Astronaut Eugene Cernan once said, “If you begin to think you’re something you’re not, you’re looking in the wrong mirror.”
In my opinion, many industries have been looking in the wrong mirror for a long time! Soberingly, those businesses are being forced to see themselves anew – in a reflection of the perceptions of their consumers.
Let’s take the mattress sales industry as an example…
If you are like most of us, shopping for a mattress is a neccesary evil.
The process typically involves seeing an advertisement in the Sunday newspaper promising inexpensive mattress options. Once you arrive in the showroom, the salesperson steers you away from the products featured in the ad and quickly shuffles you off to lay down on far more expensive options. You will soon have a strong feeling that the salesperson is steering you to a product which will deliver the best commision for him or her and that they have far less concern for your sleep comfort over the long-term.
Recently innovators in the mattress sales world looked at the industry’s overall sales process from the “right mirror” – the one reflecting the customer’s experience. Philip Krim, CEO of Casper Sleep Inc. noted, “Statistically, lying on a bed for four minutes has no correlation to whether it’s the right bed for you.” Yet this has been the industry approach to sales.
Based on these observations Krim, and leaders at other companies like Casper, sought to remove customer experience pain points and eliminate “bad profit.” Bad profit is a term I use when a business makes money through a lack of transparency in pricing or where their revenue is at the expense of – not for the benefit of – the customer.
Here are some of the specifics in the transformation of the mattress sales experience, which should be applicable to any business. Mattress leaders…
- Reduced the complexity and breadth of options associated with their products.
- Targeted products most favored by consumers and sought to lower the price of production of those products to deliver them as economically as possible. (In Caspar’s case they focused on memory foam sleep technology.)
- Emphasized ecommerce! This lowered the overhead associated with running a store front and offered mattresses at an approximately 35 to 65% reduction from traditional mattress stores.
- Innovated a delivery method. (In their case, Casper compressed their mattresses so they essentially can be delivered in a box that will fit in the trunk of a car. Upon opening the box, the mattress leaps back into the shape you would likely see in the traditional showroom.)
- Offered ample time for customers to try the product and made the return of the product easy. (Casper offers free shipping and returns on all orders. Customers also can return the mattress anytime up to 100 nights after they begin sleeping on it.)
After reading this glowing praise of customer experience re-design, I should clarify I am not a spokesperson for Casper, I’ve received no compensation from them nor am I endorsing their product (not to say that I wouldn’t accept a mattress that showed up at my door).
I am, however, suggesting that Phillip Krim and others like him are using the “customer experience” as the mirror by which they view themselves. As such, they are producing disruptive (not incremental) forms of change.
When you look at your reflection “through the mirror” of your customer, what do you see?
“Bad profit.” I like the term because I hadn’t thought of it that way. But I can see your point. By your definition, ‘bad profit’ would be what Blockbuster Video gained from late fee charges. Customers hated the charges, but the revenue flowed straight to Blockbuster’s bottom line. It’s hard to stem a powerful profit addiction, even as the company sinks under its weight.
“Transparency” in pricing, though – that’s really Pollyanna. It doesn’t exist. Capitalist economies depend on asymmetrical information between buyers and sellers. That sometimes favors sellers, and sometimes buyers. For most products, buyers don’t have full knowledge of what it costs to produce and deliver an item. Sellers don’t have full knowledge of what a given buyer is willing to pay.
I think what you have identified in Casper is more innovation than disruption – though the two are frequently confused. For me, disruption can only adequately be identified in hindsight, which often takes many years. I base my assessment of “disruption” on Clayton Christiansen’s definition, and use these criteria:
1. The market for the product or service is experiencing, or is likely to experience, an increased rate of demand. This demand might be created by social, business or regulatory change.
2. The economic outcomes in providing, acquiring or adopting the new product or service must be significantly better than the prevailing offerings.
3. The business model or core technology used for the innovation must be both fundamentally different from the prevailing offerings and sustainable.
The eCommerce and collapsible innovations are the two improvements I think have potential to disrupt the mattress industry. But if the industry does experience true disruption, I think it will be through forces much larger than this. People camping outside instead of within a structure? Millions of people eschewing beds and sleeping on the floor or in hammocks? Something else altogether?
But we won’t know whether any of this is ‘disruptive’ until it has happened.
See my article, Strategies – Not Products – Create Lasting Market Disruption.
Andrew thoughtful comments as always. I appreciate the distinction regarding transparency. My point is with 4 options all priced with likely similar margins and no pressure to steer someone to an option with a likely higher margin their is increased pricing integrity. I definitely see this as disruptive not iterative innovation. If innovation is invention addressing a customer needs – it can me incremental or “blindsiding.” In this case, industry icons like Sealy are getting in the game with their Cocoon product approach.
Andrew, you always advance discussion. Thank you! Joseph