Digital Media Digest

Customer Acquisition…For this excercise, there are 3 kinds of digital consumers:

1.  Rookies:  Consumers who have never purchased a digital download

2.  Veterens(2 types):  Experienced Digital Consumers.

_______a)  Loyalists:  Consumers that value a specific brand of music service and are not easily intrigued by cheaper prices, additional service features, or an alternate, higher quality end product.  They are comfortable with the way they already consume music and find value in the brand they have already chosen such as Image, Usability, Convenience, Security, etc.

_______b)  Experimentalists:  These consumers are crafty and have no existing brand loyalty.  Price carries a significant amount of weight in their decision but other factors are an issue such as interoperability, selection, and freedom.

So let’s say you want to start a successful digital music store.  There’s only a finite number of customers and you need to motivate them quickly in order to stay afloat, so you prioritize your attack it in this order:

Experimentalists  => Rookies => Loyalist

How do you separate them?  Price.

Customer Acquisition via Price – This automatically aligns your consumers to the desired priority above and here’s why:

Experimentalists are first because they are proactive about new ideas and new processes.  They are already acclimated to what you are asking them to do so you don’t have to teach them.  They see the value in what you are offering before they begin and are willing to experiment for that reward (a cheaper price).  Experimentalists are also great because their pioneer efforts hardly ever go unnoticed.

…and that’s where you get the Rookies.  They want what the Experimentalists are blabbing on and on about, and while they would have never gone down that road on their own, they now have a partner in crime and proof that someone else survived the journey before them.  Sure, you may get a few Rookies by chance, but the Experimentalists make great teachers and offer a support structure for them that is crucial to success.

Loyalists? – How do you get the loyalists?  Doubt…and this takes time.

You won’t win Loyalists over immediately because they are wrapped very tight in their brand security blanket, but they’re smart.  They’ve been around a while – hence the term “veteran” and at one point in time, they used to be “Experimentalists”.  They hold tightly to their belief that what they have been doing is best and take great pride in their methods, but the Rookies and Experimentalists continue to plant that seed of doubt with every successful transaction and in every conversation about music.

Rookie, “Oh, I can’t believe how easy that was…and cheap”

Experimentalists, “I know, and the price and quality is so much better than ___”

Once you win over a few Loyalists, then you have yourself a battle.  One Loyalist can convert a multitude of others because they know what it would take to convert one of them.

Want to Fail quickly? – create a bad customer experience for any of these consumers. Experimentalists are experienced shoppers and are not going to vouch for your service without good reason.  Rookies are newbies for a reason and any misstep will send them back to buying physical CDs or to your competition where they can find tried and true security.  Any misstep with a Loyalist will just reinforce his faithfulness to his current system.

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This is exactly what AmazonMP3 and Walmart.com are doing right now, and eating a ton of costs in the name of customer acquisition.  Releasing new records (Keane and Snow Patrol) at huge discounts is a great first step in getting the Rookies and the Experimentalists to try it, but it has to be a first step of many.

PRICE_is only the first step, and by itself, it doesn’t create brand loyalty or “sticky” consumers.  Both of these companies have a huge online footprint and a broad product selection that is unmatched by most, but when it comes to digital music, they have a long way to go.  They must followup their aggressive pricing with a competitive service and brand identity.  It is expensive to play offense, and deep pockets are essential, but it’s going to take much more than that.  It will be interesting to see how well they execute the next phase of their attack.