“Who is the customer?” It’s a great question and one that my managers liked to ask when I was a young sales representative. Like all great questions, it got to the meat of the matter with an economy of words that impressed as much by the brevity as for the meaning.
The customer’s identity is often far from obvious and it’s why professional sales and marketing people obsess over it. The customer is frequently not the user, technician or curious tire kicker, though these types can influence the decision. But the customer is, and can only be, the person who pays the bill — not the person in finance who cuts checks all day long but the person with the budget (and P&L responsibility) who says in effect, I will bet my job on this purchase.
To be sure, that is a business-to-business scenario but the same thing plays out on the consumer side. The customer is not the screaming kid in the shopping cart demanding some sugar-laden treat. It is the parent pushing the card and saying in a calm but firm tone, “Not today.”
Finding the customer is especially tough when there is more than one customer type in a business and it’s not simply a matter of identifying the buying influences in a strategic selling situation. A great example is the newspaper industry or more broadly publishing.
Print publications serve two masters, the reader and the advertiser. Publishers sell papers and magazines to readers who may not pay the full cost of production and distribution and they sell ads to vendors. The profits come (or used to come) from advertisers. It’s no secret that advertisers have become a vanishing species in the last few years, as many of them have at least dipped a toe into the profitable waters of the Internet.
Now here’s the interesting part. As advertisers have played a depressingly decreasing and role in publishers’ revenue streams, the readers have gained in standing. But publishers have been too slow at understanding that the shifting importance of each major group has necessitated a change in business models.
When a publisher’s primary revenue stream was advertising, the business model was very much a 19th century manufacturing one. A buyer stepped up with an order for so many widgets (i.e. ads) and the publisher quoted a price and manufactured the advertisement along with the rest of the content.
But, now, just as the reader has become an increasingly important part of the revenue equation, the reader has come into a plethora of options beyond the printed page for receiving what’s now called digital content. In all of this publishers have been slow to change and many continue to pursue the old style manufacturing approach. But readers don’t buy big ticket ads, they buy subscriptions for comparative pennies and the old school business model and all of its infrastructure — including software — are a poor fit for the new reality.
A few years ago, publishers finally decided to stop giving away their content on free websites and to charge for it through a mechanism called a paywall. But instead of solving the problem of selling subscriptions to readers, paywalls were met with a yawn.
The paywall was essentially a digital front end for the old business and change without pain for the publishers. Rather than ushering in a new era of publishing in which the focus was on delivering content in new ways and phasing out the old, the business model of printing content and putting it into trucks every day, of buying paper by the truck load and ink by the barrel, remained.
In my world, I would say that rather than starting a new paradigm, publishers used digital technology to extend the old one. The result has been a continued loss of customers and revenues.
It doesn’t have to be that way. Subscription economy companies are making a big push into publishing with the purpose of stoking a fire under the new paradigm. But what does the new paradigm look like? Simply put it’s customer-centric and the customer in this case is the reader. Advertisers retain their place as customers too but for a different part of the business and even there the business has changed.
The Internet has made it possible for readers and advertisers to get what they need from many sources that are not traditional publishers. So for either side of the publishing business to succeed each has to ask anew the old question we started with — who is the customer? Answering that question can be as illuminating for publishers today as it was for me many years ago.
If you are a reader you need easy access to content and the ability to use it in conjunction with various other content sources. If you are an advertiser, you want more than the ability to broadcast an ad the same way you did decades ago. Advertisers today want to be able to narrowcast to the exact people they want to target. All of this doesn’t happen by accident, but luckily it can all happen thanks to a few new ideas like social media and social practices.
That means capturing customer data and analyzing it so that a publisher can offer a vendor a refined understanding of the marketplace. Of course, there’s no better venue to place an ad than where your ideal traffic flow cruises through. Such an approach might not immediately reverse the fortunes of newspapers and magazines but it will stop the hemorrhaging.
Finally, too often when we think about social and CRM we may forget that social has long tentacles throughout the economy. But social is the phenomenon it is precisely because it is so pervasive. There isn’t a business or an industry that can’t benefit from social approaches. I think that’s the true learning from the plight of publishers.
On demand billing and payments company, Zuora, has been named the OnDemand 100 Company of the Year by AlwaysOn, a Silicon Valley web property that tracks activities in emerging companies.
As you know if you’ve been here before, Zuora was one of the earliest movers in the market for on demand billing services for companies that sell through the subscription channel. The company realized early on that subscriptions were much different from conventional products in how they are bought and paid for. One of the founders, Tien Tzuo, dealt with billing challenges at Salesforce.com when the company was young and trying to figure it all out. That led to Zuora.
Zuora has raised more than $77 million in its 5-year history and $36 million came in the recently completed series D funding round. The company is spending its millions on expansion, sales and marketing. It has opened offices in Europe and is expanding internationally.
The timing was right for Zuora. A huge new class of subscription companies proved the value of subscriptions and began bumping up against operational issues like billing and Zuora provided a solution. It’s not over yet. A lot of data gets generated in subscription commerce and sophisticated subscription companies can leverage it to measure and manage their businesses. Zuora still has other fields to conquer and one of them will surely be an IPO at some point.
