During medieval times, the value of any good or service produced by man was connected with the time it took to produce it. Thus, a carriage was worth more than a loaf of bread because the time it took to make the individual pieces of the carriage and to assemble them was much greater than the time it took to grow wheat, make flour, and bake bread.
The value equation was simple: VALUE = TIME
Since time is limited by nature, the value of man-made goods and services was also by its nature limited.
With the advent of the Industrial Revolution, automated processes were introduced, first powered by steam and then by electricity.
The old equation — “value=time” — was displaced for the first time. Now it was possible to produce large quantities of goods in an extremely short amount of time.
“Time” as parameter of the “value” formula, although present, became less important, as it was replaced by other factors such as “the perception of the value” that the buyer (who later became the “consumer”) assigned to the product.
By the end of the Second Industrial Revolution, “marketing” — manufactured desire — would institutionalize a series of techniques aimed at associating a product with a value that was independent of production time, which in turn, led to the birth of brands.
The value formula became: VALUE = TIME X BRAND EQUITY
The value of a car was determined not only by the time necessary for its production and assembly but also with the overhead consumers were willing to pay to buy a specific brand.
Thus brands became status symbols, created thanks to a series of targeted operations such as participation in racing, patents of innovative solutions, durability records, advertising campaign, etc.
With the advent of the Digital Age, the “time” factor disappears completely from the equation of value.
The value of digital content does not depend in any way on the time it took to produce it.
An example: Fortnite is an online video game developed by Epic Games – an American game developer based near Raleigh, North Carolina – in 2017. It has been so successful that were more than 250 million subscribers as of March 2019. Consider that for a video game today you need a team of 20-50 professionals for two or three years of development, the initial investment ranges from 1 to 10 million dollars, the means that the development cost divided on the user base is 4 cents per player and tends to become almost zero as the number of players increases. And of course, there’s no limit to that number.
In a market where value is no longer connected with time, the number of “pieces” sold is theoretically infinite, and so are profits.
In brief value formula seems to rely only on the Brand: VALUE = BRAND EQUITY
The digital revolution.
Our society has so assimilated this “click-get-click-get” mechanism to apply it even to aspect in our life such us Trust, Friendship, Love, Confidence, Empathy etc.
If we look at the customer-relationship processes which large enterprises have put in place to serve their their clients, the impact of this trend is evident. Have you tried to contact the customer service of your telco provider? Or asked your utility company to explain your monthly energy bill?
In most cases, these companies try to divert you to using an app or communicating by email. This “social distancing” trend in the relationship between businesses and customers may be fast, cost efficient, and efficient, but it is a complete disaster for the customer relationship.
Loyalty, which is the elusive element all brands seek to establish, needs a genuine relationship and to create it we need time: it takes time to talk with people, it takes dedicated time to treat your customer as a human, a friend, and not just as another number.
By managing based on algorithms, often based on the law of averages, we end end up alienating our customers.
When it comes to our personal life each of us wants to be treated as a single individual. That’s customer intimacy.
Surprisingly, the equation for long-term value returns to one from previous centuries: VALUE = TIME
Smart companies invest in time spent discussing and caring about their customers’ needs, sacrificing some short time profits to creating a loyal customer.
The others, following a strategy relying on AI and digital media become replaceable, facing the constant threat of new, cheaper competitors.
Customer intimacy is not a technology. It is time spent building and nurturing your future profits.
Enrico Foglia is a consultant, marketer, and speaker, based in Rome, Italy. He is the managing director of Kotler Impact, Europe.