Alex Goldfayn’s new book is called Evangelist Marketing: What Apple Amazon and Netflix Understand About Their Customers (That Your Company Probably Doesn’t). He is CEO of the Evangelist Marketing Institute, a marketing consultancy with clients that include T-Mobile, TiVo and Logitech.
Microsoft’s stock price today is approximately half of what it was in late 1999. While there are many reasons for the company’s stock slip, two problems stand out: mindset and marketing.
The latter is caused by the former. In Microsoft’s case, the two strands are intertwined and linked together like corporate DNA.
Mindset
In February 2005, when Microsoft was still universally acknowledged as the leading technology company on the planet, CEO Steve Ballmer addressed the current state of the company in a speech.
“And so in a sense, the lifeblood of our business is that R & D spend. There’s nothing that flows through a pipe or down a wire or anything else; we have to continuously create new innovation that lets people do something they didn’t think they could do the day before so they get the newest version of a Windows or an Office or a new program, new application that we put in place. And so in a sense, you could say all we have to live with is our innovation.”
What he’s saying is the lifeblood of Microsoft’s business is engineering, product development and feature development. What he doesn’t mention is marketing, customers, branding or life-improvement.
If corporate mindset was a continuum, with engineering on one side and marketing on the other, here is where most technology companies, including Microsoft, would fall.
The ideal range, as you can see, falls to the middle-right of the scale. Apple is there, and so is Amazon. Microsoft is to the far-left of that desired range.
Microsoft requires a shift in mindset, toward marketing. Of course, it must remain a top engineering firm, but to compel consumers, to create passion and energy among them, it must shift its focus from purely the “R&D spend” toward aggressive marketing, by demonstrating how its products improve people’s lives.
This will be very difficult for a company whose internal culture is so deeply rooted in engineering. But it is absolutely essential if Microsoft wants to get off of the stock price plateau it has occupied for the last decade.
Share Price
Speaking of stock price, I advise my clients — from publicly traded companies to startups — that share price in consumer electronics is a direct function of consumer energy. The more energy in the marketplace for your brand, the more evangelists you develop, and the more sales, revenue and profit you’ll enjoy.
See Apple, the most effective marketer on the planet, which is now worth more than Microsoft and Google combined, based on market capitalization. Apple’s stock price has grown twenty-fold in the same time period that Microsoft’s has halved. The difference is mindset, marketing, and the resulting consumer energy each company creates.
See Netflix, whose share price soared on the strength of consumer passion, that is, until it angered customers last year with a series of harmful decisions. Passion plummeted, customers left, and the stock lost two-thirds of its value in three months.
A Marketing Plan for Microsoft
The mindset shift away from engineering is difficult, but good marketing is not. Here is a six-step marketing plan Microsoft can implement to dramatically improve its effectiveness.
- Focus on strengths: The company’s strengths, as I see them, are software, productivity and the Xbox. This is where Microsoft can reasonably claim that it is superior to the competition. And this is where its marketing effort should focus.
- Adopt strengths: Everything you need to know about Microsoft’s problems with identifying its strengths is summarized in the following sentence: Microsoft Office is still not available for Android and iOS devices, although rumors have surfaced that its launch is imminent. Software is a strength, but software for computers became uninteresting five years ago. Microsoft should be adopting its excellent productivity software — as well as its tremendous gaming platform — for phones, tablets and the cloud.
- Abandon weaknesses: Smartphones are not Microsoft’s strength. In fact, Microsoft phone market share fell 20% in the fourth quarter to 4.7%. Nokia or not, there is little Microsoft can do in smartphones to gain on Android’s and Apple’s devices.
Further, while Microsoft’s Bing search engine has resonated somewhat with Internet users, it is not a strength. Microsoft’s U.S. search engine share in 2011 was up just 0.1% to 15.2%. Google’s was 61%. This war is lost. It’s time for Microsoft to abandon and redirect its marketing budget.
- Focus marketing on consumers: Consumers, not businesses, create market passion. Corporate customers are critical, but likely saturated with Microsoft products long ago. Rather, Microsoft’s marketing should focus on consumers. These are the people who can become evangelists, drive market energy, and ultimately affect the share price.
- Gather powerful, qualitative customer insights: If you’re going to market to consumers, you need to understand what consumers think, say and want in the first place. You should know precisely how they use your products — and your competitors’ products. To gather these insights, interview customers qualitatively for 20 to 30 minutes each. Internet surveys and focus groups won’t uncover the kind of compelling language and messaging that resonates with consumers. There is no replacement for one-on-one customer conversations.
- Aggressively communicate: Once Microsoft understands what to say, it must continue repeating its message relentlessly, with a focus on consumer life improvement. Remember when Apple mercilessly hammered Microsoft with its “I’m a Mac” ads? Microsoft requires the same kind of frequency and focus.
Microsoft has the money for these improvements, but its communication has likely been sporadic due to everything I discuss above: Microsoft’s mindset is on engineering, not marketing; the company’s products are too diverse; and Microsoft doesn’t know what its customers find compelling.
In my experience, a company cannot be truly effective unless it markets life-improving products. But in its corporate DNA, Microsoft sees itself as a product engineering organization. The company must shift this mindset — must alter its DNA — in order to unleash the kind of powerful marketing that will energize its customer base, increase consumer passion and drive its share price up.
Image courtesy of iStockphoto, JasonDoiy
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