The important distinction between what you are selling and what the customer is buying.
In a scene from Moneyball, one of the main characters says “If only people knew how baseball games were really won and lost, they would construct their teams entirely differently”.
Looking at Blackberry, what if isn’t a smartphone after all? What if its success was due to something entirely different from its smartphone features and benefits?
To answer these questions, we need to know that belonging is a fundamental human need. It is something we strive for every day in how we behave, the clothes we wear, the cars we drive, the brands we buy and the ones we avoid, and the people with whom we do and don’t associate. We are also constantly monitoring where we stand in the pecking order of the communities to which we belong. Are people – the right people – including us or excluding us? Are the listening to us? Are they giving us the appropriate social cues that, in their minds, we have credibility and their respect?
It is within this “belonging” context that the RIM’s success was sewn. In the early days of the Blackberry, when it was nothing more than a glorified pager, it was a product for senior executives and other people at the top level of the food chain. In other words, it was only for people of status.
Having and using a Blackberry made us feel important because it was a constant reminder to that we arrived. It enhanced and reinforced our self-perception that we were a person of status. Being seen using our Blackberries was a signal to others of our status, either as a superior to them or, if they were peers, being at the same social level. In other words, the real role of the Blackberry was to establish our social status. Having one was an indication to us and everyone around us that we had made it and that we were a member of the important people community.
The beginning of the end began on January 7, 2007, in part, because RIM never knew what a Blackberry really was. Too many people at RIM thought, and still think to this day, that a Blackberry was about security in communications and a whole host of other features and benefits. This is a classic case of looking at a product from an engineering standpoint rather than a psychological one. The result of this product-centric perspective is a classic case of only understanding what you are selling (a smartphone) as opposed to the far more valuable perspective of understanding what the customer is buying (status).
The significance of January 7, 2007 is it was the date that Steve Jobs stood on a stage in the Mosconi Centre and announced the world was changing with the introduction of the iPhone. Because RIM didn’t understand what the customer was buying, as opposed to what it was selling, it didn’t appreciate the significance of the iPhone freight barreling down the track. The iPhone usurped the Blackberry’s role of social arbiter. Having been stripped of its primary value, the Blackberry became the emperor without any clothes.
Unlike RIM, Steve Jobs era Apple has always understood exactly what people are buying: the feeling and perception that they are a part of the cool crowd. Apple is about changing the game in everything it does. It does this through groundbreaking innovation, creativity and design. By extension, when we use Apple products, we become a member of the Apple game-changing community. We become game-changers ourselves in our own minds, even if the only way we change the game in our lives is by using Apple’s products. Apple knows its customers are buying status and reinforces it in everything it does, from how it develops features to how it communicates them to buyers.
It wasn’t RIM that determined what people were really buying when Blackberry ruled the roost, it was its community of users. There is nothing wrong with that but RIM never picked up on it and then worked to constantly reinforce that exalted position. Apple always new what people were buying – as opposed to what it was selling – and when it moved into RIM’s smartphone sandbox, it did so by consistently reminding us how cool we would be using the iPhone. In the five years of the iPhone’s existence, Apple has never strayed from the single-minded focus promoting what people are buying.
The proof of the value of distinguishing what the customer is buying versus what you are selling couldn’t be more evident in the performance of these two companies: Apple now one of the most valuable companies in the world and RIM on a race to the bottom.