Archive for January, 2007|Monthly archive page
On January 1, the massively multiplayer online role-playing game (MMORPG) “World of Warcraft” released a major new upgrade. The 3D Virtual World game has over 7 Million subscribers worldwide who shell out a monthly fee to play the game. In addition, the community of WoW players has created a thriving marketplace for virtual goods on eBay, where virtual weapons, attire and characters have been selling for real cash. While there is no universally agreed-upon value for “Real-Money Trades” (RMTs) market, it is assumed to be worth somewhere between $250 million and $880 million a year, according to experts.
eBay, which has dominated the market for these transactions has confirmed that they are now going to ban auctions for the characters, currency, weapons, attire and accounts of online games such as World of Warcraft, City of Heroes and others.
In most cases, publishers of online games include in their terms of service a prohibition on RMTs. Players who violate such rules can be banned. eBay’s move is a boon for companies like Internet Gaming Entertainment who now own the third party market. Julian Dibbell, author of Play Money: Or How I Quit My Day Job and Struck it Rich in Virtual Loot Farming commented that this development is “sad” because it restricts individuals from being direct participants in the markets themselves. I should note that SecondLife is not affected by this move since virtual goods in that realm are freely traded.
If I had to bet, I would expect that the community is not going to accept this change quitely. It’s in their nature to be active participants, to control the content, terms of service be damned. When it comes to digital content, be it a virtual tool, or a song from Tool, the community always finds a way to get what they want on their terms.
The article on CNET goes into more detail regarding the motivations behind eBay’s decision.
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!
During the 2006 holiday shopping season many US consumers walked out of stores without buying what they wanted, with many giving thought-provoking reasons for their abandonment of the store, according to survey by Deloitte & Touche.
The survey found that consumers are generally becoming more surgical in their approach to shopping, and are increasingly using online shopping and pre-shopping techniques. In the survey, many said they were unable to buy (or they chose not to buy) a product because of poor customer service, a confusing store layout, or because the item they wanted was simply out of stock. dmeacham This article is copyright 2007 TheWiseMarketer.com).
The top reasons cited by consumers for walking out of a store without making their intended purchase were as follows:
- 64% said the item or size they were looking for was out of stock;
- 57% said the line at the register was too long;
- 52% said a sales associate was not readily available to help them;
- 32% said a sales associate could not answer the question they asked.
“Retailers have a considerable opportunity to improve sales and earnings by converting shoppers into buyers,” said Pat Conroy, a vice chairman of Deloitte & Touche USA LLP and national managing principal of its Consumer Business industry practice. “Better managing inventory, ensuring that store staffing matches shopper traffic, and improving selling behaviours are just some of the ways that retailers can enhance customer conversion. These levers are all within retailers’ control and, importantly, they help create long-term loyalty among shoppers, which is essential for a retailer’s survival in today’s competitive environment.”
Streamlined, intuitive store navigation also improves conversion. In the survey, more than a quarter (26%) of respondents said they walked out of a store without buying because the store layout was too confusing.
“Shoppers can’t buy it if they can’t find it,” added Conroy. “Improved store navigation and merchandise organisation can increase both customer conversion and the total dollars spent.”
The power of advertising?
The survey showed that two-thirds (66%) of store visits this holiday season were not influenced by marketing and advertising. Most consumers said that they shopped in specific stores because they were familiar with the store or they were passing by, not because of advertisements, sale notices, email reminders, or other advertising or marketing.
Apparently, consumers visit stores because of brand recognition and past in-store experiences. Retailers that consistently deliver successful customer experiences and fulfil their brand promises create strong retail brands and loyal customer bases.
Some two in three consumers surveyed (63%) did an online search for product or store information before visiting a store. Almost half of consumers (48%) read online consumer-written product reviews, at either a retailer site or a non-affiliated site (like a magazine website or social website) to help decide whether or not to buy a product, or which product to buy. Almost all (90%) of these said that the reviews were helpful in making a purchase decision.
It is clear then that retailers that provide rich multi-channel resources are more likely to attract customers and win their loyalty. In addition, multi-channel retailers may prove to have a distinct competitive advantage over online-only retailers, since the multi-channel brand will have the opportunity to develop more frequent customer contacts.
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)
I’ve been meaning to write this for weeks. Thankfully, Randy Saunders over at the Perfect Customer Experience has done much of the work to make my case in his recent post. The focus of this rant is Macys, or more accurately, Federated Department Stores, who in 1994, acquired the brand. Shortly after, they began the process of rebranding all their other holdings to the Macy’s name in order to facilitate a national brand advertising strategy.
Macy’s had been through rocky times in the 80′ and eventually filed for bankruptcy in 1992. Nevertheless, millions of Americans who lived in markets served by one or more of Federated’s other brands, typically viewed Macy’s as something more than the mid-level department store that it really was. Chalk this mystique up to the annual Thanksgiving Day parade which prominently features their Herald Square flagship store. To those folks who had never been in a Macy’s, this magnificent store was Macy’s.
I live the mid-Atlantic, where the Hechts brand has ruled for many years. In 2006, we learned that our Hechts were to become Macy’s. Unfortunately, the change did not deliver something better than what we already had. I had hoped that the change would bring some of the higher end fashion lines that I had seen in the flagship store. No such luck. In fact, prior to the changeover, they actually began eliminating some of the more interesting lines of mens clothing in favor of more of the same conservative stuff that you can get anywhere in central Virginia, and house brands. I used to shop at Hechts frequently. Since the changeover, I have been in Macy’s twice and will likely not go back.
This may be just my experience, but I have suspected that many others have been experiencing the same thing as Federated has been renaming all of their holdings. Randy’s post seems to back that theory up:
A new report from Dana Cohen, managing director of Bank of America Securities reduced Federated from a recommended “buy” to “neutral,” in part because of flagging sales at Marshall Fields and other ex-May stores. Although Federated’s legacy Macy and Bloomingdale’s stores reported a 4.4 percent gain, the same-store sales at hundreds of former May Department stores were down by 11 percent.
The report said some possible contributing factors included the sudden conversion of all May nameplates and changes in product assortments emphasizing Macy’s private brands and downsizing some national ones.
“The key issue we are facing is that management miscalculated the impact of these changes,” said Cohen.
Another report drom WSL Strategic Retail suggests that converted May locations may have lost 10-20 percent of their shopper base from a year ago because “They are asking shoppers around the country to give up a brand that a lot of them have had for a long time and have been emotionally attached to, whether it’s a store or product brand.”
Local brands under Federated worked. Tey were more expensive to operate with national brands and on economies of scale for national advertising, but the customers generally liked what they had. Federated’s strategy ignored the customer and the results speak for themselves. To many, the Macy’s name brought high expectations, but in the end, has not delivered and that’s how you destroy a brand.
When I heard a while back that Cisco owned the trademark for the name “iPhone”, I figured Apple would either negotiate a price for it, or go with a different name. When they announced the”iPhone” yesterday, I assumed that the price had been paid. Guess I was wrong as Cisco has filed suit over the trademark infringement. Read the complaint here.
In case you haven’t see this, CBS will be joined by Sling Media and SecondLife in a presentation at CES today. I’ll update the post after the details are out.
UPDATE: So the keynote is over and here’s the skinny. For the past year of so, we’ve all been talking about “The New Media”, “Generation C(ontent)”, “Web twodotwhatever” and so on. We’ve also been saying that traditional media “doesn’t get it” or is no longer relevant.
Apparently good old CBS isn’t going to go away quitely. Instead, they have spent the last year developing lots of new partnerships with everyone from social networking sites for lesbians to SecondLife where a virtual replica of the Starship Enterprise (CBS property) will be made available to residents. Perhaps that’s a bit over the top, but this is afterall the age of “Individual and Interactive”. There is no niche too small (right longtailers?) and we all want to play a starring role.
In his keynote address, CBS President and CEO Leslie Moonves showed off quite a few of his new friends to demonstrate that CBS “gets it”.
“The symbiotic relationship (between online and television content) will only tighten,” Moonves said. “What’s a big media company like us to do? We’re embracing it big time. We’re doing just about everything we can to see what’s going to work now and in the future.” That often means bringing in people outside CBS to do so, he said.
The partnership with Sling media involves Sling’s latest technology called Clip + Sling. It allows users to clip content from live or recorded TV and share it with anyone, including non-Slingbox owners. The clip can be sent in an e-mail that plays the video from a hosted portal. It’s not exactly YouTube, so to cover all the bases, CBS also has a joint venture with Google’s latest toy in the form of a contest in which users submit 15-second videos to YouTube about anything they’d like. The highest-rated video will be broadcast on CBS during this year’s Superbowl.
The message from Moonves is that “there is no such thing as old media and new media. There’s just media.” Is this kind of media mash-up going to save the traditional guys from extinction? What do you think? While you ponder that, I think I’ll head over the the StarTrek sim in SecondLife. I hear there’s a helluva dance party going on in the shuttle craft bay 🙂
Chief Linden, Philip Rosedale said today that Linden Labs is going to make the core codebase for SecondLife available to developers. Considering that the contents of SecondLife has been developed entirely by user “residents” and the number of registered avatars has grown exponentially over the past year, the move to open source is a natural progression. After all, Linden has a limited number of developers and there is much work to be done to meet the needs of its growing population and to make the software more palatable for less powerful computers (like most of us have).
Given the growth of SecondLife, the vision my many in the software development community that a 3D web is the shape of things to come, and the success that other projects like Firefox and Linux have had using the community to build the code; this move is smart and should help keep things moving. It can also lead to some interesting new capabilities:
“There are lots of handicapped people using ‘Second Life,’ It’s one of the really inspiring things about it,” Rosedale said. “There are a lot of ways of connecting people to their computers, not just mice and keyboards but gaze detection and neuromuscular stuff” that Linden Lab doesn’t have the manpower to address, but he hopes outside programmers will.
Someone also could “hook up an exercise bike and fly around ‘Second Life’ while exercising,” he said, or write a program for accessing the world from a smart phone.
“All that becomes extremely easy to do,” said Rosedale, who will speak tomorrow at the International Consumer Electronics Show in Las Vegas.
The details for the more technical readers out there, according to an AP report are as follows:
The code will be available under the GNU Public License, a widely used agreement among open-source developers that allows them to legally modify and share software. Linden Lab will review and test some add-ons, modifications and bug fixes, and incorporate them into the official version of the viewer, which can be downloaded for free.
Monday’s announcement doesn’t cover all the software behind “Second Life.” The program that controls the underlying infrastructure will remain proprietary, though Rosedale said open-source “is absolutely our direction.”
Fortune has an exclusive interview with Rosedale as well as comments from Electric Sheep, one of the largest in-world construction companies, and IBM who worked with my company, Circuit City, to open a virtual store in SecondLife. It’s worth the read.
I haven’t written much about Wi-Life (“wireless living”) in a while, but seeing how the gang over at PSFK have identified it as a 2007 Trend, I thought I would share my thoughts (and theirs).
Bluetooth & WiFi technologies have been serving the professional world for a few years, allowing us to stay chained to our desks, even when we are not at the office. OK, more optimistly, they are freeing having to be in fixed locations to accomplish tasks. This has made us more mobile and has definately changed our behavior.
Many homes now have wireless routers and high-speed internet (although its still way overpriced in the US compared to other parts of the world). I started this post in the kitchen, but am finishing it at 12:13 am lying in bed. Back in the summer, I often wrote posts outside on the patio. The home office is no longer a dedicated room. You can take that spare bedroom back now and turn it into something else. Ours is a scrapbooking room.
PSFK points out that Wi-Life is much more than being able to connect to the web wherever you want and the implications for how we will spend our leisure time in the near-future are really big:
Wireless internet and Bluetooth drives web-telephony as people can make calls from where they want when they want – and the laptop on the sofa offers an alternative to the TV or music center. WiLife means streaming your entertainment however you want. With wireless distribution systems like the Apple iTV, people will be able to use their computers as a kind of entertainment mission control from where they can send video, audio and more through the air to their TVs, Huffs and even your picture frames. (what’s a huff??)
Look at your laptop in your home as your new cable box and your additional hard-drive as your Tivo. Download your entertainment media from the web, save to your drive and play to any Wife enabled electronic. In fact, the distribution of media from the home computer to dumb terminals like the TV is a critical factor in the rise of the HearMeSeeMe web.
Of course, WiLife is not just for the home. Ford and Avis have announced a system that will let drivers download directions as they drive and give passengers to download shows and swap files tirelessly in-car. One day the cars will tell you where in the city your WiFi enabled friends are too.
And WiLife continues when you leave your car. Once we’ve recharged our gadgets with electro-magnetic wireless chargers, we’ll walk around with our phones and pods and these will us wireless technology to download entertainment and information from a media hub in the sky (Ryan talks about how he’ll use the phone in his video here). We’ll take both our record and DD collection around with us once it’s digitized and uploaded to our virtual slate on the web. And where will we play our tunes? At the beaches, parks and streets that cities are busy covering with wireless networks.
The impact of this always-on life is going to be pretty huge. Many of us have already seen our professional life become all-but always-on, now our leisure and social life will undergo a similar revolution.
Today’s technology consumer is faced with a no win situation. The planned obsolescence model of the 20th century, in which manufacturers made products that would wear out and need to be replaced, has been, well, replaced with a model in which products become obsolete long before they break. In the PC business the cycle is about 12 weeks! This rapid upgrade cycle frustrates customers and is stifling purchases in certain categories, especially among older customers. The NY Times has an interesting article about the fear of buying technology:
“There is a fundamental shift that is taking place,” says Samir Bhavnani, research director at Current Analysis, a market research firm. “People thought a product would last 10 years. They keep it three years. They upgrade their cellphone every year.”
The frustration and tendency to delay purchase is compounded by the rapid race to the bottom in terms of price. The TV you would have paid $3000 for last summer, dropped to below $2000 this past fall. If you bought it then, you probably felt good; that is until you saw the price this past Christmas.
“But this new form of obsolescence can stymie the consumer because it makes little sense to buy now if the product will be cheaper tomorrow. Knowing when to buy becomes as important as knowing what to buy… Mr. Axtle, who already has a 51-inch Sony flat-panel TV in his “entertainment room,” thinks of TV like he did PCs more than a decade ago. “You’d get the most money could buy,” he said, but it wasn’t enough because the technology changed so quickly, making the PC obsolete in only a few years. “You couldn’t hope to get ahead,” he said.”
This trend is expected to continue through 2007, frustrating both customers and CE retailers. CE retailers should look for strategies that either take advantage of the new model, like encouraging customers to use the lower prices to replace more than just the family room TV; or they should look for ways that provide alternative products and services that minimize the negative effects of the new model.
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.