Sunday, October 3, 2010

The customer saga part 1: The product

There’s a good chance that for almost any product that we might want to sell, there will already be more competing products in the market than we can count, and if not, we can almost be sure that copycats will pop up looking to replicate our success (assuming of course that we create a successful product). At the end of the day, it all comes down to us selling our products and making a profit. And to do that, we need to make our product stand out from the competition.

In this firs article of the customer saga, I will be talking about the very reason for the relationship between customer and company: The product. The following is some of the things that we need to do to create a successful product:

Build a great brand

Having a brand that customers associate certain desired feelings with (depending on what you want your brand to stand for) is one of the best ways to differentiate your product. Simply spending large sums of money on advertising might make people notice your brand for a while, but it wouldn’t mean much in terms of retaining long-term customers if you don’t have a good product to back your ads up.

A truly great brand is built by things like great customer service, understanding the customer and designing quality products with the customer in mind and with the feedback received from the customer, making a promise with your brand and keeping that promise for which your brand stands for.

I believe that companies should cut a significant portion of their advertising budget, and channel those funds into creating a better product, as in the long-run, a quality product markets itself in terms of the existing customer base buying more of the product and recommending their friends to also buy your product , increasing your customer base.

That doesn't mean advertising doesn't have a place in a marketing strategy, though. Ads can be used to let people know about your product when you're new in the market, as well as help with brand positioning. Just make sure that you have a good product to back up your ads.

Re-define the product

We need to think of our product as all the points where the customer comes into contact with us. With so many competing products in the market, a large part of the customer’s decision on which company to buy from will be based not only on the product itself, but on the experience he/she had when interacting with the company.

Say for example that we are selling jewelry, our product starts from the first time the customer comes into contact with our brand; in this case let’s say she looks up our website. Our website has to be easy to navigate and needs to have information that most of us look for, presented in a clear, straight-forward manner. The website also needs to show a way for customers to contact the company as well as have other content that customers might like to consume (photos, videos, and etc.). And if the customer decides to contact us, we need to be responsive and try to address whatever issues they might have in our response.

After visiting our website, the customer decides to visit our store. At this point of contact, we need to make sure that our service is great and that she is happy and well taken care of in our shop. About a month later, she brings back the necklace she bought saying that it doesn’t fit her and she wants to return the necklace, as the necklace is still covered by our returns policy. We refund her the money without asking her any questions and give it our all to take care of her and make sure she is happy, just like we did the first time she visited our shop.  

In a couple of months, that customer decides that she wants to buy a pair of earrings, she thinks back to the retailers that have a difficult to navigate website, have slow service in their shops, or get pissed off when she returns stuff, then she thinks about our company and the great experience she had interacting with our company, and decides to visit our shop again. A huge part of your product is the experience you create for your customers, and the experience you create contributes to what your brand stands for.

Sell products you can profit from

It is important to sell products that you are confident you can profit from in the long-term. Sure we might lose money in the short-term, but it is important that we enter businesses we project we can earn good margins running, as if we keep earning low margins or keep making losses, we might resort to cutting costs that affect the quality of our product (including the experience we create for the customer) and raising prices that might not be in line with the value we create, none of which is likely to lead to long-term success.

Create value

Our products of course need to create value for our customers. They need to improve our customers’ lives, make them happier, and generally provide them with value preferably significantly beyond the price we are charging them. You probably read something like this a million times before (the same goes for probably everything else I wrote) and it will probably be meaningless unless you act. So, if you identified a great opportunity, get out there and sell great products!

If you have any questions, or have anything you would like to share, please feel free to comment. Thank you for reading, and may you always sustain good returns on your portfolio.