Harvard Business School professor Ted Levitt was famous for his quote that “people don’t want to buy a quarter-inch drill. They want a quarter-inch hole.”
The quote, it seems, it the simplest way to describe what Levitt called “marketing myopia,” an obsession with product at the expense of customers.
Though flawed in part of his theory (fellow HBS professor Clayton Christensen’s “The Innovator’s Dilemma” explains why), there’s significant merit to the idea that a long-term focus on a customer’s desired outcome is much better for business.
(As an aside: It also leads to much better marketing. Apple’s iPod launch (“1,000 songs in your pocket”) is perhaps the purest expression of Levitt’s manifesto.)
Recently, we’ve come to realize Levitt’s myopia stance is instructive for DTC’s focus on subscription.
Take, for example, his definition for corporate purpose: “Rather than merely making money, it is to create and keep a customer.”
This line of thinking has traditionally applied to what product marketing and product development looks like, but not always how it happens.
Arguably, the how is equally important.
Consider the promise of higher loyalty that DTC offered.
Much of DTC is an obsession with LTV metrics, loyalty, and the ability to “lock in” a customer. Subscription has become the way to deliver that.
Often, though, founders tell us that subscription is more beneficial to their business than to their customers.
Setting aside judgment, you might ask yourself what Levitt might think about all this.
We think he might argue that a relentless focus on compressing LTV is the very short-term myopia he railed against 60 years ago. For that level of focus ignores how customers go about solving their problems and finding their desired outcomes.
As we mentioned last week, that takes time.
Awareness > trial > repeat > loyalty.
That’s the way it goes with the CPG funnel; there are no shortcuts or steps to skip. And that’s the way our efforts to “keep a customer” should be oriented.
While we all adjust to a world in which acquisition gets harder, it’s perhaps worth applying Levitt’s lens to our “best practices” today. If we find that holds, perhaps DTC isn’t so much a subscription channel as it is an alternative channel through which consumers can discover drill bits that cut cleaner holes—subscription or not.