If you asked most marketers whether they were audience-centric or customer-centric, they would probably pick the latter. We’ve been conditioned to put the customer first, so anything customer-centric has to be good for business, right?
Not necessarily so.
In fact, many of today’s most successful brands are moving away from customer centricity and toward audience centricity. Although the two approaches sound similar, they’re actually quite different.
The Difference Between Customer-Centricity and Audience-Centricity
Customer centricity is the old way of doing things. It’s when a company starts by developing a product it thinks you’ll buy, and then convinces you to buy it by tailoring marketing messaging to various customer segments. It feels like giving the customer what they want, but in reality, it’s giving the customer what the company thinks they want. This can be an effective business model some of the time, but it’s also an expensive model because it involves buying ads that may only reach a small percentage of actual buyers.
Audience centricity flips the business model by using consumer data to drive product development and messaging. Amazon, Netflix, Spotify and StitchFix are all audience-centric brands. They understand that their audience is their most valuable asset. For them, customer data isn’t a tool to help refine their marketing messaging — it’s the engine that runs their business.
What Audience Centricity Looks Like in Action
Let’s use Amazon as an example. Amazon basically has two audiences: developers (Amazon Web Services) and consumers (everything else). Amazon doesn’t develop new products based on what it thinks people want, it develops products around existing audience needs. If it sees a lot of people buying HDMI cables on the site, it may decide to create its own branded HDMI cable. The audience is already there, which greatly reduces its marketing and development costs as a result.
Spotify is another good example of an audience-centric company. Recognizing that it needed to create an audience quickly, Spotify initially offered its service for free. (It’s since moved to a freemium business model, although its basic service is still free.) This gave the company a vast amount of data-based insight into how its audience was engaging with the service. Spotify quickly capitalized on this data to create its recommendation engine, which recommended new songs to listeners based on what they — and music listeners similar to them — liked. Instead of focusing solely on building a product that people would buy, Spotify focused on building a relationship that people would value.
Of course, Amazon and Spotify have a vast reach, but the secret to their success isn’t simply the quantity of their audience — it’s the quality of their engagement with each individual member of that audience. Audience-centric companies have shifted away from customer segmentation in favor of recommendations. Amazon doesn’t segment its customers and send the same offer to everyone from a shared demographic. Instead it sends one offer (e.g., an email) with recommendations that are unique to each recipient. Spotify does the same thing. Instead of creating a different newsletter for classic rock fans, heavy metal fans, k-pop fans, etc., it sends out one newsletter populated with curated content based on the recipient’s unique interests.
From Customer Segments to Audience Signals
Successful companies don’t focus on customer segments. They look for audience signals, which in turn drive content or product recommendations and mid-funnel engagement:
Content recommendations allow marketers to personalize their marketing at scale and improve upsell/cross-sell efforts.
Mid-funnel engagement moves beyond top-of-funnel customer acquisition to focus marketing efforts on creating the next-best experience that will drive better customer engagement.
Audiences have become so important to businesses that, in one sense, they have become the product. When Amazon wanted to get into the gaming business, it didn’t buy a game developer, it bought a gaming audience (Twitch). Marketers should take note: audiences are no longer the target; they’re the starting point for everything that comes after.
To find out how you can turn audience data into actionable insight, tune into part two of this series, “The Adam Sandler Effect: There’s Actually Some Very Good Data Behind Those Very Bad Movies.”
About the Author
Aaron Raddon is the co-founder and CTO of Lytics and has spent his entire career working to transform data into decisions. Aaron co-founded Lytics with James McDermott in 2012 after discovering a real need in the marketplace for bridging the gap between data and action.