There were some key thoughts that I wanted to reflect on and talk about again.
The key thoughts were
KEEP OPTIMIZING AND IMPROVING
Do not stand still. Do not wait until you have an issue. A moving target is harder to hit.
One of the things that he spoke about was how he learnt the ability and importance of constantly fine tuning and optimizing what you do. They found that even small changes had a huge effect (increasing the font of links grew click through by 30%). In the traditional goods and services business, we are used to – or maybe inclined to – try and keep things constant once we pass that consumer in use test or have strong shares. The mantra is “beware of alienation” and “if it is not broken don’t fix it”. We keep things constant, and then have to do major changes when we slowly start to erode and slowly but slowly our share or sales drifts away. The issue is that it tends to erode rather than be dramatic.
I was listening to some people talk about innovation recently. One of the things they spoke about is how the most innovative groups of people have been proven to be the ones who focus on constant variations, pro-typing and constant improvements – versus those that focus on a big end result. I was shown an video but this chap that gets people to try and build a structure that balances a marshmallow on top as high as they can using straws and pretty much nothing else. The group that gets it the highest on first session are young children, as they start with placing the marshmallow on top right from the start even though low and go from there. Constantly adding and constantly experimenting.
As consumers we get bored. We are always looking for something that meets our needs better. So is it not sensible to focus on giving our consumers small, comfortable improvements, tweaks and things that optimize and evolve their experience than just keep churning out the same thing. I know from all my years in packaged goods, that we find this uncomfortable as the plants and associated functions find this state of evolution frustrating and concern about complexity and cost. But we need to work out how to achieve this, as this is also the nature of evolution itself. To keep relevant and to keep interest we need to be constantly optimizing and fine tuning.
The online players have learnt this and can see fast results. The retail business also knows the power of this. I think this is going to be key for packaged goods and services overall.
IMPORTANCE OF LOYAL CONSUMERS
It costs a lot to recruit. So keep your users happy and engaged
He spoke about how people that came to the lastminute.com site directly spent around 60% more than people that they recruited via search and other tools. People that had come to love the brand and the site and came there were open and keen to spend more with them. They liked what they got and so they tried to focus on ensuring that these people were happy, through offers, regular contact and better personalizing their offers.
So often we invest in recruitment, and of course that is important. But it is as important, or more important, to keep users engaged and happy. For example, in the category I am familiar with, the skincare brands doing best in the channels we compete in are the ones that ensure that once people have tried the brand that they keep them engaged through news, offers and cross selling. Users of the fastest growing brands buy more often per year and more per basket – simply because these brands have invested in it and focus on it. Others that invest more in trial get more peaks, more volatility and less share in the end.
I think the thing that struck me most, was the ruthless consumer centric focus of online companies. You have to be! As things move fast and you see immediate effects and results. In traditional goods and services it is not always as easy to see the change, as you get lost behind supply chains, stock sell in and slower evolutions. I think there is a lot to learn from these brands and companies...
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