The Tech Surge That's Putting Consumers in the Forefront
When I was at Pepsi-Cola in the early part of my career, producers were in control. In the late 1970s, this was the era of mass marketing when national network television could reach virtually every American household. Dominant companies could protect their brand franchises with heavy levels of advertising because customers were influenced by what product producers told them.
Right now, a surge of incredible new technologies are expanding at an exponential rate and driving a change. Thanks to big data, cloud computing and an explosion of miniature sensors as well as mobile devices, customers are becoming smarter and smarter.
Consumers are sharing opinions, reviewing products and making referrals on a huge scale. Now customers trust other customers more than they trust producers. While this is only the beginning of the big-data marketing era, the power shift to the customer is irreversible and the implications for traditional corporations are daunting. But the opportunities for entrepreneurs to disrupt and build companies have never been better.
As these powerful technologies grow, they are dramatically driving down costs. With 40 billion miniaturized, wireless sensors projected to arrive by the early 2020s, machine-to-machine communications will be possible, with human intervention not required. This will allow for new end-to-end business processes, along with smart robots, that will significantly reduce costs. For the innovators who embrace technology, disruptive pricing opportunities will be created as never before. But traditional corporations with a high overhead structure that are unwilling to adapt will be put at a high risk.
The other huge opportunity for entrepreneurs is to create an incredible customer experience. I like to call this a showstopping customer experience, one that's so good that the clients become a company's promoters. They use every means of communication from voice, the Internet, text and social-media platforms to tell others. Think about a customer's experience at the Apple’s Genius Bar or the concierge service at the Four Seasons Hotel, for example.
What's really exciting and offering the biggest opportunity for entrepreneurs is to combine a spectacular customer experience with a disruptive price. This has happened before and transformed huge industries. When Sam Walton created Wal-Mart, he focused on a low-price strategy, based upon outsourcing, highly automated warehouses and nonunion labor that his competitors could not match. He also added friendly greeters to the front of his stores to welcome shoppers and make them feel special.
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Now Wal-Mart and other retailers are in the cross hairs of Amazon and may themselves face disruption. Jeff Bezos has created fulfillment centers using cutting-edge technology, including robotics, to reduce costs to unthinkable levels. He has combined this brilliantly to create a customer experience driven by big-data analytics running on powerful cloud-computing systems in an attempt to predict the products and services each individual customer wants.
And Amazon is building supply centers all around the country with the aim of eventually providing same-day service. The company is even diving into fresh food. Amazon wants to be the supplier of everything. In the end, Amazon's power is all about customer satisfaction: giving customers an exceptional experience with convenient ordering, a huge assortment of products, delivered quickly to their homes and at a disruptively low price.
Another sector that I believe is ripe for disruption is the shaving industry. For the big companies, technology has allowed for a very high-quality shave, especially with five-blade razors. But these market leaders have priced their products so high that customers are unhappy. And due to these high prices, many retailers lock up their razor aisles to prevent pilfering, making the shopping experience inconvenient. Consumers put up with these issues, however, because they want a great shave.
I am an investor in a new online company, 800razors.com. Unlike several other online major companies that source cheap imported razors, the company sells quality razors made in America similar to those of the big brands for about half the price and with free shipping. Customers have become active promoters. Time will tell if the company has the right ingredients for disruption.
Creating a stellar customer experience requires companies to put consumers at the center of everything. Combine that with disruptive pricing and this opens up the opportunity for entrepreneurs to build huge, disruptive businesses.
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