Marketing is a long term investment. You determine the way you want people to perceive you, craft communications to that effect and find the best way to reach the customers. You try to ensure that people can understand your philosophy and gravitate towards you. Marketing creates long term value for the company and if done right creates re-collection. It is about making an emotional connect that can last over a long period.
By comparison, Sales is a short term activity. Sales is about here and now. It is about bringing in the revenue. You seek out the customers, create a lead pool, introduce the product or service to them and then sell to them. Sales is very transactional and each subsequent purchase requires direct engagement with the customer to drive purchase.
When was the last time you saw an Amul ad? Or for that matter Parachute Coconut Oil? I am sure many of us who are a product of the last century would even remember the jingle that Maggi used.
The brand-building that was undertaken by these companies over the years continues to serve them in terms of bringing them business. The marketing was powerful and has been delivering revenue to these companies. This is not meant to discount the distribution and many other functions that need to have performed remarkably well to deliver the results.
Marketing is powerful. And can deliver long-lasting value to a business if it is done right and makes the right connect with the customer. Typically, marketing is undertaken by B2C companies and Sales is the tool for B2B companies.
Exporting this analogy to the digital world
Booking.com became a reservation juggernaut by riding the Google advertising engine. They make sure that they pop up at the top of the page which in turn drives purchases and the growth of the business. Have you ever heard anyone suggest Booking.com as the site to visit for a booking requirement? I have not.
By comparison, Airbnb has driven its growth on the back of the focus on SEO and at the same time, they also invested heavily on branding and marketing. The PR and the buzz around the brand have been huge.
Fast forward 10 years and one of the biggest problems that Booking.com is faced with, is not COVID, it is what they call ‘Google Tax’. The company continue to be dependent on each lead that is driven by Google to them. This translates into a certain amount of money being paid to Google for each booking. While that figure does not hurt for a small company, it is very painful for an organisation at scale.
Airbnb was wildly unprofitable for a long time but as they reach profitability, every new customer that comes to the company is not as expensive as the early customers of the company. Their brand drives people to them instead of specific sales activity.
More to the point, paying Google or Facebook is akin to sales activity. Startups should start focusing on certain marketing and brand-building as well. Far too many startups are dependent on running these ads to drive sales of their products and services and over time it becomes difficult to wean off them. It becomes easier to lean more and more on these two companies to drive more customers, who will drive revenue; rather than taking the effort to communicate with the customer.
In the very early days, revenue is important and by extension, sales is a critical activity (even for B2C). But at the same time thinking actively about Marketing and establishing a position is important for the long term health of the company.
In the startup journey one of the hardest and by far the most critical things is to get sales for the company. Sales is what finally drives the engine and brings the income that is required to prove that the business being pursued, is worth being pursued.
When a startup embarks on sales, it is important to be focused on how they go about the process. They need to be able to describe their dream customers who would not have any hesitation in purchasing the product or service that they are looking to sell. Once this ideal customer is defined, it is very important to go ‘Narrow’ and ‘Deep’. Addressing a specific customer is easier than addressing a mass market with a wide variety of customers who have a variety of needs to be addressed.
The temptation at the beginning is to start selling the product or service to the entire market. There is no surer way of failing. I wrote a post about this earlier here.
A startup thrives on building relationships. Early customers of the company not only patronise the startup but also provide a great deal of feedback to improve the product to better meet customer requirements. These individuals also play the part of marketers on behalf of the startups. It is hence extremely important to cultivate a great relationship with these customers.
When you feel personally invested in something, you want to see it succeed. You want your customer to be in this position. This is precisely the reason you need a very specific customer with whom you can have one shared interest – your business.
Going narrow allows the startup to focus on the individuals who best suite the dream customer profile and makes sure that the conversion can be quickly achieved. Going deep allows for a lot of feedback to filter through as well as enables strong relationships which the business can depend on. Such customers would not abandon the startup to move to another (let us say a competitor) very easily.
All of this put together makes it possible to truly delight your customers.
Marketing is broad and shallow, it tries to address the mass. As a consequence it does not enable relationship building, which is very critical for a startup. Also, the cost of marketing tends to be much higher and the returns on the same much lower than selling directly to a specific customer.
Sales is about relationships and even if you are a larger entity, the relationships need to be nurtured and grown. A larger entity needs to look at sales like a long distance relationship. You might not be able to meet or spend as much time, as regularly. Nevertheless, you can always keep the channels of communication open and communicate regularly.
When engaging in sales, it is also very important to look at the product or service from the perspective of the customer who is being sold to. Most often one of the biggest mistake that most entrepreneurs make is to try and enforce their perspective on the customer rather than, get around to seeing the customer’s perspective.
If you look at the image above; at first sight, it seems like the image is one, of an old man. But a closer look makes it clear that there are two different people, one old man and a woman. Similarly what your customer sees or what you see might not be the same. Hence it is important to look at the frame of reference of the other person in order to convince them. This is easy, again, if a narrow and deep approach is taken.
Fundamentally, sales is a reflection of how well you understand the customer you are targeting. By going after a narrow subset of customers, startups can ensure that they know their customers well. When you know your customer well, your ability to see their perspective deepens and you are well positioned to close the sale.
Apple launched the new iPhone 6 in larger screen sizes. The moment the launch event ended, the entire web was abuzz with jokes about how Apple had done exactly what Samsung had done years ago. There were comparative picture, which were circulating all over the web.
Samsung just could not withhold their exuberance! They even released a TV ad within a matter of days.
As the dust settles on the event one things is obvious; Apple can sell 10 times as many (profitable) phones as Samsung can ever manage to.
In fact it is high time that Samsung should shut up and watch how Apple sells its larger phone like gangbusters, at a price much higher than itself and in quantities that it can only dream of. Apple keeps serving them a masterclass in marketing and they keep ignoring it.
Well how does Apple do this time and time again? It is called community building.
Apple has a loyal community
Apple has a loyal community that supports it. Community building is a long drawn process and it takes years of hard work and commitment to build one. Apple probably has one of the biggest communities in the planet. The sales reflect that!
Why can’t Samsung build a community? In order to build a community, you need to stand for something. Take an argument between an Apple fanboy and a Samsung user, each will favour the brand that they own, but let us twist this a bit. Let us say the argument was between a Samsung user and a Nexus or Moto user, things get a little more muddled. A Samsung user might concede.
“If you don’t stand for something, you will fall for anything.”
Samsung is the kind of company that does not have a plan. They have no stand. Look at what they are doing with their wearable line up. There is one running Tizen and one running Android. Standing for something?
They spend their considerable Billions on marketing talking about Apple products in the hope that people might buy their story about the inferiority of Apple products, instead of highlighting the strength of their own. I would suppose that it is a sad state of affairs, when you need to necessarily compare yourself with your biggest competitor to even be able to remotely highlight the superiority of your product.
Care and find customers who care
Build a product that 100 people can love, really love. That is the advice given by Sam Altman, the founder of Y Combinator to startups. When you get people to love your products, they go out and sell it for you. The effort that needs to be extended towards marketing is lower, they get more involved and are willing to forgive you when you make mistakes.
Well, Apple did that when they started; and, they never stopped. This is the precise reason why, they have a massive loyal user community who would stand up and even promote the brand whenever the need arises. Apple was the reason, the term fanboy came into existence. You may have heard Apple fanboy a lot, have you heard Samsung fanboy as much? Android fanboy perhaps, but not Samsung fanboy.
So how did Apple build this community of lovers? It has taken decades over which many of these pillars have been established.
The Pillars of Apple Community
Platform – Platforms make it possible for people to build on top of it. People perceive the benefits and shortcomings of a platform in the way that they treat them. By the time Steve Jobs came back in 1997 to Apple, he was clear that Apple had lost the platform war to Windows and acknowledged the same publicly. This did not necessarily mean that he had given up owning a platform. He knew that the Platform is the only place for a company to take a stand, all hardware could be copied. Even his entry back into Apple was facilitated by the platform that he sold to Apple.
OS X & iOS – The Mac ran the Mac OS till version 9 (Mac OS 9). OS X was actually the rebirth of NEXTStep as a the Mac OS. OS X was Steve Jobs bringing his cumulative work done at NEXT to Apple, which was launched in 2001. OS X was modified to iOS for mobile devices. Since both the operating systems are closed platforms which Apple owns, they have been able to provide a set of features that “Only Apple” can provide.
You can argue about the merits and demerits of iOS and Android or Windows, Linux and OS X; but one thing that you cannot take away is that these platforms tend to polarise people. This polarisation is what leads to love for a particular platform against others.
There are two quotes from Steve Jobs that comes to mind.
People who love their software build their own hardware ~ Alan Kay (which Steve often repeated)
Picture of one of the first buyer of Windows 95 Picture of one of the first buyer of iPhone
For me the only difference between the two pictures is how the software was being distributed. Apple kept Alan Kay’s quote in mind and decided to distribute their software through their own devices which is at the heart of spurring all of the profits. Microsoft stuck to making money by selling the software directly to customers and OEM.
The Second quote from Steve Jobs came at one of the ‘All Things D’ conferences. He said “ The iPod exists and Apple is in that market place because these really big Japanese consumer electric companies, which created and owned the portable music player market; could not write the appropriate software. They couldn’t conceive of and implement the software and if you look at the iPod, it is just software, software in the iPod itself, software in the PC/Mac, software for storage in the cloud and it is in a beautiful box but it is just software.” He said Apple views itself as a software company.
But the secret he did not let out was that it was still all about the Platform.
Apple Stores – Apple has arguably redefined electronics retail in every way possible. Back when Apple was planning to start its retail stores many said that they would fail without question; sighting the Gateway retail failure. The one thing that nobody had foreseen was that for Apple, the store was going to serve as an alter of worship for all things Apple. Apple Stores were never going to fail because the ultimate goal of the Apple Store was not to sell products!
Apple did not open their retail stores to sell Apple products, although that was a welcome consequence. The Apple stores were meant to be, for the lack of a better way to put it, a university. You came to an Apple store and learnt about all things Apple. You got to try out all of the products that Apple had, get rid of your inhibitions and got really comfortable. Windows was the dominant platform of the time and there were several inhibitions against switching.
For those who loved Apple, there was a place they could drag their ambivalent friends to, to show them how great Apple was. They themselves could come every now and then to learn about the newest and coolest things Apple was doing. They could just come and hang out when they felt like they needed to be close to what they loved.
Second lesson in community building; once you give your users a reason to love you, give them a place they can meet others like themselves. Give them a place where they can get people who do not love you; to sow them why you are awesome.
Music – The next pillar which brought a much larger following was their entry into the music business. People love music. Music inspires a range of emotions, whatever your taste might be, there would be a particular type of music that you really love.
iPod was a device through which you could carry your music anywhere you wanted and enjoy it. The biggest achievement of iPod was to put your entire music library in your pocket. This was a huge breakthrough at a time when most mp3 players could hold only a couple of dozen songs. But more than the device itself, it was the platform which enabled the device that won them legions of followers
Few realise, but Apple actually built an entire platform for their music strategy which is called iTunes. iTunes made it possible to manage all of the music you had, buy music that you loved and manage the device on which you loved to listen to your music. It was a platform that offered ‘Music’. Not only users, even musicians loved the platform, which resulted in many of the musicians loving and supporting the platform.
For several Millions of people, including myself, iPod was the first Apple device that they ever bought. I am pretty certain that for almost as many, including myself, iTunes was the first platform on which they ‘bought’ digital music.
People who really loved music, which is a large group of people, eventually started gravitating towards iTunes and the iPod which brought more and more people into Apple stores and made them discover all the other things that Apple did.
iTunes is viewed as just a software, an app and many have been recently complaining that it has got too bloated and heavy. True, iTunes was meant for music; Apple has been lazily using it for all kinds of content; movies, TV shows and even book distribution. They need to go back to the basics.
iTunes (music) sales seems to be declining though, I do not think Apple would give up on Music that easy. They will most certainly take another swipe at it, because it is important to ensure that the artists who are creating quality content are rewarded for their efforts.
Fitness – There are so many people across the world who are either into fitness or require help with fitness. Fitness affects people more personally than anything else. Apple is slowly courting this segment and seeking to make a dent. Most importantly it is a little difficult to look at fitness in a isolated way, it involves the food you eat, the doctor you consult, the activities that you perform, etc. Seems like an excellent segment to build a community around.
Apple has not done much in this area as yet. Though looking at the roster of people that it has been recruiting over the past year, it is very clear that they are focused on building a compelling offering in this area. You can rest assured that they will build a platform. The Apple Watch, Health app and such are just ingredients which are getting tested in the real world before they bring out a more well-rounded offering to the market.
At the end of the day, people love what you are doing when you care about something that they care about. If you care enough about something, it shows.
Look at what Google does, does it seem like it cares about its customers; well yes, but its customers are advertisers, not you and me.
As long as Apple cares about the things that it works on, there is nothing that can stop their community from growing.
The only way to compete is by caring more. Do you see any company caring more?