R&D is about turning money into knowledge – Innovation is about turning that knowledge into a successful business model.
That is why successful innovators not only look to create technology disruption, but also customer experience disruption.
At the recent Inbound conference in Boston which MSC R&D attended, HubSpot co-founder and CEO Brian Halligan focussed on this topic in his keynote speech, showing a slide crammed with brands he considers disruptors. The usual suspects — Amazon, Fiverr, Kickstarter, Spotify, Uber — but some less familiar names as well.
But disruption, he said, is “under understood.” More than just disrupting their industries, these brands are disrupting the customer experience. In a good way, for customers; in a less good way for their competitors. Halligan said that in some sectors where the experience disruptors operate, the stakes are looking like “winner takes all.”
Getting down to specifics, he identified five key “genetic adaptations” which are key to these brands success, and contrasted them with the unadapted approach.
- Experience Market Fit
It used to be about product market fit; developing a product or service to fit the needs of a target audience. Now it’s about developing an experience to fit an audience. Halligan had a great example to illustrate this. Buying a car. A lengthy, complicated, form-filled project, with the price often unclear at the outset. A “cringeworthy” project, said Halligan.
Consider Carvana, which is cutting dealerships out of the whole process. Purchasers buy cars online, with an easy paperwork process (electronic signatures), and actually get the car delivered. Every vehicle is certified, and can freely be returned within a set period. Dealerships sell cars too. They don’t sell the Carvana experience.
- The Flywheel
This is a concept Halligan introduced at last year’s Inbound. Essentially, it’s a bold attempt to replace the traditional funnel model of marketing and selling with a spinning wheel. The stages of the flywheel journey are summarized as “attract, engage, delight,” and the wheel must spin without friction.
This aims at handing B2B marketers a B2C playbook. Another example: Atlassian, the software and development giant, which is selling free-to-try solutions without a formal sales team. The trick, according to Halligan? Excellent products which sell themselves to a hyper-engaged user base, which in turn acts a deep pool of advocates for the brand.
Goodbye to the anonymous customer. No surprise here, the challenge is using the abundant data which is now available to any brand to achieve personalization. And using it responsibly: over-personalization, Halligan emphasized, gets creepy.
The exemplar here? Reed Hastings of Netflix, who said “We avoid psychographics” — personas in other words — and market to a “segment of one.”
- Sell Through Customers
The experience disruptors don’t sell to customers. They sell through them. The customer base is a distant and abstract source of revenue. These brands have an interactive relationship with their customers, taking suggestions and acting on them, and constantly rewarding loyalty.
Halligan named Warby Parker as a leader, cutting out steps in the eye-glass purchase process, right down to offering home try-ons.
- Business Model Busters
Finally, don’t adopt an existing business model. Models are there to be broken. Easy to say, but again Halligan added substance to the claim. Take Chewy, the eCommerce store with “everything” for pets. When Halligan bought a jacket for his dog, it was too small. He contacted Chewy to ask about exchanging it for a larger size.
Don’t return it, he was told. Give it to a friend. The replacement would be sent anyway. The benefit to Chewy: a good chance of a new customer, with zero cost of acquisition.
One overall takeaway from Halligan: “How they sell, that’s why they win.”
At MSC R&D we have nearly 30 years’ experience of helping tech businesses gain funding for both R&D and innovation – why not talk to us about your future plans.
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