Are you addressing the things that have always mattered?
How often do you get asked about trends? What are the big things that will change over the next few years? We get asked it a lot.
How often do you get asked about the big things that won’t change? We never get asked it.
But that is exactly the question Amazon CEO Jeff Bezos recommends asking. And he’s built a pretty successful business answering it.
Bezos says that you should build a business strategy around the things that you know are stable over time – for instance, shoppers will always prefer low prices – and then invest heavily in ensuring you are providing those things and improving your delivery of them all the time.
He describes it well: “It’s impossible to imagine a future 10 years from now where a customer comes up and says “Jeff, I love Amazon, I just wish the prices were a little higher” or “I love Amazon, I just wish you’d deliver a little more slowly”. Impossible. We know the energy we put into those things today will still be paying dividends for our customers 10 years from now. When you have something that you know is true, you can afford to put a lot of energy behind it”.
So, Amazon continually lower prices. They have Prime to speed up delivery. They have 1 click or Alexa to make ordering more convenient.
Why are we talking about this? Well, we think much more focus in our industry is placed on the things that will change. But, much less on the things that won’t change. For example, lots of new research gets commissioned. Then people get disappointed when the research comes back and confirms that the things that were most important 3 years ago are still the things that are most important now.
But, imagine if Jeff Bezos was shown some research for Amazon saying that they had cracked price, convenience and delivery, it’s now all about a super premium, experiential, website. There is a fair chance he’d give a two word answer and it’s unlikely to be “great insight”.
We often want to find new problems. Because a new problem or need means that we can come up with a completely new solution. It feels easier. But, the more important task is to come up with better solutions to the same problem or need. It is harder, but much more likely to make a difference. It is what Amazon do.
So, how can you focus on what doesn’t change?
Properly understand drivers of choice. The key things that drive store choice or drive brand choice in a category. Then focus your resource on continually delivering. Measure your performance. Then improve your delivery even more.
For instance, last week Aldi announced strong sales growth (up 14%) alongside a drop in profits (down 17%). Matthew Barnes, Aldi Chief Executive, said that they would do “everything and anything” to keep its prices lower than rivals, even suggesting profits may fall again next year. “We will never take our eye off the ball on price. We see that as our contract with our customers”. Aldi know low prices are important. They want to have an advantage. To maintain that advantage they will continually invest in price.
Properly understand barriers to usage. This could be barriers to using a category or sub category. It could be barriers to using a brand. It could be barriers to buying or using a product for a particular occasion. These are things that rarely just go away, so you have to do something about them.
For example, we’d imagine one of the key barriers to drinking bottled water has been taste – particularly compared to what else you could drink. So, if you are a bottled water brand you add flavour to it. Hence the massive increase in flavoured waters over the last 5 years. If you are in ready meals, one of the key barriers could be a perception that they are processed. So, you remove the processed cues and dial up the freshness cues – e.g. led by City Kitchen, Bighams and now being followed by many other players.
Properly understand key success factors for activities. The things that were true 10 years ago, are true now, and will be true in 10 years’ time. For example, premiumisation. All the evidence says that there are 3 things that shoppers will pay more for (1) something that is better quality or delivers better performance (2) something that is more convenient (3) something that is healthier. So, if you are trying to drive trade up, a product will need to deliver at least one of these things.
Or take another example – NPD performance in market. There is a massive focus on trial in our industry. Lots of new products get good trial. But trial rarely predicts success. It is repeat that predicts success. This hasn’t changed and won’t change in the future. Most companies know this, but still put most of their effort into getting bought the first time. Not the next time or the time after that.
Focusing on what doesn’t change doesn’t mean standing still. It means coming up with new and better solutions to the things that matter. Always have mattered. Always will matter.
Let’s end with Bezos – talking about Amazon Prime. “We want Prime to be such good value, you’d be irresponsible not to be a member”.
Are you as clear and confident about the delivery of your proposition?
Feel free to forward. Have a great weekend and speak to you next week.