What is The Long Tail? October 29, 2009
Posted by nichebanking in Niche banking, Nicheruptive, The Long Tail of Banking.trackback
We’re pausing to take a brief detour and lay some more foundation for our dialog here at www.thelongtailofbanking.com blog.
If you haven’t already read “The Long Tail: Why The Future of Business is Selling Less of More,” by Wired magazine editor Chris Anderson this blog may not make a ton of sense to you. So let’s go ahead and get you up to speed.
To sum it up in my own words, the long tail is the business phenomenon that has emerged over the past several years as the result of the rise of the Internet as a delivery channel for products and services. It demonstrates that we are seeing the emergence of thousands of tiny niche communities because the Internet has the ability to easily and successfully (and in a commercial sense, profitabily) deliver specialized niche content to many many very small groups of people. For instance, it’s how Amazon.com can make money selling 3 copies a year of an obscure title like “Underwater Basket Weaving for Left Handed Jews” because the Internet removes the issue of inventory and shelf space as limitations, whereas Barnes and Noble as a brick-and-mortar store would never stock such a title because it would be wasting its valuable, finite shelf and inventory space.
This blog—and the Nicheruptive niche banking business itself—is of course about applying this long tail concept to banking.
The concept intrigues me. But, to be honest, I’m not following it’s application to banking. Banking has never been impacted by inventory or shelf-space prioritization concerns.
If what you’re talking about is the ability to create an endless number of product configurations appealing to an infinite number of market niches (i.e., consumer segments), then I’m all ears — although very skeptical.
Skeptical because: 1) While some choice is good, too much choice can be confusing and stifling, and 2) Just because you’re tall, thin, and good looking and I’m short, fat, and ugly doesn’t mean we have different needs in banking products and services.
Ron, thank you for your comment. You have the honorable distinction of being our first commenter!
Regarding shelf space/inventory limitations, my argument is that banking’s corresponding challenge is this: if you start a bank in your town, you realistically have about a five-mile radius to pull potential customers from. That means that as a brand, you have to be generic/bland enough to “appeal” to as many of the people in that radius as possible. So while a book store has a finite amount of shelf space, a bank has a finite geographic market potential–resulting in both the bookstore and the bank needing to make choices that will allow them to be as broadly appealing in this finite opportunity as possible. This results in what Chris Anderson calls a “hit culture,” where the business focuses on selling the big hits to the masses, rather than selling the obscure titles to the niches.
Most importantly, what we’re really talking about is not so much an infinite number of product configurations, but more like an infinite number of brand experience configurations. In other words, we can tailor the perfect brand experience for thousands of different tiny niches. The products would be tailored as appropriate too, but honestly would be secondary in importance to the tailored brand experience. The big bet in our model is that banking customers of the future will make their choices based not on the products, but rather on the niche-interests-based experiences they have in consuming those products.
I understand that this is a big concept with lots of facets yet to be discussed. I appreciate your interest and look forward to all your thoughts and debate!
Identifying the niche and creating a brand to fit that niche is one thing, but I am interested in how you plan on marketing your brand to each niche. As a whole the concept seems rather labour intensive. Not that that is a bad thing as long as you have the labour to back it up and a sound business plan to ensure its profitability over the long term.
We are marketing our brand to the niches by becoming meaningfully engaged, sincere contributing members of their communities…because they are our communities too (due to our shared passions within each niche). We are commenting on their blog posts about their passion, contributing content to the communities via our own blogs, interacting with them on Twitter, joining the conversation in the forums for that passion, etc. Labor intensive? Yes, definitely. But social media is the only real way to connect with like-minded people, and that’s what it’s all about when it comes to niche banking.