Burning Answers
Doc
Searls hung out here last week: we laughed a lot, did tech
and swapped stories. He attended the Burning
Questions conference presented
by the Harvard Business Review and organized by Halley.
She and a bunch of other bloggers were at Katz'
Deli Thursday night.
(To answer the
most burning question at the conference, I confirmed that Halley did stop
by a Fifth Avenue boutique for some sexy
underwear for her NYC survival kit. That's the kind of undercover
work this blog will undertake to bring you the back story you deserve
to know.)
It was an interesting
week. Doc signed up to work with me and my co-consultant, Transition
Networks, to develop a massively luxurious
web application. "Massively
luxurious" is what happens when a luxury brand successfully sells into
the "mass market" of people who are almost invisibly prosperous,
living simply but insisting
on top quality for some purchases. Noted
recently,
"We
don't want to haggle over commodities but we're experts in prestige and
the tools
of our trade and we want the good life
at great prices. You'll find us over at CostCo, loading paper towels
into our Mercedes. Next we'll stop at CompUSA, grooving to our iPod while
stocking up on commodity CD blanks to Rip Mix Burn on our tricked-out
iMac. Back home, we'll order cut-rate printer cartridges from inks4art.com
since CostCo and CompUSA only stock the Epson parts."
Whether it's a Mont Blanc pen in your pocket, Steuben crystal
on your mantle or a Rolex on your wrist, you probably indulge in a luxury
item once in a while. When you do, while you may wish you could pay less,
price won't keep you from the purchase. Price often justifies
the
purchase,
a fact that supply-demand curves don't explain very well.
Transitions. Networks. Luxury.
Transition
Network's CEO Mary Olson and Creative Director
Randal Hunting
brought Steuben
Glass into the web age with the kind of success story many have
given
up on.
After two months developing an innovative web strategy with Steuben management,
they implemented, rolled out and established a new web site
over
the next two years. Their deliberate work resulted in a
site that generates
68% of Steuben's new business, revenues up about a third and web activity
up 90%. Not bad for an investment equivalent to a retail store, and requiring
just
3 people
to
operate.
Most
importantly, it's halted a decline in their customer census, attracting for
the first time the children and grandchildren of their aging customer base.
Transition Networks has been similarly
successful for other clients:
21 Club
Corning Museum of Glass
Oxygen Media
Luxury Marketing Council
Joseph Jurson
Saber Partners
Henry Welt
Steuben
These companies know better than any others that their customers are customers,
not consumers.
When you make that distinction, Doc is the guru you want on your team, and
not just because his Google link count is 88,100 (Steuben's at 14,100).
He and
Dave Weinberger nailed customers' decline into consumer hell in Cluetrain:
"So the customers who once looked you in the eye while
hefting your wares in the market were transformed into consumers. In
the words of industry analyst Jerry Michalski, a consumer was no more
than 'a gullet whose only purpose in life is to gulp products and
crap cash.' Power swung so decisively to the supply side that "market" became
a verb: something you do to customers."
The Clue Trainers,
of course, specified just how absurd that model is, and Googling "consumer
customer" at searls.com supports
the prediction that the web would reform the consumer poop collectors. But
we're still a long way from the kind of intimacy the
web can
enable–CRM
done right, as Mary describes it. Since Xpertweb is really a reputation/intimacy
protocol, I find this kind of work fabulous, dahling, as they say
in the world of fashion.
The
mass/luxe market is as boutique as you can get with a corporate web site.
Rather than
launch with a blitz attempting
to capture
as many eyeballs and clickthroughs as possible, the luxury site must reinforce
the quality of the "brand" rather than dilute it. For example, Mary's
and my client is the irrepressible Michael
George Florist, who is the florist of choice
for
New York's fashion industry,
media, celebs and notables. When Calvin Klein opened his store, Michael's
arrangement of 400 calla lilies stopped jaded New Yorkers in their
tracks. People clustered at the door to gawk.
Calvin,
kibbutzing
the activity with Michael, says, "Michael, people are
coming in because of the lilies." Michael was skeptical, but later
realizes it's true.
Late Breaking News
I'm typing the last paragraph at 1:39 EDT on Friday,
when...
From:
Doc Searls <doc@searls.com>;
Date: Fri May 2, 2003 1:33:55 PM America/New_York
To: Britt Blaser <brittb@blaserco.com>;
Subject: Mass luxe
So
the Harvard Business Review I picked up yesterday (April 2003)
at the show
has a piece called "Luxury
for the Masses," by Michael J. Silverstein and Neil
Fiske. Page 48. Useful context. Something to source and quote.
"masstige" =
the sweet spot between mass and class.
Stuff
about Victoria's Secret, BMW, Bath & Body
Works, Kendall-Jackson, Sam Adams, Pottery Barn, Grey Goose,
Belvedere. "Trading
up." Demographic trends. Discount goods from Home Depot,
Costco and Wal-Mart have lowered the cost of living, giving the
middle
class more disposable income.
Stuff
about "the new consumer's needs." There
are four:
1) Taking care of me;
2) Questing;
3) Connecting; and
4) Individual style.
Practices of New Luxury Leaders...
1) Never underestimate the customers
2) Shatter the demand curve
3) Create a ladder of genuine benefits
4) Escalate innovation and elevate quality
5) Extend the brand's price range and positioning
6) Customize the value chain
7) Use brand apostles
8) Attack the category like an outsider
It closes with a Cluetrain-like note:
Traditionally, consumers have gotten credit
for keeping the engines of production rolling merely by buying
in ever-greater quantities. Businesses got the credit for all
the breakthroughs in technology, productivity, quality and
service. New-luxury consumers, however, are so knowledgeable,
affluent,
and selective that the classic distinction between enterprising
producer and passive consumer has become obsolete.
Businesses
that have failed to note that the consumer has gotten smarter
and more active need to get busy listening and responding
-- on every level.
Swap "customer" for "consumer" and
you've got it.
More thoughts later.
ds
somewhere over Nebraska, it looks like...
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Convergence Marketing
Mary
Olson and I have been noticing a kind of cosmic convergence around the mass/luxe
meme, but today's intersections are
a little over-the-top.
Maybe Doc's message and
this blog are channeling each other due to sleep deprivation. We got 2 hours
sleep before his 4am wakeup (blog dinner gossip and Xpertweb musings while
Doc
forced
his NYC photo album down
the throat
of his balky server).
It doesn't stop
there. Mary calls ten minutes later as I'm forwarding Doc's email to her.
Apparently the mass/luxe meme is getting
some real traction, with documentation coming by courier. To understand the
traction, we need to consider the market segmentation practices that have dominated
marketing
over
the last
35
years
or
so. Just as computers morphed from mainframe to minis to PCs to phones, Marketing
theory evolved
from a single mass market through multiple demographic market segments
and now, we're certain, to sets of luxury preferences within individual demographics
and often across them.
How's that for a disturbing, self-parodying graphic? This
is the image that
Harcourt
Brace uses to attract marketing students to its textbooks on market segmentation.
The message seems to be to "carve up the people so we can serve them
better."
It echoes the
18-year-old Marine in Viet Nam who said "We had to level the
hamlet in
order
to save
it." I guess it takes a child to raze a village.
Harcourt Brace cites traditional
market segments like Mature
Age Groups, Young
Age Groups, Hispanics and Upscale
Customers. The idea is that you should address each segment as a homogenous
mass, which is only a slight refinement of the 1950s doctrine that you
aim the same message at the entire market. Slight, because it's probable
that each of those segments
now has a higher population than the reach of all television advertising
in
the mid 50s.
Mass/luxe web strategies, as practiced by Transition Networks,
is surgical by comparison to the blunt instruments of conventional marketing.
At Steuben, Mary mined executives' personal contact lists to offer compelling
opportunities to known humans in whom the executives had a continuing investment.
The database
was pristine so the approach to its members also had to be. It worked beyond
all expectations. From this base, concentric circles of acquaintanceship
and intimacy leveraged both the brand and the relationships,
rather than simply diluting the brand. The relationships engage clients,
really, beyond even customers, and far removed from mere consumers. Not only
are
they the
brand's clients, they know they are its clients,
a fact from which they draw tangible pleasure.
The relationship
is communal, and in that sense it's like the community that grows up around
a school or church. Fund raisers for a
private school will never fire a stakeholder, and neither will a luxury brand.
The institution and its members draw mutual strength from each other where
lesser brands contend with their customers in the lose-lose tension of value
versus
price. Such companies constantly abandon customers in the naive assumption
they can recruit replacements at will. In truth, if a new depositor is worth
a toaster to a bank, a long-term depositor is worth a microwave oven.
You are What you Drive
Years ago, a Car
and Driver article
summed up the mass/luxe model: "BMW drivers are bold and enthusiastic
because BMWs are bold, enthusiastic cars." It perfectly captures
what we know instinctively: A luxury item helps define its owners, whom less
subtle marketers would arbitrarily assign to a traditional
"market segment." The taste and special interests of these brands'
customers transcends arbitrary designations.
Customers are those for whom vendors must customize their
products and, indeed, their behavior in the market. Everyone benefits from
a luxury brand: high profit margins give the vendor the luxury of behaving
generously; customers have the luxury of considering quality and not price;
craftsmen enjoy the luxury of high-quality design and materials and the time
for careful execution. A sales representative is often the client's peer
in taste, fashion sense, education and sophistication. Their sensibilities
reinforce each other.
All
have the luxury of behaving as most of us wish we could. The acquired good
is merely a token of a deeper truth, a kind of Platonic ideal: The real
luxury lies in the behaviors and attitudes afforded by the margins attached
to
luxury goods and services. In that special sense, luxury purchases are the
most
affordable of all.
The move of luxury
brand owners onto the web suggests we may see the finest expression
of the evolution from consumer to customer
to
client
and
beyond. That most human of conditions grows out of the special calculus
of a luxury brand's adoption of the web's potential:
known quality + adequate
margins + a community ethic = customer intimacy
That's an intimacy that even the
Cluetrain authors might not have thought possible.
6:19:48 PM 
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