Aaron Shapiro CEO of digital agency HUGE in Users, Not Customers: Who Really Determines the Success of Your Business
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Related Podcast: Who Really Determines the Success of Your Business
Joe Dager: Welcome everyone! This is Joe Dager the host of the Business901 podcast. With me today is Aaron Shapiro, the CEO of Huge, a digital agency that helps companies reimagine how they interact with their customers and manage their businesses in the online economy. Aaron has just authored a book called Users Not Customers.Transcription of the Podcast
Aaron Shapiro: So first it’s great to be here. Thank you for inviting me on your podcast. I’m a big fan. So just to talk a little bit about
the premise of the book, part of the main premise of why I wrote the book is that we’re really at a big inflection point in business history really. For probably 30 years of business management we’ve heard marketing gurus say again and again, “Focus on customers, customers, customers, customers first.” But what we’re finding now is that we’re in this new digital reality where digital is an increasingly important part of how all companies are doing business. In this new digital-centric environment what matters are users which are the people who interact with the company’s footprint. These can be people who go to your website, who go to your Twitter feed and Facebook. They might use your mobile applications. Some of these people can be customers but they can also be people like prospects or potential partners or potential employees, really anybody that could interact with your company online. What we’re finding is that increasingly for companies to succeed they really need to have this user first approach and really think about users and the people who use your digital footprint to be successful.
Joe: You are not out there prospecting for customers so much as I’m just trying to increase the users and how much they use my digital footprint?
Aaron: Well there’s basically two main points that I’m talking about in the book. The first thing is to think about your customers as users. What I mean by that is that one of the interesting statistics that I came across that was the impetus for my writing the book is that Forrester Research recently did a study that showed that in 2012 about half of all sales that happen in our economy are either done online or are researched online first and then bought in a store, and that’s only increasing over time. So if you think about what that means, it’s a really, really big shift where literally for every business more and more most of your sales are going to be driven by the internet.
That kind of a mindset is a bit of a shift where it becomes important to think about users and to think about the people that are interacting with you digitally because that’s really going to drive business success. Probably if you think about your own behavior for how you interact with the world, I’m guessing that before you personally buy a lot of products you’ll first go online to research it. Or before you’ll even think about a company that you may want to talk to, you’re going to go online to look at that company. Probably before even inviting me on your podcast you looked at our Huge Inc. website to check out my agency’s website. That kind of orientation where digital is first in all decision making is a very, very big mind shift for companies to get around, and it really makes digital first and foremost the way in which companies have to communicate with the outside world. And that’s a lot about what I write about in the book, is this shift in mentality and likewise how companies need to be structured to be successful given this new business reality.
Joe: I think it’s interesting how you talk about that. I just talked to a real estate company the other day, and they told me that like 90% of people will do some research on homes on the web. That’s the biggest purchase that so many people make and here we are on the web with it.
Aaron: That’s right. That’s happening with every single aspect of our economy. The web is becoming the primary way that people are making decisions. But now you look at most companies and most companies aren’t thinking that way. Most companies, their website is an afterthought, their social media thing is something they may or may not do if they don’t really understand it. Forget about mobile. A lot of these same companies are still in this mentality of salespeople and stores or telephone interaction, all these kinds of in-person things where they’ll place a tremendous amount of effort in those areas but haven’t really woken up to the fact that, “Guess what, that’s not the main way your customers are communicating with you anymore. Your customers are really digital users that are first and foremost interacting with you digital before they’re going to have any further relationship with your business.”
Joe: When I’m looking at all these touch points I have, you’re saying that probably 50, 60% of my touch points with a customer is digital in nature.
Aaron: That’s correct. That’s only going to increase over time. What’s pretty amazing is when you talk to kids that are now in college today, and you look at how they interact with the outside world in general, as much as you and I may use the internet, they use the internet ten times more. For example, we did a focus group for a client where we brought in ten different college aged girls that are all 18 or 19 years old and the first question the moderator asked them was, “How often do you go online?” They all looked as us really funny like they didn’t really understand the question. Then we realized after ten minutes of prodding them, what was happening is that they’re online all the time, and they use the internet so much that they don’t even understand the concept of going online because they’re always online. Right? They always have their phone with them. They’re continuously connected. They’re constantly communicating with their friends, researching things. Everything they do is digital first. They don’t remember our world before the internet. That’s just how they’re used to operating.
Imagine what’s going to happen in five to ten years from now where as those people grow up and become the primary purchasers in our economy as well as major decision makers in corporations and their whole life is that way. That’s a very, very different shift in how companies are going to do business, and that’s a lot of the evolutions that we’re seeing starting to happen today.
Joe: Your book is really talking about the users and who the users are I think more so. It’s not a book that is “Hey I need to jump into social media, I need to do this.” It’s more of what I would say maybe a “who book” or who that user’s going to be and how that’s relationship that I have to have with them.
Aaron: Sure. So the way I structure the book and kind of the thought process behind it was I said, “Okay, so given this kind of reality of how the world is changing where digital is first and foremost; you have to focus on users and so forth, what are the best practices that we can learn from companies that have successfully made the transition to digital?” We actually did a study of the Fortune 1000 and we looked at all of those companies and how digitally savvy those different companies are and we looked at the firms that were most successful at transitioning to digital and we said, “What are the major things that they do successfully?” Probably as no surprise to you from the cover, one of the big findings was this tremendous focus on users and this kind of user-first mentality and focus on that for the companies to be successful.
Then peeling back the onion, my research team developed a model for what a user-first company looks like. The book is really structured to describe in detail all the different parts of how a company needs to be setup to be successful in this new economy in terms of how should the organization is setup, how should the company do its marketing, how should they do sales, customer service and really all aspects of the organizational structure. And it’s really a very transformative thing and very different way of how companies should think about organizing their business and how they should be structured to be successful.
Joe: I always talked about that you have to mirror that same image online offline. When someone walks, let’s say into a retail store; there’s got to be a familiarity there. There’s gotta be a connection there. You don’t want two separate personas let’s say.
Aaron: Completely agree.
Joe: When I listen to you, it’s still about a user experience, engaging that user online and make them interact on your website, isn’t it? I mean that’s your premise a little bit. You have to draw them into you a little.
Aaron: That’s certainly the first place that people are going to be drawn into a company’s world. But it’s by no means the last place. I don’t mean to suggest that stores are going away, or in-person interactions are going to go away, it’s just going to be different because of the primacy of digital. So what we’ve actually seen in our research is that some of the most effective things that traditional companies can do to be successful in digital is create this one experience across all customer touch points which spans digital as well as stores or physical places as well, and likewise thinking about how they can create solutions and services that combine offline and online together in a very powerful way. You know, just to think of a small example, if you think about Chase Bank as an example, a lot of their advertising now is around their mobile application where you can deposit checks through your iPhone and you can bump your phone with someone else to transfer money right away if you’re going to split the bill at a restaurant or something. All of those things are great examples where Chase is building a story that now banking with Chase is better than competitors because they have this great offline and online experience that works together to create a more powerful solution than a bank that only has branches. So it’s really making that full 360 touch point that we find is very successful for organizations to embrace to succeed.
Joe: That’s okay to hear Chase can do that. Can small companies do that? Is this possible that we’re really creating the people that can do it and the people that can’t? I think what you’re saying we’ve started to create that society, but can a small company do it?
Aaron: Absolutely. So we have a few examples in the book that are showing how small businesses can embrace this, as well. To give a small personal example which is dear to my heart and to give an example of how really everyone can embrace this, my mom, for example, is a dentist, and she has a small dental office in the town in Long Island, where I grew up. By virtue of me, she has the highest paid internet consultant helping her for extreme technical overkill for helping her become more of a digital business. And it’s pretty amazing how she has tremendously embraced things like social media, search optimization, her website, and all of those kinds of things, where today even though she’s a small town dental office, the majority of her new customers are coming in through the internet. It’s actually exceeding referrals at this point.
Referrals are the traditional way that most professional practices like dentists or doctors grow. And it’s always fun, I go to Thanksgiving dinners and things like that and my mom will talk about what keywords to buy and all these kinds of things. She is the quintessential mom where if my mom can get the internet and this stuff then anybody can get this stuff. It really shows that, with not a lot of investment that just focusing on the right thing, it can really be transformative for everyone. You can also see for small businesses a lot of the hype going on lately with Groupon and all of these buying services taps into that which is that-. Some of the services may be controversial but at the end of the day local businesses are seeing that they can really embrace a user-first kind of approach to drive their business in a big way. And that’s a lot of what’s happening behind these big initiatives like Groupon and Amazon and so forth, going into the local space.
Joe: I’m looking to create some type of user community. Am I jumping out there with this user community site where I’m going to ask everybody to be my friends like with a Ning site or do I approach it kind of differently starting out as a company?
Aaron: Well it depends upon the company. So let’s give an example. Let’s say you’re a company that’s selling products and services to consumers like you’re a store or something to that effect. The first thing that’s the most basic is to look at well if users and customers are going to research products and services that are in your product category online, are they going to find you? So that means making sure that you have visibility on places like Amazon and Ebay and also on things like Google Search, which are all very basic things that are pretty easy to execute. Likewise, you should make sure that people can actually buy your services on the internet, as opposed to being forced to go to your store. And e-commerce is something that’s pretty easy for a small business to enable. Those kind of basic things that I just mentioned are kind of table stakes.
Once you do those then you can start thinking of many more proactive things that can be done. For example, the social media things that you mentioned where you’re getting involved in discussion groups or blogging and starting to build a reputation online that can translate into driving more sales to your company. Maybe it’s doing different content or participating in communities around interest areas related to the products that you’re selling. Then perhaps it more advertising like exploring things like Facebook, social media advertising, areas like that. So this can definitely happen in baby steps where you can slowly build up for more and more levels of sophistication. But the main thing to keep in mind through all of this is think about the typical person who is going to be looking for products and services, and they’re probably going to want to go online first. If they can’t find your business and have a good experience with your business online, then it’s going to be very hard for you to succeed. And that’s a critical first step, is really making that intellectual leap and realizing how important digital is for a company’s success.
Joe: We have to take an active role in a user community. We don’t need to sit there, and just blast our traditional advertising out into social media and stuff because that’s not going to work, is it?
Aaron: No, an active role, is definitely required, and actually one of the chapters in the book is about how through this user-first model companies can market successfully. What we’ve in our research as well as our consulting work at Huge is that the most effective marketing is a methodology that I call utility marketing. The basic idea here is that, in traditional advertising, it’s really about storytelling. You’ve got a passive audience sitting in front of the television watching a commercial. So you can blast away lots of messages to all of those people about your products and services and a certain percentage of them will decide to do business with you. But on the internet that’s very hard because digitally there are very few places that people are going to passively watch a marketing message. Most people ignore banners nowadays, and there isn’t really an equivalent of TV advertising where you’re truly watching a video – just a few places like Hulu.
The way that we find that marketers are most successful is that they market in a way that really helps user needs and helps people to accomplish their tasks. So most basic way is let’s say that you’re someone who sells let me create an example you’re a store that’s selling surfing equipment just to make something up. By buying search advertising on Google which is a very basic thing to do, that’s a good example where everybody is looking for surfboards and those people who are looking for surfboards could then find your stuff. But that can get much more sophisticated where you look at if your company could then evolve to a level where you’re helping people get advice about the right surfing equipment to have, where are good places to surf, the right beaches, all those kinds of things, the next thing you know you become a resource in the surfing community where you’re really helping these people proactively and, as a result, word will get out about your business, and they’re more likely to do business with you.
It’s really about being helpful and being part of the solution and helping solve users’ problems, as opposed to just pushing these scary messages at you which is very hard to have work online.
Joe: Do you need to grow into being user-centric? I know you show a hierarchy in your book similar to Maslow or whatever there. You show a hierarchy and ask someone – well every company is customer-centric whether they are or not. I mean they’ll tell you that they are. But user-centric is at the top of that, do you have to kind of grow into that or how do you go through it? Is there a progression to get there, or can you just make the leap?
Aaron: I think it’s something that you can make the leap right away. It’s a logical progression in this pyramid you’re talking about because it’s the next natural evolution beyond customer-centric is to think about digital. That’s why we have it at the top of the pyramid. It is an intellectual evolution beyond the current thinking of management just like customer-centric was very breakthrough 30 years ago when that first entered the market. But the biggest challenge for embracing user-centric management is first making the intellectual leap up the importance of this kind of focus. And the second thing is going to be getting the expertise and talent to make it successful. One of the interesting things of becoming digital is now you have this whole new set of problems that the company has to solve for which is basically now all of a sudden you need a good website, you need a good mobile experience, you have to have talent internally that knows how to do social media well. In many ways, every company now has to do a mini version of like Google and Facebook.
Every company is effectively a technology company even in some small way. So the way that the company needs to think about this is that they have to continue to run their core business the way they always have, but they also have this new kind of a software layer that runs around their entire business that digitally enables everything. And that’s kind of a second business that people need to run. So companies need to have the management talent and the technical expertise and the digital savvy to be able to do that. And that really means hiring lots of new sets of talent or training existing talent to become digitally savvy and then structuring the organization that those people can make a big impact.
Those operational things are very significant. It’s what I would say the majority of the clients that we have at Huge, all of whom are some of the biggest corporations in the world, all struggle with these issues. And it’s something that’s a very gut-wrenching transformation for a lot of these companies to get the right talent and the right kind of work structure in place to be successful in the digital economy.
Joe: In the book do you tell me basically how to get there? Do you take me through the hierarchy and are you explaining a step by step procedure?
Aaron: Absolutely. The way that the book is structured is that we’ve developed a model that I call the user-first company which consists of several main principles, and each principle is a different aspect of the company. There are four external touch point principles which is specific ways the company should structure their products, do their marketing, do their sales and do customer service. There are three internal drivers of how they internally setup a company, which is how their management philosophy is, how the company is organized, and finally what technology they use. All of those things combine to make a user-first company successful.
The book is really a guide book to how to implement all those seven principles in your company where each chapter is devoted to one of the principles and gives a lot of in-depth discussions about why the principle will make the company successful, how to implement it into your business, and also examples of other companies that are successfully or not successfully implementing that principle and what are the learnings we can get from those companies. That’s one of the reasons why I’m personally excited about the book was that it was really an opportunity to galvanize this message to a broader audience. A lot of these are management techniques and strategies that we’ve been using a lot internally at Huge with our clients. This is an opportunity to expose those views to a much broader audience and have an impact on many more companies in our economy.
Joe: What have you found to be the biggest obstacle for a company to make this move?
Aaron: I think the biggest obstacle is the digital savvy of leadership in the company. And just to extend on that a little bit, earlier in my career I was a technology entrepreneur. So it was the early days of the internet, and this was kind of the late 90’s and the first dot-com boom and I was right out of school and it was the most exciting thing in the world and so I went off and started my dot-com startup. And I was fortunate enough for it to go on and for it to be pretty successful. But I actually had a lot of trouble in the early days. And the reason was because I was a business guy and I didn’t really know how to program and how to do the technology and really understand the nuances of what it takes to make digital successful.
Venture capitalists and investors wouldn’t fund me because they said, “Hey, we’re not going to fund someone who doesn’t know how to do this stuff really well.” And quite frankly they were right, I didn’t deserve to be funded back then. Likewise I knew so little that I wasn’t even qualified to evaluate talent to hire, to know if they were even good. So after kicking around for a while I finally rolled up my sleeves and learned everything, everything from how to program to all the nuances of internet marketing and everything else. Once I went through that process then I was able to get the company funded and have it go on to grow and become successful. And those are big growing pains that I personally had to go through and the challenges that most companies that are looking to make the shift, the senior leadership either has to go through a similar gut-wrenching transition or have the confidence to hire the right guy or gal and give that person the power and authority to make all this stuff happen. And that’s a really big shift for companies because a lot of the leadership that’s now in place just aren’t setup to make those kinds of decisions, so it’s a pretty tough thing.
A lot of the challenges that these companies have is they’re now competing against digital pure plays like the Googles and Amazons of the world who are all run by technology people who totally get the internet and are totally optimized to be successful in digital. Now, you got these people with no experience trying to compete, and it’s very one-sided battle. So it’s getting over that hump that’s probably the biggest impedance for companies to succeed in digital and become a true user-first mindset.
To the credit though of a lot of our clients and to other companies that aren’t our clients, there have been a lot of really bold moves by senior executives to hire very, very senior digital leadership in very senior parts of the company. For example, American Express denounced a few months ago that their whole head of consumer products is a gentleman who previously was the CEO of Skype. And that’s a pretty big deal if you think of a quintessential blue chip Fortune 50 Company like American Express, and now one of the top executives in the company is an internet guy. That would have been unheard of five years ago. And this person has authority for many areas that do not deal with digital. So it’s going to take that kind of out-of-the-box thinking and decision making for these companies to succeed in our new economy.
Joe: We talk a lot of different things about touch points and everybody being a marketer within a company anymore, and they have to do it. One of the big risk that I see in this or things that people have to come is security in a user-centric – do you address at all or do you talk about that at all or can you maybe shed some light on that for me?
Aaron: Sure. Can elaborate on what you mean by security? Do you mean internal employees leaking secrets? Is that what you’re talking about?
Joe: You make it very transparent. You open up your company, and you open up individuals in your company and that transfer of information. It’s really tough to decide on what you should be transferring, what not, how far to go with customers.
Aaron: That’s a very good point. That’s a very good point. So that’s a subject of huge debate in a lot of organizations about how public and not public to be. At the end of the day we’re moving to a very transparent world, so a lot of this is companies really getting their heads around to get to be successful in this new environment but there has to be much more transparency and much more authority by more junior people in the company to make these kinds of decisions and to be a spokesperson for the organization and to your point that can be very hard.
The traditional large marketer is very, very command and control to make sure that every single touch point in the entire world is consistent. You think of a brand like Nike. Nike didn’t get there by random acts. Nike got there because everything is Nike and is Nike branded, and that’s very command and control which is different from a social media environment where you might need to have lots of employees’ blog or Twitter and really have that very open kind of atmosphere. So what we find is successful is that it really boils down to corporate governance. Companies have to establish policies of which employees are able to communicate in social media, what they’re allowed to talk about and not, and there is a bit of trust.
You have to trust that your employees are going to follow the rules and then to the best of your ability you can sometimes put in technologies to enforce what they’re doing or at least moderate after the fact to make sure that they’re doing their job. The final thing to mention though is that companies don’t have to be completely transparent to be successful. You look at a company like Apple that are notorious for their confidentiality and holding things close to their chest yet they’ve done a great job in the digital environment. So you don’t always have to completely open up the kimono to be successful in digital.
Joe: Do you have to develop a culture within the company, and the culture drives the transparency, because everybody just understands. So like Zappos they just understand what they can do and what they can’t do.
Aaron: There are a lot of cultural things like that, and there’s a lot of training that’s required and it’s a big job. But in the end, really with the exception of Apple, most other successful companies who have embraced digital so well really have this transparent attitude where fundamentally they’re trusting employees to do the right thing. That’s a very, very big leap of faith. But if you can cross that hump and you can get your employees on board and you get past all those issues then it can be very successful for the business.
Joe: I look at design as a big driver in industry today, in the marketplace today, how does that relate to that user approach? Do we leave the customers? You hear about Lego leaving them design and Mindstorm and get the different things there. Is that something that we should be looking at when we’re using a user-centric approach is that we should be able to innovate and bring our customers and co-create things with them?
Aaron: Absolutely. So there’s really two pieces to this. The first thing is that one thing the digital revolution has done is design has become so critically important for all of these companies to be successful. And there’s a very simple test that I ask companies which is I say, “Spend five minutes on websites you love. Go to Google, Facebook, click around, have a really good experience. Now flip over to your website for your company. If you’re not as in love with your company’s website as you were with those other services then you have a big problem because that means that your prospects and your current customers are going to that site and are going to be just as underwhelmed. More importantly some hot shot internet pure play can come along and create an experience as good as Facebook and Google, but for business and then you’re going to have a lot of problems because all those users are going to go to your competitors and not to your own site. And that’s going to be the beginning of the end.”
There’s no shortage of successful companies that became very successful on the internet fundamentally disrupting established players entirely through design. One example I talk about in my book is the service Mint, which is a personal finance service, and they did a great job really giving into it as well as all the banks a run for their money, not for doing anything unique and special in personal finance. All they do is make a great user experience so that it was the easiest, most pleasurable way to balance your check book and manage your money, and they disrupted the industry, as a result. So every company is at risk of that kind of disruption if you don’t focus on design and making sure that you have a great user experience.
The other piece to this that you’re mentioning is that there are really tremendous opportunities to create services to help personalize your offerings to allow users to personalize exactly what they’re going to get from your company. I like the Lego example or Nike where you can get your own sneakers or Levis where you can get your custom jeans. All of those things have been very, very effective, and it really ties to this ethos among users where people are expecting the personalized experience and tailored experience just for them, and that applies to the types of products that they buy and services that they’re willing to pay money for.
Joe: You put user-centric on the top of the hierarchy, is there something out there on the horizon that you’re looking at that might be the next?
Aaron: That’s the million dollar question. When I figure it out, you’ll be the first to know. Maybe I’ll have to write another book after that to talk about the next book, right?
Joe: Well you usually will have to wait for the book to get published and to get it out because most authors learn a lot from getting their book out there because people challenge things in it.
Aaron: Oh, absolutely.
Joe: That’s the fun part of writing a book I think.
Aaron: Oh, it’s been a tremendous experience. And the book hasn’t even been released yet. It’s coming out very soon; we’re a few days away. But I’ve already on the advanced copies distributed received tremendous feedback, a lot of positive support and also a lot of really interesting discussion about “What does it mean for their business? What does it mean for xyz? Is this right, is that right?” And that’s part of the healthy debate that’s happening. Fundamentally we’re going through a time of really great change in our society that’s really, really exciting. I personally feel blessed that I’m part of that.
Everything that’s happening now has a lot of implications for how our society is going to be in the future and what businesses are going to be like over the next decade. So it’s a very fun debate to be a part of and it’s what I personally find rewarding at Huge that we can contribute in some small way to this revolution and help companies become successful online and become successful in really helping users have great experiences and fundamentally do more with digital.
Joe: It’s an exciting book to I read. I enjoyed it very much. Aaron is there something that you’d like to add to this conversation that maybe I didn’t ask?
Aaron: I think the final methods that I would just put out there to all of your listeners is that probably the most important thing that all companies should think about is to really love the digital experiences that you put to the outside world. I see too many companies that have beautiful brochures, beautiful stores, and beautiful lobbies when you walk into their corporate headquarters that everyone is proud of, and then you go to their website, and it’s embarrassing and you cringe and there are broken links and the cheesy graphics, things that this company would never allow when it’s public. Or you send an email to the company, and it says, “Great, someone will be back to you in 48 hours.” Or you want to chat with them, so you click the online chat button and no one shows up on the other side. It’s like a lot of these companies it’s not top of mind so it just kind of becomes marginalized.
If there’s one thing that hopefully your listeners can come away with is to take a look at all of this stuff because it’s really, really important to your business. Just because you don’t see it every day, because when you walk into the office you don’t see that, doesn’t mean that it’s not incredibly important because every single person that you interact with in the outside world sees all of those things, and that’s the impression that they’re forming about you. At the end of the day, if you make a digital experience for your company that you love and that you’re proud of, that’s half the battle and users will resonate with that, and they’ll want to do business with your company and they’ll go on to be successful.
Joe: Well I’d like to thank you very much Aaron. This podcast will be available on the Business901 ITunes store and of course the Business901 blog site. So thanks again Aaron.
Aaron: Thanks. Great talking to you.
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