I had an ah-ha moment this weekend. I was reading a recent Wired magazine I got in the mail and it has an article about products and services being simply good enough. Its called the Good Enough Revolution.
Here’s the premise: people don’t want complicated, jack of all trades gadgets and gizmos. They want easy to use, accessible, and cheap. And here is where the value part comes in, they are willing to deal with imperfection if those parts of the offering are taken care of. That isn’t a remarkable overview, smart businessmen have been saying that for a long time. However, knowing that and having the convictions to follow through on it are not the same thing. Just go to Best Buy and look at the number of printers, cameras, and phones. There are high end products, mid tier options, and low end.
In the recent past, companies tried to do two things – exceed customer service expectations and delight. These often went hand in hand. But many companies are now doing analysis of what it costs to do these two things and they are coming away with the strategy to cut ties with expensive customers or not even bothering to go after the segment in the first place. It just costs too much to keep these customers happy. But a hypothesis evolved: these same customers are the ones buying in the mid tier.
I noted in this blog in October of ’07 the change in consumer spending. I titled the post Peanut Butter and Pasta. Well, this change in spending was inevitable, but no one was quite sure what the long term impact would be on the US consumer. At first there was a observation of a new dawn of savings. Savings are up, that is true, but thrift isn’t a lasting characteristic. The 1990s gave everyone a taste of the good life, now there’s no going back. People just want to make sure they are covered if something bad happens – in the near term. Plus, high inflation is going to make saving a bad deal in a few years (unless interest rates and CDs go up in value).
The real change is in what people will buy. Consumers will spend, if the product or service is straightforward, cheap, and a problem solver or if its a luxurious item. The mid tier offering is now economically obsolete.
Consider the success of the Flip camcorder, the Redbox DVD rental system, and flu shots in airports. If someone wants to record their child’s first steps, get a movie while picking up milk, become vaccinated while waiting a flight, it is available to them. But to be successful the design has to be right. Less is more. The iPhone is a masterpiece in design. It’s sales are through the roof and it’s a luxury item. It’s more than good enough, but you pay for it.
As the US slowly moves out of the recession, the rebound will benefit offerings that are cheap, accessible, and easy to use. People are now impressed with simple and that’s good enough.
Working Thoughts 10/21/08
The Next Stimulus Package Must be a Job Creator
Working Thoughts 