Musings and rambling rants

Posted on the Drum a while back, I’ve updated it a bit. 

Developing a sustainable customer value proposition today can be very difficult. In english that means matching up what you are offering versus what the consumers actually want. Most of us are familiar with the term ‘Value for Money’ i.e. it’s about price. However that’s only one factor in the equation. Whenever you see anybody use the word ‘Premium’ it means, we aren’t the cheapest, we are better than them in some objectively identifiable way, better fabric, better whooshing noise, go faster stripes etc. Basically about definable product attributes. When it comes to services you have a whole set of other emotional triggers – do you trust them, is it easy, do they help me, is it for me, did I enjoy it etc.

The relative weights of all the factors which make up your relevance to the consumer are constantly shifting and apparently insignificant tweaks can lead to complete failure if you aren’t careful. It’s one of these things you see every day and yet brands and services keep falling into the same trap, sometimes because of greed, others just circumstance

It’s worth reminding ourselves the Holy trinity of ‘Company’, ‘Brand’ and ‘Product’ have been mashed together in consumers minds now. Corporate behaviour influences consumers now in ways far more profoundly than could ever happen in the pre web world and so the value proposition goes far beyond just the product at hand.

I thought it would be interesting to look at a few current examples of how and why these changes occur and what the impact can be.

Adobe Creative Cloud

What did you used to get?

Every other year Adobe would release a suite of software (at various price points) which you would then ‘own’. This would be updated sporadically over that cycle, usually doing a feature bump about a year in. You would then be charged an upgrade fee for each 1.0 upgrade (and the odd 0.5 one too). If you are a business owner this model is bittersweet – you need enough licences for all your bums-on-seats. Too many it’s not efficient, too few expensive upfront cost. It should be noted that software can be depreciated for tax purposes over time so there is a bit of a break there.

What’s changed?

Recently Adobe created a great deal of noise when it announced the end of their ‘Creative Suite’ as a boxed product, moving to a subscription model instead. Microsoft have been doing the same, if a bit more cautiously, with Office 365. It makes a huge amount of financial sense for them to shift to these kinds of models as you can get more cash from the consumers, for longer, reduce their bi-annual big marketing spike in favour of drip feeding feature upgrades. The idea was also to curb piracy but given the newest edition of Creative Cloud was hacked within 24 hours not entirely sure it helped.

What do you get now?

• Convenient access to most up to date software
• A teeny tiny bit of space in a cloud
• Some online services

What you give? 

• An ongoing subscription
• Your freedom of choice
• The inability to just buy the suite or individual components like Photoshop outright
• The inability to depreciate your investment against tax.

What’s the consequence?

Actually for the Professional set who use the tools everyday as part of their workflow there are massive advantages to the subscription model. However, if you use the applications infrequently it becomes a very real tax. Many out there are having a long hard look at their own requirements and realising that actually they don’t need the cannon when a peashooter will do. There are many alternatives out there in the market like Pixelmator, which costs a tenner, has many of the same features of photoshop, but squarely aimed at pro/amateurs. It opens up the ecosystem for a smaller players to sneak in as has already happened on IOS.

What could they have done better?

Followed Microsoft’s example and had a transitional period. Potentially stop selling the Suite but continue selling the individual applications.

Tumblr

With the recent tumblr acquisition things are very much up in the air as far as what changes are likely to happen to the service. The general tone from the new owners is ‘Keep Calm and Carry On, we won’t break it, we promise’.

What did you used to get?

Ease of use. Blogging for folk who be bothered writing loads.  Open and non-judgemental. No ads or any real explicit business model barring a sale or IPO. Young and independent. Not-Facebook. A way to collectively share interests / obsession without the underlying commerciality of Pinterest. Trust.

What’s changing?

High profile acquisition by a ‘legacy’ digital business who has a well documented history of ‘breaking’ their newly integrated services.

What you give (currently)

Cats. White men wearing Glass. More Cats.  Basically lots of content.

What’s the consequence

Significant but not catastrophic (yet) migration from the service – principally to WordPress. Unsurprising really as for many, especially the younger audience,  the content creation route has been Twitter –> Tumblr –> WordPress.

But still, why the panic? Let’s just give yahoo the benefit of the doubt and assume they won’t wall it off and kill it the way they did with Flickr and delicious and do in fact keep it exactly the same.  The key part of the value proposition that has changed right now is Trust. Yahoo didn’t spend a billion on it to let them just do what they do on perpitude. There needs to be a bit of commercial flavouring mixed in now or soon because its such a big bet on yahoo’s behalf they will need to show a return pretty damn quickly.  We know this, everyone knows this and poof, just like that trust earned is replaced with suspicion and revulsion.

This provides great opportunity for others in the space to hoover up the disenchanted. I’m actually really surprised that WordPress hasn’t launched an ‘ImPRESSion’ product yet using a simplified skin or app on top of their existing software. They could out Tumblr Tumblr in a heartbeat actually.

*UPDATE

Various reports with various reasons suggest Tumblr has cracked down on Porn and changed their policy on search. Most feel this is Yahoo’s influence although founder denies it.

What could they have done better?

They got a BILLION dollars. The owners don’t really care do they? If they did, they would have spent more time upfront working with Yahoo to agree a commercialisation roadmap and share it with their users. Would be more intellectually honest and in tune with the spirit of Tumblr. Time will tell whether the migration continues.

Star Wars: The Old Republic

About a year and a half ago, with great fanfare there was the launch of ‘the old republic’ a massively multiplayer game based on the smash hit star wars series ‘Knights of the old republic’. With over a million initial sign-ups it was the fastest growing MMO in history.

What did you get?

This was the first major licensed Star Wars MMO since Star Wars Galaxies, which whilst popular with the very hardcore didn’t really gain traction with the masses, especially in a post Warcraft World.  SW:TOR had High production values, multi-platform, easy to get into and even apparently fits within Star Wars cannon for the uber geeks.

What changed?

Whilst adoption was extremely quick, so was drop off. Everyone appreciated the ‘Star Wars’ but the content didn’t match the expectations of a typical MMO user. Instead of, as is often the case, killing it. They recognised they needed to engage a new audience. Whilst maintaining their subscription option they opened the game up as ‘Free-to-play’ charging micropayments to advance quicker and open new areas.

What’s the consequence?

As a result they went from half a million players to 1.7m in a few weeks and doubled their revenue at the same time.  It introduced a whole bunch of people who haven’t played MMO’s before but are susceptible to ‘get them hooked and jack up the price’. Nice one. Of course it’s not all roses, the hardcore players who have been paying the whole time are now inundated by ‘a bunch of noobs’ who are more likely to dip in / dip out, which can be frustration. Hopefully they would recognise that it will increase the longevity of the title and provide funds to create more content.

What could they have done better?

They probably could have moved to the new model sooner. Complaints about the game started appearing within a few months of launch and they had a hard time developing sufficient content to keep the hardcore amused.

So what does it all mean?

Again, what the business wants and what the consumers want can easily get out of whack. Every time you tweak your offering never mind transforming your model, service or general proposition it’s just worth having a chat with your customers first. It’s perfectly reasonable to prioritise one customer over another – you are running a business after all – however before doing that understand why they are actually engaged with you as opposed to what you imagine want them to feel. You may find your biggest payers are actually not your biggest advocates and all those quietly content folk can make an awful din when riled.

Jon Bains is a partner in Atmosphere