A marketplace theory of everything

When I moved into my office a little over four years ago, there were three Italian sandwich establishments within a one-block radius (Fortunately for me, there was also a YMCA within walking distance). The subs at all three (or hoagies, heroes, grinders, torpedoes) were all above average in quality and competitively priced. It was truly difficult to tell one Italian with the works from another.

Fast-forward to 2010 and the number of sub shops has doubled, without a corresponding increase in population. This scenario is being played out in virtually every category of products and services; from coffee to computers, from subs to apps. Web-based business models, especially "info products" and "content marketing," provide an extreme example of the problem.

The problem, or course, is one of abundance: abundance of information, abundance of technology, abundance of ideas. This wealth of opportunity has resulted in too many ideas chasing too few, very well-informed and extremely overloaded customers. The consequent shift in power has put some serious hurt on the growth plans of even the most "customer-centric" companies as they struggle to understand the new value equation of these turbulent times.

Well, here it is. A simple Theory of Everything in business: in an information rich, oversupplied economy, customer feelings drive purchase decisions, growth and profitability. If people "feel" that Wal-Mart's products are as valuable as yours, they'll save some time and money and "feel" good about that decision. If they "feel" that they’re getting ripped off on the excessive price of a brand of razor blades, they'll eventually become perturbed enough to spitefully switch and "feel" good about it. Persuasive advertising be damned!

Are you competing in a market category oversupplied with interchangeable products or services? Can customers easily (remember, this is subjective) switch from you to a competitor and get just about the same rational and emotional benefits? Do you find yourself frequently competing on price?

Welcome to the feelings economy, where planning what to make and how to market has changed dramatically - and permanently.

It used to make sense to pay attention to your industry and benchmark your direct competitors. It used to be enough to learn and diligently apply the latest sales and marketing tactics and techniques. It used to be prudent to treat business like war and try to kill your competitors. But not any longer.

It should be apparent to you by now that the status quo is not working. Your new imperative is to assess and appeal to your customers' feelings . . . period. Feelings are the basis for all profit generating consumption in a market at the mercy of customer choice. Focus on feelings, especially the subtle ones that customers themselves cannot articulate.

What are feelings, anyway? Let's keep it simple. "Feelings" refers to a very specific quality: pleasantness, unpleasantness, or neutrality in an experience. Pleasant feelings - ease of use, excitement, fun, reward, increased self-esteem, etc. - habitually condition desire. Unpleasant feelings - pain, effort required, decreased self-esteem, etc. - condition aversion. And neutral feelings condition forgetfulness.

Given this definition, the purpose of every business in an oversupplied market should be to increase customers' pleasant feelings while minimizing their unpleasant ones. This goal should be systematically applied to every interaction a customer has with a product, a company, its outlets, platforms, communication, or representatives. A comprehensive feelings analysis should be applied to every business process - to your brand!

For several decades, the mantra of marketing has been "USP" and "features and benefits." This traditional view, however, concerns itself with a rational, analytical view of value. In an oversupplied market with an incomprehensible amount of conflicting information, rational decision-making is a myth. So instead of a Unique Selling Proposition, start thinking about your Unique Feelings Proposition.

Start paying attention to what people do (which is the best indication of how they feel), not what they say. And realize that the more choices there are and the more complex life becomes, the more people make decisions on what "feels" right to them and not on some objective truth.

The US economic tide has receded and there are a lot more brand boats in the sea. Growth is no longer guaranteed. Take a look at how strangely the stock market has been behaving. Even though companies are exceeding their earnings projections, share prices are stalled. Why? Because investors care more about future earnings, and they too are having a difficult time seeing the growth potential

I wrote it in Opportunty Screams, and it's worth repeating here: "Great success is the product of a great passion, a passion for sweating the small stuff and adding value to every product, every serivce, and every interaction. Value delivered - value that causes people to become interested in an idea and feel proud about their decisions - is the meaning and purpose of any successful idea."

Welcome to the feelings economy.

Posted December 6, 2010
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Comments

Jeff

Tom -

I don't know if this is a new concept - having spent a bit more than 30 years in the graphic arts industries, and the last 20 as an account executive (salesman), I learned that all relationships are built on desire - and trust.

Most importantly, you can't sell someone something that they don't want. In in order to sell someone something they need to trust you, not the thing you're selling.

These trusts come out of connections via referral, recommendation, and reputation. Cold calls just don't make it - not anymore.

Unfortunately, in my industry, as I'm sure in others, personal contact has been reduced or eliminated in the selling process. "Buying" has been distilled down to a form that's emailed to you or downloaded from a procurement site. A bid is then submitted, judged not on creativity, ability, trust, or relationship - just on price. Cheaper price overcomes all.

Even some on the buying side of the equation, the creatives for instance, are frustrated by the fact that everything seems to have become a commodity. How many widgets can be bought for a dollar.

So how exactly do we overcome this when all seems to be reduced to bits and bytes?

I do believe that personal connection is still valuable - it still "gets you in the door" so-to-speak. But differentiation is becoming a dream. You have to be able to prove it - and process is taking that opportunity away.

Or as I said to a client recently, you're going to make cheap enough until it breaks.

Frustrating.

- Jeff

Posted by: Jeff | December 18, 2010 at 08:07 AM

Tom Asacker

Hey Jeff,

You have beautifully distilled the essence of today's marketplace challenge:

"Differentiation is becoming a dream. You have to be able to prove it."

Without differentiation that truly matters to people's feelings - without a reason to care - customers will continue to compare.

Frustrating? Indeed. And destructive to the business and to the people who try desperately hard to make it successful.

There's a way out, and I've tried my best to describe and codify it in my new book, Opportunity Screams.

However, you know the old expression: "You can lead a horse to water . . . " :)

Posted by: Tom Asacker | December 18, 2010 at 09:07 AM

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