Beyond the Sale
At some future point of time, the pendulum will shift from growth-at-all-costs to profits. It is profits that create the free cash that translates into valuation (or market cap). Capital will turn scarce and every company will need to shift focus to monetising their existing customer base. It is then that attention will become front and centre; without attention, there is no engagement and transaction, and without a sale, there is no revenue and profit.
We are not there yet, and probably not even close. Case in point: Zomato’s sales and valuation. As Vivek Kaul explained after Zomato’s listing and first results as a public company: “The revenue from operations of the company for the period April to June 2021 amounted to Rs 844 crore. The total expenditure was at Rs 1260 crore. To put it in another way, for every Rs 100 that Zomato earned, it spent Rs 149. If we look at the same metric for the period January to March 2021, the company had spent Rs 128 for every Rs 100 that it earned. For the period April 2020 to March 2021, the company had spent Rs 131 for every Rs 100 that it earned. Clearly, the expenditure that the company has incurred for every rupee that it earned during April to June 2021, was higher than it was in the past.” For now, discounts are the transaction drivers. But it will not always be so.
When the shift happens, the digital customer’s attention will matter. Attention is upstream of everything: engagement, monetisation, cross-sell and retention. It is attention, more than loyalty programs, which can unlock profits. And it is attention which holds the key to the B2C metaverse. It is the space beyond where brands can create amazing and memorable experiences. Two businesses can be selling the same product at the same price (or with the same discount) but can offer very different metaverse experiences. This is what will drive attention and eventually the sale and persistent relationship. There will be little to distinguish the brands in the physical world, but a lot that can differentiate their relationship with customers in the metaverse. As such, the metaverse will emerge as the new frontier for B2C innovation and building lasting customer relationships.
We have seen a glimpse of it on the websites and apps of businesses via personalised recommendations. But there is little else which differentiates a first-time user’s experience as compared to a loyal customer’s. This is where brands need to start thinking differently. In an acquisition-only growth-focused world, only the first transaction matters. In a retention-centric profits-focused world, repeat transactions matter more because they are the only way to create lasting surplus cashflows.
Every business needs to think digital. For B2C businesses, experience differentiation is critical – not just better than competition, but also for their Best Customers as compared to the Rest. The metaverse can be the enabler of digital experiences, the link between attention and a profits flywheel. Welcome to the µniverse (pronounced ‘mu-niverse’).