Focus on the Customer; Everything Else is Secondary, says UP21 Marketing Strategist

When carpets were sold in ancient Persia, the most successful merchant wasn’t the one who sold at the cheapest price or who shouted the loudest, but the one who could best explain to customers why his rug had the biggest value for them. Over the past two thousand years, this principle hasn’t changed. The customer should always be at the heart of every business. You might think this is crystal clear, but you'd be surprised how many companies completely forget about their customers. Milan Šemelák, who has created the UP21 incubator strategy, knows a lot about this.

You help businesses realize the value they create for their customers. Don’t they know it themselves?

Surprisingly they don’t. I’ve met a lot of brands, from the biggest, like Unilever, to the smallest startups who didn’t even know their added value; otherwise, they had it defined only vaguely, like, "We are in the fashion industry and we make nice clothes and accessories." At the same time, these companies burn hundreds of thousands of dollars on development, marketing and design, without knowing why and for whom they are doing it. I realized that it was necessary to take them back to the beginning to realize what value they offer.

Could you say that you’re showing companies how to create value proposition?

The phrase value proposition is very perplexing and sounds terribly complicated, but it's such a simple thing. Every company has one basic function and that is value creation – primarily for the customer. When I create value for you and you like my product or service, you’ll buy it from me and thus you’ll also create value for me, namely the financial kind. Most companies, however, have a completely opposite approach – they first ask how they can make money and they’re not interested in the customer. I’ve been to dozens of board meetings where the word customer did not occur once in three hours, but instead people spoke about numbers, technology, costs, and operational matters.

Milan Šemelák, Chief Strategy Officer, Main Board Member and Kopilot in UP21

How is it possible?

As for startups, they’re often lured by two things: technological possibilities (it’s very easy to use buzzwords rather than return to what the customer wants) and the idea of ​​rapid growth. In the current startup bubble, everyone is struggling to grow quickly and satisfy the investor, but to build long-term, sustainable value for the customer takes decades. On the other side, corporations are in such a comfortable position that they don’t need to move the ball further; it’s much easier for them to do the same thing over and over. Just tell the boss a good story and look like you're creating value. There is a lack of focus on what really matters. Startups don’t focus on the customer, but on the investor and technology; corporations focus on their own internal policies; and investors concentrate on getting their money back as soon as possible. Once you take the money, no one is interested in the most important person – the customer. And that's the problem in a nutshell.

What’s the solution?

You need to ask yourself every day, who am I doing this job for and what value does it give them? Nowadays, Simon Sinek's "Start With Why" theory, which leads people to think about why they go to work every morning, is very popular. Though I think he’s onto something, this question leads to overly philosophical answers like "I want to make the world a better place." In my opinion, it’s better to ask yourself "What value will I create today?" which can’t be turned into something abstract because it must be something specific.

Is that enough?

I think that one simple and honest conversation that goes into depth and starts by modeling who the customer is (who he is, what he needs, how he behaves and how he will use our product) is enough. Once you know who your customer is, you’ll quickly get to what he needs. Suddenly we get to five or six things that we can give him. I want companies to concentrate on one thing and make one or two words out of it, which is a very difficult process because suddenly all buzzwords disappear and when creativity is added to the process, something new will emerge.

That sounds rather theoretical. How does this conversation look?

I'll give you the example of Shipvio. When I met the founder, André Dravecký, for the first time, Shipvio presented itself as a simple and fast logistics shipment. When I asked him what value they create, he said speed and simplicity, but every logistics company does that, so we had to look further. Eventually, it emerged that his ambition is to fill empty spaces in trucks. Suddenly, we hit a big issue that is related to sustainability. Shipvio essentially eliminates all kinds of waste – related to time, money and environment – and that’s how we got to zero-loss logistics. This story works very well and holds the whole business together. Anyone who’s trying to make value proposition into rocket science is inflating it.

 

OK, so once I’ve created a value proposition, what should I do with it?

A well-defined value proposition can be used as a company vision. Take zero-loss logistics for example. The vision can be “We want to remove all losses from logistics worldwide” and based on that you can create individual products. Value proposition is also used in every presentation in front of investors, when communicating with customers, in advertising campaigns, and introducing company culture to employees. When the company creates real value, people are extremely proud of it. The fact that someone increases quarterly profits by 12 percent doesn’t touch anyone's heart.

Do you know any companies that know how to communicate their value well?

Certainly, a global example is Patagonia, which sells outdoor clothing. They don’t present themselves as selling quality coats, but they say they’re in business to save our planet. They create different propositions, such as a lifetime warranty for clothing repair or activities that connect the global community of outdoorsy people. Besides which, they also invest millions of dollars to protect parks and rainforests. A good local example is Airbank or Slovak O2, whose proposition is that they remove everything unfair from telecommunications. They’ve abolished contracts, started to connect fair employees from different companies and fight corruption. After twelve years of market entry, the brand still profits from this proposal.

Many companies do common things – bake rolls, produce screws or sell electronics. How can these businesses communicate their value?

It always depends on the ambition of each business. If a baker wants to sell cheap rolls in Tesco, his value will be low price. But if another baker says he can no longer look at what pastry people are buying in Tesco and so he starts making the healthiest rolls from buckwheat flour, you can build a great story about it. Anything can be communicated, but the constant must be that a proposition of value is evidence-based and not merely a convenient statement.

What do you mean?

I always try to push companies to not only communicate their value but also to create it. Many people from marketing and advertising think that posting and putting jokes, nice pictures and ideas into the world is enough, but that’s nonsense, and also the reason why the whole sector is in crisis. The primary role of companies is to make propositions. If the company just says something and doesn’t do it, people will quickly see it -- and that’s bad. It's just "mission-vision-bullshit."

How many companies do you think create "mission-vision-bullshit"?

95 percent of what companies do is rubbish, but it doesn’t have to be. For a company that has money, it isn’t hard to do something really good and in the long run earn from it, but most companies go from quarter to quarter not caring more than they have to. Especially in corporations, ladies and gentlemen in suits like to use sentences like "We make the world better thanks to our innovative approach to (insert high-falutin concept here)..."

How can a regular customer know whether a company is really trying or just faking it?

Last year I worked for the big Dutch insurance company Interpolis, whose brand proposal is "Focus on what matters." They want to eliminate stress and financial fear from your life and motivate you to focus on what's important. If they said, "We’re improving the world by helping you concentrate" and didn’t do anything about it, it would be empty words, but they’re really trying. They’ve released an app that blocks calls while driving. For every kilometer that your phone is turned off, they contribute money to road restoration in the Netherlands. Now, they’re doing an educational program for millennials because they have problems with burn-out syndrome. They gesture towards different things, build a brand and connect products to it.

If I want to create a value proposition, where can I look for inspiration?

People are the greatest inspiration to me. Everything we do is for people, not for technology or great results in Excel sheets. That is to say, you should be interested in what people use, how they use it, what benefits it gives them, what they don’t like and what they’d like to have. Because if you create something that people want, you’ve won. You can certainly follow different trends and see what your competition does, but the whole principle of success lies in the fact that the people – customers – must be at the heart of your business.

So, despite all the new technology, nothing has changed?

In principle, people don’t change. It doesn’t matter if I give them normal glasses or Google glasses with virtual reality, they will still want simple, emotional and rational things. A lot of people think that new technology will erase all the old functioning technology, but tools are just tools; they don’t have value of their own. Nowadays, for example, people say retail is experiencing a crisis, but well-executed retail is experiencing a big boom. Amazon invests massively in retail operations. Large luxury brands that can make shopping into an experience are blossoming like never before. Sometimes I feel that many so-called 'disruptive startups' want to destroy everything so we can just sit at home and click endlessly on the computer, but we're not made for this. Whoever claims something is dead is a populist. It doesn’t matter whether you have a stand at the market or 70 digital channels, whatever realities and blogs – these are just tools. When you do something good and you bring value, that’s what works.

Milan Šemelák is a marketing strategist and creative thinker. He works at the UP21 Incubator as the Chief Strategy Officer, helping startups to formulate long-term strategies and marketing activities. Among other things, he has founded Unicorn Attacks consulting company and leads strategic activities of the technology company STRV in the US. In the past, he served as Chief Disruptive Officer at the Oliver Group in London and together with Michal Nýdrle, he built the first local in-house agency for O2 in the Czech Republic and Slovakia.