This post was co-authored with Nikita Avdiushko, a first year MBA student at the Fuqua School of Business, Duke University, Shiwani Kumar, a former MBA student from the Fuqua School of Business, and Ben Richman, Business Development at Blockstream.
If you were watching the Apple headlines in December, you know that the company faced a flurry of class action suits related to the company’s admission that it slows older phones, it says, to prevent shutdowns and crashes. In a space where every phone manufacturer is regularly accused of artificially degrading performance of older models to encourage users to upgrade, the statement has caused tempers to flare, and at least temporarily tarnished Apple’s sterling reputation.
What you may not have seen is that Apple was voted the overall winner of the 2018 CMO Survey Award for Marketing Excellence . . . for the 10th consecutive year. Given the controversy over slowing phones seems largely like a self-inflicted wound on Apple’s part—the disclosure was handled in what is arguably the worst possible way—these two bits of information can be hard to square.
Apple is one of the greatest marketers of all time, but even it can stumble. Apple’s consistent marketing excellence is built on some core disciplines, which others would benefit from learning from and applying. At the same time, as in so many other parts of management, strengths can easily become weaknesses or points of vulnerability.
Marketers who aspire to reach Apple’s heights need to look closely at the reasons for Apple’s consistent reign at the top. But it’s not enough to simply try to copy Apple. Each of these marketing practices can backfire without careful attention and top-notch execution, as Apple is seeing right now.
So what are the reasons Apple has remained a consistently excellent marketer for over a decade, and what pitfalls do you need to be aware of? Here are our top ten:
1. Create an Experience Ecosystem. Apple has a legendary focus on the customer experience. Every customer touchpoint (products, the website, ads, app store, and retail store) yields a consistent Apple experience. Over the last 10 years, Apple has aggressively expanded the areas where the Apple experience is part of daily life. By encouraging app builders but rigidly enforcing standards, Apple ensures that the universe of Apple-mediated behaviors continually expands. By innovating product form factor and function from computing in either your pocket or on your wrist, to paying for all your purchases, to opening your hotel room, to controlling all of your home electronics, to reminding you of your calorie count or parking spot… all of these experiences are connected, integrated, and packaged in a singular accessible ecosystem of complementary products. Additionally, Apple has focused on innovation beyond the core by creating the infrastructure to enable this ecosystem in a secure and seamless fashion (think Apple Pay secure payments or biometric facial recognition on the iPhone X). The most tangible example, of course, is in Apple stores. Apple overturned conventional retailing wisdom when it created its stores, putting experience before “selling.” It’s continued building on that success by further removing “store” from its retail branding because it sees its stores as so much more.
Pitfalls: Aside from the obvious difficulty and expense of creating an ecosystem that can benefit from network effects (witness Amazon’s and Microsoft’s struggles here for instance), the key pitfall is that you have to take full ownership of every experience in the ecosystem. When ApplePay doesn’t work at a vendor, Apple has to view that as an Apple problem to solve. When an app in the AppStore is misbehaving, Apple has to take responsibility and act quickly to resolve the issue. If it doesn’t, the negative customer experience can quickly spill over and alter customer perceptions of every part of the Apple experience.
2. Foster a Community of Evangelists. Apple has always empowered customers who “think differently”—seeking to inspire customers to do things in unique and creative ways. However, as its products have become more ubiquitous, Apple has had to work harder to maintain that focus. For students, artists, and entrepreneurs, Apple has sought to build community and bring more customers into the fold. Currently, Apple offers youth programs, such as free classes for children learning to code, to capture the imaginations of future consumers. Apple is also turning its retail locations into “town squares.” At select venues, the company is building “The Plaza’—an area open 24-hours a day with free Wi-Fi, public seating, and weekend concerts. Another feature is “The Forum”—an area surrounded by a 6K Video Wall and “Today at Apple,” a program that brings talented artists, photographers, musicians, and other visionaries together to further ideate on their passions. According to Angela Ahrendts, VP of Retail, “We are renewing our focus on liberal arts—humanizing technology through experiences that educate and entertain visitors and empower entrepreneurs.”
Pitfalls: Any firm that wants to have a community of evangelists must take that community seriously. It has to invest in their care and feeding, but most importantly, it has to listen to them and act proactively. A community of evangelists who feel like their input is ignored can quickly move from being a huge marketing asset to a catastrophic liability.
3. Organize Sales and Marketing by Customer, not Product. Apple targets four main B2B customers—education, government, SME, and enterprise. For the diverse SME and enterprise segments, the company organizes its sales teams based on the industry served, not products sold. Salespeople work on teams that focus on different types of customers. For example, a former biomedical engineer with experience working in hospitals might be assigned to small-to-medium sized accounts in healthcare, while a sales rep with a financial services background might be assigned to work on a team selling comprehensive solutions to banks and credit unions. The benefit of this approach is that it ensures the salesperson really understands the customer and can offer solutions from across the Apple portfolio to best meet customer needs. In the same vein, Apple hires sales reps for its retail stores from all walks of life. In this way, they can embody every type of person that walks into an Apple store and thus connect more genuinely.
Pitfalls: While this structure may seem like a no-brainer, anyone who has worked in sales and marketing in a large firm can tell you it’s much harder to pull off than it might seem. Many companies have cyclical reorganizations of their sales and marketing teams that shift from product-centric to customer-centric to region-centric, and back again. That’s because it’s easy for a group to get too intent on one perspective and cause problems in other domains (for instance, customer-focused teams often put competing and conflicting demands on product designers or drive an untenable multiplication of product SKUs). Apple manages this challenge by keeping its structure focused on customers, but the structure is informal and there are no separate divisions for different industries. Keeping sales or marketing from splitting into warring silos requires constant vigilance.
4. Control Pricing. Have you ever seen new Apple products with deep discounts during Black Friday or Cyber Monday? Apple’s marketers leverage pricing—with very little discounting– as a tool to convey the brand in the same way as luxury retailers. This strategy extends to the microcosm of Apple retailers, dealers, and resellers, where Apple uses “minimum advertised price” (or MAP) to keep prices relatively comparable to its own stores and minimal wholesale discounts to prevent retailers from passing discounts onto consumers. While many other technology retailers might use discounting to drive demand, Apple focuses less on acquiring new customers through price and, instead, by making them loyal to Apple products by offering an outstanding customer experience.
Pitfalls: Apple has lived through the pitfalls of different pricing strategies. During the dark years of the mid-90’s when Apple’s products fell out of fashion, Apple’s history of premium prices and pricing control accelerated the firm’s decline. When it tried to react by licensing technology to “clones” and cutting prices, it was seen as a mark of desperation, which further damaged the brand rather than opening the door to new customer segments. Pricing control is a double-edged sword that requires on-going investment to justify the prices.
5. Use Customer-based Metrics. At most stores, the salesperson works tirelessly to up-sell, cross-sell, any-kind-of-sell, often leaving customers confused and frustrated. Since 2007, Apple has used the Net Promotor Score (NPS), an index that measures the willingness of customers to recommend a company’s products to other people, as a critical indicator of success and of a customer’s brand loyalty. Apple manages nearly all 500 retail locations and its staff using NPS scores. NPS feedback is collected and shared with store teams daily—all negative feedback is addressed within 24 hours with a personal call from a store manager. NPS is also used to guide decisions ranging across employee promotions to long-term strategy.
Pitfalls: Apple’s success with NPS doesn’t mean that the metric solves all problems. Every firm has to be vigilant about sales and marketing staff “managing to the metric”—witness the ongoing scandals at Wells Fargo. Secondly, the easiest way for sales and marketing to boost NPS scores is to cut effective prices, devastating the firm’s bottom line. Apple has never fallen prey to this practice and instead continues to build value from quality rather than from price.
6. Unpack Simplicity. Apple has mastered the art of minimalism—where product aesthetics, user interfaces, the brand logo, support functions, and even advertising are stripped down to the fundamentals. Products have simple, clean lines, with even simpler, self-explanatory names. The core purpose of this simplicity is to make the products easy to use so they can be understood and easily adopted by non-experts. As Steve Jobs said, “The way we’re running the company, the product design, the advertising, it all comes down to this: Let’s make it simple. Really simple.” Apple focuses not only on making products simple but also intuitive, meaning there is tremendous attention to every last detail, even the unboxing experience. This makes products more enjoyable to use. Apple Support is equally seamless, providing targeted software counsel to consumers in seconds. Finally, Apple carries this principle through to its advertising. A typical Apple advertisement or billboard has the product name and a clean picture of the product—no technical specs, pricing, or expensive special effects.
Pitfalls: First and foremost, witness the backlash inherent in the current class action suits. Apple’s efforts to make things “simple” for the customer led it to slowing phones to protect the user experience—without explaining to the customer what it was doing or offering choices to customers. Apple’s decision absolutely makes sense from inside the company—it fully conforms to Apple’s emphasis on keeping things simple and protecting the user experience. But this focus also obviously carries the possibility of enraging loyal customers who feel they have been misled.
7. Start ‘With the Why’. A common tech marketing misstep is focusing on technical features, not customer benefits. This is the classic marketing myopia that Theodore Levitt wrote about in 1960 in the Harvard Business Review: “In the ease of electronics, the greatest danger which faces the glamorous new companies in this field is not that they do not pay enough attention to research and development, but that they pay too much attention to it.” Tech companies are not in the technology business—they are in the business of providing customer benefits (just like every firm, no matter its industry). Apple understood early on that its products must fill a customer need and inspire first, and that this should be the focus of marketing efforts. As Simon Sinek puts it, this approach helps Apple ‘start with the why’ and therefore more effectively connect with its customers. While PC salespeople talk about megabytes, gigapixels, and processing power, Apple employees have been trained to do exactly the opposite. Their “Specialists” are taught not to speak in jargon, but instead to speak to benefits and aspirations to the customer. For example, to customers more memory means more photos, texts, and videos; ultimately experiences and memories, not just gigs. These conversations are enhanced in “Genius Groves,” an evolution of the “Genius Bar” where trees and seating build an even more customer centric and supportive experience.
Pitfalls: For the same reason that so many marketers fail to start with the why—it’s easy to get caught up in your own technical expertise and misread customer needs and interests—it’s easy for a “why” message to go off target and sound a very sour note with customers. In Apple’s case, witness the reaction to Apple’s removal of the headphone jack in the latest versions of its phones. Apple’s “why” message for the removal didn’t land with many customers. In fact, much of the messaging was about technical details of design driving the change rather than why customers might benefit or how this innovation could transform them. Apple’s holiday commercials were a move back in the right direction, attempting to put the focus on AirPods’ ability to “move” a customer.
8. Act Glocal. Whether you’re in Macao or Milan, Brussels or Beijing, you’ll recognize the iPhone’s standardized sleek design, minimalism, and ease of use that appeal across the globe while instilling the Apple experience with nuanced local features important to consumers. For example, one Apple Store in Paris is housed in a Haussmann-style building to reflect Parisians’ architectural preferences. The ‘Mac versus PC’ campaign in Japan, where direct-comparison ads are considered tasteless, was tailored to more subtly address differing product attributes in way that wasn’t nearly as direct as the equivalent Western campaigns. Although the color red is off brand for Apple, in China the company has run red packaging promotions during Chinese New Year to better connect with that market through a color that evokes luck and fortune. Such marketing and product moves have allowed Apple to stay true to its brand identity, while quickly expanding sales to over 100 countries. Likewise, while Apple ensures its ecommerce websites have a uniform look and branding regardless of country, it has greatly customized the languages working with translators and copywriters to ensure local ease of understanding.
Pitfalls: Apple’s ability to successfully make “exceptions” to the brand rules is built on extraordinary efforts to build the brand ethos and experience into everything that Apple does. It’s only because the brand is so strongly adhered to throughout the organization that local decisions can be trusted. Toyota is another example of a company that can successfully act glocal, again because it has done the hard, hard work of ensuring that the brand and culture has been internalized by everyone in the firm. Without that baseline, local actions quickly erode global consistency and the brand begins to fragment.
9. Foster the Employer Brand. Apple has built such a strong brand in part because it attracts the talent to continually do so. Top talent recognizes the exceptional professional development opportunities synonymous with the Apple brand and the brand cache that comes with having Apple on their resumes. Apple employees are given the same opportunity to think differently and challenge the status quo as Apple gives its own customers. They are also given a state-of-the-art campus, Apple Park, as the work environment to support their creativity. Like every product, each detail of this cutting-edge structure is intentional to foster an environment where design and collaboration are at the forefront and where employees have a unique workplace experience. Even the office chairs, sourced from Barber Osgerby, are intentional in how their design reinforces the in-office experience Apple seeks to offer its employees. Tim Cook believes that “Ultimately, it’s on the company leaders to set the tone. Not only the CEO, but the leaders across the company. If you select them so carefully that they then hire the right people, it’s a nice self-fulfilling prophecy.”
Pitfalls: Obviously, investing in people requires upfront investment that hits profitability in the short-term for pay-off in the long-term. More importantly, it requires demanding and enforcing management and HR policies and practices that continue to foster the employer brand—all the way to the top of the company. Apple, and specifically Steve Jobs, learned this lesson the hard way. In his first term as CEO, Jobs was widely reported to have been a terrible manager who frequently undercut and demeaned employees. His now nearly legendary status as a business leader is due to the ways he learned and changed his style and his enforcement of standards of behavior throughout the company.
10. Do What Is Right. Just before the launch of Apple Music, Taylor Swift wrote an open letter to Apple, decrying the decision to not pay artists during Apple Music’s 3-month free trial period. She rightly pointed out that the policy was deeply harmful to smaller artists unable to make an income from touring. That very evening, Apple publicly announced that Swift’s letter made it re-think the decision and change their minds. This turned what could have been a huge brand blow amongst Apple’s core creative community into a public relations coup that helped promote Apple Music before it was even launched. Paying for music while giving it away free for 3 months was costly for Apple. However, the long-term gain of addressing this situation, fostering a dialogue with artists and showing that the company cared about creators big and small was a huge boon to the brand perception. Likewise, in 2014, a court asked Apple to unlock an iPhone belonging to the man who shot 14 people in San Bernardino. Apple declined to help the FBI stating that if the FBI could access this phone, they could eventually do it for many others. Consumers are increasingly concerned with data privacy, especially in light of recent exposures of the NSA and government surveillance. Apple chose to publicly defend the civil liberties of its customers. This continued effort to fight for strong encryption and protect customer data has built trust among its customers.
Pitfalls: While it’s not always easy to determine what “the right thing” is, for a company that cares about the long-term and not just quarterly revenues, there are no pitfalls. Period.