Well, the IPO for Fitbit got off to a flying start, but will it last? Can the company continue to grow at the rate it has? Here’s the good news. This certainly looks like a market on the march.
According to the Guardian, 16 million fitness trackers were sold globally last year, with just under 34 million expected to ship this year and 56 million in 2018. So, on the face of it, plenty of organic growth. But while noting that the company’s launch on the New York Stock Exchange is one of the biggest IPOs of the year and that the company is profitable, The Economist believes the company faces an uphill race.
They’re not the only ones. In fact, a number of articles on the company’s future performance, including this one, raise questions. The thing is that at least some of those questions apply not just to Fitbit but to all sorts of brands, particularly those doing well at the moment.
So if your brand is on a tear, here’s some things you might want to ask…
What’s the next success? Fitbit has certainly grown strongly and the uptake of tracking wearables has been significant, but with suggestions that one-third or more consumers abandon their devices, customer acquisition won’t keep the numbers up forever.
Querying whether Fitbit will go the same way as the Palm Pilot, Vauhini Vara asks if the big players like Apple will simply take over. In the same article though, she notes that GoPro is managing to hold its own after IPO, with its cameras continuing to be popular and the company announcing plans to develop drones and virtual reality capabilities.
At some stage, Fitbit is going to have to find ways to lower the drop-off (if indeed it is anything that high) or broaden its offering. Perhaps, that’s the challenge of marketing a product that seeks to change habits. In time, a high number of people will revert to what they used to do. But broader than that, it’s symptomatic of a world where the timeframe from hit to has-been continues to contract.
Question: What has your brand planned for next? How will you capitalize on what works? Why will that feel like a natural extension of the relationship that your customers already have with you?
Answer: Your purpose should provide clear guidelines for future development. By thinking of itself as an adventure company and not a camera company, for example, GoPro has extended its development license considerably. It can literally look for new ways to give people experiences they haven’t had or never thought they could have/share.
How do you turn know into yes? I really liked Sonny Vu’s point about Fitbit’s “use case” – what do you do with the information from the Fitbit once you have it? For trackers to work, he has said, they need to shift from nice to have to need to have. Right now, they lack that urgency for consumers in his view. In a world of data, you can’t just collect information, you need to provide or invent exciting ways for people to make use of it. “This creates tremendous pressure for Fitbit to innovate beyond simply tracking steps and sleep, particularly as the Apple Watch, with rich functionality, begins to dominate the smartwatch category.”
Question: What will you help your consumers understand? How will that knowledge help them continue their brand journey with you?
Answer: Brands that provide consumers with information will need to find ways to keep that information interesting if they are to avoid the “use-by” trap. One question I would be asking – what could that knowledge unlock? Beyond just new data, what new journey/experience could it encourage buyers to take with your brand?
Where’s the bridge? The future may lie not so much in what you offer as what you connect to. As Vara points out, Facebook and Instagram have proven that once consumers allocate a specific provider for a type of content, they are reluctant to abandon it. These brands also benefit from “the network effect: the more users that a given social network connects, the more useful it becomes”. So “GoPro and Fitbit, whose appeal has as much to do with the material they help store and share as with the devices themselves, might have the best chance at staying in business if they think of themselves not as hardware companies but as providers of services that let people manage and share their content.”
Question: How can consumers remember their experiences with your brand?
Answer: Inevitably, brands will need to secure themselves to a community in order to continue to prosper. GoPro is looking to do that by becoming a safe-house for people’s adventurous footage. They are literally syncing their product with people’s memories in a unique environment that celebrates personal achievement. Building such a network encourages recurrent use among consumers and builds social bonds with the brand.
Five observations to close:
- Brands must balance critical mass with competitive intensity. You want enough participants in a market for it to be viable and attract attention, but not so many that price pressure and convergence will send margins south. (Which is worse – Apple enters your market, or Apple doesn’t enter your market?)
- Unless the market can agree on a finite number of operating systems, it will be difficult for consumers to keep growing their involvement. One of the issues with the wearables sector is that there have been so many devices that wouldn’t talk to each other. Apps will resolve that – but they also open the market to other players.
- You must grow what you have to the greatest extent possible, while knowing that in itself that will probably not be enough. At some point, there normally won’t be enough organic growth to just do more of what you’ve done.
- People want data that is specific to them, but then they may want to be able to take that data and apply it elsewhere in their lives. The irony of privacy is that everyone wants to keep their information to themselves and at the same time use it as broadly as possible.
- Today, everyone’s a publisher. Building memory and community into what you offer could change the dynamics. People want content that is specific to them (because they created it) so that they can then share it with others. Offering them ways to do that, that add value to the content they have made, keeps them within your brand’s ecosystem. Without it, people’s interest in sharing will mean your brand feeds someone else’s network effect.
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