Transcript

GRANT LEBOFF, Speaker, The Academy for Chief Executives:

Now what the web's done, and this is crucial, is it's changed scarcity and abundance...because if we go back to a world before the web, what was scarce was information. How did you source products and services?

It was relatively easy to grab people's attention. There was an abundance of attention.

So the media's been fragmented, we don't get the attention we used to get. But here's the thing: where's the value in it, for you as the customer? You see, what we're looking at is response rates of direct mail, telemarketing, advertising, all of those response rates are going down. That's just a statistical fact.

How many of you really take advertising seriously or watch it in any way? We don't do those things. Problem is, the marketing model that everybody still uses is a funnel - everybody knows the funnel, right? - you get a lot of stuff in the top, and what comes out the bottom has to pay for what goes in the top, and as long as it does, that's called return on investment.

Thing is, with all these response rates going down, this funnel no longer works.

Companies that don't get this are in big trouble. So the thing is, what do you replace this with, and how does it work, and that's what my session is all about.

Take this funnel, and literally we're going to turn it upside down. So this becomes that. And what does this represent? Well at the top you've got a very narrow point. The reason why you've got a narrow point now is because no longer can you go around shouting at people about your products and services. This is what the old model is - whether it's a phone, whether it's a mailbox, whether it's a TV or a radio. What we do is we shout about our products or services and we hope that someone along the line, something comes out at the bottom. We can no longer shout.

Today, customers are going to have to come and find you.

So the idea is, how do you get customers to come to you, and then, once you've got them to come to you, you've got to keep them. That's why this funnel just gets wider and wider and wider. Because, the scarcest thing today is people's attention. The companies that win are the companies that can keep the customer's attention. And so what we talk about now is not about return on investment but return on engagement.

And how do you put an engagement strategy together? That's what the session's about, and I just want to give you one example of how you put an engagement strategy together, and that's this:

Pre-World War II in the industrialized world, we sold products. That's what we did. As we got wealthier, products became commoditized. By the Sixties and Seventies we became a service economy. And I'll give you a really good example of how that played out: John Lewis.

John Lewis didn't sell any different Sony or Phillips TV's from anybody else. But, what John Lewis did is they dressed it up in service, because you know their strapline 'never knowingly undersold' you knew that if you went there you wouldn't get ripped off they gave you free delivery. That's how they won and beat some of the competitors. But today, what the web's done is it's commoditized services.

So what are people buying today? Where's the value? We're moving from a product, from a service economy, now to an experience economy.

What people today buy are experiences. Why is the X-Factor or Strictly Come Dancing, why are these the biggest shows on TV now? Because who gets to decide the outcome (allegedly)? We do. That's the point. We get to decide.

What differentiates a service from an experience is simply this. A service is something that's done to you. An experience is something that's done with you.

A football match has always been an experience because if I go to Chelsea Manchester United, and I'm the only one there...it's not that fun. Because what's fun is the tribalism of going to the game with everybody else in the colours, the banter between supporters, the interaction, the roar of the crowd when someone scores or the referee makes a bad decision. That's what makes an experience an experience.

The thing is this: if you're looking to sell an experience, the product or the service doesn't matter anymore. It's the value around it. And what I teach people to do - and I've got a matrix for doing this, I call this a problem map - is understand the value around what you give, and how that plays out, how you can add value and how you can engage.

It's about engagement, but that engagement has to come from the value around what you do, and not about what you do. Or as Steve Jones once said, 'It's not about the music, you silly cow.'

Thank you very much for listening.