The maxim “How they sell is how they win,” which Hubspot co-founder and CEO Brian Halligan repeated during his speech at the company’s 2019 corporate convention, portrays the state of the art of inbound marketing, which is at the same time a historical, cultural, and economic phenomenon (read about the highlights of Halligan’s keynote here).
Inbound marketing has been noted since 2005 when the phrase was coined by Halligan, but it wasn’t until 2012 when it became a true buzzword and widely known among business professionals.
Exceptional cases of Inbound Marketing
According to the patriarch of marketing, Peter F. Drucker, the fundamental traits of an Inbound mentality have existed since the nineteenth century. Recounting the professional adventures of Gillette, Cyrus McCormick, Sears and Roebuck, all pioneers of a rogue entrepreneurship, means telling the story of how an intuition as old as man had become, at the dawn of the era of mass consumption, a market reality full of promise. Regarding inbound marketing, Peter Drucker said that it was a current and absolutely effective idea, but not a new one: identifying leads, staying in touch by providing them with meaningful content and interesting conversations and then converting them into customers according to their habits was a strategy that had been implemented for a few centuries, obviously in very different forms and using very different tools.
Mr. Gillette’s razor blades
King Gillette didn’t invent a “safe razor.” Dozens of razors were patented in the 19th century. At the time, Gillette’s was no better than the others, and it was much more expensive to produce. The real issue, however, was another: Gillette wasn’t interested in simply selling his razors. His strategy was much more forward-looking. The idea itself was quite simple and even more ingenious: the razor was designed so that it could only be used with patented blades owned by Gillette, who paid less than 1 cent each for the production, at factory price. Gillette sold razor blades for 5 cents, and since they could be used six or seven times, customers could spend much less (10 times less, says Drucker) than an appointment with the barber. In this case, the pricing strategy was its competitive advantage.
Gillette had decided to focus on evaluating the purchase price of the customer experience, i.e. shaving, rather than just the product: in short, people were willing to pay – and the success of Gillette’s blades proves this widely – for what they actually bought, i.e. a shaving, and not for the mere physical object.
In Monetizing Outside the Box, the invention of the double-edged disposable razor is used as the founding case history of a business model in which the sale of the razor was below production costs while profits were derived from the recurring sale of blades. From this was born a business model, the “Razor-Razor Blade,” adopted by many companies that benefited (and many still benefit today) from its extraordinary innovative scope. Just over 100 years after King’s birth, the Gillette Safety Razor Company was sold in 2005 to Proctor & Gamble for $57 billion at a time when it was making an astronomical $2.5 billion in profit.
Mr. McCormick’s mechanical harvesters
Around the middle of the 19th century, Cyrus Hall McCormick, inventor of the mechanical harvester, was among the first to use some rudimentary but effective market research techniques to develop strategies that today we would call Inbound, with the aim of convincing consumers to buy their products in a way that, at the time, was radically new. In the 1840s, Cyrus McCormick was one of many Americans who, out of necessity, built their own harvesters. McCormick soon discovered, however, that the farmers he wanted to sell it to could not afford it. Although everyone knew that the harvester would allow them to recoup costs within two or three seasons, there was no bank that would lend farmers the money to buy one. As a result, McCormickbegan to offer the possibility of payment in installments, to be paid in three years.
This, like Gillette’s, was a pricing strategy that proved to be a winner. Once again, technological innovation, had to be accompanied by an equally powerful innovation in marketing.
The mail order catalog of Sears, Roebuck & Company
Around the same time, Richard W. Sears and Alvah Roebuck published the first mail order catalog in history. The catalog, first published in 1888, started with 80 pages and soon increased to over 300. The mail order catalog became a global sales tool capable of capturing the attention of millions of potential customers.
In order to communicate and sell his products, Sears had an infallible tactic: by listening attentively to his customers, he captured their anxieties and worries, intercepted their desires, and understood their urgencies. Then he chose advertising that spoke their language, the language of the small towns of the Midwest, of farmers, of large families. At that point, he offered refund guarantees and flexible terms for non-payment. He also organized a return service.
If people couldn’t find what they wanted in the catalogue, Sears would think of alternatives and provide them within a reasonable time. If customers had difficulty filling out the order form, they were encouraged to simply list the items they wanted. At the Chicago headquarters, Sears hired teams of writers to respond by letter to customers, especially those living in the most remote corners of the United States: maintaining correspondence – the relationship – was a matter of utmost importance.
In short, Sears provided efficient distribution, the convenience of home delivery, and fast and uncomplicated shipping, accompanied by prompt focus on the consumer.
Drucker: the origins of the Inbound philosophy
In these success stories, three concepts emerge, which are both the foundation of Drucker’s work and the cornerstones of marketing as we know it today and, in particular, of the Inbound philosophy.
1. Customer first
As Peter Drucker said in the 1974 Management: Tasks, Responsibilities, Practices, there will always be the need to sell. The purpose of marketing is to make sales superfluous by knowing and understanding the customer so well that the product and service sells themselves.
In other words: only by investing in the customer, listening to him, trying to understand his behavior, can you discover who he is, what he does, how he buys, how he uses what he buys, what he expects, what he really appreciates.
2. Marketing innovation + technology innovation
Drucker uses the case studies of King Gillette, Cyrus McCormick, Richard Sears and Alvah Roebuck to articulate one of his most fascinating theories, one that clarifies and redefines the scope of technology innovations by observing them in relation to the evolution of marketing and framing them in a broader cultural context: technology is generally unproductive if it is not supported by marketing.
3. The importance of market research
Drucker has always stressed the value of market research as an exceptional tool with which to identify, quantify, and value the interests and orientations of customers. Since the 1950s, in explaining his theories on the essence of marketing, Drucker has been talking about “customer orientation” and “market segmentation” (The Marketing Concept).
On the road to Inbound
Increased product, potential product
In Marketing Success Through Differentiation – of Anything, Theodore Levitt, an emeritus professor at Harvard Business School in Boston, pointed out that, at the time of purchase, customers rarely buy just one product. Instead, they buy a whole package of values, both real and perceived. Companies don’t compete on the basis of what they produce, but rather on “what they add in the form of packaging, services, advertising, customer advice, financing, delivery agreements, storage, and many other things that people, perhaps unknowingly, appreciate.” It is the “increased product“: those things that contribute to how it is perceived, the values that correspond to how the potential customer expects to be satisfied. Levitt explained that the generic item is not itself the product; it is simply the minimum necessary to give the producer the opportunity to participate. It is through this process that you achieve results by getting and keeping customers.
People attribute value to a product in proportion to its perceived ability to help solve their problems or meet their needs. Everything else is derived: the product is, therefore, the total package of benefits that the customer receives when purchasing (Raymond Corey, Key Options in Market Selection and Product Planning, “Harvard Business Review”, 1975).
To the increased product, typical of a mature market and of relatively experienced or sophisticated customers, Levitt connects the potential product, a sort of projection through which to fulfill unexpressed desires. This forms the perspective of what should be offered to a specific customer to intrigue him, convince him, gain his trust and loyalty (economic conditions, business strategies, competitive conditions, etc.). The way that a company manages its marketing, analyzing the present and creatively formulating educated guesses about the future, thus becomes the most powerful form of differentiation.
Another step forward in forming inbound marketing was taken in the early 1990s by Regis McKenna, a long-time media strategist for Apple. McKenna formulated the main assumption of relational marketing (Relationship Marketing: Successful Strategies for the Age of the Customer, Perseus Publishing): companies need to form friendly, even empathetic relationships with customers. Rather than a monolog, companies need an open dialog, a conversation, with customers. He also coined the slogan “Marketing is everything“: organizations needed to focus on customer satisfaction and loyalty and to create lasting relationships. Brands would move in the direction of relationship marketing to face a changing world. The concept, by the way, doesn’t hint at aging if in a Forbes article a few years ago, Jay Deutsch, CEO of BDA (one of the world’s longest-running merchandise agencies), says:
“I view relationship marketing as a brand’s ability to create an emotional connection with the consumer.”
The keyword here is “emotion.” The relationship with consumers can and must be updated to include the dimension of emotional investment.
Before his “permission marketing” Seth Godin, one of the most popular contemporary marketing gurus, dwells on the approach that for almost a century had characterized how companies communicate with consumers: Interruption Marketing. The interruption was typical of an advertisement to which individuals did not pay attention voluntarily, but which was imposed, in an aggressive way, in the situations of everyday life, to induce consumers to stop what they are doing and pay attention.
In the age of digital transformation, the customer is not so easily interrupted. Instead, they can choose what to view and whether to respond to, participate in, or even ignore advertising or other forms of interruption. Godin defines Permission marketing as the privilege -not a right – of reaching one’s target audience with appropriate, personal, and relevant messages. Once again, it’s about a company’s ability to attract and maintain the attention of potential customers who are increasingly aware, attentive, and selective (for more information on Permission marketing, see our recent article).
Hubspot: how they sell is how they win. And so, we come to Inbound Marketing as Hubspot defines it: a corporate methodology that creates connections based on consumers’ interests, producing valuable content and tailor-made experiences for them. Hubspot places inbound marketing within a wider movement, in which business logic changes, often in a radical way, reorganizing around a simple idea: inventing new sales models based on a customer’s actual experiences of a product and how they use it, to invest in relationships in the most respectful way possible, and to intervene promptly, throughout the customer journey, to solve difficulties and misunderstandings (frictions).