Do you use social media? Most likely, yes.
But are you satisfied with your feed? Most likely, not.
Social media is the perfect example of the mismatch between customer needs and business interests.
If you’re offered something for free, you’re the product
All theory, dear friend, is gray, but the golden tree of life springs ever green!
Johann Wolfgang von Goethe. Faust
According to economic theory, any business seeks to fulfill customer needs.
For instance, if I need a hammer and a nail to hang a clock on a wall, different companies may learn it and suggest several ways to satisfy my need.
– One company can sell me a hammer and a nail in a supermarket.
– Another company can sell them to me online
– The third company can offer me to send a professional to my house who’ll hang the clock instead of me
– The fourth company can offer me a clock that can be hung without using a hammer and nails.
– Etc.
So, theoretically, there is a point in time and space where we, me and one of these companies, will be in economic ecstatic bliss.
I’ll get what I need. The company will receive my money.
But customer needs and business interests rarely match. Especially if the company offers something for free.
Money makes the world go round
Despite all we can read in newspapers, social media, or companies’ presentations, business leaders think about profit – first and foremost.
Even if they think of customers, most leaders see them as a resource to make their companies more successful.
What do truck owners want? They want their vehicles to be reliable and spare parts to be cheap and easy to install.
I happened to work with several companies wholesaling spare parts for trucks, and all their CEOs claim that the quality of almost all trucks has decreased significantly over several decades.
Since truck manufacturers can’t earn much money selling vehicles due to the tough competition, they try to compensate for it by making spare parts expensive and hard to install. A truck owner must go to a certified service center to fix even minor troubles for significant money.
John Deere, a tractor manufacturer, had a conflict with farmers. Farmers worldwide have turned to tractor hacking and jailbreaking to bypass the digital locks that manufacturers impose on their vehicles. It allows farmers to modify and repair the expensive equipment themselves the way they could with analog tractors.
Farmers need freedom and low costs. John Deere needs profit.
But this contradiction climaxes when a company offers you something for free.
For instance – I want to see more meaningful posts on LinkedIn, where I am pretty active, but the social network wants me to see more ads or content it somehow thinks I would like to see (and that I don’t like).
We exchange our time and attention for something somebody else thinks will bring them more money.
Whether you are a truck owner, a social network user, or a person who goes to a supermarket to buy some stuff, you are, most likely, a walking wallet for the business.
Few enterprises manage to overcome this contradiction.
Conclusion
Paradoxically, this contradiction is almost non-existent in the world of luxury.
If you buy a luxury purse, a very expensive car, or an iPhone, the deal ordinarily looks fair for both sides. The seller makes much profit, and the customer is happy.
But as soon as a manufacturer begins to find a balance between the price and quality, as soon as it enters the ‘red ocean’ of severe competition, the contradiction arises.
And this contradiction is dangerous long-term. If you have to balance your business goals and customer needs, the number of disappointed customers will snowball.
Threads got 100 million users that fast not because they were happy with Twitter.
Thus, targeting a relatively narrow audience, identifying their needs, and meeting them with a substantial price premium appears to be a less risky strategy.