.  Items that will show up on most all lists are things like focus, clear strategic intent, competitive advantage, flawless execution and mostly consumer understanding.

Recently I came across such a case history in progress in the form of Zappos.  I happen to follow Tony Hsieh on Twitter where he recently posted his presentation at the South by Southwest conference.  Tony is the CEO of the incredibly successful Zappos business.  In the spirit of full disclosure (and to give an unabashed endorsement) I began following Tony and Zappos because The Ad Store, where my son Brian is President, does their advertising.

Several incredibly important themes jumped out at me as I read Tony’s slides.  The first was his emphasis on the consumer, tonality (fun), all leading to the goal of superior customer service.  The second was the importance of company culture which led to the third which was one of the best illustrations of succeeding where others have failed – getting the first two right. Zappos appears to be making a ton of money with what is basically a commodity offering.  In fact, what they appear to have done is to have built a competitive advantage by aligning their execution in the consumer’s 90% versus their own.

How does this competitive advantage result in incredibly fast-growing business?   In my last post, Marketing Under Attack, I wrote that the art and science of growing sales is based on the principles of volumetric modeling: awareness, trial, repeat, rate of repeat.  If consumers are not aware of the product or service then they cannot try it.   Once they try it the product or service must be good enough for them to repeat (buy it again).  Rate of repeat is a function of usage rates, getting consumer to buy early and often.

Zappa’s consumer message and ability to reward the consumer at every step generates initial awareness and word-of-mouth (awareness), the desire to experience Zappos (trial), rewarding a great buying experience (repeat) and having in place simple and rewarding benefits to the consumer like unquestioned free return (rate of repeat) generates a business model that succeeds by its success.   The culture that Tony has generated guarantees to enhance the value derived from being so customer centric.

What I think makes this all work is the simplicity of how the company goes to market and their flawless execution.   What they go to market with is a commodity.  Their competitive advantage is all about the culture and to be totally focused on the consumer.   It is amazing how many words have been written on this simple premise and how few businesses have put it into practice.

Nicely done Tony..

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