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".
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
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.