Jeff Bezos said, “Is there ever a day when someone says they want fewer options, slower delivery, and higher prices?” By asking that question, he defined the atomic-level needs of Amazon customers. What I mean by “atomic-level” is this:
The needs are so deeply ingrained into the customer that they will exist today, tomorrow, next year, 10 years from now, 30 years, etc. Amazon has grown into the giant that it is because it relentlessly focuses on meeting customer needs that will never go away.
These atomic needs are what define the Amazon core business flywheel of wide selection, fast delivery, and low prices.
Jeff defined these over 20 years ago, so good luck to anyone trying to catch Amazon along these three dimensions today—their flywheel is spinning fast through inertia.
When I work with companies to help them identify their input metrics, it is vital that they start by identifying the growth drivers of their flywheel. But identifying their atomic-level customer needs is easier said than done. For example, one CPG company decided that “broadly available on every channel” is one of their growth drivers. In other words, the broadest distribution at retail.
Coca-Cola had a decades-long strategy of putting Coke products “Within Arm’s Reach of Desire.” They focused on broad distribution- restaurants, retail, gas stations, vending machines, etc. This strategy factored in the specific nature of their product — that people drink liquid many times a day and that beverages like Coke are an expandable consumable.
The rate of consumption of most CPG products (e.g. laundry detergent) is a fixed amount per day or week. But the daily rate of consumption for a beverage like Coke, especially in warm weather, is much higher than that of other CPG products. And while you will only do your laundry in your house, you will get thirsty everywhere.
In other words, Coke identified an atomic customer need — people get thirsty many times per day in many locations per day. Coke focused on this for decades, investing in a global network of bottlers, restaurants, vending machines, etc. Winning in distribution created value for their customers— they were the best in the world at this, and it enabled them to differentiate themselves from the competition for decades.
So does that mean that high investment in distribution makes sense for any CPG company? Is the broadest distribution an atomic customer need for all CPG products?
Clearly, it depends on when, how, why, and how often customers use the product. For example, people generally don’t want or need to buy cosmetics at a gas station. To identify the atomic needs of your customers, start with data-based insights into their needs and behaviors for your particular products and services.
What are your observations regarding CEOs and their companies identifying durable atomic growth drivers?
