WHY WOULDN'T I GIVE MY CUSTOMERS CHOICE?
PHYSIOCRACY GOES DIRECT
By Dr
PETER HIGGINS
Aussie on
the spot
One of the tenets of human
society is "L'histoire que se
repete" or more colloquially; "Everything
old is new again". Humans are
creatures of habit and this can be supported physiologically by the fact that
there have been no anatomical or physiological changes in our neo cortex for
35,000 years. In those days we were
living in caves, hunting animals for food only, living in small close knit
communities with common goals and interlinked similarities, reacting,
communicating and interacting on a one to one basis, living subsistently and
using our instincts as our main source of decision making.
Clearly, 35,000 years
later we are living a totally different, albeit artificially forced, lifestyle
but our basic needs, emotions and neuro physiological drivers are still the
same. Today 'civilised' cities force people
to be less interactive with each other - our biggest predator now is not a
large carnivore but rather being 'ignored
to death'- this can be a slow process over a number of years or the result
of apathy if lying hurt in a busy street.
We no longer live in small, like minded groups but, rather, huge diverse
megacosms. We no longer use our
instincts or emotions but rather build rational, 'societal' facades. In sociological surveys over the past 10
years we have constantly said we are no longer in control of our lives -
bombarded with mass communication and still subjected to classical 1950's sales
techniques.
Despite these outward
differences we still have deep seated biological drivers which not only steer
us towards the familiarity of cave life but when we are proactively triggered
by the satisfaction of these needs externally, our instincts are ignited and we
respond subliminally but with positive aggression.
Consumers in the latter
half of the 1990's want to be part of "community"-
something and someone that they can relate to, they want one to one
relationships, they want interactivity, they want to be in control, and
they will respond with deep seated instincts (or emotions) if given the correct
stimulus.
Organisations must
capitalise on these trends if they are to survive in the new economy of not just the 21st century - but right NOW! Direct
provision of products and services has to be one of these changes. The question is not 'If?' but rather 'When?'
and 'How?'
The
principle of direct provision of products and services centres around the
philosophy of multiple distribution channels - put the consumer back in control and give them choice. If you do not do this your competitor will,
or there will be new competitors that don't exist now that will capitalise on
these market gaps.
The
above corporation reflects a strategy of exposing your brand to consumers
regularly and often and places your products or services at risk of being sold.
“The message is: be
quick to change or be dead. ‘The new economy is all about competing for the
future,’ writes Don Trapscott in The Digital Economy, ‘(it’s) the
capacity to create new products or services and the ability to transform
businesses into new entities that yesterday couldn’t be imagined and that the
day after tomorrow may be obsolete’”
INTERNET - The Brand
As you would be aware the
Internet has been around now for 30 years.
Its popularity however has increased dramatically within the last five
years. The commercial viability of the
Internet has been spoken about and acted upon both in forums such as this one
and also in the reality of the companies, institutions and associations getting
on the Net itself.
There has been much
written and spoken about how using the Internet is a new wave of marketing, and
so therefore we need new commercial and communication skills. There has been much written and spoken about
how the Internet is a revolution happening and that if we don't quickly learn
the rules of the revolution then we will be left behind.
The truth in this
hypothesis falls upon the very premise that the Internet is markedly different
to other communication tools. What is the big difference between the
Internet and the existing tools we have now? One could say it’s the universality of it, but then this is only
a matter of degree. Universality now
exists with television and Pay TV particularly. Instant newspaper reports, radio etc and other traditional forms
of media produces the similar universality but perhaps not to the same degree
as the Internet does.
I suggest to you the main
difference between the Internet and other media sources, and I believe it is as simple as this: it is the INTERACTIVITY of the Internet.
The mere fact that a person can interact with what is in front of him or
her on the screen and actually help to form what is in front him or her on a
screen. This interactivity is really
the difference that we must tap into.
If we were using the Internet as a brand then the interactivity would
represent a Unique Value Added
Proposition. Similarly, as a
brand the point of difference
between the Internet and other communications, is this interactivity.
Therefore any differences
that occur within marketing or communication programs, must centre around how
consumers best use this interactivity.
How we communicate it and how we, as business leaders, maximise the
interactivity in all aspects of our involvement with the World Wide Web.
One to One
If we go back to the early
1990's the catch phrase for a number of years was 'one-to-one' marketing. Everyone wanted to do 'one to one'
marketing. Very few people understood
it, but most organisations and associations wanted to do this "thing"
called one to one marketing. There were a number of companies who claim
that is happening now with their direct marketing activities, (including mail,
phone and face to face activities). I question strongly that it is
happening now.
Most direct mail pieces I
see are not one to one marketing, but rather just brochures and advertisements
put in the form of a letter. Hardly one
to one. Hardly building a whole of life
relationship. Hardly looking at the
differences of the customer or the consumer, saying this is their unique set of
circumstances and so therefore this is what I should be saying to them. In the ‘old days’ one to one marketing was
practised all the time. Corner stores
were doing one to one marketing consistently.
Corner stores realised that understanding the uniqueness of each customer
is what kept them in business. They
knew the difference between customers who had a large or a small family. Those who worked longer than others. Those that ate more meat than others and so
on - they knew the differences and the "unique set of circumstances"
- they practised one to one marketing.
L'histoire que se repete
So, one to one marketing
is not new, however the application of it in marketing over the last ten years
has been very poorly done by most Australian companies and associations. True, "one to one" marketing,
requires multi-segmentation of the market and looking at what those differences
are between customers or consumers and addressing those differences and doing
this is time consuming and expensive and requiring astute database management,
but it is still a prerequisite of "one to one" marketing. Now perhaps this has been said before, and
it has, but why isn't it being followed.
The rules are simple. The
application of them seems to be backwards in coming forwards in Australian
organisations.
The Corner Shop Man Goes Digital
The reason I digress to
"one to one" marketing is indeed that the difference that we have
with the Internet is that we can truly practise "one to one"
marketing with the sort of interactivity that I eluded to earlier.
We are suddenly presented
with this new technology and everything old is new again, because this new
technology is now saying, "I can do
for you what the corner shop keeper did for you, and I can do it for you in a
way that is non-threatening - the same as the corner shop keeper did thirty
years ago".
My corner shopkeeper was
Mr. Cooley. He would see me (or my
mother) and provide our family with the groceries, tell us about new products,
order in specialised needs for us and simply, update us on gossip. The Internet is simply a large version of "Mr. Cooley's Place".
Strategic Approaches
So if we look at what we
can do with the interactivity of the Internet, my suggestion is, the marketing
and communication skills are little different to what we are using now for
other media. I strongly challenge the
people that are saying we have to develop new skills and develop new
approaches.
The new approaches are not from a strategic point of view or even from a
tactical point of view. The new
approaches are only from an operational point of view or a executional point of
view, i.e., in terms
of how and what we do when we actually get down to doing something on the
Internet. But developing that something
is no different from any other communication or channel management program that
we would do or any other business strategy that would be developed. What I am suggesting in essence is that
despite what you may hear, the Internet is nothing special. It gives us this powerful device which
enables us to all of a sudden, become a corner shop keeper to the entire world,
but the way we do that is still nothing special to what we have been doing or
perhaps what I should say - what we should have been doing.
How to become a Corner Shop man
If we believe in "one
to one" marketing, (and I would suggest that it would be hard not to
believe in it, considering consumer attitudes have changed and will do so ever
more, particularly with the millennium
madness that is still developing) then we should use the Internet to full
potential and penetrate one's market - and maximise it's interactivity.
If we look at what the
Internet is in terms of the marketing mix, it effectively forms two functions. One - it is an advertising medium in the same way that one
could say, that television is an advertising medium or Pay TV or Bus Sides or
any other media that we have either general or specialised.
The second function is
that the web is a channel in its own right in the same way that we may
have a retail channel, a direct marketing channel, (telephone or mail) or a direct sales channel. Channel management, particularly to a multi
channel company should now include the Internet. It is a channel in its own right and it is a way of selling to
people directly.
So whilst it can be used
to get an advertising message across, it can also be used to sell product or
services as well. This is the other
difference between the Internet and other media that is available; that is, it
performs both of these roles. You can
actually buy something from the Internet.
The real revolution will occur with the continuing convergence of media
such as Television and the Web so that e-commerce will quickly be superceded by
T-COMMERCE.
If you're thinking about
becoming involved in the Internet, you have to be very clear on your
purpose. If you want "one to
one" marketing, if you're developing a site, if that's indeed what you
want to do, then that site should be an interactive site that enables people to
input their particular circumstances.
Once the particulars are
entered, from there it can be decided what is required for that particular
person. Information can be provided to
customers electronically or if we really want to be old fashioned, send it to
them in the mail via a fulfillment pack.
This is exactly how the old shopkeeper would have done it, by simply
asking and chatting away with them asking questions about their life. We are still performing this role of the
corner shopkeeper.
So if we want to sell
product or services on the Internet, then it is a simple matter of finding out
about the person first, finding out their set of circumstances, understanding
what your product is in the first place or get a product which would be more
appropriate. Then tell them about it
and provide a satisfactory way of ordering.
How Big is my Shop
The involvement of ALL
companies or organisations is not a stated necessity that must be obeyed, least
the organisation will come collapsing down around your ears.
Some organisations do not
need to be on the Internet at all. Some
only need a small presence, perhaps by Hyperlink from another site. Some may need a large presence.
The degree of involvement
with the Internet can be determined by the Internet
Value Added Coefficient (IVAC) that I have devised. The IVAC
simply looks at the parameters of your business and asks you to rate them 1 to
5 and by multiplying by a numeric weighting will automatically give you a
coefficient (as a percentage) that determines the degree of involvement you
should have.
If your IVAC is 0-25% it
would suggest no involvement.
If your IVAC is 25-50% it
would suggest minimal involvement - perhaps with someone else's site, or
develop some advertising.
If your IVAC is 50-75%,
then you should be thinking of a small to medium sized site.
If your IVAC is 75-100%
then you should have a large site with promotions and advertising, etc.
The following table shows
how you can calculate your own IVAC.
INTERNET VALUE ADDED
COEFFICIENT (IVAC)
Weighting Business Parameter Rating
(1 - 5) Low/High Weighted Rating
4 Bit
Business Physical
Delivery/Delivered on Net
3 Commodity Business? No Alternative
/Many Alternatives
2.5 Channels One
Channel/Multi-Channel
3 Information Complexity SimpleProductInfo ComplexProduct Info
3 Purchase Pattern LowVol/HighCost HighVol/LowCost
2.5 Competitiveness Monopoly/Free For all
2 Market Share High/Low
TOTAL (%)
Simplicity
A number of people may say
that this is all a bit of over simplification and to that I would say, 'Well
that's partially right". It is
simple. The business world is made
overly complicated by people rather than simplified.
Many
problems and many areas of involvement in the marketing and general business
area are made to be overly complicated by people that have vested interest in
those areas. Our world can indeed be a
simple place, if that's the approach you take.
It is all in the mind of the business manager.
There are a number of
reasons for over complicating things.
People may want to justify their positions in those areas. People may want a shroud of mystery in
areas. People may want to 'muddy' the
waters by throwing in complex details which albeit would be true, but in the
overall strategic plan of what is trying to be achieved, does not affect the
end result.
If this is a
simplification then I am pleased. It is
a simplification - that is what I wanted to prove. What we have now with the Internet is a very powerful tool, and a
very powerful communication device, and an expansive channel, but the use of it
is still relatively simple - do not think that it is over complicated.
WHAT IS A PHYSIOCRAT?
Physiocrats were part of a
school of economists founded in 18th-century France and characterised chiefly
by a belief that government policy should not interfere with the operation of
natural economic laws and that land is the source of all wealth. It is regarded as the first scientific
school of economics.
Physiocracy
etymologically denoted the "rule of
nature," and the physiocrats envisaged a society in which natural
economic and moral laws would have full play and in which positive law would be
in harmony with natural law.
They were first to purport
the principle of 'laissez faire'
(Fr; "allow to do") economics i.e. a totally free market controlled
by customers with no government interference.
This condition has to date not (arguably) been achieved.
It seems ironic that as we
proceed into the next millennium that ideas 300 years old may now be coming to
fruition. In fact, as more and more
commerce goes direct and in particular the use of the Internet grows in usage
world wide we will soon have 'friction
free' capitalism which will nearly mirror what the physiocrats advocated in
the 1700's. Consumers will have total control
with decisions being made at the touch of a button - the only difference is
that the physiocrats advocated an agricultural led recovery fully. Although one might be excused for thinking
that 21st century Physiocrats would replace agriculture with Aquarius and
support a digital led revolution.
SO, WHAT NOW?
The answer to that
question is completely up to you. The
facts are clear. We as a species are
essentially the same as we were 35,000 years ago. Sociologically, we are not being treated, or indeed, living the
way that we are meant to be. People
want to have a sense of community (being a member of a club), they want true one to one marketing, they want interactivity, they want to be in control
and......they will respond with their hearts
- and their wallets. Those companies that recognise these facts
will be the leaders of the new economy of the 21st century.
We are all
privileged to be at the forefront of a new information revolution. We can either ignore the revolution,
complain about the noise of the revolution or lead the revolution. I don't know about you, but I choose the
latter.