The world wide web influences cost of things. It has made lot of things people once paid for free, be it the basics like news, email and communication tools, or not so basic things like websites, storage space and office applications. The power of adware is changing the source of income for product and service providers and bringing the cost for the end customers down to as low as zero. In this world, an important pricing question arises: should the product be free or close-to-free?
Couple of things come into picture when this question is answered. What is the barrier to entry in the market for this product? If the barrier to entry is low, and the product is adware-able, the wiser strategy is to make the product free and set a customer base before competitors following the “used apple strategy” enter the market. This is much better than charging for the product initially and then driving the cost down to zero when competitive products come into picture.
Versioning plays a role. A good strategy is to provide the basic set of services that are easily adware-able for free and charge the customer for the high-end services, the ones with a smaller set of targeted customers or the ones which will look attractive to the customers after they start using the basic set of services and familiarize themselves with the product.
Whether the price is set to zero or close-to-zero, the seller should do one very important thing: communicate the reasoning behind that to the customers, or in other words, communicate the source of income to the customers. If you are providing something for free, it’s important to explain the customers how you plan to monetize it. This makes it easier for customer to adopt your service and believe that there are no hidden fees. The most rediculous strategy is to keep something free, but take the customers’ credit card for records. Even with good intentions, this challenges the customers’ trust on the company.
Similarly if you are charging for something, justify it. Explain the customer why your product or service is worth paying for, and make it attractive enough for customers to accept it with that price tag. If something is on the web and is not free, you got to explain why, because if it is on the web, the customer expects it to be free, at least partially if not entirely.
Global advertising is a more than $600 billion industry that is growing year-over-year. This endorses the fact that in today’s competitive environment, the value of customer connection is more than ever before. Companies go to great lengths to make sure they connect with their customers, be it using old mediums like television and newspapers or new mediums like blogs and newsgroups. Television, radio, newspapers and other mediums sell their ad spaces based on how many people will watch that particular advertisement, and most of the time, more the eyeballs, more expensive is the advertisement space.
But does it really matter how many people watch your advertisement? Of course it does, if you are selling bottled water, because that’s one of the few cases where all the people watching the advertisement are your customers. But in nine out of ten cases, the marketers need to target the niche. In that case, it doesn’t matter how many people watch the advertisement, what matters is how many potential customers are watching it. The success of web search powered advertisements is a testament of the importance of relevance. If the advertisement reaches the right customer at the right time, it can have a real impact on the sales of the company.
To sum up, it doesn’t matter if your advertisement reach out to a million people if your potential customers in that million is a hundred. A much better strategy will be to first identify those hundred customers using customer intelligence and then tailor your campaign to reach those hundred customers with a clear and focused message. It’s the who that matter, not the how many.
Just like acceleration, efficiency is another important thing that technology brings to the table. There is growing emphasis on efficiency around the world, and technology fills the primary requirement of increasing efficiency in many areas. It is very clear that there is unlimited scope for efficiency in areas where a human life is at stake. Technology enhances the efficiency in such critical fields like healthcare and security. Be it latest diagnosis and scanning machines in hospitals or secure live networks syncing international data on individuals around the world, technology brings efficiency to these fields.
In the field of marketing, technology brings in efficiency like never before. Cutting edge software applications have made customer relationship management far more efficient. Connecting with the customer virtually one-on-one is now possible for companies with millions of customers. Companies can make more effective use of advertising budgets by reaching the right set of customers through the right medium at the right time. Technology also helps in making enterprise resource management more efficiently. Retailers of any size, varying from walmarts of the world to mom-and-pop stores, can maintain their supply chains more effectively using computer software and networks.
Then there are a whole lot of areas like travel, telecommunication, information management and so on where technology has the dual effect of bringing in both efficiency and acceleration to the table. For example in case of internet search, technological advancement helps us efficiently mine through terabytes of data to reach to the right information in a fraction of a second.
When we look into technology adoption in developing countries, or countries where there is no shortage of human labor, this efficiency effect of technology counts the most. Be it healthcare, education, telecommunication or security, if technology is increasing efficiency that cannot be brought in otherwise, technology will be embraced. Due to the efficiency aspect of technology, we will see wider and deeper penetration of technology around the world in the times to come.
Working in the technology industry and reading case studies of successful companies out there often makes me wonder what technology brings to the table. Take any industry, you will find application of technology in it, and there will be technology companies out there working on new tools for that industry. But when leaders of great companies were asked to list the top five factors that led their companies to deliver great result consistently, in most cases, technology didn’t make the list. Though they considered technology to be very important, they just didn’t think it was important enough to be considered as one of the primary reasons for their success.
I think that makes sense. Technology in most cases is equally available to all companies in the industry, but even then, some companies succeed while others don’t. If technology was one of the prime reasons for success, why didn’t the other companies deliver the same results as the leader in the industry? But still technology is important, because even though just application of technology cannot deliver great results, neglecting the adoption of technology can drag you down. Or in other words, technology is required, though it is not enough.
So back to the original question – what does technology bring to the table? I believe technology impacts lot of things, but two things that matter the most are acceleration and efficiency. Acceleration holds great importance in lot many industries. People care about the speed with which they get something done and technology plays a critical role in enhancing that speed. Starting with the obvious industries – consider travel and communication. Technology has accelerated the speed at which we travel many folds. In the field of communication, from telegraph to telephone to internet, technology has been a critical piece of the puzzle to increase the speed.
Another industry where technology plays a very important role is the information industry. Access to information is as important as anything else in the business world and fueling this information at the right place and right time is another multi-billion dollar industry. Internet has played a very important role in providing the right information at the finger tips. Technology rich search engines help in locating the exact information out of the endless information available on Internet.
Speaking of acceleration, one thing that cannot be omitted is computer processing power. Computers have accelerated the pace of doing work in every industry out there. Innovative application of this technology in several fields gets work done in a fraction of time as compared to what it took otherwise.
Over time we have seen application of technology increase the speed of getting work done in many fields, making the new speed as the expected standard that gets noticed only when something is not getting done at that speed, be it something as simple as using elevators to reach the 30th floor in a building or as complicated as diagnosis of diseases in the human body. Breakthrough application of technology acted like an accelerator in the past and will continue to influence the pace of getting things done in ages to come.