“Nobody Asked for Uber”
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Marketing Innovation Jan 14, 2016

Nobody Asked for Uber”

Tim Calkins on prof­itable growth, strong brands, and delight­ing your customers.

Based on insights from

Timothy Calkins

For busi­ness lead­ers look­ing to grow and scale a com­pa­ny, it can be dif­fi­cult to iden­ti­fy oppor­tu­ni­ties for inno­va­tion. Accord­ing to Tim Calkins, a clin­i­cal pro­fes­sor of mar­ket­ing at the Kel­logg School, cus­tomers often are unable to artic­u­late the improve­ments or fea­tures they tru­ly want in a prod­uct or ser­vice. Dri­ving prof­itable growth means devel­op­ing a frame­work to retain cus­tomers while devel­op­ing inno­v­a­tive services.

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Video 1 (1:18): Busi­ness Growth Tip: How to Iden­ti­fy Oppor­tu­ni­ties for Innovation

Now the hard part when it comes to find­ing growth oppor­tu­ni­ties is that what peo­ple want is often not what they can explain.

A lot of the great inno­va­tions that come into the world, a lot of the great growth oppor­tu­ni­ties that devel­op, are prod­ucts and ser­vices that nobody real­ly asked for. You think about some­thing like Uber. Nobody asked for Uber. Taxis were taxis; they were fine. If you’d asked peo­ple what was wrong with taxis, I guess they’re dirty and you some­times can’t find them when you want them, and maybe they’re too expen­sive. If you had than some research, that’s what peo­ple would have told you.

A plat­form like Uber comes along and all of a sud­den peo­ple say, My gosh, that’s fab­u­lous. I love that and I real­ly need­ed that. I don’t know how I would exist today with­out it,” but they nev­er could tell you this, part­ly because the insights that moti­vate peo­ple are things that in many cas­es peo­ple can’t explain. This is why mar­ket­ing is hard. It’s why inno­va­tion is hard. It’s why growth is some­times hard, because the easy things, the obvi­ous things, are often not the most promis­ing opportunities.

Video 2 (2:31): Busi­ness Growth Tip: Build­ing a Frame­work for Prof­itable Growth

The uni­ver­sal busi­ness chal­lenge, real­ly, is to find ways to grow and to find ways to keep the com­pa­ny mov­ing for­ward and expand­ing and grow­ing. For any­body going into the world of busi­ness, growth has to be top of mind. It’s got to be what you’re think­ing about because that will define, ulti­mate­ly, your success.

One of the big dif­fer­ences too is between growth and prof­itable growth. One of the chal­lenges, I think, is that if you’re not care­ful, you can get very caught up on the top line and you lose sight of the bot­tom line. Rev­enue is good but rev­enue isn’t every­thing. Rev­enue only mat­ters if it’s prof­itable. Ulti­mate­ly, you’ve got to find a way to gen­er­ate mar­gin and to gen­er­ate the profits.

It’s not enough just to look for oppor­tu­ni­ties and inno­va­tions and new ideas, you’ve got to find the ones that are going to turn into prof­itable oppor­tu­ni­ties and, ulti­mate­ly, into cash flow and growth com­ing from those. Growth is real­ly about the cus­tomer. If you’re going to grow, you’ve got to find ways to get out there, con­nect with cus­tomer needs, to deliv­er against their needs and wants. In all the class­es I teach, we cir­cle around these points because they̵#8217;re real­ly the foun­da­tions, in a way, of a growth strategy.

What they ran into at Dis­cov­er Card was that they need­ed to find ways to grow. But the chal­lenge was that a cou­ple years back in the finan­cial down­turn, their resources were very lim­it­ed. The prob­lem is that on a cred­it card, it takes a lot of mon­ey to bring in a new per­son. You’ve got to get out there and put forth a real­ly strong offer: maybe that’s just a cash pay­ment, or maybe that’s zero inter­est for a cer­tain peri­od of time, or maybe that’s miles, if you’re in that kind of a world. But bring­ing in new peo­ple is real­ly costly.

What they did, they looked at the dif­fer­ent ele­ments of the equa­tion and they said, The key here is, what we’ve got to do is we’ve got to find a way to hang onto our exist­ing peo­ple.” That lead to a whole series of efforts then designed to real­ly delight their cus­tomers, to make sure their cus­tomers were feel­ing con­nect­ed with the busi­ness, to make sure they liked that card more than oth­er cards and they were stay­ing with the business.

Ulti­mate­ly, it worked out bril­liant­ly well. They slowed up the attri­tion and they built with the cur­rent cus­tomers and in total, Dis­cov­er Card went on to have just a remark­able run of suc­cess and growth by real­ly think­ing strate­gi­cal­ly about the dif­fer­ent elements.

Video 3 (1:35): Busi­ness Growth Tip: Build­ing and Evolv­ing a Brand to Facil­i­tate Growth

Build­ing a great brand is real­ly all about growth. The rea­son we care about brands is because brands are plat­forms for growth more than any­thing. If you’ve got a brand that’s a strong brand, by that it’s a brand that peo­ple know about, it’s got aware­ness, but it also is a brand that stands for some­thing. It’s a brand that peo­ple val­ue and will pay for. If you’ve got a real­ly strong brand like that, that is a key lever when you think about growth because with a great brand like that, you can do all sorts of dif­fer­ent things. You can extend the brand into dif­fer­ent cat­e­gories and find oppor­tu­ni­ties for growth with new prod­ucts. You can increase your prices. You can raise prices and that’s a way to find mar­gin growth and to dri­ve prof­its through top-line activities.

As times change, as cus­tomers change, as tech­nol­o­gy changes, we need to evolve a brand to keep it rel­e­vant, to keep it up-to-date, to find plat­forms for growth. Find­ing a way to tran­si­tion a brand over time can be dif­fi­cult, but that’s one of the things you real­ly have to do.

The oth­er thing, some­times though, is you’ve got to say, We have our cur­rent brand which is real­ly strong, but then it might be time to think about intro­duc­ing a sec­ond brand or a third brand or a fourth brand.” The top­ic of growth very much lends itself to the ques­tion of brand port­fo­lios. How do we build a great col­lec­tion of brands that togeth­er can work to find ways to increase prof­its and cash flow for the company?

Video 4 (1:03): Busi­ness Growth Tip: Which Ques­tions to Con­sid­er When Build­ing a Brand Portfolio

Con­struct­ing a good brand port­fo­lio is a real­ly impor­tant part of dri­ving growth. What we need to think about is how far can we push our exist­ing brand? Then how many addi­tion­al brands might we need? Often to address dif­fer­ent oppor­tu­ni­ties, dif­fer­ent cus­tomer groups, we’re going to need not one brand we’ll need to assem­ble a vari­ety of dif­fer­ent brands.

That all becomes rather com­pli­cat­ed. First because there’s dif­fer­ent ways to assem­ble a brand port­fo­lio. There are sub-brands, there are endorsed brands, there are brand­ed ingre­di­ents, there are brand­ed ser­vices. There are all these dif­fer­ent ways we can con­struct a port­fo­lio. Then the oth­er thing that makes it hard is that at some point we can go to far. We can find our­selves with a port­fo­lio that is too many brands, that’s too com­pli­cat­ed, too hard to man­age, too dif­fi­cult. The ques­tion for any busi­ness is to say, well, do we need more brands or do we have too many? How do we real­ly opti­mize all of this?

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