Apple Gets It…. But Sony Does Not

Its been a while since I wrote critically of Sony, but a piece  by Randall Stross in this weekend’s NY Times reminded me of a similar exercise that I did a few months back with Samsung and Nokia.  In his article, Stross compares experiences at both Apple and Sony’s Style stores and points out some of the reasons why Apple is so wildly successful and Sony is not.  Here are Stross’s key points with my commentary:

People vs Product:  Everyone knows the Apple story.  Over half of the store’s staff is dedicated to post-sale service;  Free, one-on-one consultation, with “Geniuses”.  This recognizes that your engagement with a brand is only starting at point of sale.  The real engagement is made or lost as you use the product.  Apple makes sure that you are going to get the most out of it.  As a side note, they also get the concept of Marketing as Storytelling as demonstrated by “The Geniuses”.  Sony, on the other hand, is all about the thing itself.  They have a much broader product line of electronics, which could give them an advantage over Apple if they focused on the value those things can bring to your life, but instead, the engagement exercise is all focused on the pre-sale marketing of the stuff. 

Function vs Fashion:  According to Dennis Syracuse, senior vice president for Sony Retail, the Sony Style stores are intended to be a “fashion boutique for women and children” that incidentally happens to carry electronics instead of clothing.  Wow, that seems a bit shallow.  How successful are you going to be targeting women who only want that red notebook because it coordinates so well with their outfit?

Engaged vs Disengaged:  Stross describes the experience of walking past a number of Sony employees who were ”so engaged in a private, and apparently amusing, discussion that <his> imploring presence failed to draw anyone’s attention.”  He speculates that they have become so used to inactivity in the store that had “become accustomed to busying themselves with their own entertainments.”  At a nearby Apple store, the employees were always alert and attentive, despite being very busy.  I’ve been in a lot of Apple stores and this just seems to be part of the culture.  For Apple, some of this has to be due to the enthusiasm of the owners to the products themselves.  Engagement can be a circular thing.  Engaged customers tend to make employees more engaged and visa-versa.  Regardless of the source, the engagement is real and is a huge differentiator.

Stross closes the article suggesting that perhaps a key differentiator IS having some amazing piece of hardware (running Windows) which will bring in the people.  Once they are in the store, they might see the other products in a different light.  This is where I think Stross misses the point.  Sure Apple has great products that people are passionate about, but it’s not because of their technical specifications, its the experience delivered by the product, the store and the employee.

What do you think?  If you are a retailer, do you get it?

Kids, the Internet, and the End of Privacy

“As younger people reveal their private lives on the Internet, the older generation looks on with alarm and misapprehension not seen since the early days of rock and roll. The future belongs to the uninhibited,” reads the first paragraph of the article Say Everything by Emily Nussbaum for New York Magazine. The article was published in February, 2007, but I just found it this weekend and it blew me away.

Nussbaum profiles several Gen Y’ers; early adopters of social media, many of whom have been using the tools to record every detail of their adolescent years. It’s a fascinating look at the new generation gap where young people willingly and openly share the details of their lives in a way that is unimaginable, even shocking for older adults.

As a 21st century parent, I had been feeling good about how well I have kept up with the next generation. The things that defined the generation gap of the sixties (specifically music and cultural attitudes) are not big differentiators between me and my 13-year-old. What I have noticed over the last few years as she has adopted various social tools and creative outlets on the internet, I have noted her willingness to create and connect with people outside of her local sphere. This is way beyond anything I would have imagined at 13 because the capability simply did not exist. For this generation, it’s seems perfectly natural. Describing a 26-year-old named Kitty, Nussbaum writes:

She left her teens several years before the revolution began in earnest: the forest of arms waving cell-phone cameras at concerts, the MySpace pages blinking pink neon revelations, Xanga and Sconex and YouTube and Lastnightsparty.com and Flickr and Facebook and del.icio.us and Wikipedia and especially, the ordinary, endless stream of daily documentation that is built into the life of anyone growing up today. You can see the evidence everywhere, from the rural 15-year-old who records videos for thousands of subscribers to the NYU students texting come-ons from beneath the bar. Even 9-year-olds have their own site, Club Penguin, to play games and plan parties. The change has rippled through pretty much every act of growing up. Go through your first big breakup and you may need to change your status on Facebook from “In a relationship” to “Single.” Everyone will see it on your “feed,” including your ex, and that’s part of the point.

Parents of this generation have lots of opinions on this new level of transparency. Most worry about risks of sharing private information on the net. There are also the concerns that today’s youth can’t develop real friendships through the computer, that they have no attention span, and that they are only interested in getting attention. Nussbaum counters this argument with a theory put forth by NYU professor Clay Shirky:

“Whenever young people are allowed to indulge in something old people are not allowed to, it makes us bitter. What did we have? The mall and the parking lot of the 7-Eleven? It sucked to grow up when we did! And we’re mad about it now.” People are always eager to believe that their behavior is a matter of morality, not chronology, Shirky argues. “You didn’t behave like that because nobody gave you the option.”

It could be jealousy, or it might be that it’s just not natural for those over 30 since they did not grown up with in a hyper-connected, always-on, reality-based entertainment world.

I don’t share most of the concerns of my parent-peers. I find the honesty of this generation is refreshing; I believe great friendships can and will continue to be made without physical interaction; and what looks like zero attention span might just be an conditioned ability to multi-task which exceeds that of the previous generation.

More young people are putting more personal information out in public than any older person ever would. One 2006 government study showed that 61 percent of 13-to-17-year-olds have a profile online, half with photos and these numbers are rising rapidly. So what’s different between us and them? They have a completely different definition of privacy. They think that the overly cautious nature of “their elders” is strange. Nussbaum suggests that there is a reason for this shift:

Younger people, one could point out, are the only ones for whom it seems to have sunk in that the idea of a truly private life is already an illusion. Every street in New York has a surveillance camera. Each time you swipe your debit card at Duane Reade or use your MetroCard, that transaction is tracked. Your employer owns your e-mails. The NSA owns your phone calls. Your life is being lived in public whether you choose to acknowledge it or not.

A different perception of privacy isn’t the only difference evident here. Professor Shirky suggests that there may be real neurological changes at work here:

They think of themselves as having an audience. They create content and once others begin to consume it, they feel motivated to continue providing and improving it.

They have archived their adolescence. I can barely remember mine. Today’s youth will not have that problem. They take the time to capture the details of their life and make them available for the world to see.

Their skin is thicker than ours. Nussbaum writes, “We live in a time in which humiliation and fame are not such easily distinguished quantities. And this generation seems to have a high tolerance for what used to be personal information splashed in the public square.”

There are a couple of powerful concepts being discussed these days in some of my favorite blogs. Developing your personal brand is one. Conversation Marketing is another. The thinking is that these are important concepts for marketers and businesses to understand and leverage as the consumer has fundamentally changed. Business leaders are having difficulties understanding the importance of embracing social media. The don’t see the point of much of it because they are from that other generation. Instead of trying to figure out the value of the tools, they should focus on understanding the Gen Y consumer. Understand how they are fundamentally different from you in the way they communicate & collaborate, how they create and maintain relationships, and what it is that they value. Reading this excellent article would be a good place to start.

Who is Your Employee Having a Conversation With?

Greg Verdino posted a really thought provoking piece On Friday.  Seems that someone created a Delta Airlines Twitter account and the conventional wisdom said that it wasn’t Delta Airlines.  From a scan of recent tweets, it seems that they may be coming from someone inside Delta acting in an unofficial capacity, but the net result is really interesting:

revamped the award ticket system for you SkyMiles me”mbers recently: http://www.delta.com/awardt… – you can shop around, calendar-style

sending out flight notices/reminders to those who’ve signed up for my messenger service: http://tinyurl.com/29xt5f

Happy Mother’s Day! Did you know you can donate miles to the Breast Cancer Research Foundation? http://tinyurl.com/yudbdo

Verdino comments that having “an active Twitterer acting as a mouthpiece for the brand (and responding in real time to direct comments and questions from other Twitter users) is truly revolutionary.”  “Sanctioned or not, the Delta Twitter-er literally is the voice of the brand for anyone following his/her tweets”.  Verdino goes on to discuss the implications of individuals claiming brand ownership and question of whether or not companies should be locking their trademarks.

Using a social tool like Twitter to engage with customers in real time IS revolutionary, but how many companies even understand the potential here?  If it weren’t for the attention that popular marketing blogs (Jaffe, Waldman, AdPulp) have given this story, would Delta even know about it (do they now?).  

So many companies are totally oblivious to how the world is changing around them. They see social tools as distractions and time wasters.  My company, a major US retailer, just blocked access to Twitter from inside our corporate network.  

Why???

At a time when we need to be finding new ways to engage with our customers and employees to design better experiences for both, management is focused internally on productivity and security.  It came as no surprise that company leaders were unaware of the over 350 MySpace pages created by current and former employees.  Every one of them references the company name & logo.  Many of them are private groups for individual stores. The public ones are great resources for gaining insights into cultural and engagement issues.  In an organization of 45,000 people, most of which are 18-25-years old, there is an amazing amount of conversation going on.  Rich consumer insights, potential employee morale problems, operational issues, poor management, you name it.  It’s all there in the conversations that are happening in the “unofficial” channels of your organization.

So here’s the point: Whether your executives like it (get it) or not, your employees are having conversations with each other and with your customers, and are doing it under your company’s brand.  Is that a good thing?  Perhaps, if it is identified and supported.  Your Gen Y employees certainly have a better understanding of the communication tools and channels that their peers, and increasingly, your customers favor.  Sure, there may be messages that aren’t strictly in line with company communication guidelines, but the voices are human.  Internally, they build a sense of family which is much more genuine than what comes out of your periodic employee engagement campaigns.  Externally, they can establish a dialog with your customers in ways that your highly structured, talking point-ladened corporatespeak simply cannot.  Overturn your Orthodoxies.  Let these voices show you the way.

Brand Engagement – Apple Store

Do you have young teenagers? If so, do they like to go to the mall and hang out at the Apple Store and take goofy pictures of themselves using “Photo Booth”? If so, you are not alone. Young teens share a couple of common traits:

1. They have time to kill, but not a lot of money
2. They are hyper-connected and highly social
3. They like to play with stuff
4. They love the Apple Store

If you ask them why, they will tell you “It’s Fun!” or “Because the have cool stuff to do there”. Flip that around and ask them why they don’t love to hang out at the the big CE retailers and you probably hear them say “there’s nothing for us to do there.”

How does Apple feel about all the kids always in their store playing with the cool stuff, but not buying anything. They absolutely encourage it. Sure, the kids can be obnoxious and disruptive, but they are also engaging with the brand in a way that most other purchasing segments never will. Apple is smart enough to realize that these kids have a significant say in family technology purchases today, and in a few years, when they become purchasers, Apple will be top of mind for them.

How strong is this brand engagement? I often use my soon-to-be-13-year-old daughter as a barometer. Statistically invalid, but directionally OK. She called me into the family room yesterday because she wanted to show me the cool menu that she had built for a DVD she was making for her friends. It was “cool” and I told her so (egos need lots of strokes at this age), but then the first scene of content began, she really had my atention. It was entitled “The Apple Store”. It’s a simple slideshow set to music. The images are a collection of manipulated Photo Booth pictures taken of her and her friends in the store and e-mailed home over the last year. (Interesting thought as I am writing…. it would have never crossed my mind even five years ago that kids would be creating and publishing their own movies, but I’ll save that for another post).

So this post could be about several things that I like to rant about. The migration of content from Mass to Personal. The consumer technology that makes this easy. The close, hyper-connected relationships that today’s youth have with each other. But the big takeaway for me is that Apple, either by accident or by design, has tapped into the next generation of digital lifestyle consumers and they are totally engaged with the brand. Can you imagine kids making movies about their experiences at Circuit City or Best Buy?

But Apple has figured it out. Whether its the purchasing customer or just the pack of kids passing through on their daily romp through the mall, Apple knows that brand engagement is created not through finding, selecting and purchasing a bundle of products and services. That’s an orthodoxy that they have clearly overturned. They understand it’s created through customer experience, but not just during the in-store transaction. They design the experience around the customer’s (or future customer’s) life.

Sense & Respond: Is Your Ear to the Ground

Greg Verdino has a great post up today that deals with one of my favorite topics: The importance of using Sense & Respond techniques to allow your business to be more agile and adaptive to customer wants & needs. Simply stated, Sense & Respond means knowing things earlier and being organized to respond quickly. To know things earlier, businesses need to establish sensing networks which feed information in from all over the place. It may include customer comments on your discussion forums, blog posts, input from vendors, and insights culled from data-mining you transactional databases. Much of it may appear to be noise, but with the right filtering, you can gain competitive advantages through these insights.

In his post, Greg talks about agencies tracking what potential influencers are saying about their client’s products:

These agencies seem to be doing what they can to keep abreast of what potential influentials have to say about their clients’ products. If listening to what consumers (in general) and social media content creators (in particular) are saying about your company, brand and products is the first step toward a smart social media strategy (trust me, it is), I’d say McCann and Ogilvy are certainly heading in the right direction.

Social Media is an increasingly important sensing target for organizations looking to be more adaptive. The highly publicized “Dell Hell” story and Dell’s eventual response in the form of IdeaStorm is a great example of the importance of having a social media strategy.

Greg closes his post with the following:

How about you? Do you have your ear to the ground? Or is your head just buried in the sand?

Well…..

The Little Stuff Redux

Earlier this week, I wrote about the opportunities in addressing the sources of customer dissatisfaction. On Friday, APs Technology Writer, May Wong, published a report citing difference in the service levels between Circuit City and Best Buy. The report was insightful and absolutely reinforced the points I was making earlier in the week. I’m including some quotes and commentary below.

This customer’s past experiences have let him to solid opinions of the two retailers. Who do you think he recommends to his friends and family?

Ralph Devoe’s hunt for a new computer monitor didn’t include a stop at Circuit City, even though one of its stores was only a few doors down from the Best Buy where he went shopping this week. “They often don’t have what I want,” the retired physicist said. “And Best Buy just seems a little better. The salespeople actually know what they’re doing.”

Having a large inventory selection and “knowledgeable associates” are really important, but they are big and potentially costly things from an operational stand point. In my earlier post, I focused on the smaller sources of dissatisfaction, like how the customer is treated in the store. The following really drives that point home:

For sure, bargains and good rebates could be found at the stores of either chain — an important draw for the price-conscious American public.

But other times, it’s as basic as how a store feels, how the products and aisles are laid out, how the workers there treat you.

A friendly greeter is stationed just inside Best Buy’s front door.

“How’s it going? Welcome to Best Buy,” he repeats.

Within a minute of browsing in a section, a Best Buy associate swings by to offer assistance. The staffer casually dispenses product info or comparisons, and just as quickly lays back if you decline the help.

A visit to Palo Alto’s Best Buy and Circuit City to pick up a component-video cable illustrates the differences.

At the Circuit City, it took some effort to find a store employee to ask where to find the cables — and the red-shirted employee who was tracked down misdirected this shopper to cables for TVs.

At Best Buy, the greeter at the door quickly responded with a more specific question, “What kind of component video?” By asking, he learned the cable’s purpose was for a game console and pointed to the video game section.

The desired Sony-branded cables were sold out, but the Best Buy associate did double check the store inventory.

That kind of attention to detail goes a long way in a shopper’s experience.

I also talked about ensuring that your interactive displays are always functioning. Ms. Wong points out this difference between the two retailers:

At another Best Buy in Sunnyvale, for instance, the music MP3 players on display were in good working order, and a patron could test the controls and use headphones to listen to them. By contrast, the Palo Alto Circuit City’s portable players — with the exception of a separate display for Microsoft Corp.’s Zune player — were not powered and lacked headphones so a shopper couldn’t get a good test run of the devices. Product information placards were also missing from some models.

The bad news for Circuit City is that this “little stuff” is rampant throughout its stores and it all adds up to a pretty crappy experience for customers. Both companies recently reported results for the previous year and the differences were like night and day. I am not an analyst and I can’t tell you to what degree Circuit City’s continued lagging performance is attributable to the sources of dissatisfaction in their stores, but my gut tells me that it is a significant cause.

The good news is that these problems can be overcome and for the most part, the solution doesn’t involve a big capital investment. What it does require is much more valuable, and perhaps more scarce, than money. It requires people that care. Store associates that take the time to look for things that aren’t right with their store and fix them. Support associates that are not only responsive to the needs of the people in the store, but are proactively looking for ways to improve the operation so that the store associates can focus on the customer and not the infrastucture.

Remove the Sources of Dissatisfaction. That’s the fourth item in my Prescription for Building Loyalty but after Listening to your Customers, it’s the next most important thing that retailers must do.

It’s Important to Sweat the Little Stuff

In an age where a single consumer can have amazing reach through social media, and where customers generally expect perfection, it is critical for retailers to understand that the first order of business should be to get the little stuff right. As pointed out in a recent story from mycustomer.com:

There is a line between brand reputation and common sense customer service that is becoming wider by the minute. While brands may aspire to having customers identify with that brand, it may be just as important to get the service basics right to close the gap between what the brand promises and what the customer actually experiences.

In January, 2006, the Verde Group and the Baker Retail School at Wharton released the results of a US study designed to better understand the effect of problem experience and negative word-of-mouth on the retail shopping experience. The study revealed ten key findings. Some of the big ones are:

• Chances of a smooth shopping experience are only 50:50.
  • Half of shoppers encounter at least one problem when purchasing items - in fact, they encounter 2.7 problems on average.
• The retailer may be the last to know.
  • Shoppers experiencing problems are more than five times as likely to tell a friend or colleague about it than to contact the company.
• When they talk, they talk.
  • One in three disgruntled shoppers will complain to a friend or colleague but each one will tell an average of 4.1 people about their bad experience.
• Their word does carry weight.
  • Almost half of shoppers have avoided a particular store in the past because of someone else’s negative experience. A similar proportion say they will avoid buying a similar item at the store, or visiting the store altogether, in the future.
• Bad shopping experiences are not easily forgotten.
  • Almost half feel that a return visit to a store where a problem occurred would likely result in a repeat of the problem. And, one in five reveal some hesitancy – the problem may or may not occur again.
• Bad shopping experiences erode loyalty.
  • Shoppers encountering one or more problems are less likely to continue shopping at the store, to recommend the product or item purchased to others, and are particularly less inclined to recommend the store.
• ‘Disloyal’ attitudes can have wide spread consequences.
  • Customers revealing the lowest levels of loyalty will talk to the largest number of friends or colleagues about the problems they encountered.

Retailers spend significant time and money coming up with new and innovative ways to get their customer to Engage with them. Innovation programs to come up with that new winning idea have been all the rage over the last few years. But when was the last time you put yourself in the customer’s shoes and took a good, hard look at the little things that diminish the experience? That peg hook that has been empty for weeks (is the product “in the back”?); the interactive displays that aren’t working; or even something as simple as acknowledging the customer as they are coming in and out of the store. These little things, more than anything else, define a brand to the customer, yet some retailers never seem to be able to focus their resources there. Why is that?

It boils down to trust, reputation and word of mouth. Customers satisfied with the way they have been treated become the best ambassadors for a company, sharing their experience with friends, family and colleagues. Big, new ideas are great, but they will gain you nothing in the customer’s eyes if you don’t get the little stuff right first.

What are the little things that detract from your customer’s experience. What can you do about them?

Storytelling – Geeksquad vs firedog

I have several official and unofficial jobs at Circuit City.  One of the “official” ones is that I am heading up our entry into the virtual world of SecondLife.  Partnering with IBM, we have a “demonstration store” on one of IBM’s islands.  It’ was in no way designed to be a compelling SecondLife experience, but was intended to be an interesting device to show the “art of the possible” to our executives.  The “store” has been up for a little over 3 months and we are starting the process of envisioning the second generation experience.

Our IBM partners told us that our competitors from Minneapolis were inquiring about SecondLife at January’s CES.  Today, I saw that Geeksquad island has opened in SecondLife.   That’s a fast implementation and points out the strength of BestBuy’s Sense & Respond capability, but the big story here is something else entirely. 

Looking at the Geek Squad SecondLife announcement page, I came to a realization about the different marketing approaches for Geek Squad and firedog.  For months, I’ve been trying to figure out why I didn’t feel comfortable with the firedog brand.  Today it hit me. 

In today’s “experience economy”, it’s not enough to simply make your products and services available.  To win in this market, you need to be able to tell compelling stories.   Lots of promiment Marketing types like Hugh and Seth, have discussed this concept recently.  I think Geek Squad has that ability.  They have created this “geek mystique” that resonates with the masses of people who know they are not as technically savvy as some folks (like the geeks).  With their SecondLife marketing, they carry this “story” forward:

“While this announcement is expected to help Geek Squad’s customers by offering an extension of Geek Squad’s 24-hour service, it is also expected to cut further into its Agents’ already meager social lives.”

“I’m constantly asked about what it is that Geek Squad Agents do in their free time,” said Robert Stephens, founder and Chief Inspector of Geek Squad. “While it used to be a pretty clean mix — divided between poring over computer manuals and sleep — we’ve seen the balance shift in recent years to poring over computer manuals and immersion in digital worlds like multiplayer online games and environments like Second Life.”

Sure, most Geeks have probably never even been to SecondLife, but the story that has been build around the “Geek” makes it easily believable.  It makes sense that “geeks” would be out on the technology edge.  Contrast that with firedog which uses the metaphor of man’s best friend to represent the brand.  The big word here is ”Loyal”, but there are a whole series of other words that are used to describe what “what makes a firedog a “firedog” including “Tidy”, “Real”, “Grounded”, and “Fresh”.  

The problem is that these are just words.  They don’t really tell a story.  They don’t say “these guys live for the technology problems that drive you crazy”.  There is no “mystique”, no story about who these guys are and why you should use them.  It’s simply not as engaging as the ”Geek Mystique”.

I’ll probably get some serious grief from my Circuit City family for this post, but I have to call it as I see it.

What do you think?

A “Sense & Respond” Retailer Would Have Bet Early On the Wii

I just bought a Wii.  They are still hard to find, but I happened upon a pallet of them in my local Costco last week (right place, right time).  Although I have been blogging about the Wii Experience for months, I had never experienced it personally.  After the first swing of the virtual tennis racquet, I felt it.  I was really “playing” tennis.  I was not “pressing A to swing”.  With just that brief experience, I completely understand why the Wii has taken off like it has.   ‘It’s the experience, stupid!’,  and it’s quite a success story.

Nintendo has long been the underdog in the video game market.  Sony and Microsoft flew past them in terms of titles and realistic graphics during the last cycle.  Nintendo titles have historically been more “family oriented” (no cop killing or hidden sex scenes), and their stock performance has historically been lackluster.  When the third generation  (3G) console war started heating up last year, the PS3 was supposed to be the big cheese (with the big price tag).   XBox 360 had gotten a head start on the 3G market a year ago and had over 150 titles so they were expected to hold on to the number 2 position. 

Retailers, while covering all the bases, believed that PS3 would be the big winner.  As a result, they all fought for the same scarce pre-christmas inventory.  Fast forward three  months and we are now seeing headlines like: “Nintendo’s Wii Leaves Sony’s PS3 In the Dust and Nintendo Wii Sales Quadruple PlayStation 3 and Analyst: PS3 Readily Available, Wii Still Sold Out?

Faisal Laljee  over at StocksandBlogs.com made this observation:

I visited no less than 6 stores on Monday night – EB Games, GameStop (NYSE: GME – News), Best Buy (NYSE: BBY – News) and Target (NYSE: TGT – News). None of them had the Wii in stock. I spoke to one of the employees at GameStop and he told me that they get Wii shipments from time to time, but the units sell within minutes. Talk about demand.  He did volunteer that they had plenty of PS3’s stacked up in the back.

Were there early indicators that the PS3 would fail so miserably against the Wii?  If you recognized those indicators, could you have profited by changing your retail strategy and focusing more on the Wii?  Did any retailer see opportunity?  Perhaps Gamestop did as they secured an exclusive agreement to have Wii demonstration kiosks in their stores.  Did they “Sense & Respond” or was it accidental?  Here are some early indicators that could have pointed the way:

1. PS3 is too expensive for the average household

Lots of discussion about this from analysts following the E3 debut.  An analyst with ABI Research was quoted as saying “Asking consumers to pay $500 to $600 for a game console, when most have yet to purchase an HDTV, will give many current PlayStation 2 owners reason to consider the competition.”

2. E3 Performance: Poor PS3 showing; Big Nintendo buzz

From IGN.com:

“We went into E3 2006 unconvinced of the Wii name or the machine’s potential and walked away from the Convention Center knowing for certain that Nintendo has another hit on its hands…. The Big N’s new platform may lack the graphic horsepower of competitor PlayStation 3, but its innovative controller stole the show right out from underneath Sony’s collective feet.”

3. Continuous stream of bad news and missed expectations from Sony

Originally slated to debut in May, 2006; pushed to August, and then to November, Sony just could not deliver.  Industry observers were warning as early as February, 2006 that the PS3 could be a flop due to the high cost of the technology-bloated console.  Sony’s strategy was to use the PS3 as a Trojan horse to get Blu-Ray into your family room, but limited availability of key components which were reported as far back as July ‘06 caused Sony to scale back the number of units available in North America delayed European availability until 2007.

4. Nintendo’s disruptive shift that focuses on the experience of the gamer

I think this was the biggest indicator that Nintendo would be the clear winner.  Nintendo’s decision to approach the business from the players perspective and make a product that truly engages the player (at half the cost of a PS3) was disruptive. 

Did you see it coming?

You Can’t Buy Loyalty

Customers Rock! blogger Becky Carroll always has great insights on customer experience. She points to a piece from blogger Chris Baggott, and his poston Best Buy’s Rewards Zone loyalty program. Chris’s position is that Best Buy’s “rewards” amount to no more that junk mail. As Chris shares:

I get paper based junk. My reward for spending around $10,000.00 since joining the program…..and the most recent offer following the holiday season?

A Credit Card Offer!!

Man do I feel special.

This is a campaign, nothing more. Marketing 1.0 just like the airlines. Monetize your list, not build better relationships with your “special” customers.

Chris is not alone in his feelings if the comments are any indication. Companies spend lots of money on loyalty programs. Often the approach is credit card based, primarily because the business model is a little more sellable to the CFO, but in the end, credit-based rewards only benefit the credit card company. Plans that offer incentives and perks don’t fare much better as they simply attempt to “buy” your customer’s loyalty.

So what is a winning formula for growing loyal customers? Here’s my simple list (not necessarily easy to do):

• Understand what your customers want. This requires you to actually talk with them and listen! Engage them in an ongoing conversation.
• Provide products and services that support the things they are passionate about. People’s passions drive where their disposable income gets spent. If you can tap into that, you become a destination.
• Help them to get the most out of the products and services you offer, both before and after the sale.
• Consistenly deliver great experiences that exceed expectations. Start by eliminating sources of dissatisfaction. Then act as an advocate for your customer at every touchpoint.

Advocacy is the key. You can’t buy loyal customers, but you can be their advocate and advocacy is contagious. A customer who is loyal to your brand because they see you as their advocate, will return the favor by advocating for you. That’s how you build loyalty!

…..but Nokia does!

As promised, here’s my take on the Nokia store on 57th street, Manhattan. First off, while the Apple store around the corner is a futuristic, the Nokia store makes it look like the Little House on the Prairie. The building’s peacock-blue facade, one of the few parts of the store you cannot interface with, seems to be made out of gigantic plastic pieces from an educational toy. With neighbors like Bulgari, Burberry, Louis Vuitton, Prada and Tiffany, the flagship store appears to be less about actual retailing and more about exposure. Click here for more photos.

Inside the narrow, three-level, two-thousand-square-foot space, luminescent Plexiglas walls and Barry White-inflected music make you feel as if you’d walked into an airport cocktail lounge. Should you wish to change the color of the panels from magenta to cyan or any of the other sixty choices, sit down on a bar stool, pick up one of the cell phones attached to the counters that flank the room, and send a text message to the wall. You can also click to control the images on screens, to switch, say, bubbling bubbles to alphabet letters blowing in the wind. Or you can send a note to the walls in any of the other five Nokia stores in the world. You can also walk upstairs, snap a picture of yourself with the superb optics built into the N93 phone, and print a copy of it to take home (note to Samsung….).
Those entertaining panels actually serve a purpose in that as you pick up any phone, a window pops up with all the details about the phone. A fantastic demonstration of what great digital signage design can be. Here’s a video taken in the store that shows some of the experience:

The first floor contains the main collection of devices, while the second floor holds the NSeries and the tiny third floor is reserved for the exclusive Vertu boutique ($4,500 – $150,000; for a phone, service plan is extra). The second floor resembles the first, with digital panels and high interactivity. Vertu is a jewelry store experience; all phones are under glass and and must be shown to you.

I visited about 15 retail destinations on my recent trip. While the Apple store was the one where people were most actively engaged (duh), for me, it was the Nokia store that offered the experience that made me want to know more about their products. It was an “entertainment experience” that was totally engaging.

(Photos courtesy of newyorkdailyphoto)

Samsung Doesn’t Get It

During my trip to NYC this week, I spent a day visiting a number of retail “flagship”and concept stores. Obviously the Apple store on 5th Ave was on the list and it was everything the hype promised. The last “store” that I visited, was the Samsung Experience located in the Time-Warner Center at Columbus Circle. In today’s rant, I want to share some thoughts on how these two companies approach customers.

I am a tourist’s tourist with the camera always on (and flash off so that I don’t annoy others). I like to capture my trips so that I can share with others. As we all know from the exploding growth of social media, I am not alone here. Walking through the Apple store, I took over 100 photographs and recorded videos of their digital signage. I was approached by several Apple employees, each asking me if I had any questions or if I needed help with anything. Not once was I asked to stop taking pictures. The store actively promotes hands-on interaction. Apple clearly understands that the customer is in control and they are there to help them achieve the things they want to do, including taking photographs. They know those photos will likely end up on the net, and they don’t see that as a problem. For Apple, the store belongs to the customer and when I was there, the customers were having lots of fun!

I should point out that I also had free reign at the Nokia store, which was by far the most engaging experience of the trip. I’ll save the details for a later post, but the people that worked there were actually assisting me in getting som of the shots that I wanted!

The Samsung Experience was something completely different. An absolutely beautiful space, the Samsung experience draws you in with a giant touch sensitive table in the atrium outside the doors, which displays interactive maps, RSS feeds, and videos of New York neighborhoods. From the outside, you can tell that Samsung has spared no expense on this venue. They have the latest in technology that the average consumer hasn’t even dreamed of and it’s designed to be interactive with audio walking tours. Its a museum for high tech consumer electronics, and when I go to museums, I take my camera.

Unfortunately, Samsung doesn’t want you to capture digital memories of their “experience”. I was able to capture only one picture before I was quitely, but firmly told that picture taking was not allowed. I wasn’t greeted or asked if I could be helped; I was just told to stop.  I explained that I worked for Circuit City (a very big customer of Samsung’s products) and that I wanted to share their concept store with my co-workers. To that, I was handed a business card that gave the URL for the store’s website.  I was told that there were pictures there, but a subsequent check of the site proved that statement to be false. Great “Experience”.  After this encounter, the biggest thing that I noticed (besides the 80″plasma) was that the “Experience” had all this technology in it, but very few people.

The Samsung Experience clearly operates on a different business model than Apple or Nokia. Their focus is on their products (look at us, aren’t we cool).  Apple’s focus is on the customer (let us help you to get the most out of whatever you are passionate about).  Ironically, Samsung sells all kinds of products that capture pictures and video, but won’t allow you to use those devices inside their “Experience”.  Apple doesn’t sell cameras or picture phones (yet), but they don’t have any problem with you using them in their store.

The bottom line is that Samsung doesn’t really get the whole “customer is in control”, social media thing.  I walked into the store really excited about “experiencing” the store, but after being challenged, I had very little desire to spend any more time in the store.  I made a quick pass through and left. That’s unfortunate because the store has the potential to be really great place.

Do You Let Your Customers Talk To You??

I say it all the time….  Companies need to open lines of communications with their customers (both good and bad) in order to build a brand that the customers love.   Most companies don’t do this.  Instead, they segment and analyze customer groups based on reseach (usually done by another company) in order to “understand” who their customers are.   Nowhere in this process does the company actually reach out and speak to a large cross-section of their customers.  And if that’s not bad enough, consider the fact that most companies make it really difficult for customers to reach out to them. 

A report card published recently in the Seattle Times states that out of 500 major American corporations, only 10% of them received an acceptable rating (grade C or above) in how well they dealt with customers over the phone.  

“Got a question about your credit? Good luck reaching someone at Experian, the national credit bureau.   They won’t even give you their phone number until you order a copy of your credit report.”

“Having trouble with your Eureka vacuum? Don’t press 0 — the manufacturer hangs up on you if you try to dodge its automated phone system.”

“Need information from Chrysler? Choose from one of five menu options on the car company’s phone system — or be trapped in an endlessly repeated loop from which there’s no escape.”

Only nine companies (that’s the number 9, not 9%) received an A rating.  My company, like most in the retail sector, received an F rating.  The article goes on to state that entire industries (cable and satellite TV, insurance, software) are failing to meet minimum standards for telephone customer service.

The report card was compiled by Paul English, who manages the gethuman 500 database. It rates companies for such criteria as:

• Can you hit zero to speak to an operator?
• Does the system let you know how long you will have to remain on hold?
• Does the caller have to repeat information such as names and account numbers?
• How easy is it to understand the human customer representative who eventually answers?

In the retail sector, the few companies who do score well include Dillards Department Stores, L.L. Bean, Lands End.   The Seattle Times interviewed some to these companies to get their perspective:

“Providing a human option is critical to our business model,” L.L. Bean spokesman Rich Donaldson said.  Customer-service representatives employed by L.L. Bean answer calls at four centers in Maine. It’s costly to do business that way rather than hiring contractors or relying on automation, but Donaldson said the company views it as a long-term investment.

Doing away with the human touch “is something we wouldn’t consider,” he said.

Find your company in the GetHuman database and then ask what you could be doing differently to be human to your customers.

PS:  Just saw Becky Carroll’s first post of the New Year in which she talks about cost cutting and customer service.  Wearing my “Master of the Obvious” hat, I would presume that most of the low scoring companies in the GetHuman database are there because of a cost cutting focus.

Traditional vs. Open Innovation

Patricia Seybold, in her new book Outside Innovation: How Your Customers Will Co-Design Your Company’s Future, explains the difference between traditional “inside-out” innovation and “outside in” or customer-focused innovation:

Traditional innovation: “Traditional ‘inside-out’ approaches to innovation assume that our subject matter experts (within our company) invent and design innovative new products to meet needs customers may not even realized they had. Then our marketing and advertising departments make prospective customers aware of those needs, wrap a brand experience around our innovative products, package and price those offerings… and bring them to market.”

Outside-in/customer-focused innovation: “The ‘outside-in’ approach is to flip the innovation process around and assume that customers have outcomes that they want to achieve, they have deep knowledge about their own circumstances and contexts, and they are not happy about the way they have to do things today. They will innovate – with or without your help – to create better ways to do things or to design products and services that meet their specific needs.”

There’s obviously a big difference in these two approaches, but the impact to organizations who don’t understand that the game has changed is much larger.  Just as the Consumer has begun to take control of media, they will also demand a starring role in co-creating your company’s products & services.

This is an evolution that makes perfect sense.  In traditional innovation, we don’t really know what our customers want – we may think we do, but at best we’re shooting in the dark, and hoping we hit something. From a marketing and sales standpoint, our new products are “pushed” through the sales channel to the customer, who often has to be incentivized with discounts, rebates and other creative “carrots” to persuade them to buy. The result?  These programs cut into gross margins and profits, and usually aren’t very effective.

In contrast, if you really understand not only your customers’ needs, but the critical outcomes they want to achieve, you can then work shoulder-to-shoulder with your key customers to “co-create” products that meet those needs.  There’s no need to “push” your offerings, because customers will gladly pay a premium for products and services that make their lives easier and more profitable.  The result?   Higher margins and profits for the company.

I am just starting to read Patricia’s new book, but I can already tell I’m going to like it. Open innovation is one of the key trends in the world of business right now, and this book looks like a terrific guide to what it is and how to implement it in your company.  This concept goes way beyond creating products that meet customer’s needs.  Embracing the customer as a partner is a way to transform and elevate your brand.  As competition  increases and the ability to differentiate yourself decreases, are you asking your customers to help define your brand’s experience???

<via innovationtools.com>

The Customer Relationship Ladder

Shaun Smith over at The Perfect Customer Experience has a great post today in which he discusses Apple and Harley-Davidson as being Brands that have reached the Customer Advocate stage.

Advocacy at this level is rare and beyond the reach of most consumer companies let alone professional services firms. Yet, the principles hold true whatever the nature of your industry and customer base. The fact is that delighted customers have an affiliation for the brand that translates into bottom line growth.

So how do you create a level of customer satisfaction that is so strong that customers become your best sales people? The answer lies in creating a customer experience that is so distinctive and valuable that it goes beyond satisfaction. Jerry Gregoire CIO for Dell computers says “The customer experience is the next competitive battleground” Michael Bray Chief Executive Officer for Clifford Chance said this about customer experience “… equally relevant for the leaders of professional services firms looking to build ‘trusted advisor’ relationships with their key clients.” Jill Griffin, in her book ‘Customer Loyalty: How To Earn It, How To Keep It’ suggests a useful ladder of customer relationships which brings clarity to this issue.

Stage 1: Suspect. Suspects include everyone who might possibly buy your product or service. We “suspect” they might buy; we do not know enough yet to be sure.

Stage 2: Prospect. A prospect is someone who has a need for your product or service and has the ability to buy. Although a prospect has not yet purchased from you, he or she may have heard about you, read about you, or had someone recommend you to him or her.

Stage 3: Disqualified Prospect. These are prospects about whom you have learned enough to know that they are not the best fit for your products and services and so you may choose not to target them.

Stage 4: First-Time Customer. First-time customers are those who have purchased from you one time. They are customers of yours but are almost certainly still customers of your competitor as well.

Stage 5: Repeat Customer. They have purchased from you two or more times. They may have bought the same product twice or bought two different products or services on two or more occasions. They will buy from you but will also continue to give their business to competitors. In professional services you may be one of a number of firms on their panel.

Stage 6: Loyal Customer or Client. A loyal customer or client buys from you rather than anyone else. You have a strong, ongoing relationship that makes him or her resistant to the pull of the competition. For professional services firms this is where you begin to make the transition from being a supplier to trusted advisor. You are ‘top of mind’ and the first firm that a client calls when they need help.

Stage 7: Advocate. Like a client, an advocate buys everything you have to sell and purchases regularly. In addition, an advocate encourages others to buy from you. An advocate talks about you, does your marketing for you and brings customers to you. >p>Brands like Virgin, Apple and McKinsey all have advocates who are happy to be unpaid sales people for these companies. For professional services firms this is when you create a relationship for ‘life’. You are likely be the preferred supplier for this customer whichever company they happen to work for. You may have a seat at the planning table when they think about their longer term strategy but will certainly get advance notice when the client is thinking about a deal.