In the scenario described below, each paragraph ends with a listing of some of the concepts, issues and technologies that are involved in making the scenario work.
On the morning of October 23rd, 2004, John A. Consumer woke to the sound and smell of his automatic coffee maker. After he stumbled into the kitchen, John poured himself a cup of coffee, thinking to himself that some of the oldest conveniences were still the best. Of course, this was no 1990s Mr. Coffee machine; this machine had a large canister of gourmet coffee beans on top, a built-in grinder and was connected to the filtered water supply. It automatically discarded its coffee grounds into the sink disposal. It was, in short, the perfect appliance — effortless, unobtrusive and completely reliable.
As he opened the fridge, John marveled anew at how it was always well stocked and had just about everything he could want. The thrice-weekly delivery from the ShopLink service had replenished his fridge and pantry with fresh bread, milk, produce and other items the previous day. They had picked up his laundry and delivered his shirts from the previous trip. They had also left some new firewood by the fireplace, and returned his repaired (and polished) shoes.
It had been two years since John had been inside a supermarket; at first, he thought he would miss it (squeezing the tomatoes and all that). But now he never gave it a second thought. Besides, he had never been very good at picking the sweetest honeydew melons or cantaloupes. Now, they were just right every time. And he was actually paying less for his groceries now than he had before. Guess those huge, well-lit, air-conditioned supermarkets cost a lot to run.
In the beginning, John spent about twenty minutes a week placing his online order. As he got more comfortable, though, and as his buying patterns became more discernable to the computer at ShopLink, he found that the shopping list offered to him when he first logged on was actually more appealing than what he would haie created himself. Gradually, John had found himself making fewer and fewer changes to the list. About a year after he started using the service, John decided to let it go solo. Now he looked forward to the deliveries, knowing that each one always contained two or three “surprises” that were guaranteed to delight him (if not, he would get his money back, of course). John found that, as a result, he had tried new foods that he never would have thought to try earlier, and liked most of them a lot. Sometimes, it was an exotic fruit, or an usual kind of cheese, even some new imported beer. Once a month, they even replenished his coffee machine with some great new beans, leaving a little pamphlet about it next to the machine. They did this with all of their “Just for You” selections.
Best of all were the fully prepared meals. John had invited a few friends to come to dinner that night, and he had asked for a meal for six. As he looked at the neatly packed containers and the two bottles of Italian wine, he saw the printed menu that had been sent with the meal. “Rustic Tuscany,” it said across the top. John was tempted to open a couple of boxes and take a peek (and perhaps a taste), but he resisted. The price was great —just a little more than it would have cost him just to buy the ingredients. He could have tried to make the meal himself, but the cost of his time (very high) and the value of his cooking expertise (very low) made that an unappetizing proposition.
John took his croissant and coffee into his study, and turned on his computer. As was his habit, he started by checking his email. There was an email from Paul Frederick & Co., informing him that they had selected four new shirts they thought he would like. John looked at the high- resolution images on his screen and liked what he saw. If he did nothing, the shirts would show up in his SmartBox in a couple of days, monogrammed and in his size, of course. The next email was from Jaguar. John’s current Jag was coming off lease in a couple of months. The email offered him a great lease rate on the hot new S-class that he knew had a long waiting list. But that was only for first time buyers. if he wanted the car, they would bring it to his house and take away the old one on the day the lease ended. John was tempted to say “Yes!” on the spot, but reluctantly decided he should think it over a bit. Not that he expected to change his mind…
The third email was from Scott Burka over at Delbe Home Services. This was John’s favorite service of all. John had never been much of a handyman or a gardener, though he liked living in a big house and enjoyed looking at a well-tended garden as much as anyone else. For a ridiculously low $125 a year, Delbe completely took over everything to do with the house and the yard. When he had signed up, Scott had done a complete inspection of the house, noting down all the makes, models and condition of his appliances, heating and air conditioning systems, the condition of his carpets, hardwood floors, roof, outside and inside paint and a dozen other things John did not even know you were supposed to worry about. Delbe then set up a web page with all of this information, and updated it every time any work was done on the house. John rarely felt the need to go to this other “home page;” still, he had it in his bookmarks, and it was sure nice to know that it was there. Once every couple of months, using his own key, Scott came through and did a quick inspection. He sent service people to the house to take care of problems before John even knew he had them. Best of all, he didn’t have to wait around for them to show up. John got a monthly email from Scott updating him on what had been done and what was upcoming, and the money was paid automatically. The rates were as good or better than those John would have paid had he dealt directly with the service contractors. In return for steady business, Scott had negotiated lower rates with them. If there was ever a problem, Scott handled it with the service technicians Scott had also arranged for a cleaning service, and was now looking into offering a bundled cleaning/home maintenance/insurance package that would be like an HMO for the home. John thought that was a great idea and fully expected to sign up when the service was offered. John had raved so often about Delbe’s comprehensive services that literally a dozen of his friends were now customers of Delbe’s, or were on a waiting list.
The next message was from John’s Personal Financial Manager, with a full report on the previous month’s activities in his account. John was starting to feel like one of those mega-rich athletes whose financial affairs are completely handled by a management company, and who simply receive a monthly “allowance” for incidental expenses—except there was no chance that John’s money could get sunk into some fly-by-night scam. John was not mega-rich, by any means, though each monthly email provided a gratifying report on his steady progress toward that goal. For a guy who had never quite mastered the art of balancing his checkbook, it was certainly comforting for John to know that all his bills were checked and paid on time. The only time John needed to think about them was when there was something unusual, in which case the item was automatically flagged for his attention. All of his spending was automatically categorized and entered into his Quicken register, and his monthly reports would on occasion point out that he had exceeded his budget in some category or another. Even his tax return was prepared and filed automatically. John’s savings were automatically routed into appropriate investments by the “Financial Engines Investment Advisor,” a very popular computerized service developed by a Stanford professor who was an economics Nobel laureate. As with every one of John’s automated services, he had been assigned a personal advisor who could answer all his questions. As he grew familiar with the services, John found himself calling less frequently, though his all advisors always sent his personalized greetings on his birthday and other occasions.
The last email was from his car. When he bought the car, John knew that it was equipped with a GPS device as well as the ability to send data and email wirelessly, but didn’t think much of it. Not anymore. The car had saved him from some sticky situations more than once. John still found it hard to get used to these emails, though. The emails came infrequently, only when the car had something on its mind. Today, it had several things to convey. First, it reminded him (somewhat plaintively, he thought) that his lease was about to expire, and what it would cost him to buy the car if he wanted to. Second, it reminded him that it was due for an oil change, and that it had already scheduled several possible times with the dealership. John clicked next to the one that worked for him. Finally, the car pointed out that it needed new tires within the next 1000 miles, and offered a direct link to Costco with the recommended tire size information already incorporated. With a few clicks, John purchased the tires and set up an installation time to coincide with the oil change.
The holiday season was approaching and John was starting to feel a little tense about all the gifts he still had to buy. But he was trying out a new system that he thought would make life a little easier. A nifty new web site (MsManners.com) reminded him of upcoming occasions for giving gifts, and also suggested some alternative ideas for each one. John had gone through a somewhat lengthy “interview” process when he signed up, and his “agent” knew what he expected to spend on each individual and on a given occasion. It also knew which of the recipients were personal friends, relatives or professional contacts. So far, it had worked well; John had been able to send gifts with a single click, selecting from the offered choices and quickly personalizing a message for each. The company used John’s personal font to create “handwritten” messages.
With Christmas looming, John thought he would also try out “wishlist.com,” a universal gift registry that he had been subtly promoting to his nieces, nephews, siblings and others for several months. Wishlist.com was a universal registry; it allowed all people, not just those getting married, to create their own equivalent of a bridal registry. Sure enough, John found that about a dozen of his friends and relatives had in fact signed up. John quickly scanned each person’s wish list; he smiled to himself at some of the entries (“Yeah, sure, George, someone’s going to buy you a 96” HDTV,” he thought to himself), but was able to quickly select items that were in his budget range. On two occasions, he decided to split the cost of an especially large gift with several of his relatives.
John glanced up at the clock. It was only 8:30; he still had an hour before he had to make that video conference call to Bucharest. Glancing out the window, John saw a delivery truck pulling away from his driveway — an increasingly familiar sight nowadays. This particular truck was marked “FedEx,” but John knew that all the major delivery companies now used each other’s trucks to deliver packages, so that the FedEx truck contained many packages that had originated with UPS, the US Postal Service, AirBorne or a variety of other smaller players. It was like completing a long distance phone call; the receiver did not have to be a subscriber of the same company that the sender used.
Putting on his slippers, John went into the garage. A small door in one of the side walls opened directly into his SmartBox, which sat unobtrusively next to his garage; it was even painted a matching color. Punching in his code, he opened the door and entered the small shed. The light went on, and he could see that he had received several packages the previous day, left there by delivery people using a code to enter the SmartBox from the outside. One was from Amazon.com. John had joined their “Must Read” club, though he now downloaded most of his books electronically into his eBook. The difference between this and the old “Book of the Month” club was that the book was specifically chosen for him, rather than the same book going out to everyone. In the one year he had been a member, John had yet to get a book that he hadn’t liked a great deal. He didn’t know how they did it, but it sure worked. John also saw a package from drugstore.com, containing some toiletries (they always knew when his blades and shaving cream were running low), a couple of prescription refills (he never had to remember to fill those anymore) and a 60-day supply of a customized multivitamin his doctor had emailed in.
As John shaved and showered, he mused about how his life had become so much less crazed and stressful in the last few years. Gone were the weekly grocery shopping trips, the long lines, handling the products a dozen times before he used then, the midnight milk runs. No more marathon bill paying sessions on the last day of the month; John hadn’t written a check in years. No more worrying about balancing the checkbook. No more need to keep track of when the car needed an oil change or new tires (the car “called in” its own service needs, and an email showed up on his computer about when he could bring it in, or have it picked up from the office). Most of all, no more nagging worries about the house; “Do I need to change the air conditioning filter? It is time to service the furnace? Do the gutters need cleaning? Does the lawn need fertilizing? Is that insect damage in the shrubs?” Good old Scott was there to take care of all that.
Thinking back, John found it hard to imagine what life had been like in 1999; it seemed eons ago, a primitive, harried time. Now he had plenty of time to work out, socialize with his friends, even do volunteer work. And yet, he was working as much or more than before, making a lot more money and enjoying it more as well…
Just then, the alarm went off, and John was jolted back into his real reality. He was back in 1999, and as he lay in bed thinking about his day, John groaned to himself. The house was a mess, he needed, to do a huge grocery shopping trip, the lawn was too long, it was the last day of the month, he had no clean shirts, and several friends were supposed to come to dinner that evening. How was he going to finish that project at work? Shuddering, John pulled the sheet back over his face and shut his eyes tight, hoping to get back to that beautiful dream.
In addition to the issues discussed in the accompanying paper, this scenario also illustrates the following:
- Scope-based one-stop-shop service provision: We will see the emergence of new kinds of intermediaries, who may be described as customer-focused service integrators. These companies will produce very few products or services themselves; their function will be to own and manage the customer relationship, and serve as the value-adding “hub” around which customers and service providers can interact.
- Responsiveness to special demands as well as routine replenishment: Companies cannot simply optimize for routine replenishment; their systems must be able to effectively respond to special demands.
- Producer economies of scale and the industrialization of service: The automation of consumption can only work if there is net value added. This would happen through the realization of efficiencies by providers that can leverage scale and specialized technologies to deliver higher quality service at lower cost than the alternatives available to the customer.
- Outsourcing of memory functions: Customers need to be relieved of the mental costs of monitoring and scheduling.
- Optimal matching of products and customers: Customers often make sub-optimal decisions in selecting products because they lack the time and / or information to select the right alternative. Automated systems should be able to outperform customers in this regard.
- Mass personalization: Mass customization without personalization is sterile and emotionally uninvolving. Marketers need to be able to offer true personalization.
Everything that is described here is technologically feasible today, and the infrastructure to create and deliver the services exists today or is being developed. Many of the companies mentioned already exist (ShopLink, Paul Frederick, Financial Engines, Delbe, Wishlist.com, SmartBox).
The real challenge is customer behavior: how to get consumers to adopt this way of doing business. Besides the obvious benefits to marketers and consumers, there are also benefits to society in the form of greatly reduced marketing noise and wasted efforts. As Don Peppers has said, today’s marketing has simply evolved into targeted harassment.
Clearly, the scenario described here applies to certain segments and not to the market as a whole. However, we do believe it will be quite broad-based, and will encompass middle-income consumers as well as high-income consumers. The cost savings that are inherent in this mode of operating (the reduction of marketing costs, greatly reduced inventory levels and expensive retail real estate, better matching of supply and demand) mean that many of these conveniences can be provided at little or no premium compared to traditional ways; in many cases, they will cost less.
Marketing needs to concern itself with larger quality of life issues rather than the usual trivialities of cents-off coupons and advertising tag-lines. The automation of consumption represents one important way for marketing to make a greater positive impact on peoples’ lives.