We are working on a project that has me thinking about the “long tail”.
For those who took Statistics you may recall that the long tail is the portion of the distribution where occurrences appear far away from the distribution’s center.
A long tail business strategy is one where the service provider makes hard to find goods and services regularly available. For example, I did not become a Netflix customer in the late 1990’s because I was a fan of pop culture hit movies. Rather, I did so because Blockbuster did not carry the obscure content I prefer while Netflix did.
YouTube became the dominant online video service not because you could find the latest Taylor Swift video or Avengers movie clips. Instead, whatever you were looking for – no matter how niche the subject matter – you could find relevant content on YouTube.
Google became the dominant search engine not because it would provide answers to the world’s most common questions. Rather, no matter your query’s subject matter, Google would provide a return.
Amazon has become the dominant retailer not because it carries the world’s most popular items at a reasonable price, but because it most likely carries whatever it is you are looking for.
CoStar is the dominant information service provider to the Commercial Real Estate industry. It did not achieve this leadership position because it houses property information within the largest and most active CRE markets, but because it has broad and deep coverage across ALL CRE markets.
Thus, there is something to be said for investing in the long tail. Despite the fact that the long tail does not mean high demand, it does engender a certain level of trust and brand equity with consumers. Think of the center of a normal distribution as table stakes – a “must have” to get a seat at the table. However, it is the long tail that will differentiate you and your service from the rest. By having the courage to invest where others fear to follow (so long as you can see customers on the other side), the long tail will often provide dividends over the long-term.
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