May 22, 2012

New Customers, For Free

If you like to keep up on marketing/analytics, you probably read Andrew Chen, right?  And you've probably read this post, right? (click here).

If not, there's two sentences that you might pay attention to.
  • The important thing about virality is it is free. So it's an important skill for startups.
It's an important skill for anybody!

I get calls and emails ... "what's the next big idea, Kevin?"  Now, I don't have the slightest idea what the next big idea is, but a business like One Kings' Lane that goes from $0 to a couple hundred million dollars in a few years is worth paying attention to, right?  Mostly grown by virality, it's certainly something we should pay attention to.

That's when I get the response ... "I need something that scales. You can't bank on virality, it's unpredictable. You can bank on Abacus giving you a million names that will generate $1.5 million in sales, +/- 5%.  That's what I'm talking about.  What's the next big idea like that?"

In other words, you want someone to assume all of the risk for you, and you will gladly pay them for the right to remove all risk, correct?

Big ideas are headed in the opposite direction, and have been for some time.  Judy's generation paid for offline access to information (Abacus).  Jennifer's generation paid for online access to information (Google).

Jasmine's generation just won't pay.  New customers can be found, for free.

Now this is hard, risky work, isn't it?  With Abacus, the odds of breakthrough success are nearly zero, but the odds of treading water are great.  With word-of-mouth, the odds of breakthrough success are, what, one in ten, or one in a hundred?  With word-of-mouth, there is no treading water ... you either succeed wildly, or you're finished ... you'll know, either way, really soon.

In the old days, you'd have a customer acquisition analyst, horse-trading names with competitors. And some geeky mathematician wrote SAS code on a mainframe computer, hoping to avoid a dreaded SB37 error ... analyzing test results when there were enough cycles available to process information.  Combined, the individuals earned your business new customers.

Read the blog post above, or the post on Growth Hackers, and you see a world that parallels what was done twenty years ago ... but is fundamentally different.  Gone is the teamwork required twenty years ago, replaced by technology, coding skills, rapid A/B testing, and the promise of free, new customers.

There is a gulf between the world that Judy thrives in, and the world that Jasmine thrives in.  We probably need a better balance between the two, don't we?

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