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Users Not Customers

Users Not CustomersWho Really Determines the Success of Your Business?

Users First: If You're Not Thinking about Users, You'll Soon Be Out of Business

My wife loves seltzer water. I can't stand it, but she will hardly drink water if bubbles aren't in it. So I thought it'd be great to buy her a soda maker. One afternoon, I passed by a Williams-Sonoma store and decided to stop in. Lo and behold, they had one sitting on the shelf: a SodaStream Genesis drinks maker for $150. But it seemed expensive. I could buy her a pantry full of 150 bottles of premade seltzer for that price. So I decided to shop around.

I opened the RedLaser app on my iPhone and used it to scan the machine's bar code to find out what other retailers charged. Bed Bath & Beyond carried the same thing for a hundred dollars. Success! Fifty dollars in savings. I waved down a sales clerk and showed her my findings. But she declined to match the price.

So right there, in the middle of a beautiful Williams-Sonoma store in a high-rent location on the Upper East Side of Manhattan, I bought the SodaStream Genesis drinks maker-from Bed Bath & Beyond by using my mobile browser.

Companies such as Williams-Sonoma are in for a rude awakening. One day everyone will shop this way, and companies will either change their ways or be out of business.

Twenty years ago, purchases were driven by television ads, the selection of stores in the local town center or nearby mall, the brands those stores carried and the prices they charged. "Shopping around" meant traveling from store to store or calling down a list of retailers in the Yellow Pages. This is the antiquated environment in which most companies are still built to thrive.

In one short generation, we've seen a dramatic shift in how we buy things as well as how we interact with companies, do our jobs, and communicate with each other. Digital technology has quickly become so pervasive that it's rare for any personal or business interaction to begin anywhere else.

We are often introduced to new people through e-mail or an online community. After a phone call or in-person meeting, we maintain contact through digital channels, whether it's e-mail, instant messaging, or Facebook. In three years, texting is expected to surpass voice usage on cell phones. The same goes for how we learn about companies. If we're job hunting, we may find opportunities through a career site such as Monster or a jobs search engine such as Indeed. We maintain our résumés on LinkedIn, because that's where recruiters go to initiate interactions with us. If we're shopping, we may be introduced to the product by Googling, by noticing its newest promotion on a Groupon e-mail alert, or by seeing something listed on a product comparison site such as TheFind. Already 41 percent of all offline retail purchases in the u.s. begin with Internet research, and 7 percent of all retail commerce is now transacted online. In 2012, the total of these two figures is expected to reach 50 percent, which is equal to $1.2 trillion of digitally driven consumer spending. We're entering an economic environment in which the majority of our transactions begin digitally. In this context, there is no such thing as an offline business; everything is a digital business.

Beyond our social lives, careers, and consumer behavior, digital services also power our information gathering: we learn the news from our e-mail accounts, Twitter, Web sites, and apps; we find out the weather by installing a widget on our desktop or by opening "The Weather Channel" app on our phones. Digital technology helps us figure out where we are on the globe and where we need to go; it's how we count calories, read books, deposit checks, maintain grocery lists, and listen to the radio. In the always-on environment of the Internet and smart phones, we constantly rely on digital services and products to accomplish our everyday tasks. In a typical day, I use more than a hundred Web sites, apps, and digital services made by at least twenty-five different companies.

Businesses must keep up with these changes or else risk becoming the next Circuit City, Polaroid, or Blockbuster-companies that, thanks to digital technology, are either out of business or just a shadow of their former selves.

At huge, the interactive agency I run, we spend a lot of time thinking about these issues, and how companies should respond to this new business reality. When our clients first approach us they're asking for many different things-a new Web site, a mobile app, a social media campaign-but they're actually asking for the same thing: digital transformation. They need to renew their company to fully compete in this new economy, and are asking for our help in making the shift. Through my work at huge, my colleagues and I have had the privilege of studying the inner workings of many blue-chip companies across a diverse array of industries. We work with their leadership to help formulate the correct strategy, organizational structure, and business processes to compete in the digitally driven marketplace. When looking back at our years of inside access, what's most striking is that the issues facing companies and the effective solutions are remarkably similar regardless of industry or organizational size. To validate and challenge the patterns we observe in the field, we embarked on a quantitative study to help answer the question: what drives success in today's digital-centric business environment? Our first step was to identify a large pool of companies and pick out the ones that used digital technology effectively, proactively, and progressively: what I call the "Digital Leadership Set."

We began our search for these companies with the Fortune 1,000-the thousand largest companies in America. Recognizing that it might not be all that fair or accurate to compare the digital progressiveness of, say, a petrochemical company with a pure technology play such as eBay, we broke up the group into nineteen industry sectors. Then, for each sector, we evaluated the twenty largest companies.

More than sixty aspects of each company's digital footprint were systematically examined. We measured the degree to which digital is effectively used across all aspects of their businesses: sales, marketing, customer service, human resources, and the core products and services the companies offer. This information was then aggregated into an overall digital excellence ranking (1-100). The top performers were named members of the Digital Leadership Set-the group of companies that consistently performed better in the digital environment than their peers.

For 2011, these companies are:

Amazon

JetBlue Airways

American Express

Macy's

Apple

Microsoft

Best Buy

Sears Holdings

Dell

Southwest Airlines

FedEx

Staples

Google

Target

Hewlett-Packard

Walmart

The Home Depot

Washington Post Company

IBM

Wells Fargo

Next, we researched the organizational structures, management styles, and strategies shared by the leaders. We wanted to identify the qualities that determined stellar digital performance and differentiated the winners from the losers. Not only did we want to understand their approach to digital from an organizational and management standpoint; we wanted to see how digital integrated with different aspects of their business, from sales and customer service to product development and marketing.

The Digital Leadership Set survey added a much-needed level of nuance and rigor to what I already suspected from my consulting work: the companies that were most successful in this new economic order consistently prioritized the needs and interests of the people who interacted with them through digital channels-their users. True market leaders focus on meeting user needs above all else. Keep users happy, and customers follow; grow your user base and your customer base grows as well.

Beginning the Journey

One of the most surprising things new employees find when they start at huge is that many big companies don't know what to do online. From the outside, we all imagine that famous, billion-dollar businesses function like well-oiled machines and completely understand digital media. But when one looks inside, many of these firms are struggling to adjust to the new economy-in spite of the successful management and incredible revenue stream that got them to household-name status in the first place. These firms may all be great at what they do, but since digital isn't a core competency, they can struggle with it.

If you feel as if your business is not effectively leveraging digital, you are not alone. A user-first strategy may seem like a faraway, idealistic goal, but you can probably say the same thing about your competitors or any other peer companies. Moving toward a user-first strategy is a big way for organizations to propel growth. User-first is a management philosophy, not solely the province of engineers who build software. You don't need to know a lot about technology to understand and learn from the chapters that follow. By putting the right management approach in place - which really boils down to accepting that the people who interact with your company online are the most important thing-your entire company can transform and succeed in our digitally driven economy.

If you're an entrepreneur, this book can help you too. In today's environment, a user-first approach is key to the success of literally any start-up. We talk about only a few start-up companies in this book - Diapers.com and Mint.com, for example - but candidly, I could have made every example a different start-up company. More often than not, start-ups are doing things the right way.

Entrepreneurs are the great agents of change in our society. They make user-first management a necessity to every business, because if the existing, big-name companies don't do it themselves, entrepreneurs will come along and sweep them out of business. Some companies are motivated to change because of opportunity. But most change because of this fear.

Whether you're part of a large company or the head of your own shop, the user-first company framework can help you create a high-performing organization that's in tune with how people want to do business. Indeed, think about your own interaction with the user-first companies such as Best Buy, Zappos, or Digital Leadership Set organizations. They're probably the companies you prefer to do business with yourself.

In the following chapters, we'll explore how this user-first approach manifests across all aspects of a business, exploring in depth the seven internal and external principles of the user-first company framework. I hope that when you finish reading this book, you'll have the knowledge you need to effect positive, user-first change in your organization.

Excerpted from USERS NOT CUSTOMERS: WHO REALLY DETERMINES THE SUCCESS OF YOUR BUSINESS by Aaron Shapiro by arrangement with Portfolio / Penguin, Copyright (c) Aaron Shapiro, 2011.

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