An Apple a Day Keeps the Doctor Away

This post was first published at http://www.thinkaboutcrm.com/articles/apple-day-keeps-competition-away

I am listed as one of the Think About CRM Thinkers.

If there is one company that continues to generate exceptional levels of consumer loyalty and long time retention, it’s Apple. This week, they launched the IPAD2 (no doubt to be followed by #3, #4, #5 and so on) and as expected there were lines of eager Apple fans waiting outside the stores waiting to snap up the new version.

Apparently, there are back orders, Apple cannot meet the initial demand and this launch has caught all of the competition off balance by launching the new version before they have the opportunity to get a foothold in the 25% of the tablet market that Apple still does not yet hold.

What’s even more amazing is that while there are some improvements on the IPAD1, IPAD2 is not so much an upgrade as a small tweak (and they have not addressed the single biggest consumer complaint that there is no USB connection). Perhaps the most compelling reason to buy the new version is that it is being retailed at the same price as the previous version.

I thought it might be interesting to use this example as a case study for this post with the objective of understanding what we could all learn from Apple about retaining consumer loyalty. Here are my thoughts:

1. Apple has managed to successfully transition from being a company with great products to an organization that markets great brands: Apple is about an experience; that starts with entering the Apple world (either in a virtual or real store). They offer a differentiated and in most cases unforgettable experience. Whether it is ensuring that the customer’s new product is up and running before they leave the store, working with the Genius or simply playing with the products instore, Apple delivers something that no other manufacturer has successfully managed to do: Engage the consumer before they buy and then hold on to them after the purchase. I currently do not own any Apple products (my last two IPODs crashed, failed and burned and I was told by the Apple store to buy a new one – note Apple, an unsatisfied consumer), but I can see how this sort of attention is compelling. When I bought my last computer I had to start it up, work out my options and take all the ‘risk’ of opening up the pack by myself. It would have been great to walk out the store with my new computer up and running. Whether it is the iPod, Macbook, iPhone Apple have done a great job of creating a positive consumer experience behind the brand taking the engagement to an emotional level – a much greater driver of loyalty than anything else.
2. Create and dominate the category: Apple, probably more than any other company since Sony has been successful at creating entirely new categories or totally redefining existing categories. What Apple does is completely change the consumer perception of the marketplace so that Apple’s products are more favorably viewed. Apple did not invent the MP# player, but they sure did capture the imagination by developing a consumer interface that was intuitive and accessible. They did the same with the iPhone and are doing the same with the iPad. A lot of what Apple does is disruptive because they make decisions about where they are not targeted. They think and act differently and do not mind if they are not targeted at all possible consumers. What they are great at is acting as an architect of the category. They are Marchitects.
3. Innovate, innovate, innovate: Here’s a company that never rests on its laurels. While I may not think that the iPad2 offers a lot more than the iPad1, what Apple has done is re-launch an improved product before most of the competition even had a chance to launch their fast following alternatives. Speed to market is increasing for every company, yet Apple remain ahead of the curve, compelling consumers to upgrade, rethink their functionality and look carefully at why the choice is moving to Apple instead of waiting for a new version of their preferred supplier. They also keep themselves relevant by offering the products that we did not even know we needed. My wife was totally unconvinced by the iPad until someone said to her “it’s just like having a big blackberry”. I am sure the people at RIM are delighted to hear this sort of comment…not. iPad is a business tool, out of home movie theatre, book reader, in fact it is probably a lot of other things as well that we just have not worked out if could be. For that reason alone, customers are flocking to it and all the discussions, blogs and communities building up around the product simply work to increase that buzz and loyalty to the brand.
4. Never lose sight of the fact that in the end consumers have to dig into their pockets to buy your offering: The iPad2 retails at the same price as the iPad1. Apple in this simple move promises more value, and is perceived to deliver much more value to its customers. We are almost programmed to having annual price increases and price hikes when new versions are released, when in fact, prices should come down as manufacturing becomes more efficient. Apple’s message here – production is at levels where we are making efficiency gains, we will pass on some of that benefit to you.

I think that the Apple case study goes to show that customer relationship management starts with great concern about delivering something meaningful to the consumer at a functional and emotional level and then backing that up with excellent support and follow through – because, let’s also remember, Apple has a world class leading CRM program that maintains all the records of existing customers. Through this they cross sell, up sell and manage the continuing customer relationship at a level that truly represents best in class.