The Microsoft of the past 5 years has demonstrated an impressive ability to shift course and focus on its customers’ needs. Marketers can learn from Microsoft’s hard-fought experience.
Microsoft has gotten a lof of guff over the years when it comes to product releases and marketing. And deservedly so.
But it is also the company that convinced a lot of consumers to pick up Microsoft products.
The company is showing some interesting signs of owning its identity and paving the way for future innovations. We’ll get into the specifics of Microsoft’s approach, but let’s first take a look at the company’s ups and downs.
As much fun as it can be to joke about the Zune or Microsoft’s big bets on mobile devices, we have to keep in mind that the company had two industry-defining products practically from the start. Windows and Office became touchstone tools of offices and homes.
Years later, the Xbox carved out a major space for itself in a gaming industry where a handful of other major platforms already had dominance.
These few big products were the key to Microsoft’s profits for years.
At the same time, the company missed out on some major opportunities.
Steve Jobs of Apple won big in the iPod versus the Zune battle to dominate the personal music player space.
Microsoft’s big play in the mobile device space finally died out when current CEO Satya Nadella got rid of Nokia, a company it had acquired only a few years prior.
The Surface… Not the iPad
Some of Microsoft’s biggest marketing messes have come from trying to promote the Surface tablets. The iPad quickly became the de facto for tablets—even when stars tried to promote the Surface on Microsoft’s behalf.
You can just imagine the field day that people had with Oprah’s tweet in 2012. If she loved the Surface so much, why’d she use an iPad to send out the tweet?
Maybe she actually was a fan of the Surface and truly meant to give Microsoft some praise, but it backfired big time.
Speaking of marketing efforts backfiring, the Surface had a rough time in the NFL, too.
In January, 2016, the New England Patriots were having trouble with their tablets on the sidelines during a playoff game. These tablets were supposed to provide footage from the game, but all of the tablets on the Patriots’ side of the field were not displaying the footage.
When recounting the incident, the coach stated that issues with the tablets were a “pretty common problem.”
It turns out, the tablets weren’t at fault but the network that was supplying the footage. As Mashable pointed out, Microsoft’s attempt to share that news “was too late to save the Surface from another hit thanks to its NFL partnership.”
A Cultural Shift
During the Bill Gates and Steven Ballmer eras, Microsoft did not cooperate in open-source projects or play nicely in the sandbox with other tech companies.
CEO Satya Nadella changed these mentalities.
This doesn’t mean that a mindset shift can fix every marketing issue. The NFL incidents mentioned above happened after Nadella was named CEO. He was not, however, the CEO when the initial deal with the NFL was signed.
Lots of people have talked about Nadella’s contributions to the company and how positively the market has responded to his leadership. I won’t belabor the point here, but I will say that he’s proven himself to be a strategist that can project a vision and keep a company aligned to that direction over the course of years.
Marketing to Match the New Focus
One thing I like about Microsoft is its ability (today) to admit when it made a mistake.
While I don’t blame Microsoft for all of the marketing blunders over the past decade, we should all recognize that the company had to start making some changes. That said, motivating such change is not always easy.
This photo helped turn the tide internally.
Chris Capossela is the Chief Marketing Officer for Microsoft, first obtaining the job in 2014 soon after Nadella became CEO.
Capossela brought the viral image to the marketing team to show that while Microsoft was winning the PC market overall, the company was definitely missing out on the student demographic.
In short, Microsoft recognized that it had to become more relevant to younger generations.
Shedding the Old Ideas
In the past, Microsoft focused on being the walled-off garden.
Interestingly, Microsoft abandoned this strategy to great success while Apple is holding on to the strategy with immense profit. The difference being that Microsoft’s garden was starting to rot. The company wisely shed the old strategy.
How has it gone about implementing these changes?
For starters, Microsoft Office is not restricted from iPhones. This was an incredibly important shift in how Microsoft interacted with other companies.
Secondly, Microsoft made a few key acquisitions, but the spend was much more than just the products and services they bought. They purchased thriving communities.
Microsoft bought LinkedIn and gained access to a user base of 645 million people around the world.
Microsoft bought GitHub (the platform for open-source development) and gained access to 31 million developers.
Balancing Acquisition with Brand Building
In an interview at the 2018 UBS Investors Conference, Capossela shared some interesting insights in to Microsoft’s current marketing approach. He talked about the fact that Microsoft has a clear understanding of their cost per customer acquisition for Office and Xbox customers. As long as the company is sticking within its budget per customer, it can scale up spend as necessary.
And why wouldn’t you? If you’re making money on every dollar you spend with your marketing, you should keep spending.
Capossela commented that “Microsoft’s marketing spend as a percent of revenue has come down dramatically over the past six years.” Still, the company is able to drive up the effectiveness of its “performance based marketing” because they have the data to support their decisions.
On the other side of that equation is the need for brand building. Capossela talked about the fact that Microsoft is working hard right now to demonstrate their leadership in AI and in cloud technologies.
Those are much harder to draw a direct line to the customer acquisition cost, but we know in our customers’ eyes that if we’re not seen as an innovative company, and if we’re not seen as a trustworthy company, and those for us are the two perceptions that probably matter most, then that spells problems for us long-term.Chris Capossela, EVP, Chief Marketing Officer, Microsoft Corporation
If we get outside of the marketing terminology for a moment, Microsoft is focusing on its short-term and long-term needs. Every business needs to balance these same needs.
Shining in the Gaming World: Xbox & Mixer
Microsoft is also a gaming company. The Xbox is one of a few premier gaming platforms out there today.
In 2019, Microsoft presented a fantastic message of how to make gaming more inclusive.
Microsoft’s commercial, titled “We All Win,” introduced its new controllers. The company made devices specifically set up for gamers with disabilities in order to empower them.
The entire messaging around the controllers focuses on that same theme: empowerment.
In the 2018 interview referenced above, Capossela kept coming back to this same idea. Microsoft seeks to empower its users in all of its product categories.
Going Big with Mixer
Recently, Microsoft snagged the biggest video game streaming star Tyler “Ninja” Blevins to stream exclusively from Mixer.
Mixer is Microsoft’s answer for live-streaming platforms like (Google-owned) YouTube and (Amazon-owned) Twitch. Microsoft’s platform heavily favors the Xbox and computer gaming, so it’s not as open-ended as its competitors.
The level of restriction is actually helpful for up and coming streamers, and the company is certainly hoping to entice both professional gamers and their fans to spend some time on the new platform.
Good for Microsoft. Now, What about My Marketing?
The point of reviewing all of Microsoft’s moves isn’t just to understand whether or not the company is succeeding. It’s about whether or not we can apply any of this to our own efforts.
I don’t work at a company as large as Microsoft, and most other folks don’t, either.
That said, I still have marketing responsibilities to get our company’s message out there.
Here are my takeaways.
- When you know you’ve got a bad business idea in place, stop it–even if it’s expensive. Microsoft had to forfeit billions when it walked away from Nokia. It was still the right move. It would have ended up costing the company a lot more if the leadership tried to stick with Nokia.
- Despite your best efforts, you can’t control how people are going to respond to your marketing or products. Oprah and the NFL call Microsoft tablets “iPads.” It happened. How do you adjust course when you get egg on your face?
- You have to win the internal battles before you can win the external battles. Capossela had to shake the marketing team out of its old ways in order to shift course, and he was the head of the department. Take the time to prove to your teammates (or to drive out your own doubts) before you launch into that new idea.
- Find what your targeted spend is. If you know you’re making money at a particular budget, you can scale up confidently. This is way easier said than done, so you and I will need to put the appropriate systems in place to measure.
- Branding is not dead. It doesn’t get unlimited budgets, but it is still necessary to creating a future for your company.
- Make the customer the star. Microsoft way of doing this is to focus on how the company can empower its customers to get their work done. What can you do to make your customer shine?
I read a lot of marketing material, and it can get to the point of overwhelm. With all this material, where can we can even start?
At the end of each article here on this site going forward, I want to provide a clear next step for you. So, here’s my challenge based on how Microsoft is marketing its company.
Pick one of the takeaways above and commit 15 minutes to how you can apply it to your work.
Have you ignored branding? Spend 15 minutes there. Not sure if you’ve taken time to win your internal battles? Take 15 minutes to think through how you can start the process.
You get the idea. Now, get to it!