Better Know Your Customer

In the first part of this series on Better Place I made the rather simplistic assertion that the company failed because quite simply it brought in much less money than it spent, and then ran out of money by trying to be all things to all people.

While the concept of cars was not new and the idea of putting batteries into cars was not all that new, the notion of electric car-as-cellphone was new, with the company itself making that analogy both in terms of its billing practices (fee plus system usage) and its unique battery swapping system.

Better Place put a great deal of effort into marketing by going so far as to build a visitors’ centre so that the general population could learn about the company, the car, and go home with a bumper sticker that read “My next car is going to be electric”, stuck to the behind of many a gas guzzler. It was soft-sell all the way with the hopes of converting the visitor into a customer on the next purchase of a family car.

Oops number one: first-hand family cars typically stay with their owners for between 5 and 7 years. There was no sense of immediacy to switch nor was there incentive to buy, say, being paid book value for trading in your old car.

For all the lobbying the company did, and with all the friends it had in many high, high places , it was surprising that no government program (in Israel) incentivised drivers to switch.

Now it could be that the relaxed sales approach was a cultural choice, or that the company was deliberately selling slowly so that it could build out its support systems and infrastructure (a la Mailbox). But the visitor centre’s real purpose was to draw in early adopters who were far more mesmerised by the car’s allure than its practicality. They would then turn into an evangelical force multiplier, spreading the word to other potential customers.

I can personally attest that this tactic worked very well with early adopters bombarding their friends with messages and photos about their wonderful new shiny thing. Even so, I’m still friends with them.

But Better Place completely misunderstood their market. It’s not mom (or pop), it’s the corporate fleet manager where fuel, maintenance, turnover and worker jealousy all play a part in large purchasing decisions.

Oops number two: the first customers should have been the Israeli government, key corporations (the Israeli Electrical Corporation, for one), and municipalities.

The enterprise sales route was tried and failed. Why? Next post.

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