Since the Industrial Revolution, the standard business model has been to build something, market it, then sell it. This notion of build > market > sell confined marketing’s role to the introduction of the product, a mere intermediary between production and sales. Mercedes Benz, a 90-year-old company with a valuation at $61 billion dollars, follows this traditional build > market > sell model, and it is well known for its grand advertising campaigns as one of the world’s top luxury brands. Tesla, by contrast, a young, 13-year-old company with a value of $63 billion, follows the market > sell > build model—an operating model borne of the Infinite era—in which marketing is intrinsic to every aspect of its business, from the location of showrooms to the booking of test drives to the purchase of vehicles to the amassing of thousands of advocates, who help fund the next model. Tesla’s success is attributable to more than simply making a great product: it’s the Context Revolution’s poster child.
The superiority of the market-first model is clearly seen when you compare the two brands. Where Benz focuses on mass advertising as its growth model, Tesla doubles down on context across the entire customer journey to fuel its growth, and it begins in the ideation stage of the customer journey by focusing on a shared purpose: getting the world off fossil fuels.
This focus on sustainable living through radical innovation—rather than focusing on electric cars only—is the heart of Tesla’s brand strategy. The majority of articles written about Tesla showcase its radical business strategy and unconventional choices, such as launching a car into outer space. (It helps when the company founder also owns a space exploration enterprise.) Mercedes Benz, on the other hand, is all about cars. This key difference explains why, as of 2018, Tesla has been mentioned more than 23,000 times on CNN.com, compared with 5,000 mentions on the same channel for Mercedes Benz. And even though much of the press Tesla garners is on topics other than electric cars, its powerful purpose-focus spills over to the product conversation. Tesla’s current market share of the electric car conversation is the largest, with a 22% share, while Mercedes-Benz is eighth at 5%.
Tesla has also mastered context at other stages of the customer journey. In the Consideration stage, it dominates the results of every major search term related to electric cars. A recent search for “Best Electric Car” turns up a U.S. News and World Report article on the 8 Best Electric cars: two of them Teslas, with the Model 3 getting an honorable mention, taking its total to three of nine. No other electric car manufacturer is mentioned more than once in the report.
In the Purchase stage, Tesla’s website replaces the dreaded, time-consuming process of negotiating with a salesperson with an experience that Paula Tompkins, writing for ChannelNet, an omnichannel marketing site, describes as “empowering”: she was able to schedule her own test drive and within moments received a text confirming her appointment. Shortly afterward, she received an email with a link to MyTesla.com, a personalized site where she could configure her own car and go deep into the details she cared about, on her own time. Tompkins was also paired with an “Owner Advisor” (not a sales person) who, based on their similarity in choices, helped Tompkins weigh options and further develop her understanding of the car. Based on their conversation, she decided against the all-wheel drive option.
Tesla’s contextual effectiveness in the Advocacy stage might be the most impressive of all. The company provides 24/7 tech support and proactively alerts owners when maintenance is due. After a bit of time, Tesla introduces owners to its referral and advocacy programs, which offer a cash incentive of $1000 to both the Tesla owner and the friend who purchases a car based on the referral. Extol reported that a top advocate, known by his handle Wei70644, referred a whopping 188 people who also purchased a car, single-handedly bringing in $16 million in sales for Tesla, at a cost of around $135,000 for his prizes. That’s a strong Tributary—and all of these stages taken together is what a connected, contextual brand experience looks like from start to finish.
Comparing the build > market > sell model with market > sell > build, as represented by Benz and Tesla, is revealing. When Tesla began taking orders for its mid-priced Model 3 in May of 2016, more than 200,000 customers had paid deposits to reserve one in the first 24 hours— before the physical product even existed, and Tesla raked in over $10 billion dollars in pre-sales globally. Domestically it pre-sold 270,000 units, 3X total sales of all (not just electric) domestic Benz C Class cars in the same year. What’s more, Tesla pulled off this hugely successful launch without a grand campaign, without as much as a tagline. An impressive feat, no doubt, yet even more impressive is that the average cost of advertising per car for the Model 3 was $6 compared to Benz’s $926.