The Curve

The Curve

How Smart Companies Find High-Value Customers

Nicholas Lovell

Format
ePub
Price
$27.95
 
Additional Formats
  • ePub
  • ISBN 9781101631447
  • 256 Pages
  • Portfolio
  • Adult

Overview

It’s the ultimate business question of our time: How do real companies make money when customers expect (and often get) products for free?

There are millions of potential customers in the world. Most of them won’t pay anything for your product. But some will pay almost anything. The
challenge is to find the latter without wasting time and money on the former.

In The Curve, Nicholas Lovell weaves together stories from disparate industries to show how smart companies are solving this puzzle. From video games to pop music to model trains, the Internet helps businesses forge direct relationships with a vast global audience by building communities and offering bespoke products and experiences.

In many cases, businesses can win by sharing their product (or a version of their product) for free, allowing it to spread as widely as possible. Eventually, a huge number of freeloaders spread the word to the superfans who value that product the most. And a small number of superfans will love a product so much that they will spend substantial sums of money on it—given the chance. These high-value customers are enough to fuel a profitable business. For example:
  • Nine Inch Nails front man Trent Reznor gave away his album for free to find the 2,500 hardcore fans who wanted the $300 limited ultradeluxe edition.
  • Bigpoint, an independent game developer, released three adventure games to 130 million users—and made 80 percent of its $80 million revenue from just 23,000 users, who spent money to upgrade their game-playing arsenal.
  • King Arthur Flour shares useful recipes and tips on its Web site, enchanting a cult of devoted bakers, many of whom happily travel to its Vermont headquarters for expensive specialty baking classes.

This approach doesn’t apply just to digital products anymore. With the advent of 3D printing, customization of physical goods is easier and cheap, and companies can truly tailor their offerings to their customers. A doll company can personalize everything from hair color to eye shape, and automakers
and technicians can create laser-scanned replacement parts for classic cars. Although the potential for piracy will spread to industries that believed they were immune to such disruption, businesses have an opportunity to make money in this new paradigm by offering variety, complexity, and flexibility at little to no extra cost.

What Lovell calls the Curve is a ranking of your company’s potential customers from those most likely to least likely to pay for your product or service. It charts their interest against the amount they are prepared to spend—be it nothing at all or thousands of dollars. The curve itself separates your revenue
opportunity (willing big spenders, your superfans) on the left from your marketing opportunity (freeloaders, whose only acceptable price point is $0) on the right. The area under the curve is the total amount of money you might be able to get from your customers or fans.

Lovell offers a strategy to draw more people into your orbit than was possible when physical costs limited your ability to expand. The Curve heralds a new era of creativity and business freedom.

Praise

“Business is changing. The days of one size fits all are over. From pay-whatyou- want pricing to niche customization, customers have come to expect (and demand) more. The Curve welcomes us to this new reality and shows us how to take advantage of the exciting opportunities it offers.”
Jonah Berger, marketing professor at the Wharton School, and author of Contagious: Why Things Catch On

“Before reading this book, I was behind the curve. Now, I’m behind The Curve—as a supporter of Lovell’s provocative and important thesis that marketers have to think very differently today about the relationship between pricing and value.”
Robert B. Cialdini, author of Influence

“In The Curve Nicholas Lovell adds the desperately needed perspective of dynamic pricing to the ongoing shift into today’s world of mass-customized offerings and experience-seeking consumers. It will show you how to find markets within each individual and thereby fill demand all along the curve.”
B. Joseph Pine II, coauthor, The Experience Economy and Infinite Possibility
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