Attractive Thinking. Chris Radford
these approaches we favour instinctively. We will also have a sense of the balance of our decisions: are they mostly ‘attractive’ and ‘adding value’ or are they mostly ‘extractive’?
All businesses operate with a mix of these attractive and extractive elements. The first question is how we maintain the balance, the second question is what is driving the agenda in our business and the third question is how we prioritise between the 14 critical numbers (that I listed earlier in the chapter) when making business decisions.
Attractive Thinking will show us how to make these decisions so that we attract more customers, create more value for our customers and build a profitable and sustainable business in both the short and the long term.
Game changers or market disruptors are usually value adders
Businesses and brands that disrupt industries usually create considerable growth opportunities both for them and other insurgent incomers. Disruption is not the only growth strategy, but when a business gets it right it is often spectacular. If they get it wrong, it is usually spectacularly expensive.
But what binds together all disruptors is that they always add value for customers. They always start with the customer. They deploy Attractive Thinking to attract customers away from established players to a new way to get a service or product. Very often they attract new customers into a market by making the product or service easier to buy, more affordable or more enjoyable to use. What is true is that they never start by using Extractive Thinking. Some switch to it later in their development but no-one ever disrupted an industry or market by seeking to extract more money from their existing customers. What is also true is the disruptors successfully grow their market:
• Monzo, Tide, Revolut are providing banking that is easier and more convenient to use and cheaper to run by harnessing mobile technology.
• OFX, TransferWise, Travelex and others took most of the foreign-exchange business away from traditional retail banks.
• First Direct established banking without branches and extraordinary customer service.
• Amazon: (need I say any more?).
• Virgin Atlantic brought value and service to transatlantic airline travel.
• Celebrations chocolates reinvigorated the casual chocolate gift market when Roses and Quality Street were taking it for granted (my own small contribution to this list).
• Pharmaceutical switches: Every time a medicine is switched from being restricted to prescription only to being sold over the counter then the product ends up being easier to buy, more people can be treated and often it is cheaper, so real value is added e.g. Nurofen, Ella One, Zantac, Voltarol, Imodium.
In mobile phones there were three disruptions. The car phone, the mobile phone – which started large and heavy and got smaller – then the iPhone, which killed Nokia. Apple chose a careful balance of value extraction (locked systems and high prices) and value adding (stunning design and ease of use) to attract customers and grow their business. I would argue that the value add created by Apple through superior design and functionality was so huge that they were able to extract additional rent through high prices and locked systems without much harm. They built a monopoly control over their users. But as Samsung and Huawei have chased them with similar design, lower cost models and better distribution, the dynamic of the market is changing, and I would argue that only an Attractive Thinking approach will work in the future. Apple is now pursuing privacy control as a point of difference.
Another category of disruptive business that create massive added value for consumers are the new tech platform intermediaries that facilitate transactions between providers and customers: Airbnb, HomeAway, Expedia, Booking.com, Uber, Deliveroo. They have grown customer demand for products and they have sometimes brought down prices (Uber taxis vs black cab, Airbnb vs hotels). They have created opportunities for providers to earn extra money or even make a living (room renting on Airbnb, Uber taxi drivers).
But as these businesses start to exert control on the markets, they are no longer disruptors, they are the market. Then the temptation to become value extractors arises and these platforms are extracting too much value. The platform charges either the customer or the provider a fee or commission. The question is: Does the fee provide enough value to the customer and the provider? If they get this balance right, they will continue to prosper and be true disruptors and value adders. When they get this wrong, it is likely the markets will slow down as providers refuse to deliver stock to the platform and customers resist the charges.
Attractive Thinking is the best approach. This is not a moral or principled position that this is somehow superior but is a practical belief that it just works better. In the next chapters we will examine some rules and evidence about customers and markets and how they work to demonstrate why Attractive Thinking is the best way. Then we will look at how we can offer value in PINPOINT, POSITION, PERFECT, PROMOTE and PITCH.
Four insights from customers are pivotal
If we are to start with the customer, it is helpful to focus on the different steps that the customer will go through when they buy our products and services.
There are four steps in the customer experience (Figure 1.4). Some marketers call this the customer journey. What matters for us is how well we perform at each step. We must succeed at all of them to make a sale and create an advocate who will recommend our product and service to others.
Figure 1.4 Four moments in the customer experience
Once we understand how well we perform at each step, we can decide what is the priority area to attract more customers. Either we need to develop stronger ‘pull’ strategies (e.g. brand building and advertising), adopt a ‘push’ approach (e.g. improve distribution and availability), improve our likability (improve design or customer experience) or increase our visibility (more promotion or on shelf or web standout).
The problem or need
A fundamental truth of business (and life) is that no-one ever put their hand in their pocket to spend money unless they experience a problem or need. People don’t buy your stuff to be nice to the brand; they don’t buy it just because they like us (they probably won’t buy if they don’t like us). They hand over their money or their credit card because they have an issue or need or want to get something done and they have decided we can help them. These problems and needs fall into various categories. Here are a few:
• physical e.g. hunger, tired, cold, hot, lose weight, get fitter;
• emotional e.g. bored, seeking to impress, wanting to be social, lonely;
• financial e.g. security, managing money, saving, creating income;
• success e.g. business, social, personal goals, happiness;
• family and friends e.g. express love, stay close, communicate;
• safety e.g. manage risk, avoid danger, protection.
The United Nations has produced another list based on its global goals for sustainable development (Figure 1.5). This list also indicates for us several human needs and problems that different businesses could address. These are things that occupy our minds, and everyone is preoccupied with at least some of these. Look to see if your business can act to work in one of these areas.
Figure 1.5 United Nations Sustainable Development Goals. Source: United Nations, www.un.org/sustainabledevelopment/sustainable-development-goals/