Creating Demand: The Secrets of Truly Magnetic Offers

Adrian Slywotzky

How do some companies generate runaway growth and extraordinary customer loyalty, even in a sluggish economy?

Adrian Slywotzky, an Oliver Wyman senior partner and bestselling author, examines the unpredictable dynamics of demand creation in his latest book, Demand: Creating What People Love Before They Know They Want It.

With engaging stories, Slywotzky pulls back the curtain on how demand creators wind up creating the killer offer: things customers can’t resist and competitors can’t copy. How do some companies seem to know what we want – even before we do? we all want video-on-demand now. But could we have even imagined it 10 years ago? Netflix founder Reed Hastings anticipated the future shift to on-demand streaming – even in 1998, when fewer than 7% of U.S. homes had broadband: “that’s why we named the company Netflix, and not DVDsBymail.com.” Demand “creators” always look to solve the next customer hassle – before we even recognize the hassle itself.

What makes us rave about some things, but rant about others, even when the underlying products are functionally the same? Magnetic products not only offer superior functionality, but also forge an emotional attachment that is hard to sever. they embed themselves so seamlessly into our lives that they become part of who we are. take the grocery chain Wegmans. More than just an incredibly functional supermarket – with an average of 60,000 items in stock – Wegmans has an emotional appeal that led 7,000 people (in 2010 alone!) to beg for a store in their area.

Here is an excerpt from an  interview of Slywotzky. To learn more about his firm, Oliver Wyman, and its services and resources, please click here.

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How do some companies seem to know what we want – even before we do?

We all want video-on-demand now. But could we have even imagined it 10 years ago? Netflix founder Reed Hastings anticipated the future shift to on-demand streaming – even in 1998, when fewer than 7% of U.S. homes had broadband: “that’s why we named the company Netflix, and not DVDsBymail.com.” 1 Demand “creators” always look to solve the next customer hassle – before we even recognize the hassle itself.

What makes us rave about some tHings, but rant about otHers, even wHen tHe underlying products are functionally tHe same?

Magnetic products not only offer superior functionality, but also forge an emotional attachment that is hard to sever. they embed themselves so seamlessly into our lives that they become part of who we are. take the grocery chain wegmans. more than just an incredibly functional supermarket – with an average of 60,000 items in stock – Wegmans has an emotional appeal that led 7,000 people (in 2010 alone!) to beg for a store in their area.

Can you actually create demand – or are you just getting lucky?

Smart companies recognize that we often can’t articulate what we really want, and that “creating” demand is often just a matter of recognizing untapped demand. Demand creators identify hassles that bedevil all of us – and instead of simply accepting them, they ask, “Do they have to be this way?” Reed Hastings founded Netflix after a personal frustration with a $40 late fee. By making the leap from the way things are to the way they should be, he unleashed demand… to the tune of $2 billion.

Why do most attempts to create demand fail?

Identifying hassles that could be solved is a start – but it’s not enough. Demand creators recognize that even great products have a very low chance of success, and they do everything they can to increase it. Toyota knew the Prius’ odds of success were less than 5%. yet instead of dropping the project, Toyota actively asked, “how can we change those odds?” the company even went so far as to create a new division for the project – and then successfully launched the Prius two months ahead of an already “impossible” schedule.

Does what happens behind the scenes actually matter for demand creators?

It’s easy to think that only the product itself matters, but what happens behind the scenes can shape both the end product and your experience using it. Take the market for e-readers. the Amazon Kindle provided instant, wireless access to the world’s biggest bookstore. the Sony reader – released 10 months before the Kindle – offered wired access to only 20,000 titles. the backstory makes all the difference: there really is no point to an e-reader that doesn’t have the books you want to read, when you want to read them!

So many great products never get purchased, while others fly off the shelves. What triggers us to buy something?

Most of us need a trigger to get from want to buy. For Zipcar, it’s density – and just a short walk to the car. For Nespresso, it’s taste and trial in a fancy boutique. For Netflix, it’s waiting one day for a movie to arrive instead of six. Smart companies recognize that each product has its own trigger – and that discovering these triggers is the key to creating demand.

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To read the complete interview, please click here.

Adrian Slywotzky, a senior partner at Oliver Wyman, has consulted to Fortune 500 companies from a broad cross-section of industries, working extensively at the CEO and senior executive level for major corporations on issues related to new business development and creating new areas of value growth. He has written several books on strategy and growth, including Value Migration, The Profit Zone, and The Upside.

 

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