surviving the future: disruptive innovation in the age of inbound
DESCRIPTION
May you live in interesting times: We live in one of the most interesting periods in the history of commerce. Large, established incumbents are being disrupted by fast moving attackers using new technologies and methodologies. In this talk, I discussed how inbound marketing can not only be used by attackers to disrupt established competitors, but how inbound marketing serves as an "extendable core" that can insulate larger, established business FROM disruption by attackers.TRANSCRIPT
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Surviving the FutureDisruptive Innovation in the Age of INBOUND
Sam Mallikarjunan
Head of Marketing & Growth, HubSpot Labs
Sam @Mallikarjunan
Head of Marketing & Growth
@HubSpot Labs
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But first, let me take a selfie.
Everyone smile and wave!
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(Don’t lie)
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A disruptive innovation is an innovation that helps create a new market and value network, and eventually disrupts an existing market and value network.
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Disruptor Disruptee
Personal computers Mainframe and mini computers
Mini mills Integrated steel mills
Cellular phones Fixed line telephony
Community colleges Four-year colleges
Discount retailers Full-service department stores
Retail medical clinics Traditional doctor’s offices
Some examples of disruptive innovation include:
Examples of Disruptive Innovations
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Not a disruptive innovation
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A disruptive innovation
Go try Uber. Use code 9Yf3E to get $30 to use
(and I’ll donate $30 to charity: water)
We live in the one of the most interesting periods in the history of commerce.
“May you live in interesting times.”
We are in a mass extinction of businesses.
We live in an era of big bang disruptive innovation.
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Traditional Adoption
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Big Bang Disruption
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The Kodak Moment Went Bankrupt
Kodak Went Bankrupt
Incumbents no longer have such daunting advantages.
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Spent 188M in 6 months launching their site (2000)
Technological Barriers to Entry Have Lowered
Lower technological barriers to entry gave birth to
“We don’t make money when we sell things. We make money when we help customers make purchase decisions.” – Jeff Bezos
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Where to go to find products.
Where to go to find information.
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“Inbound marketing is a business model innovation that capitalizes on the fact that it’s more economically efficient to create an experience customers love than it is to interrupt someone else’s.
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Inbound marketing leads is more efficient per dollar.
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…because inbound marketing creates
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Inbound marketing is inherently customer centric
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Customer centricity creates competitive leverage
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Inbound marketers understand customersNarrative Buyer Personas
Uses psychographic dimensions to create experiences that attract and influence
Algorithmic Buyer Personas
Uses automated numeric correlations to predict behavioral responses
What kinds of customers do you want?
Service Demanders
Revenue Reversers
Promotion Maximizers
Spending Limiters*
What kinds of customers don’t you want?
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“I spend $W to acquire customer of persona X from
source Y, and they spend an average of $Z with me
over their lifetime.”
Customer Centric Economics Model
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Customer centricity creates
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Time to Payback
Diamonds may be forever, but the way they’re sold isn’t.
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“Our customers want to try the jewelry on before they buy it.”
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Imagine a world where eCommerce delivers in 30 minutes or less.
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Imagine a world where every home has a 3D Printer.
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Not possible now doesn’t mean
Anytime you can say “I’m safe because my customer needs…” you’ve identified a job-to-be-done.
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Inbound marketing works best when your customer needs education, help making decisions, or to feel that they’re part of a community.
No one wants a ¼ inch drill bit.
They want a ¼ inch hole.
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The company that bestsolves for the customer
wins.
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Disruptors are coming for you.
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Access to capital is no longer the innovation barrier it once was.
Innovation is inefficient.This (sometimes)
gives fast followers an advantage.
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Your extendable core is the job you do
for customers that a competitor
couldn’t replicate without adopting the
same cost-structure.
An Extendable Core Insulates You From Disruption
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Inbound marketing creates an extendable core that insulates you from disruption.
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Revenue: $148,919.75/minuteNet Loss: $126M (2014Q2)Valuation: 112X Earnings
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60% of ecommerce marketers don’t know their abandoned cart rate
That’s not even disruption. That’s just bad fundamentals.
You can’t improve what you can’t measure.
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Inbound marketing is highly measurable.
More Measurable = More Leverage
C = # of new customers, D = # of downloads, V = Average LTV
Yes. I downloaded their eBook.Yes. They helped me make a decision.Yes. I bought from them.
And yes. She said yes.
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Inbound has created the ability to better compete in buying phases previously
inaccessible to businesses.
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Buy and read “The Innovator’s Dilemma”
Buy and read “The Lean Startup”
Take your best customer out to dinner (or hire
them)
Measure everything
Model your business’s leverage
Your Homework
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THANK YOU!Download these slides + free
bonus content & Ask Me Anythingat www.inbound.org/sam
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* Special Bonus Content
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“I’m spending a bunch of money on
marketing, and I’m making more money
than I’m spending back.”
The Old Economics Model
Expense Yearly Amount
PPC $500,000
SEO Firm $60,000
Content Writing $120,000
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“I’m spending $X money on marketing, and
I’m making $Y in sales per channel.”
The New(er) Economics Model
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Starbucks has an AOV of ~$6*
Real world Example:How Much Would You Spend? *
*Source: KissMetrics
Knowledge is power - and the balance of power between companies and between consumers has shifted dramatically.
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Customer Centric Companies See Higher ROICompanies that saw ROI by company focus
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Customer LTV Is A Profitable FocusCompanies that saw ROI by LTV focus rating
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OH NO! He’s gonna make us do math!Don’t worry about the actual
formulas and numbers, these slides will be available at
www.bit.ly/RapNetSam
Yep. I’m not here because I was the cool kid in class.
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Inbound marketing channels cost less than any outbound marketing channel
Source: State of Inbound Marketing, HubSpot, 2012
Marketing $$$ Sales Revenue
We naturally operate using ratios
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Ratios help us determine leverage
Marketing $$$ Customer Revenue
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Solve For The Customer
Solve for LTV
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Word of Mouth?There’s a math for that.
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So easy, pretty, and simple to understand, ain’t it?
The Conventional LinearBuying Process
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A Grand Unified Theory of eCommerce
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A Grand Unified Theory of eCommerce
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A Grand Unified Theory of eCommerce
Price competition isn’t working anymore – there’s always someone willing to make less money than me.
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More marketers are adopting pre-transactional conversions
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Instead of interruptingexperiences people love…
Inbound Marketing is…
Inbound marketing focuses on creating
them.
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A Grand Unified Theory of eCommerce
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The marketing activities and tools to this point add up to the Cost Of Customer
Acquisition
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Now the focus shifts to increasing the customer’s
Life Time Value
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A Grand Unified Theory of eCommerce
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A Grand Unified Theory of eCommerce
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A Grand Unified Theory of eCommerce
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Everyone goes through this process