Apple Competing on Analytics - and Customer Intimacy

It's been said that companies have a choice. Compete on customer intimacy, product excellence, or operational superiority. Pick one, but it's just too hard to do all three.

But Apple has been doing a great job at operations, with arguably the nimblest supply chain the technology sector, as well as at creating excellent products -- even considering their MobileMe hiccup, which has largely been dealt with. 

As for customer intimacy, the sense of closeness that customers feel for Apple has been much more than Apple's actual leverage of customer data. They've won that warm and fuzzy feeling from top-down branding.

Genius, in iTunes8, changes that. 

Genius analyzes your songs and can make recommendations about playlists, either by showing you a list of compatible songs you already own, or by suggesting additional songs on the iTunes Store. It's fast, it's REALLY good at what it does -- and it leverages customer data to create more perceived value in iTunes.

There are two consequences. First, Apple lovers will continue to love Apple, and barriers to exit will be higher than ever. Genius, after all, does what my beloved Pandora does -- recommend songs similar to what I like. (Microsoft has a Channels tool that does something similar, but I've not tried it.)

The second consequence is bigger. Many of Apple's newest customers are switchers. They have bought iPods, the iPhone, and iMacs, spending billions on a product that seemed far less risky to them now than they might have seemed just a few years ago. But these switchers are not the early adopters -- nor even the early followers. Early adopters and followers behave that way because (for various reasons) their risk appetite is quieter than most. Most people, in fact, rightfully want to know more about product choices before they buy. They want to choose carefully -- and they want to suspend their loyalty to a brand at the slightest hint that the brand sucks.

So, in short, Apple has a lot of new customers that are just waiting for it to fail them, at which point they will (and have been) complaining loudly about how Apple products aren't any better than Microsoft products. Apple products may be great, and their supply chain may be great, but if they're not PERFECT, they will get demerit points from this huge, skeptical market to which the company now sells billions of products.

Genius can help Apple win their hearts and minds. It's powerful, it's fast, it's easy, it's fun. It keeps one's music library popping. And, underneath it all, one gets the sense that Apple knows me, and it cares.

Genius does all this, and it's free with iTunes8. It's a great start. I would look for Apple to do more with analytics over the next 12 months to gain even more customer intimacy. If they're smart, they'll acquire a few companies to accelerate the process, and introduce a few high-profile customer-driven platforms that truly elevate the customer from their current position (at best, worshipping at Steve Jobs' ankles) to an entirely new position. A position to be defined by Apple.