September 19, 2007

Amaze Your Friends!

Ask your friends these questions:

"Netflix offers about 35,000 film titles. What percent of those titles do you think get rented at least once a quarter?"

"Of the top 100,000 books sold on Amazon, what percent do you think they sell at least once a quarter?"

If your friends are into "conventional wisdom," they might answer 20%. After all, conventional wisdom says that 20% of any universe of products generates 80% of the sales.

But the true answer is 95% for Netflix and 98% for Amazon. That's right: 95% of the 35,000 different film titles at Netflix get rented at least once per quarter.

And that's because - thanks to online distribution and retail - we have moved from the world of scarcity into the world of abundance. We have moved from a small handful of hits dominating the market place to a modicum of hits followed by an extraordinary abundance of successful also-rans. Chris Anderson details the phenomenon in his interesting book, The Long Tail.

The title refers to the graph of sales in companies like Netflix, Amazon, Rhapsody, iTunes, and so many other companies that sell online. There's a big bump at the beginning of the graph representing "best sellers." But then there's a very long tail of smaller quantity sales of many, many, many more items.

Consider books: In 2004, more than 1.2 million different book titles were sold. Only 32 sold more than 500,000 copies, while 948,005 of them sold fewer than 100 copies. That's a very long tail!

Thanks to new technologies and online selling, it is now possible to cost-effectively print books and CD's on demand, thereby diminishing inventory costs. This means it's so much easier to bring new products to the market place and, therefore, products and product choices have become so much more abundant.

Is it overwhelming? Well, it can be. Anderson sums up what he calls "the secret to creating a thriving Long Tail business" with two imperatives: 1. Make everything available. 2. Help me find it.

It's that second imperative that is our challenge as marketers. Among other things...

I think we need to make site navigation as logical and easy-to-follow as possible. By now, that should be easy. But I am stunned every day as I get caught up in the frustration of navigating through some site that is more about the designers than the users.

We need to be creative in creating aggregators and filters that profile a customer's preferences so we can expeditiously direct them to the products and services that will interest them the most.

We need to find ways to get product choices into the market place through influencers, bloggers, sampling situations, etc.