Mon Jun 26 2017
The music industry has had a rollercoaster ride in recent years. Tech struggles, disappearing markets and – with the advent of streaming and downloads – its business model going through a revolution.
So what can businesses in sectors like retail learn from it? We looked into it and spoke to Stuart Cain, Managing Director of The Ticket Factory and Eight Feet Tall (part of the NEC Group), to find out.
Every rose has its thorn, and for many years the internet was a painful one for the music biz.
It threatened the whole model, and the industry itself was slow to capitalise on its most important aspect – its potential as a new method of accepting payments. That’s a crucial lesson for small business innovation too.
“The record industry didn’t realise that the internet would replace CDs, and it’s only in the last few years it’s got its head around it,” says Stuart. “You need to be alive to what’s happening in the world, and embrace change.”
That means having an ear for how your customers are experiencing your product or market. There’s a good chance there’ll be a strong digital hook. That might mean you need to tie together several channels, making sure customers have the same, great experience no matter what device they’re using, what channel they’re on or how many different channels and devices they use in one buying journey.
“Digital and mobile channels have changed the way people discover music and buy tickets,” says Stuart. “Small businesses need to put the opportunity to buy in the hands of consumers whenever and wherever they want.”
Let’s say you’ve got a high street store and you’re seeing decline in footfall but a rise in online traffic to your website. How can you use one to make the other more successful, and vice versa? For retail businesses with time and money to invest, taking an omnichannel approach could be the answer. This enables shoppers to click and collect, to buy in store and return by post and to browse in store but buy via an app rather than queue at a checkout.
Stuart says that one of the reasons the music business was slow to respond effectively to the internet is because the people in charge thought they could run the new era as they did the old.
“The industry was too entrenched in its own thinking, and it didn’t have the people that could understand it,” he says. “You need people in a business who are flexible. Don’t try to overlay an existing model onto a new world.”
For businesses, it’s the same. By surrounding yourself with like-minded, inspirational people, you’re set to always innovate and never stand still. Business coaches, mentors, influencers and expert external resources could all be incredibly valuable to the future of your business.
“Artists used to tour to promote an album, now they record an album to promote a tour,” Stuart says.
The music business has realised how important the experience is to fans, so it's taking the music to the people. That’s something that small businesses can do, too.
After all, research shows that 78% of millennials crave experiences over material things. And that 55% of them say they’re spending more on live experiences than ever before1. It’s not just about jumping on the bandwagon, though.
Long gone are the days of aspiring musicians and pop stars being able to see what’s popular and replicating it. Now, it’s all about finding a niche where no one else is, and understanding that you have to be the whole package, not just a great talent.
For musicians, that means having stage presence, an audience connection, drive to promote themselves on social media and ability to build relationships with influencers in order to spread the word.
For businesses, it means thinking outside of the traditional website or high-street store environments. That could mean having a pop-up shop, diversifying into festivals, or taking the checkout to the customer with a mobile payment option. Whatever the direction taken, the focus should be on giving the customer an overall better experience, from first contact to payment, to customer services, returns and rewards for loyalty.
It’s probably not enough to run a shop or restaurant in the same way as you always have. Customers want to associate your brand with things they’re interested in. That’s why high street food and drink brands are starting to appear at festivals, alongside the smaller food truck vendors who may not have a recognisable brand.
“Being able to go up to a customer who’s ready to pay and allow them to do so on a tablet or a mobile terminal can make the whole experience much nicer,” says Jo Simpson, Barclaycard’s Strategic New Business Manager.
The music biz has excelled in communicating with – and selling to – its consumers by building engaged communities of fans. It’s a great way of maximising spend per head, and Stuart suggests small businesses do the same.
Make it easy to talk to your customers, but make it feel relevant to them when you do,” says Stuart.
That message is backed up by Nick Stacey, Director of Corporate Customer Solutions at Barclaycard.
“A lot of businesses do the ‘customer experience work’ by numbers, but they don’t really spend enough time understanding if they’re delivering what their customers actually want,” he says.
Once you know what they want though, you still have to make sure your instruments aren’t clashing.
“If you try to upsell at the initial transaction, you’ll annoy your customers,” says Stuart. “But once you’ve got their data, you can provide offers that enhance their experience. Be seen to be adding value, and don’t make it feel like you’re selling.”
Social media has, in many ways, made it easier to make these connections. Yes, it’s a noisy place where it’s hard to be heard, but create relevant, single-minded content that evokes an emotion (joy, excitement, shock etc.) and you’ll gather fans. Those fans will hopefully become engaged and loyal customers.
The music industry has its fair share of established acts that have been around for decades, but how do you make sure your business is a long player and not a one-hit wonder?
“For some artists it’s about reinvention, while others have a simple focus on what they do well,” Stuart says.
For businesses, it’s about recognising that while you might be serving a local area incredibly well, that popularity might not scale up well. The temptation is to take what’s working and roll it out to other locations, for example.
But recognising that creating demand at a larger scale can be difficult is something business can definitely learn from the music industry. The chances of a highly successful pub singer heading to the big time are very slim. As a business, look at what you’ve got that could help you diversify, whether that’s into a different channel, pop-up commerce or new products based on customer insight and feedback.
“For a small business, playing in the middle ground is where you can get lost. Be a rock star or a pop star, but don’t try to be both because that’s when you confuse the customer.”
Please note that the views expressed in this article are personal opinions. Barclaycard cannot accept any responsibility or liability for reliance by any person on this article or any of the information set out in it.