The Service Economy

I’ve never had the opportunity to use instant messaging to contact a customer service rep in the UK — not 100 percent sure if it’s even something on offer here. But Imgur has this exchange from the US that’s pretty instructive for anyone involved in customer service. It’s winning in its honesty. But I’m not sure phone operator AT&T comes across as well as Darlene. See what you think.

The way consumers receive information is changing rapidly. Traditional broadcast media is fragmenting, and being steadily replaced, particularly in certain demographics, by an increasing array of peer-to-peer channels.

This revolution provides unprecedented opportunities for brands, both big and small, to create sustainable mechanisms for attracting and retaining customers.

But we need to think very differently — the content and style of broadcast advertising is largely inappropriate for peer-to-peer (P2P) interactions.

How we, as businesses, adapt our communication strategies to the new landscape will continue to be the source of learning and debate, but adapt, we must.

Here are five things to consider when planning your social marketing strategy:

1. Look Beyond Viral:
   As Josh Bernoff points out, the Blendtec campaign exemplifies the two key elements of viral advertising — entertaining content and brand payoff. Kylie’s Agent Provocateur clip adapted from a 2001 cinema advert, to ads more carefully crafted to the humour of their target audience. Although created for the Internet, these campaigns are still based on a broadcast philosophy, just with a more niche message that is often unsuitable for a mainstream channel. And while they can raise awareness or deliver promotional messages, they don’t leverage the unique opportunities that P2P offers.
2. Target Mass Referral:
   Some companies have started using twitter and other media to launch products. But the way Susan Boyle broke into the US, from a Demi Moore tweet, to 80 million YouTube views, resulting in appearances on CBS Early Show, Oprah, and the final of America’s Got Talent, has shown the true power of social media and set a benchmark that consumer brands can only dream of.
3. Create Advocacy:
   To benefit from peer-to-peer media, a brand needs vocal advocates who will recommend the brand to others. Understanding the drivers of consumer advocacy is a huge help to any business, but it’s fundamental for leveraging social media. This goes beyond simple review sites, although they are important, but forms the basis for all true P2P marketing.
4. Give Them Ammunition:
   Providing active advocates with an ongoing stream of “insider information” both rewards their loyalty, and gives them ammunition to market on your behalf. Since the groundbreaking Blair Witch campaign 10 years ago this week, all movies and games have insider websites and planned leaks prior to launch to help generate a buzz. But there are many other ways (both good and bad) to prompt advocates to talk, and brands are only just scratching the surface.
5. Give Them Something Useful:
   Brands increasingly realise that if they provide their target customers with something useful, like an information portal, facebook application or mobile app, they forge a relationship. From there, they can build and leverage advocacy in a much more subtle and personal way. Finding ways to provide real value, to help customers in their daily lives through whatever means, is likely to become the most powerful social marketing tool of all.

Most executives talk about the importance of customer service, but far fewer are able to succinctly describe what they mean. It can easily become an empty cliché rather than a strategy for growth.

Yet customer service can be as important for product businesses as it is for service organisations. I recently worked with a group of manufacturing executives who made the point that customer service has been as important as pricing in helping them retain customers through the recession.

You are likely to turn your customer service proposition into a real competitive advantage when

• It is focused on the few dimensions that your target customers really value.
• You can create a service offering that is truly distinctive.
• You can deliver it consistently to the required standards.

Here are 10 dimensions of great customer service. Which should you be focusing on to drive loyalty, profitability and growth for your business?

1. Convenience and accessibility. Dell doesn’t sell through retail stores, but you can buy custom-made computers online or over the phone 24-hours a day, which are then delivered direct to your door.
2. Environment. As a result of their selective distribution agreements, premium cosmetic and fragrance companies such as Clinique and Estee Lauder only supply retailers that deliver a high-quality retail environment to support their products.
3. Self-help tools and support. Supermarkets provide shoppers with a range of trolleys and baskets, and Nike has developed online support tools for runners to set themselves training goals and track times and distances.
4. Product and service availability. One retailer I spoke with recently believes that improving the availability of key product lines has contributed over three per cent to its sales growth in the past year.
   
5. Attitude and friendliness. A key aspect of Southwest Airline’s success in the US has been its ability to deliver a friendly service alongside its low fares.
6. Competence and expertise. NetJets (pictured), the fractional aircraft-ownership service, is currently advertising how it spends more on training and safety than the major airlines.
7. Speed and responsiveness. Tesco stole a march on competitors when it introduced its “one in front” policy, where it opens a new till when shoppers, queuing to pay, have more than one other shopper in front of them.
8. Personal(ised) attention. Nordstrom, the US department store, places customer service as its #1 strategic objective. As part of this objective, the store provides all its sales people with access to a “Personal Book”, allowing them to record and refer to individual customer preferences through their till systems.
9. Community. When a balding, middle-aged banker buys a Harley-Davidson, he is buying into a concept of youth and vigour. Harley supports this relationship with its brand by establishing communities of Harley bikers, known as the Harley Owners Group.
10. Links to related suppliers. Apple has created a whole new industry of apps providers for their iPhones. Apple hasn’t sought to provide the applications themselves, but, through its App Store has created the links for application developers and users to do business.

(Photo: Nick.Allen, CC2.0)

Price cuts are a good way to build sales and destroy the business. London’s Evening Standard newspaper has been giving a masterclass in this suicidal art form.

Over the last two years it has responded to the free sheets by halving its price, giving it away free on some days, charging full price but giving away free umbrellas, charging less after 9pm at some locations; offering discounts for loyalty card holders and many other pricing wheezes.

Each short-term fix gave a short-term boost to sales. It was following the ‘birdie strategy’ — birds go “cheep cheep”, and the Standard went cheap, cheap.

Academics call this “blue ocean strategy“, which sounds fancier. But each short-term fix was as effective as another hit of heroin for an addict: the immediate relief simply creates long-term problems. The Standard was educating its buyers into believing that it was not worth full price.

Last month, the birdie strategy reached its logical conclusion: the Standard is now free, and circulation has gone up. Its only rival free paper, the London Lite, is going bust and laying off all 36 employees (36 employees for a newspaper?)

That is the problem with free: it can be crap — 36 employees can do no more than clip together press releases, buy a few freelance photos of celebrities and print some opinions. Opinions are cheap, facts are expensive. It was hardly a newspaper.

This, inevitably, is the fate of the Standard. It will not be able to afford news, so it will resort to opinions, celebs, and games. The paper has already got much thinner since going free, and it will continue to cut its product. First cut the price, then cut the product. Like the Cheshire Cat, it will slowly disappear until all that is left is its smile.

There is an alternative. Stuart Rose, chairman, CEO, big banana and el generalissimo of M&S, finally announced that it would sell leading brands in M&S. “Customers are saying to us that I like my favourite brand… and you, Marks and Spencer, don’t sell it so I have to go somewhere else to buy it,” Duh. Only 20 years too late. For genius insights like that, he must be worth every penny of his outsize salary.

So the alternative to the birdie strategy is to build your brand. Tabasco, Mars, Fairy Liquid, Marlboro all have built up unique customer franchises over decades. They have educated their customers to buy the brand and buy quality.

All of them could double sales tomorrow by slashing their prices. But no brand manager outside of an asylum would follow that route. As the tale of the Standard shows, cutting prices destroys your brand values. Temporary price reductions have a nasty habit of becoming permanent. Invest in your brand and you will not have to destroy your business with price cuts.

What do you think: as a customer, do price cuts influence your perception of a brand’s value?

(Photo: sarchi, CC2.0)

“There’s only one thing worse than being talked about, and that’s not being talked about,” said Oscar Wilde.

What Wilde knew was that to stand out means running the risk of offending people. Finding ways to polarise public opinion has long been a tool for celebrity — look at Lord Sugar’s anti-small business outburst the other day.

Some do it through controversy, others by being unique, opinionated, and unflinching. Either way, polarisation generates publicity, a loyal fan base and, ultimately, customers.

For as long as a brand retains its vitality, freshness and integrity, and as long as the number of people it attracts is sufficient, its future is secure.

At the heart of Apple’s success is a loyal group of brand evangelists. Indeed, it appears twice in the top 10 of the 2009 Brand Keys loyalty leaders list, for the iPhone (Number 1), and Apple itself (Number 9).

Apple and other businesses with fiercely loyal customers have a clear, consistent, and uncompromising position. That means not everyone’s a fan.

None of Brand Keys’s top 10 loyal brands are “middle of the road”. They may not be loved by all — see WalMart (#5) and McDonald’s (#16) — but the people that like them, love them. As Jim Hightower, the Texas populist, once said, “The only things in the middle of the road are yellow stripes and dead armadillos.”

In practice, many of the businesses I talk to, particularly in the retail and leisure industries, feel a need to be all things to all men.

The fear of alienating potential customers leaves them bland, meaningless and, in a recession, playing the value game just to survive.

Here are some of the key factors in developing a polarising proposition. Please feel free to add more:

1. Create an identity: stand for something different.
2. Work with others that share your passion.
3. Never compromise: stick to your values.
4. Invest time and energy in customers that share your values.
5. Listen to your lovers, not your detractors.
6. Be happy to alienate people — if they don’t care enough to love or hate you, they haven’t properly understood you.

Does your proposition clearly stand for something? Does it create strong feelings, both for and against? If not, you’re just another armadillo in the middle of the road.

(Image: procsilas, CC2.0)

Although the recession has affected nearly every social stratum in the UK, graduates and people aged 18-24 have had a particularly raw deal.

Higher education leavers had it tough even before the economic meltdown: the average graduate leaves university £11,000 in the red. Now, with corporations tightening their belts, there aren’t even the safe-havens of graduate training schemes to fall back on.

For many seeking to bridge the gap between education and employment the solution has been to embark on unpaid internships. An internship at a top company can boost a graduate’s future employability and can sometimes even be that foot-in-the-door that turns the internship into a full-time job. The problem is that the vast majority of internships are unpaid, and for a young person already saddled with debt, even a four-week placement is unsustainable without some form of financial support.

There is, of course, a ready source of support for anyone who is out of work and seeking employment in the form of Job Seekers Allowance (JSA). By signing on, job-seeking graduates can receive around £101.90 per fortnight to tide them over until they land a job. There’s a catch, however: anyone who does more than 16 hours of paid or unpaid work a week, or more than two-weeks unpaid interning, becomes ineligible for JSA.

As things stand, many budding interns find themselves having to choose between short-term financial support and improved long-term job prospects. The irony of all this is that the government announced only this year that more internship opportunities should be made available to young job-seekers. The government’s plans even went so far as to include allowing people to undertake up to 13 weeks unpaid internships while still receiving state benefits.

A great deal you might think.

A quick check of the small print however reveals that this fantastic opportunity is only available to those who have been claiming JSA and been unemployed for six months. By my calculations, this means that even  graduates who have been claiming JSA since they left university in the summer will still not qualify for this much needed helping hand.

If the government is sincere in its desire to save a generation from the scrapheap, it needs to adequately address the needs of graduates and clarify the relationship between unpaid internships and state benefits.

(Photo m00by, CC2.0)

Tesco’s pushed ahead with a totally self-service shop. So is it just a matter of time before retailers dispense with people altogether?

My mum tells me there was a time when there was a man behind the counter at most shops, who fetched you what you wanted, put it in a bag for you, and asked how young Frank was getting on in his apprenticeship at the garage.

But since the 1970s and ’80s, most retailers have moved on to self-select and pay-at-the-till models. This solitary shopping model is so ingrained that now, when an assistant approaches me in a store and asks if they can help, the reply “No, I’m fine thanks… just looking” is usually out of my mouth before I can even stop it.

So is Tesco’s opening of a completely self-serve store a complete surprise? Or is it inevitable — even overdue? In response, an Asda spokesman said: “Hell would probably freeze over before we had a store with no customer interaction on the checkouts…You get to have a bit of a chat with some human interaction and that’s very important for a lot of people.”

But stand at the check-out area of most supermarkets, and you’ll see the paucity of interaction for yourself. In fact the main reason shoppers don’t use the self-service tills is that they’re rubbish, not because they crave conversation with a 17-year-old called Richard.

For a small number of items — fuel, or a few items at B&Q (great self-serve tills) –I’m perfectly happy to do my own scanning and bagging. But self-service tills at big grocers don’t give me much confidence. They don’t like me buying alcohol, don’t recognise which type of vegetable I’ve put on the scale, and they don’t listen, even when you shout “I have put it in the bloody bagging area!”

So until the technology gets much better, self-scanning tills are of limited use. RFID, which uses electronic tagging put in at manufacturing stage, was hailed as shopping’s future some years back.

I’d hoped by now that my bin would update my shopping list and my fridge would collaborate with my cupboard on inventive recipes.

If all I had to do was push my trolley through something that looks like a metal detector, I’d be delighted to do without the checkout chat at a supermarket. Wouldn’t you?

(Photo:paulswansen, CC2.0)

The ability to fall back on a loyal and dependable customer base has undoubtedly helped many businesses weather the economic storm, but how do you go about establishing and then maintaining the loyalty of your customers?

The legendary US business guru and public speaker, Jeffrey Gitomer said: “Customer satisfaction is worthless, customer loyalty is priceless” and “You don’t earn loyalty in a day, you earn it day-by-day”.

The first comment may be provocative and the second blindingly obvious, but it’s surprising how many businesses have a confused view of their customers and how to keep them.

The notion that customer loyalty takes time to cultivate stresses the long-term investment needed to achieve it might be hard to accept, when a quick-fix solution to your business is might be more desirable, especially through an economic downturn.

Equally, a satisfied customer who never returns for repeat business is a form of false economy, since a business that fails to build up a base of loyal customers will have to work harder in the long-run to generate sales.

Many businesses take a reciprocal approach to customer loyalty: show your customers that you are loyal to them and they will in turn be loyal to you. Retailers such as Tesco and Sainsburys do this with loyalty schemes which reward customers with points or vouchers that can be redeemed on in-store products. However, such schemes are by no means a magic bullet to securing customer loyalty.

In a recent MORI poll  carried out on behalf of the customer loyalty experts the Logic Group, only 47 per cent of those surveyed belonged to a customer loyalty scheme, and of those 47 percent only 51 percent claimed to be fairly satisfied with the scheme and its rewards.

Anamaria Chiuzan, senior marketing manager at The Logic Group has three to businesses:

1. Keep it simple. Chiuzan says: “Rewards that are relevant to the individual rated highly amongst consumers in the survey – 30 per cent said that this would encourage them to spend more with a business.” See point number two.

2. Know who your friends are. Getting to know and understanding your regular customers and their needs is essential if businesses want to breed loyalty. Existing customers will not be taken for granted nor will they tolerate having their expectations ignored. In a way, it’s a chicken and egg situation — you have to have some loyal customers before you can find out how to make customers loyal. Be prepared to invest some time in getting that information.

3. Maintain service standards
A loyalty scheme isn’t worth much if your customer service stinks. If the customer service in your business isn’t up to scratch it might be worth concentrating on that before you can start thinking about customer loyalty. According to Chiuzan, the survey found that good customer service is the number-one factor in encouraging spend, while poor customer service was the chief factor in discouraging consumers to spend more with an organisation.

(Photo markhillary, CC2.0)

I’m often amazed when smaller businesses think the secret of success is to be more like the big ones. The opposite is true.

In my local town we had only two fishmongers, and life was good for the fishy folk. Then within two years we were bestowed with a Tesco, Waitrose and Marks & Spencer.  I love buying fresh fish, so keenly observed what happened next to the local shops.

Fishmonger One started to complain about Tesco. He complained to the local press, the other retailers and even his customers.  I remember him telling me that he couldn’t compete on price with Tesco (I hadn’t even asked about price!). After a lame and bitter fight, he closed and even put a notice in his window blaming Tesco et al.

Fishmonger Two was different. She got to work creating a local brand and local loyalty, she would tell you about the fish, when and where it was caught and offer some little extras if you spent a few pounds more.  She must have felt the effects of the three new arrivals in town but she didn’t complain once. She survived, thrived and of course since her rival closed she’s never been busier.

Don’t try to be like the big boys. Flip It and find out what they don’t do that you can, and what you do that they can’t.

Here are a few ideas to get you started:

Speed it up. What do we want? Speedy service!  When do we want it? NOW! Smaller retailers can often change faster, adapt more easily and manage trends more quickly than the big boys.  However, looking at many smaller retailers the opposite appears to be true.  What can you do to get a first mover advantage?

Specialise. How can you apply your specialist knowledge to what you do?  How many years of experience do you have that you don’t tell your customers about?  I watched a gent’s outfitter close down and blame £30 suits from ASDA as the problem. Do you really think that was the real reason? If you have a speciality to be proud of, shout about it and work hard to get even better.

Create customer loyalty. My friend Jeffrey Gitomer wrote a great book called, “Customer Satisfaction is Worthless. Customer Loyalty is Priceless!” Think for a moment about the lifetime value of a customer. That’s their entire spend with you over the next 50 years. Isn’t it worth creating an amazing customer experience for these people?  Yet how often do you see the small retailer being outdone in the customer service stakes by offering POOR service.

There’s a fantastic opportunity for the right small retailers to stop moaning to the people who could be their biggest advocates, to get creative, give a bit more oomph to their businesses and focus on what customers really want.

There has never been a better time to be a small retailer.

(Photo:telethon,CC2.0)

It is strange that one of the most effective methods of collecting a good knowledge of your workforce and the quality of service they provide — the mystery shopper – is also one of the most poorly executed and misused.

Mention the term to the average employee in a customer service role and the chances are they will visibly stiffen with unease. This is a waste of an excellent opportunity for your staff to gaze into a mirror and see their customer service flaws in a way that doesn’t put the store, brand or company at risk.

The concept of mystery shoppers — undercover researchers posing as customers — is well established and in business, and dates back to the 1940s. Businesses looking to assess their workforce would hire the services of an external agency to supply a mystery shopper, who will test shop staff against a pre-determined set of criteria such as friendliness and helpfulness of staff, or cleanliness of premises.

The aim is to enable companies to discreetly monitor the performance of their staff through the feedback of an expert third party.

There are several clear benefits to employing the services of a mystery shopper. These include:

1. Allowing companies to view their business through the eyes of the customer.
2. An independent evaluation of the success of a company’s training programmes.
3. The identification of specific areas within a business that need improving.
4. Speed and efficiency: A mystery shopper is often a cost-effective and expedient way of assessing the workings of an organisation.

Clearly, the mystery shopper offers a great insight to the scrutinising eyes of management, but there are down sides as well. The clandestine nature of mystery shopping has a tendency to unnerve customer-facing staff, particularly if they are only informed after the event. Companies run the risk of alienating their staff, damaging morale and creating a climate of suspicion and resentment, none of which is good for business.

The key to making a mystery shopper’s visit work, is transparency and trust between management and staff. By informing customer service of your decision to use a mystery shopper, you will offer reassurance by demonstrating that you are not going behind their back.

It should be made clear that the intention is not to start a witch-hunt against individuals, but to try to enhance the company as a whole.

Deployed in this way, the occasional mystery shopper will allow you to keep an eye on things, without appearing too much like Big Brother.

(Photo .Martin., CC2.0)