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September 11, 2009

Wrong customer, or, the perils of dog food marketing

by Josh Bernoff

I used to work for a textbook company. The CEO explained to me that we used "dog food marketing." "Our buyers are students, but the decision makers are professors. So we market to profs based on the idea that their students will benefit. Like selling dog food -- you convince the owner that the dog will like it."

Look where the textbook business is now. It tried to keep those profs happy, but the students, powerless as dogs, had to deal with bloated, $120 or $300 books they'll use once. So they rebelled, creating a burgeoning used book market. The textbook guys are scrambling to create electronic versions, but those clever students with their digital skills have the edge. This is not going to end well for the textbook companies.

Most companies have at least two kinds of customers, the ones who use their products or services, and other ones that are buyers, distributors, advertisers, or other types of partners. Often those other customers, like the professors, seem more important, since they make decisions that affect hundreds of sales or thousands of dollars.

If you make macaroni, that "other customer" may be Walmart. If you make TV shows, it may be an advertiser. If you sell software, it may be the CIO. If you are a non-profit, it's the donors that support you.

Chris Anderson's new book Free is filled with models where people who use products don't pay for them. Most of these models generate some other type of customer, like an advertiser.

Dog food marketers: beware. The more time you spend on the needs of the non-user customer, the less you are focusing on the user of your products, and the more vulnerable you become. If you empower that other customer to persuade you to make decisions not in the best interests of the the people who use your products, you are striding down the path to ruin.

Where would the movie business be if it had thought its customers were theater owners, not viewers with VCRs, HBO, and iPods?

Where would the music business be if it ignored its customers' desires for electronic singles over its retailers' desires for CDs in 1999? Oh yeah, they did. They got it, but way too late. Screwed.

This applies in government and non-profits, too. If you're a non-profit that helps kids with cancer, concentrate on the kids, not the donors. If you're in government, concentrate on the people who use your highways or collect your unemployment payments. They are your customers, even if they don't pay you.

It doesn't matter if you sell insurance, shoes, or web searches. If you always worry first about the one who uses your products, she will lead you into new business models, new features, and loyalty. Social technology means you can form a relationship with that customer, even if you send your invoices to someone else.

If you worry too much about that "other" customer, he'll go into competition with you, insist on more discounts, drag you down as he goes out of business, or distract you, opening up room for competitors. User customers may have loyalty. Those other customers rarely do.

Complex distribution chains, powerful partners, and advertising subsidies are great. Just don't lose track of who is eating the dog food.

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Comments

Mark Allen Roberts

Strong thought leadership.

Your comment about government is right on track, and I discuss this in my blog : http://nosmokeandmirrors.wordpress.com/2009/09/01/12-lessons-all-leaders-can-learn-about-launching-new-products-and-services-from-the-2009-health-care-reform/ and click # 9

Mark Allen Roberts

monica levy

ha! great post.

i use a dog food marketing analogy, too, to highlight the importance of correct segmentation.

imagine a dog food company that decides to segment by traditional factors -- old dogs, young dogs, thin dogs, fat dogs, etc. this is ok (and many companies do, in fact, segment like this), but the problem is ... dogs don't shop.

to your point, buyers shop. so a better model is to focus on the relationship the buyer has to the dog -- dog as dog, dog as pet, dog as child, dog as grandchild. if you've ever seen dogs running around with $500 hermes collars (yes, they exist), you'll know you're dealing with a "dog-as-grandchild" target.

Mayank Dhingra

Nice post Josh. I'd say the company should just focus on the dog and completely ignore the master.

Let the product guys focus on the product and the marketing guys focus on the master and am sure things would be this way in many companies.

Ludovic

Nice post, easy to remember analogy too.

Isn't it like this with IT Analysts as well?

The user is the IT buyer, sometimes they buy IT Analysis, sometimes it's free at the point of use and IT vendors pay for it.

But analysts that veer away from IT users needs may find increasingly difficult to get IT vendors to pay for their services.

Thoughts?

Josh Bernoff

@Lodovic I don't speak for Forrester, but I do feel that companies that analyze vendor markets and sell exclusively to vendors are on dangerous ground -- exactly as you say. You're always better off serving users.

Lara

Your site suggests using the comments to contact you, so these 2 comments have nothing to do with the above article.

1) I'm wondering when your book is going to come out in paperback?

2) For experts on social media, I'm surprised the Groundswell twitter feed is blank? http://twitter.com/Groundswell

Josh Bernoff

@Lara:

1) We will announce a paperback version at some point, but it's still selling well in hardback for now, so not very soon.

2) We set up the @groundswell feed for a specific program around the time the book was launched (a purpose that now would be served by a tag, but few were using tags back then). I would prefer to keep it associated with us, but those seeking personal advice from groundswell authors will do better to follow us at @jbernoff and @charleneli.

Pet lover

I liked the content of your blog and the points you have mentioned are also perfect. I liked the content of your blog and the points you have mentioned above.

business opportunity leads

Yeah, i think you should be fair for the two products, if you suggest, know about the product information and details so you wont be ignored by customers.

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