Does Your Business Model Rely On Knowledgeable Customers?

In the early ’90’s I had lunch with two executives in the Toronto movie production business and my late friend Doug Dales, who supplied equipment to the movie industry. All were interested in and had interests in satellite delivered TV. The meeting was about the viability of acquiring, “evergreen” (always interesting) media libraries so as to take advantage of prospective on-demand downloading of digital media. “I would like Original Star Trek episode 16, please.”

All of these people understood on-demand delivery, the satellite requirements, the receiver requirements and the availability of libraries. They all agreed that there was only a single potential flaw in the business model.

How many people can set the time on their VCR?

If you see the 12:00 flashing in the display, these folks may not be technically capable enough to make this scene viable. Strangely, this problem came to dominate. All of the high-powered technology of satellites, dishes and recorders and the purchase of libraries became secondary. If the customer can’t use what you sell, how much will you sell to them?

It is like that with any technical subject.

The people who understand it in depth frequently fail to understand that others do not. They believe everyone knows or will know what they know. Since having the customer learn more is a track with uneven success, it is seldom used. Once people catch on to that, there are only two choices remaining.

  • Find a way to motivate the customer if their ability is low, or
  • Find a way to make the transaction so easy that the customer can continue to know little and still achieve the result.

Usually you will find that simplifying is easier than motivating.


Learn to communicate better. In my view, there is only one important law of communication. If the receiver does not get the message, the sender is at fault. Always. Work from that basis and you will tend to get better at sending messages. Most of that comes from clarity and knowing the customer better.

On-demand downloading still has not reached the level they foresaw in 1992, but it is coming closer. In the interim, customers have overcome some of the fear of technology and children and young adults take for granted that it can be done.

That has not happened in financial product businesses. I doubt you can count on informed young people or new technologies that will overcome your problem.

You need to get working at informing clients about their choices in ways they can accept and act upon. Essentially make the model more user friendly. With luck even intuitively obvious.

Hard problem.

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.

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