Boston—Your business isn’t just about selling “stuff” anymore, but creating value in the new economy, said David Solomon, co-CEO of investment firm Lazard Middle Market, during his Thursday session at the NEMOA conference.
What is the new economy? “I’m not convinced there’s a new consumer behavior,” said Solomon, who heads Lazard’s specialty retail and direct marketing group. “The new economy is the intersection of technology and change.”
Technology is causing the change, Solomon said: “Everything and everyone is connected. There are no barriers to entry. It’s not just selling stuff anymore. It’s selling a lifestyle.”
Specifically, Solomon pointed to the Internet, iPods, cell phones, texting, mobile apps, Facebook, and Twitter as critical elements of the new economy. “Commerce is shifting to the Internet faster than we think,” he said. “Paper catalogs will remain important for a long time, but more for reactivation, not acquisition.”
So fine-tuning your organization should focus on the Web. “A senior Internet team is a must,” Solomon explained. “Break down barriers between marketing and merchandising. Find passionate leaders to develop and maintain your value package and brand.”
Brand and value are synonymous, Solomon said. “You have to have a very strong brand going forward or you’ll shrink and someone else will take your place. You want to have a brand that evokes emotion and passion.”
Amid the chaos of the Internet, he added, “brand matters even more. Your brand must take a stand and stake a claim around your value proposition.”
About 40% of all buying decisions are made after Internet research, regardless of the purchase channel, Solomon said. “You must find your community, add useful content so customers can do their research, and allow customers to interact among themselves within their community. Reviews are for customers, but also for you to improve your business.”
While it’s been hard to get consumers to spend in recent years, Solomon said that demand will improve when you deliver value to the consumer. And charge the customers for your value, he added. Pricing and gross margin reflects your value-add.
“Great brands usually have gross margins of 40%-70%,” Solomon said. “Pricing should reflect market value, not cost.”