Customer Hacking

From the moment you start selling a product or service, it is becoming obsolescent. Initially, you may solve a problem for a customer - you help them do something they couldn't do before - you do a better job at something than anyone else, but then things begin to change.

Customer expectations change - as your solution becomes the new floor for what is expected in the future.

Customer needs change - as their businesses change, as their objectives change, as they themselves change.

Markets change - as competitors figure out new ways to take business away from you.

How fast your product or service becomes obsolescent depends on a lot of factors - but it's as reliable as entropy, death and taxes that your product or service has an expiration date on the lid.

That's why everyone must innovate - not just if they want to succeed, but ultimately if they want to survive.

Thankfully, people are, by nature, adaptable...and so are your customers. More often than anyone wants to realize, customers are very good at adapting your product or service so that it solves their problem.  In a process not unlike jamming a square peg into a round hole, customers will take what you give them, then adjust, support or work around it to get what they want.

For example, in the days of vinyl records, music lovers wanted to hear music, so they were willing to buy large and akward plastic discs that scratched and degraded easily, just so they could hear a song. Music lovers bought huge stereo systems to play the records, took over entire closets to store the records, they learned how to clean the record with special brushes, to gently handle the record by the edges and to delicately place the needle in the right groove. They even learned to bump the record player when the needle got stuck.

And record companies learned to help music lovers by giving them the same thing they already had, only a little better. They reduced prices by manufacturing poorer quality vinyl. They made the large discs more interesting by packaging them with "album cover art".  

For decades, to love music meant to love vinyl records.  The symbol or "brand" associated with music was often that of a record.

Customers were willing to use a technology decades past it's expiration date, not because it consistently and easily delivered good music - but because there wasn't anything else available - and they adapted to the existing technology.

And when they were presented with something better, such as CD's - it took less than five years for everyone to switch. When they were presented with something even better at delivering music on demand, the mp3 player, they switched even faster.

It is extremely dangerous to rely on customers' willingness to adapt. The moment someone has a better answer - the adaptation will end and they will abandon you.

But if you discover the adaptation first, your customers can guide you to innovation.

Asking customers what they want is pointless at best, and destructive at worst. When asked what customers want in the future, most likely they will describe a version of what they can get now - only with a little better quality, some slight changes in design, and at a much lower price. Surveying customers with direct questions around innovation can even help you persuade yourself not to innovate.

"Research shows that customers love album cover art, they even hang it on their walls; they'll never buy a small disc or a digital file."

So instead of asking customers what they want, perhaps you should observe how they are adapting your square pegs to their round holes.

The best customers to watch are the "hackers". By "hacking", I mean a certain kind of creative development practiced by computer giants such as Steve Wozniak or Linus Torvalds and all the behaviors, methodology and thought processes that allow them to develop new approaches to problems. Not to be confused with the criminal exploits of those trying to obtain credit card numbers or infecting computers with viruses, true hackers adapt whatever is at hand in order to create very useful products, services, and systems.

Jon Erickson introduces his book, Hacking: The Art of Exploitation, with the following:

"The essence of hacking is finding unintended or overlooked uses for the laws and properties of a given situation and then applying them in new and inventive ways to solve a problem - whatever it may be."

Substitute the word "innovation" for "hacking" and suddenly Mr Ericson's quote becomes a useful definition for innovation. At the same time, it's a useful model for the kinds of customer behavior you might be need to observe.

For example, when Harley-Davidson's business was pummelled in the 1970's by Japanese competitors able to deliver a better quality motorcycle for less money, customer "hacks" allowed them to find a new definition for their company, their products and their customers.  Even as new bike sales continued to drop, their accountants were able to see that their after-market parts business remained strong.  It became clear to the company that their best customers were customizing their bikes - "hacking" them to make them more personal.

The accounting insight led to a realization that they could innovate the motorcycle business. Instead of selling the best quality or the highest performance motorcycles, instead of rejecting the dark images of motorcycle gangs, they could embrace their hackers and become a premium lifestyle company.  They could sell customization, club membership and the romance of an old-fashioned, rebellious, and incredibly loud experience.  Motorcycle sales jumped upwards, along with branded clothing, accessories, tatoos, and of course, after market parts.

Despite some difficulties in recent years, the turnaround of Harley-Davidson remains one of the more innovative re-inventions of a company.  All because they noticed how their customers were hacking their product.

Are there customers hacking your services or products?  Are they using them in a different way than you think they are?  

Find out, and you may be able to find meaningful - and profitable - innovation.

What is marketing...really?

I'm often perplexed by how most people seem to define the word "marketing".  Ask what a marketer does, and usually advertising comes to mind.  Marketers are seen as characters in an old movie starring Tony Randall looking for the commercial gimmick that will sell the latest product.

Even those who call themselves marketers have a Madison Avenue vision in their minds, and even if they are talking about the latest Internet based, new media, social media, branding or viral market gimmick, they are likely still thinking about some form of advertising.

And therefore Marketing is advertising...or is it?

Did Google advertise in order to become the giant they are today?  If I remember correctly, Yahoo had amazing advertising campaigns, while Google had none.  Was it advertising that created the frenzy for iPods and iPhones?  They had some good advertising, but perhaps there was something about the products themselves? Was it advertising that made millions of Americans thrilled to spend more than $3.oo for a cup of coffee at Starbucks?  I can't remember a single commercial for Starbucks but I do remember seeing everyone carrying around those cups.  Was it a commercial that created waiting lists for the Toyota Prius?  Or perhaps a car company actually delivered the first meaningful innovation in forty years and everyone started to notice.

In countless cases, people are persuaded to value and ultimately to buy an idea, a product or a service because companies marketed.  Advertising helped get the word out, but without something special to back up their claims, little could happen...even when they put commercials on the Internet.

So if advertising alone doesn't make a difference, what does?

An interview with computer hacker Virgil Griffith printed in the New York Times last week ("Internet Man of Mystery" by Virginia Heffernan, 11.23.08) put it surprisingly well, "You step back and look at the entire interacting, breathing system and pick out the counterintuitive, unbalanced, seldom-explored parts and look for a way for these parts to interact such that they play off each other, synergistically amplifying their power to influence everything else..."  Reading this, I was able to recognize a true marketer in Mr. Griffith, even if he was talking about hacking computer systems.

Marketing is a way to look at a market, understand the system of buyers, sellers, suppliers and clients - what makes it all tick, what is really happening underneath the lies we all tell ourselves, the slogans, the official descriptions and the talking points.  When a marketer understands how the system actually works and why - then they can change it.

They may change it with a new product or service, a new way to approach the market, a new way to make something or a new use for something.  But when a company is marketing, they are essentially innovating a new relationship with the market or redefining what the market means and how it works.  

That's why I believe that marketing at its core is actually Innovation.

...and advertising?  It can be a lot of fun. It can capture someone's attention.  It gets the word out. It gives people permission to enjoy or be proud of  buying your product.  But without meaningful innovation (marketing), how much is it really worth?

Advertising and all other forms of communication are powerful and important tools, but they in themselves do not market a firm, any more than a hammer and nails build a house.  Skillful carpentry skills alone cannot make a brilliant building - it's the vision of what could be - of how to make something better, of how to manipulate the existing system, materials and tools to create a new and more exciting world - it's innovation.

iPod innovated how people can interact with their music, movies and even their telephones.  Zune innovated nothing but spent some real dollars on advertising.  Ronald Reagan and Barack Obama's presidential campaigns innovated how the US could be governed and what the US could be in the future while their competitors merely communicated.  Actually, those two presidential campaigns are interesting cases.  Both presidents were brilliantly successful communicators - but they were not communicators alone...the skillful communications and advertising was put to use by their innovative visions for where the country should go.

Their unsuccessful opponents weren't bad communicators.  Jimmy Carter and John McCain both had skillful and experienced communications teams, they both were proven communicators who could influence people with their powerful rhetoric and they spent millions of dollars on advertising.  But they didn't have innovation and vision driving their words.  They weren't seeking an improvement to the systems, rather they were trying to make what exists a little better.

If you aren't innovating, I wonder if you are really marketing.  

How to "hack" marketing

There's something interesting about IT and computer culture that most people in Marketing haven't picked up on...something that may very well hold the key to persuasion strategies, and ultimately to selling a product or service:  Hacking.

Good IT developers take as a given that there are two steps to getting what they want.   

Step one:  figure out how a system actually works.

Step two:  figure out how to use that system to make it do what you want it to do.

Those two steps seem rather obvious, until you realize that great IT developers are most often"hackers" in disguise.  That is, they instinctively look for weaknesses, loop holes or structures that allow them to "game the system".  When a developer learns how a system works, they are less interested in the appearance of an application, but rather the gears, principals, and underlying code that make it work in the first place.

In the old days, hackers were seen at best as anti-social - at worst as criminals.  But now, the richest and most powerful men and women in the world are hackers.  Bill Gates is, perhaps, one of the richest and most well known, but hackers are running everything from our financial system, world-wide logistics and shipping, media and military security, to on-line retail to phone systems. 

And hackers aren't just working computers.  Hedge funds made a lot of money by hacking financial systems to come up with new financial structures. Southwest Airlines hacked the commercial airline business by understanding what was really driving costs as well as customers - then using it to their advantage.  The best real estate developers hack neighborhoods to find value in a parcel of land that no one else sees.

Unbeknownst to most people, every discipline and every industry has "hackers" - and almost always, they are the ones running things.

However, it's usually not too difficult to spot a hacker if you can watch them solve a problem. Most people when solving a problem will start by asking, "What did we do before?"  a hacker will ask, "How does this system really work?", followed by, "What do we want to get away with?" Once a hacker understands how a system works, then they can use or manipulate the systems rules to solve their problem.

Let me illustrate with a classic marketing hack:

One of the oldest rules of advertising has been Repetition.  The more you repeat something, the more likely people will believe what you say and act upon it.  That's why we see the same ads over and over again - why the same words, the same images and the same benefits are shown repeatedly.  

Here's how it works:  As a survival mechanism, people forget far more than they remember. Part of how we survive is by constantly editing what is important information and what is not.  If we weren't able to do that, we wouldn't be able to discern between information that leads to survival - such as where the good food is or how to avoid the hungry lion and information that we don't need, such as how a grey pebble at your feet looks just like the grey pebble that you stepped on two seconds ago.

However, if you keep seeing that grey pebble over an over again, especially if that grey pebble is fundamentally different from the white pebbles you usually see, you will pay attention to it - and you may remember it as important.

By repeating, "grey pebble" over and over again, the brain starts to register "grey pebble" - and if enough significance is created, it will be rememberd - and even cause someone to act upon it.

A blunt tool that most marketers use is:

Say the same thing, the same way, over and over again until people get it.

Sometimes this can work - but sometimes it can mostly annoy people.  Rarely does it actually build a brand (see my last posting).

A sophisticated hack - one that takes into account how the brain actually works - is to talk about the same thing, in different ways, from different people/sources,  at different times until people conclude that it is important.

In order for a repetition to really mean something, there are a couple of things that should be in place:

1. It has to be different.  If your grey pebble looks like all the other grey pebbles I'm walking on, and nothing of interest happens whenever I step on one, there is no reason for me to remember one over the other.
2. Information needs to come from multiple sources in a credible way. In other words, if one person keeps babbling on about grey pebbles, it can only rise to a certain level of importance.  It may even drop in significance - as one wonders why this person is so obsessed about grey pebbles.  If several people you meet during your day talk about the grey pebble, if there is debate about the significants of grey pebbles, if there are even disagreements about what it means  - then it must be important and true.  It's more credible if it isn't "sold" to you.  It's more important and more believable if you engage in a "dialogue" about it.

Instead of following a formula, instead of looking at how something was done before, instead of just marketing, one may want to consider hacking the market - and in the process begin the "dialogue".