Binary Strategy -Business Chess Move

The Binary Strategy: Why Businesses on Extreme Ends Will Win

“Every side attacks you when you don’t take sides.”  – Marty Rubin

The ubiquity of the internet has created a consumer-base that is more informed, more selective and less patient.

No longer is there an expectation that the salesperson will educate you on the product or service to the degree that it will determine your decision.

Their role, as the first or only interaction point with the company, is to reinforce what you already know.

The most obvious example of this would be purchasing a computer at your local computer retailer like Best Buy.

All your research will likely occur online, before you ever step foot in the store. You already know the specifications and simply need some validation by touching and feeling it.

Your decision was formed before you walked in the store.

As a buyer, you want more than a product. You want either the best price or best experience (or both).

With consumer-facing products, salespeople become less sales-like and more support-oriented.

For enterprise technology purchases, this sales function becomes more consultative and strategic. The ‘why buy’ becomes the ‘how to best integrate and optimize.’

So what does this mean?

I would argue that this evolution of a purchasing process means that only businesses on either side of a spectrum will win.

On one end you will have a high focus on customer service and quality experiences, often accompanied by higher prices.

On the other you will have optimized buy-flows that empower the customer to move fast, in a more customized environment, with more competitive prices.

Companies in the middle will lose and die.

This trend is especially prominent within the consumer retail space. Companies like Nordstrom and Bloomingdales are winning big because they focus on providing high levels of customer service.

The convenience and individual attention make shopping much more enjoyable. The higher price-point becomes more justified because of the distinctive buying experience.

Conversely, companies like JCPenny and Sears are losing because they only provide an average buying experience with products that aren’t priced the cheapest.

These same items could be purchased online from websites like Amazon, for the same or lower price, with delivery within two days or less. This actually makes the lack of human interaction more enjoyable.

Walmart is still winning because of its consistent low prices, low-touch customer experience and optimized supply chain.

The winners have chosen a side.

In the enterprise and business-to-business space, the same effect is playing out but at a larger magnitude.

Older Silicon Valley companies that previously commanded hundreds of thousands of dollars for complicated storage and networking systems offered higher prices without the stellar customer experiences.

Clients were still required to do much of the integrations and implementations themselves.

Think SAP. Think Oracle.

Meanwhile, many of the products and services that were previously only offered by a these giants are now also offered by companies like Google, Box and Workday.

These younger companies offer easier buying processes, with less touch-points while being priced lower.

A divergence is occurring just as it did in the consumer space.

CIOs and CTOs are better informed and often have all the data that they need well before they pick up the phone or fill out a web inquiry.

Furthermore, these decision makers are increasingly gaining more leverage as more alternatives enter the market. Things like data storage are becoming commoditized, putting prices on a race to zero.

So what will determine which technology companies survive and which will fail?

Part of it will be based on which companies add value to their customer experience, much like their retail counterparts.

The new measure of value will reflect things like product integrations, APIs and consultative sales relationships. Easier buy flows, simplified pricing models and frictionless management of data will be key differentiators.

The winners will be the ones that chose a side.

Closing Thoughts

This binary approach to business strategy, while still in the early stages, will define how the big industries evolve.

Brands that were once household names will cease to exist and young companies with specific focus will scale to success.

Having an average price and customer experience simply will not suffice.

Selecting a business model that drives for an exemplary customer experience or an unbeatable purchasing process will determine success.

The writing is on the wall for big businesses and it will merely be about who decides to read it.

Thoughts?

 

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