Category Archives: Business

I recently attended a meeting for product development of a technological product. There were representatives from different desciplines including program management, software development, business management and product design. Twenty people, all with their laptop open, were sitting in a conference room. Most of the participants were meeting people from other deciplines for the first time. The meeting organizer comes in the room and before the introductions could start, pointed at three folks in the room and said: “You must be designers.” “Bingo!” came the reply.

How did that person, or for that matter all others in the room, know that they were designers? They were the only ones carrying Apple macbooks in a room full of Microsoft Windows running laptops!

This is a typical case of targeting the niche, and Apple does it with ultimate perfection. Like any other niche marketing effort, Apple as well gets the pros of targeting the niche. You will hardly find any designer, artist or the likes carrying anything but a mac. Mac has a die-hard following and a strong cult continuously growing around it. At the same time there are cons to the approach. There are millions of people who do not want to be associated with this cult and go for the alternatives.

But there is something bigger going on here with respect to this cult. What do the young masses in their late teens and early twenties think about carrying a macbook? For most of them, a macbook provides everthing they need from a computer and carrying it gives them a way to join this “cool” cult. If you believe that’s the future, Apple has found a pretty good route to target the mainstream…

Ten times one million equals ten million and one million times ten equals ten million (I know it’s not rocket science, but stay with me for a second). What I am getting at is comparing two scenarios: first, having a few big customers and second, having a lot of small customers. Which is the better option: having ten customers and earning $1 million from each or having one million customers and earning $10 from each?

The first scenario is where you are targeting for specific customers. This is the more common when your customers are businesses and you are selling expensive products like computing grids, plane engines etc. or services like supply chain management. The size of the customer’s order and one-on-one relationship with a customer is what matters the most in this case.

Now let’s look at a few things that play important role in this type of business. First is goodwill. You got to (literally) have really good customer relationship management in place and maintain great relationship with every customer. A successful operation in this business turns more into a consultant-client relationship than a supplier-buyer relationship. Second, word of mouth marketing. When you are serving a niche and large amounts are at stake, referrals make all the difference. Third, brand equity. This is as important as anything else. For you to be successful in this business, your customers and prospective customers should be able to recognize your brand, depend on it and vouch for it.

The second scenario is where you are targeting for volume. This is the most common type of business in the consumer marketing and the Internet world. In case of consumer marketing, you will be selling products like soaps, cellphones, cars and so on. The success of your business depends on the size of your customer base. Similarly in case of Internet, what matters is the number of customers using your search engine, reading news on your website, participating in your social network and so on. More the eyeballs, better are your prospects.

Advertising plays a crucial role in this type of business. The goal is to reach the masses and increase the number of customers using your product. Advertising your product to the right audience at the right place and the right time can make all the difference. Another important thing is the network effect. Having a network around your product can draw more customers to it. Some services like social networking sites on the Internet naturally attract customers to the same place in order to serve their basic purpose (networking). In case of other products like cellphone, the mobile operators provide incentives like free calls to others on the same network to initiate the network effect.

There are loads of success stories (and unsuccessful attempts we don’t even know of) in both scenarios. It doesn’t matter which approach you take, what matters is how well you execute on that approach. Another thing I want to point out here is goodwill, brand equity, word of mouth marketing, advertising and networking is required for any business you choose, by pointing them in specific scenarios here, I am trying to put forward what matters more where. You cannot ignore any one of these, irrespective of whether you choose to go for few or many.

I took a flight from New York City to Seattle this week. The unexpected turn of events made me realize the importance of customer service yet again.

To start with, the Delta airlines flight took eleven hours to reach Seattle. Yes, we spent eleven hours sitting in the plane…normally it is between six to seven hours. Out of these eleven hours, four hours were spent standing and taxing at the JFK airport, during which the air conditioner was turned-off and turned-on (on passengers’ request) a few times. 

As you might know, Delta like many other airlines do not serve food in the main cabin, they sell it. As per their estimates of how many passengers normally buy food in a six hour flight, they have food for a some percentage of the attendance. So despite of standing at the door for about a couple of hours with 200 passengers in the plane, they did not take the pain of revising these estimates. Result being about half of the passengers asked to spend eleven hours on peanuts (they are complimentary!)

Well you can say, it was all circumstantial and no big deal (seriously, four hours more in a plane and no food for eleven hours is not that big of a deal). But to top it all off, there was a team of unapologetic crew. The crew right from the captain to the flight attendants acted very casually about the delay and food shortage without apologizing even once during the entire thing. The flight captain was quick to blame the delays on the JFK staff and flight attendants pointed to their estimates for shortage of food.

The simple thing that they did not get is that the customer sitting in the plane had an expectation from them, not from the JFK staff and certainly not from some guess work of how many people will be hungry. The easy thing would have been to not board the flight knowing that you are going to stand at the gate for two hours. Yet easier, load the plane with enough food after learning that the flight is going to take at least ten hours to reach the destination. and easiest of all, say the passengers who “paid” to travel with them “sorry” about the mess.

The purpose of this post is not to do Delta bashing over the bad experience I had, but I am pretty sure, or let me say I hope, that the customer service they provided their passengers here could not have been any worse.

For Amazon it is was books, for Zappos it’s shoes, for Trader Joe’s it may be that chips collection, for Google it’s search and so on. Books, shoes, chips and search are the customer magnets for Amazon, Zappos, Trader Joe’s and Google respectively. Customer Magnet is that one thing that really attract customers to your door steps.

It is very important to have customer intelligence around the customers coming to you and identify the magnet that is attracting them over there. Equally important is how to put this magnet to work. First, make sure you are continuously improving on that product and beating competition squarely when it comes to the magnet product. This will help you build the equity for your brand. This should be done to an extent where your name becomes synonymous to the product. Next is developing the ecosystem around that product. This is something that can make a huge difference. You got to do brand extension “correctly” and use the equity you have built for your brand.

Do you got to have a customer magnet to be successful? I am a die-hard advocate of serving the niche, so I believe yes. You got to start from somewhere. Get hold of one thing and do it in the best possible way beating all the competitive options out there. That product will be your customer magnet and the center of the ecosystem that you could develop around it.