What Brands Can Learn From Apple’s Play For Schools
Focus on customer experience and aim for lifelong lock-in
Apple’s Education Play
Apple hosted an education-themed event in Chicago on Tuesday where it unveiled a refreshed 9.7-inch iPad with an upgraded processor and added support for Apple Pencil and multiple users. The company also announced a number of educational and productivity tools, including updates for the iWork app suite, free iCloud storage for students, and various educational apps designed for classroom management and inspiring creativity. One particular feature that Apple highlighted was a handful of ARKit-powered educational apps that leverage augmented reality to bring 3D objects and interactions into classrooms.
Apple historically had a strong presence in schools, but recently started to lose ground to Google’s Chromebook laptops. According to data from consulting firm Futuresource, Google commanded 58% of the primary and middle schools in the U.S. in 2017 with low-cost Chromebooks and its cloud-based G Suite productivity tools, while the combined impact of MacOS and iOS are far behind at 19%. In contrast, just three years earlier, Apple’s products represented nearly half of devices shipped to U.S. classrooms. Beyond Apple and Google, Microsoft is also a major player in the classroom electronics market with around 22% of market share. The Redmond, WA-based company is also scheduled to lay out new education-oriented products and services at a New York City event scheduled for early May.
Taking the stage, CEO Tim Cook reemphasized Apple’s commitment to serving schools and its coding initiative Everybody Can Code. He also briefly addressed the controversy over user data privacy, noting that “it’s important to us that you understand this data stays private.” However, the new “low-cost” iPad, even with the paltry $30 education discount, still carries a high price tag of around $300, which can go even higher once you factor in accessories like styluses and bluetooth keyboards that are needed to make the most of iPads for productivity tasks. The education market also has an discrepancy between the buyers (schools) and the users (students) that makes price a far more important deciding factor than a premium user experience, especially in budget-constrained public schools. Nevertheless, this is a solid step in the right direction for Apple to catch up with its rivals in the education market.
The education market is very software-centric, and Apple is, at its core, a hardware company. In a way, it makes sense for Apple to maintain its focus on the higher-end of the education market so as to remain an aspirational brand. Google, by comparison, quickly took over the education market in the last couple of years on the back of its cloud-based productivity tools and lost-cost Chromebook laptops. It is not serving ads to students in order to monetize or charging schools for using G Suite, but rather charges $30 per device by selling management services for the Chromebooks that ship to schools.
Lifelong Lock-In For Lifelong Brand Loyalty
Make no mistake, Apple is not aiming at taking back the education market from Google and Microsoft for profit. The broader point of going after the education market for Apple, and Google and Microsoft too, is about reaching its future customers, getting them accustomed to the iOS ecosystem while they are young, and potentially lock them in for life with the various iOS-exclusive apps and services. Similarly, Google, as New York Times explains, works with schools to encourage students to convert their accounts to personal accounts upon graduation.
As we enter the 21st-century economy, where products and content abound and the cost of discovery has significantly decreased thanks to the internet, it is now far more valuable to control demand rather than the means of production or distribution. The rapid rise of tech startups like Uber and Airbnb is a testimony to the growing importance of owning the customer relationship. At the end of the day, it doesn’t matter whether your products or services have a built-in ecosystem lock-in element like Apple does. If the customer experience you provide is consistently great, consumers will gladly pledge their loyalty to your brand.
Alexa and the various voice assistants in market today provide an interesting example of this lifelong loyalty play. There have been several reports of young kids being enamored with Alexa and treating Alexa like a friend or even a family member. For those kids, Alexa could become an important part of their childhood, and they may be likely to grow up being Echo users and Amazon shoppers. In this regard, Alexa might just end up being the most intimate and successful hook for converting the next generation of shoppers into the grand lock-in that is Prime membership. Amazon clearly realizes that too, as the company is reportedly talking with banks about creating checking accounts for teens.
We are also seeing a similar strategy manifest itself across various industries besides technology. In the entertainment industry, for example, we are seeing all major players in on-demand video streaming investing heavily in children’s programs in the hope of hooking viewers young. Apple is reportedly taking a family-friendly approach for the content it is procuring for its rumored OTT content service.
One of the less-discussed aspects of Disney’s acquisition of 21st Century Fox assets is that, should the regulators approve this mega-deal, Disney will gain a nice roster of content geared towards a more mature audience to counterbalance the more teen and youth-oriented content slate it currently owns. A kid that grew up watching the Disney Channel that later graduated to become a Marvel fan in their teen years can now transition into a fan of the grim, prestigious drama series on FX as they age. For those that grew up obsessed with the classic Disney animated movies, there is a live action remake currently in development for nearly every cartoon from the Mouse to lure you (and your kids) back. In a sense, this acquisition will effectively grant Disney “cradle-to-grave” content, allowing it to keep a fan for life.
How This Strategy Applies To Other Industries
In the auto and mobility market, auto brands have historically targeted audiences as they move through major life stages such as getting married or having kids. As their household size and income changes, car-owners’ mobility needs also change, and the auto industry has done a pretty good job at capitalizing on those new needs by relying on the brand trust that was already built up with their previous vehicles.
Now, however, with ride-sharing services taking off and self-driving cars just around the corner, it is not so easy for auto brands to convince a father-to-be to upgrade his convertible to an SUV. When more and more parents are starting to rely on services like Uber and Lyft to transport their kids despite safety concerns, it is important for auto companies to take a closer look at their position in the value chain of future mobility, reconfigure their marketing strategies, and figure out a way to reach the ride-hailing generation.
In cosmetics, Estée Lauder is taking a similar apporoach to expanding its customer demo. The NYC-based beauty giant that historically targeted a mature demographic launched the Estée Edit collection in 2016, offering a new line of products with different benefits meant for a pre-aging audience. This new lineup, made available exclusively at Sephora, the go-to beauty playground for many Millennials, marked the brand’s ongoing efforts to court younger consumers. The goal is to establish a brand presence at the retail touchpoints where the customers already are, attract them with a targeted user experience, and hopefully move customers through different collections as their beauty needs change.
Insurance and personal finance is another market that some startups are experimenting ways to reach beyond the typical target demo. A handful of app-based investment tools, such as Acorns and Robinhood, promise an easy-to-understand, user-friendly experience for Millenials to manage their personal investments on their phones, rather than having to talk to an investment manager at a local bank.
On the banking side, First Republic Bank set a good example by acquiring loan management startup Gradifi in 2016, leveraging its student loan repayment platform to provide employer benefit to help its clients attract and retain talent. Interestingly, personal loan platform SoFi recently announced it will be rolling out virtual checking accounts and debit cards this spring to address the everyday banking needs of its customers. In both examples, we see a financial service brand leverage the brand trust they established with their loan management services to extend into new bank services so as to build out the customer relationship and potentially lock in their customers for life.
The key here, for most brands, is not just about a simple product extension to cater to different age demographics, but rather reaching customers outside your brand’s target demo with a superior user experience, building up that brand affinity and trust, and, more importantly, maintaining that relationship as they move through different life stages. It’s great for brands to “hook them young,” but it is even better to keep customers for life.
