Archive for the ‘Retail’ Tag

Radio Shack’s Mobile Store Experiment

Radio Shack is testing a new store model under the name PointMobl.  The three test stores in the Dallas area focus on “mobile” categories ranging from compact laptops and MP3 players to smart phones and GPS systems.

The depth of selection is greater than what a typical RadioShack store carries and there is no reference to the parent company to be found anywhere in the store or on the PointMobl website which lists the copyright owner as being “PointMobl Corporation”.

That last point is a very smart move which clearly shows Radio Shack understands where the brand sits in the minds of their target PointMobl customer.  I’m making an assumption here that they are trying to appeal to upscale, tech-savvy customers in the 18 – 35 year old range based on the store description and the images shown on the website.   Taking this “anonymous” approach removes one barrier to acceptance by those target customers.  On the other hand, the way they pitch the concept on the website sounds like the typical safe, boring nonsense that I sometimes hear coming from corporate marketing departments trying to appeal to a much broader and older segment:

“It’s time to let your mobile life out to play.  Give your productivity a power-up, stay connected, and take your inner rockstar on a world tour.  It’s time for a true mobile outfitter. One who really listens to your needs, then leads you to the right solution.”

Blech! If you are 18 – 35, chances are you are already leading a “mobile life”, you are always connected,  and when it comes to figuring out what gear you need, you do your own research because experience has shown that you usually understand the technology and the options better than the salespeople.  The rest of the copy on the site doesn’t get much better.  I should also point out that the website has at least one typographical error where they proclaim “You don’t need another mobile store – you need a good listenter“.  Come on guys, any spellchecker program would have found that.

Some analysts have expressed concern about testing new store concepts under the current economic conditions.  I think Radio Shack has no choice but to explore alternatives given that a third of their existing store revenue comes from mobile sales and that business is being eroded by the likes of Best Buy who has opened their own chain of mobile specialty stores and expanded the mobile departments in over 900 of their superstores.  Radio Shack is also losing business to the mobile carriers which continue to pop up like weeds in every stripmall nationwide.  RadioShack has 6,000 company-operated and franchise stores and 700 wireless phone kiosks.  That gives them easy access to real estate that would be retrofitted into PointMobl outlets.  A slideshow of images from one of the test stores is available on YouTube:

This approach could end up generating higher revenue per square foot  than existing Radio Shack stores.  I’m fairly certain that is one of the test criteria and if the test proves this out, an expansion of the PointMobl concept could boost the chains revenue for a few years.  While that idea seems appealing, I don’t see it is a differentiated strategy that can be defended over the long term.  There’s nothing special here.

Store Aesthetics

The stores are described has being “upscale” with white fixtures and clean glass, but based on the following slide show, the interior of the store doesn’t generate that Apple store feel that I’m sure they were going for.  Instead it looks cramped and dark.  In some places, the dramatic lighting makes it seem almost museum-like; not the kind of feel that invites you to pick up the stuff and interact with it. 

The Competition

The mobile carriers all have significant presence in this size footprint and it would be extremely easy for them to expand their product offerings to include a similar product mix.  The only real differentiation here might be in the ability to offer multiple mobile carriers in one store, but that’s not unique either considering Best Buy’s strong position in the market and the growing presence of mass merchants like Walmart and Target in the mobile space.

In order for PointMobl to really be sustainable, it must be able to offer the customer an experience that no one else can.  I just don’t see that happening with categories that are already commodities.

The only important thing is…..

“The only important thing is that we make the children happy”.  It’s one of the most memorable lines from the 1947 classic, “Miracle on 34th Street”.  Replace “children” with “customers”, it is also an idea that has unfortunately faded from the fabric of American retail.  In the film, the Macy’s Store Santa makes that important point to an incredulous mom after telling her that she could get the fire engine her son wanted at a competitor.  Mom couldn’t believe that Macy’s would send customers to another store.

Fast forward to today and imagine Macy’s or just about any other retailer helping a customer find the thing they are looking for by pointing to a competitor.  It might occasionally happen, but it’s certainly not Standard Operating Procedure.  To do so would reflect badly on the store’s merchants and send business to the enemy, right?  The retail would much rather send a customer away unhappy than send them to a competitor.  But perhaps the retailer’s perspective is different from the customer’s?  Perhaps in the customer’s eyes, helping them find what they were looking for, at a competitor no less,  was an unexpected “surprise and delight“.  Might that not earn a few loyalty points?

A few years ago, a major consumer electronics retailer was testing various innovation ideas in the Boston area.  One of those ideas was to place a “concierge” near the store entrance with the objective of improving close rate.  The job had two roles:

  1. Greet people coming in and direct them to destinations in the store.  This wasn’t just directing customer to “go to Aisle 5”.  The concierge was trained to engage the customer to learn why they had come to the store.  If  “assisted selling” was involved (e.g. HDTVs, digital services), they would escort the customer to that part of the store and introduce them to a salesperson.
  2. Engage people on the way out.  If they had made a purchase, thank them.  If not, ask to assist in locating the item.  The concierge desk had a couple of internet terminals and the concierge would help the customer find the product they wanted on the retailer’s website.  They were also instructed to help the customer search for other retailers who might carry the product if they didn’t carry it!

The concierge idea was only tested for couple of months and in that time, the close rate improved, but not enough to offset the cost of the position.  With that being the company’s determining success metric, the idea wass killed.  The test also included a survey of customers to get their feedback on the experience and the results were impressive.  Roughly 85% of the 1200 customers surveyed felt that the concierge improved their shopping experience and, more importantly, The same percentage said they were likely to recommend the retailer to friends based on their interaction with the concierge.

While the test did not generate the targeted close rate numbers during the 60 days it was operational, customers really liked it.  If the company had run the test for 6 months or a year, would the close rate improved?  Who knows, but I’d argue that the improved customer experience in those stores would have resulted in higher traffic over time and that’s every bit as important as close rate.

So why are retailers so focused on the transaction and not the experience?  Because it’s the fastest thing they can measure.  Unfortunately, a change in the experience may not lead to improved business in a 60 day time frame and most retailers don’t have the patience or the confidence to invest in an improved experience for the long haul.   Paradoxically, failure to make customer experience improvements may prove to be the downfall of a many retailers in the next few years.

Are You Focused on the Transaction or the Experience (part 1)

With the economic downturn taking a toll on retailers one has to wonder what is going the be the differentiating factor for the survivors.  With people spending less across all retail channels, I heard a pundit on a financial network say last week that retailers were going to focus on taking market share away from competitors.  That sound good on paper but how exactly does one do that.

The vast majority of retailers will be going for the wallet with margin-crushing discounts and deals.  While this may be good for customers (clearly a buyer’s market), it will not be sustainable unless you are a retailer with deep pockets and those are few and far between.  The other approach would be for a retailer to leverage their experiential benefits.  Unfortunately, this approach is not something you can just whip up in time for the holidays.  If you have not been growing your customer base through great experiences, you are not going to be able to take this approach this time around.  That said, you may want to consider making changes now.

In retail, the experience your customers receive is a reflection of your organization’s culture.  An open culture that encourages, rewards and acts upon bottom-up and outside-in feedback is one that fosters engagement at all levels.  Engagement with the organization by your customer-facing people leads to engagement with the customer and that lays the groundwork for delivering great experiences.

I don’t mean to over simplify the idea of an open culture.  If your organization isn’t structured this way, you can simply mandate it.  Getting there requires real leadership, considerable effort and a willingness and ability to dedicate resources to the goal.

As the title suggests, I’m planning a series of posts on this topic.  In my next post, I’ll offer some suggestions on how to build an Open Culture and how to leverage it once you get there.

Not Expecting Great Things at Kohls

I’m a frustrated customer.  I drove to a local Kohl’s store today to purchase the Men’s Nike Air Tri-D II running shoes that they advertised in their 10/1 – 10/11 sale catalog.  The shoe department at that store was a disaster.  There were very few men’s athletic shoes on display and the shelves were in disarray.  The shoe I wanted and that they had gone to the expense of advertising, was not even on display.  I asked someone to check stock and the answer came back that they only had a size 8-1/2 in the back room.

Years ago, retailers used to practice a fraudulent tactic called “Bait & Switch” in which a desirable item was advertised at an attractive price, but in reality, there was little or no inventory to support the offer.  When the customer arrived at the store to purchase the item, they would be offered an alternative item which often provided the retailer with higher margin.  There are Federal Trade Commission laws that make that practice illegal.  If a retailer knowingly advertises a product that has limited availability, they have to say so in the ad (“quantities limited”). I understand that sometimes operational issues come up which can result in advertised products not being available and I’m assuming that is what happened in this case.  Nevertheless, it was a frustrating waste of an hour of my time.

Multichannel Retailing to the Rescue (or NOT!)

I wanted the shoes to take on a trip this week, but settled for ordering them on Kohls.com so I could take advantage of the additional discount offered to Kohl’s Charge customers.  A search of the site took me right to the shoe, but when I went to put it in my cart I saw that it was only available in sizes (wait for it….) 8 and 8-1/2!

I could understand a single store in a 1000 store chain not having a particular advertised item, but to not have enough product available through a national website is a big problem.  Kohl’s Merchandising team has to know about this.  Any merchant responsible for a line of products checks to be sure they have sufficient stock chain-wide before advertising something.  In this situation a good approach would have been to put a note on the product detail page acknowledging the shortage of inventory and apologizing for the inconvenience.

This is a great example of a really bad customer experience.  Kohl’s tells me to “Expect Great Things”, but based on interactions in two different channels (web and store), I “expect” that I won’t be shopping at Kohl’s in the future.

Winning Against the Big Guys: Ukrops

Ukrop’s is a 28 store, family-owned grocery chain based in Richmond, VA.  All of their stores are located in central Virginia, mostly in Richmond, so you’ve probably not ever heard of them.  That’s too bad because Ukrop’s is a very unique retailer.  Over the last four decades, Ukrop’s has steadily grown to dominate the central VA grocery marketplace, competing easily against much larger regional and national chains.  Instead of taking the “lowest price” approach, Ukrop’s has always focused on delivering a great customer experience.  Ever since Joe Ukrop opened the first store in 1937, the operating philosophy has always been “treat customers, associates and suppliers as they personally want to be treated.” That attention to the customer experience coupled with a history of innovation and community engagement has built incredibly strong brand loyalty.  In this post, I’m going to share some of things Ukrop’s has done to build their brand.

Customer Focus Differentiators

Ukrop’s does things for their customers that I’ve never seen at any other grocery chain.  They’re little things, but as I’ve said before, it’s the little things that differentiate you from your competition.  Things like:

  • Ukrop’s employees carry your groceries out to your car and load them for you.  By the way, don’t bother tipping them.  They won’t accept it.
  • If you get to the checkout counter and realize you have forgotten your wallet, don’t worry.  In most cases, Ukrop’s says to take the groceries and pay them next time you come in.
  • Ukrop’s provides in-store “Tot Spots” in their larger stores.  Parents can leave their child at the “Tot Spot” while they shop.
  • Ukrop’s listens and responds to individual customers.  Each store has a Customer Requests board prominently displayed at the front of each store.  Have feedback or want the store to carry a new product?  Simply write down your request and put it up on the board using a refrigerator magnet.  Each note is read and replied to within a week.  The next time you come into the store, check the board for your note and the reply.  I once asked for a specific flavor of ice cream.  The product was in the freezer the very next week.

Marketplace Innovator

Ukrop’s has a history of grocery industry innovations that have allowed them to differentiate their brand.

  • Like most Americans, you probably carry around some kind of supermarket discount card, but I bet you didn’t know that the very first supermarket card program in the US was launched in 1985 at Ukrop’s as part of a Citicorp Point-of-Sale initiative.  Ukrop’s saw huge potential in being able to identify their customers by name and understanding purchase behavior of it’s best customers.
  • Research conducted during the mid-1980s revealed that changing consumer demographics and lifestyles indicated a growing demand for convenient, restaurant-quality food. Demonstrating their “sense and respond” competency, Ukrop’s decided to tap into the demand and further differentiate themselves from competitors. The result was one of the grocery industry’s most lauded success stories of the late 20th century.  Ukrop’s already had experience with a central bakery, having purchased a well known local bakery to supply bakery items to to their stores.  The bakery gave them some experience with manufacturing and logistics.  Leveraging that experience, Ukrop’s decided to create a 10,000 sq-ft “central kitchen” to package chilled prepared food, which consumers could then re-heat.  On Halloween 1989, the company’s prepared foods line debuted, featuring ten items that included twice-baked potatoes, lasagna, and macaroni and cheese. By 1994, the roster of prepared foods had swelled to a rotating list of 125 items. Ukrop’s foray into prepared foods became the talk of the industry, accounting for nearly 15 percent of the chain’s total sales and adding further incentive to shop at Ukrop’s.
  • Don’t feel like cooking? Ukrop’s added an in-store grill to their larger stores in the late 1990’s.  The grill serves everything from sandwiches to stir fried Asian dishes to steaks.  Of course, the ingredients for all the menu items are available in the store.
  • Ukrops’ latest innovation is a partnership with a local gas station operator called Fuelperks.  Capitalizing on the concern over rapidly rising gasoline prices, the program rewards Valued Customer Cardholders with a 10 cent per gallon discount (up to 20 gallons) for every $50 spent.

The Other Bottom Line

Ukrop’s is perhaps best known for their community involvement.  Each year they commit to giving at least 10% of their pretax profits back to the communities they serve. They sponsor many local events including the Monument Avenue 10K and the upcoming Richmond Folk Festival, but perhaps their biggest community program is the Golden Gift.  Started in 1987, the program allows customers to designate a local non-profit organization.  It might me a charity or perhaps your kid’s school. Each year, Ukrop’s allocates an amount to the Golden Gift fund.  This year it was $400,000.  During February and March, Ukrop’s awards each customer with a Golden Gift point for each dollar spent.  At the end of March, the fund is allocated to the customer’s designee based on points accumulated.  The customer then receives a certificate that they can give to their non-profit which can bee redeemed for cash.  Since inception, the program has given back $11.6 million!

These are just a few of the many things that have helps build the Ukrop’s brand.  By putting customers and community first and through innovative ideas that have redefined the grocery store, they have been able to stand the test of time.

Do you own or work for a local or regional retailer?  Having a hard time competing against the big guys?  Perhaps you can take some lessons from Ukrop’s.

What Not to Do – Food Lion

Food Lion is a regional grocery store chain with stores in the Southeastern US.  I had an “interesting” experience last weekend while making a last minute run to the local Food Lion store for two cans of baked beans, an onion and a green pepper.

I’m in the express checkout line trying to navigate the payment pad when the clerk hands me a pad of preprinted forms and asked me to fill out one explaining why I thought he should be employee of the week.  Seriously!  So all this guy has done is swiped four items (remember this, it gets better) and pushed a button.  Why should he be employee of the week?  What things are being measured to qualify one for this honor?  Still trying to focus on the difference between the “Yes” and the “OK” button on the payment pad, I told him I didn’t know why he should have that title, and he said, “that’s OK, just put it on the form”.  So apparently, collecting the most forms makes you employee of the week.  I guess working the express lane is a advantage in this contest.

Needless to say, I ignored the request.  After I paid, I noticed that he had not put my pepper and onion in the bag and had, in fact, rung them separately thinking they belonged to the person behind me.

I’m pretty sure this program was something that the local management came up with.  I’m sure they had the best intentions: improve performance of the team through competition and improved the quality of the customer experience, but their approach was completely wrong.

This program was focused on the employees, not the customer.  It resulted in the employees being more concerned with scoring points that delivering consistently great experiences.  The “express” checkout line was slowed down as a result and the overall customer experience suffered.  Employee of the week/month programs are fine, as long as they don’t get in the way of what should be the primary objective: taking care of the customer.

50 Ways to Improve Your Customer’s Experience

Doug Fleener over at Retail Contrarian has reposted his list of 50 ways to be more customer focused. Take a look and see how many you and your team do on a regular basis:

1. Open the door for your customer whenever possible. This is especially important if her hands are full.

2. Don’t just hand your customer his product, “present” it to him.

3. Keep the store temperature at a setting that is comfortable for customers. Most retailers set the thermostat at what’s comfortable for the employees.

4. Acknowledge your customer’s children.

5. Offer to gift-wrap purchases if you already know it is a gift. Don’t wait for your customer to ask.

6. Always suggest accessories and other items that will enhance a customer’s purchase and his/her life.

7. Offer to carry your customer’s purchase, however big or small, to her car.

8. Send handwritten thank-you notes. Come on, do you really do it?

9. Smile.

10. Introduce yourself to your customer.

11. Ask your customer her name. Use it.

12. Compliment your customer on his purchases. This is especially effective if he is another staff member’s customer.

13. Don’t give your customer too many choices. You’re the experts, so recommend a product based on what you learn from him/her.

14. Tell her why a product isn’t right for her.

15. If you can’t fulfill a customer’s need, suggest another company that may be able to do so.

16. Never ever say something negative about another company.

17. Act just as happy to see a customer with a return as you are one who walks into make a purchase.

18. Make it easy for customers with returns. Almost all customers are honest and should be treated as such. If you have to give a customer a refund, end the conversation with “I’m sorry this product didn’t meet your needs but we will welcome the chance to serve you again.”

19. Warmly welcome every customer who comes into your store.

20. Loan umbrellas on rainy days for customers to get to their cars. Ask them to either drive up to the sidewalk where you are waiting to receive the umbrella back or to bring it back on the next visit. Most customers will turn you down but you score major points for offering.

21. Don’t interrupt the customer to talk. Talk – listen – talk – listen. You get the idea.

22. Do whatever you can – within reason – to keep an unhappy customer. What you’ll lose on the one transaction you’ll make it back because he will tell his friends and family how wonderful you are.

23. Refrain from visiting with a colleague when he/she is with a customer. It’s distracting to both the customer and the colleague.

24. Never rush customers out at closing time. Gently let them know that you’ll be closing in a few minutes. Never flash the lights or sound the air horn. (I’m joking.)

25. Offer to teach your customer how use the products. Clothing and home goods retailers might show their customers how to accessorize the items he/she have already selected.

26. Never blame the company for a policy or decision. You are the company.

27. When a customer says “Thank you,” say “You’re welcome.”

28. Add “It’s my pleasure” after you say “You’re welcome.”

29. Provide written details of frequently asked questions.

30. Don’t coach or reprimand an employee or colleague in a customer’s presence.

31. If you’re on the phone with a customer and you absolutely must put him on hold, tell him approximately how long he will have to wait.

32. Don’t interrupt an employee with a customer unless it’s extremely important.

33. Create a children’s craft area in your store so the kids can create art while their parents shop.

34. Give your customer your undivided attention when she is talking. Everything else can wait.

35. Accept responsibility when the store has made a mistake. Too err is human. To not admit it is stupid.

36. Empathize with upset customers. Say you’re sorry.

37. Offer free drinks to your customer.

38. Give a gift for no reason. Even better, give a gift for being such a great customer.

39. Have the owner or manager personally call a high-ticket customer and thank her for her purchase if the sale was made by another staff member.

40. Loan books and other resources at no charge. This positions you as an expert and creates repeat traffic.

41. Ship a replacement to a customer with a defective product before you receive the original back.

42. Open the doors early when customers are waiting outside.

43. Provide seating for customers and offer to bring them product to look at.

44. If you’re busy and a customer is waiting for help, give him an estimate of how long he’ll have to wait for someone to help him.

45. Stop cleaning and doing busy work when customers are in the store. They’re less likely to ask for help if you’re doing other things.

46. Partner with restaurants and other stores to present exclusive discounts and offers to your customers. (A win-win-win. The other company gets incremental revenue, your customer saves money, and you’re the nice person doing it for both of them.)

47. No checking email or text messages on your phone when customers are in the store. It makes you look bored and nobody wants to shop in a boring store.

48. If you have to walk away from your customer to go to the backroom or counter tell her what you are doing.

49. Always offer to contact your customer when a product she wants comes in. Never tell her to call and check.

50. Always thank as many customers as you can for coming into your store and invite them back.

51. Always go above and beyond for every customer.

You can download the 50 Ways to Improve Your Customer’s Experience article that’s formated as a handout from Doug & Matt’s website .

(Image courtesy of Becky Carroll)

Amazon TextBuyIt

textbuyit1.jpgWhen you are shopping over the web, its very easy to compare prices through multiple browser tabs, but comparison shopping is not so easy to do in a brick & mortar store. Browsing e-commerce sites using most cell phone browsers is a painful experience. Text messaging on the other hand is a very easy task on most cell phones and for younger cell phone users, “texting” is the primary method of communication.

With that as the backdrop, Amazon is once again showing that it “gets it” and in the process, has created a new competitive advantage against traditional retailers. TextBuyIt is an innovative new service which lets people text the name of a product, its description or its UPC or ISBN to 262966 (that’s “Amazon” on the keypad) from anywhere their cellphones work — including from inside physical stores.

If Amazon stocks matching items, the service returns two results at a time. Shoppers can immediately buy one of the first two the selections by texting back the number “1” or “2,” or they can ask for more by texting the letter “M.”

New TextBuyIt customers will be prompted to enter the e-mail address associated with their existing Amazon account plus a shipping zip code. The service then calls them and walks through the checkout process using an automated voice system. Shoppers get confirmation by text message and e-mail.

From there, the customers can check on order status on Amazon’s website.

Why This is Disruptive

Say you’re out shopping at the mall and see some new, expensive thing that you just gotta have. Historically, you have had no way of knowing whether the price is good or not. By allowing you to send a simple short text message to initiate an order, Amazon has just empowered you with comparative price information to make a fact-based decision about the purchase in the physical marketplace and in the process, have inserted themselves into the middle of your purchase process in hopes of steering your dollars in their direction

This is a clear “Make It Easy for Me” differentiator targeted squarely at younger, text-message-oriented consumers. It is also a wake up call for traditional retailers already impacted by the information empowered consumer. Your competitor is now actively competing with you inside your four walls.

 

[From USAToday]

It’s the Little Things, Part 3

handshake-recruiting-sepia.jpgIn a recent post on her excellent blog, “Customers Rock!”, Becky Carroll told a tale of two experiences. The last paragraph of the post focused on how “Little Things”  can make all the difference in a customer experience; a concept I have discussed here on several occasions. Becky said:

I heard an interesting quote on the radio today which sums this all up: “The little things aren’t a lot – they are everything.” Little things like looking a customer in the eye, greeting them, smiling, and carrying on a human conversation go a long way towards marketing a company/store as friendly and welcoming. And it is cheaper than all those advertisements, right?!

Right! So why is it that, generally speaking, the larger the retailer, the larger the spend on messaging and the smaller the spend on the human capital who interact directly with customers and can have the biggest impact on the experience?

In large retail chains, store and call center employees are usually viewed as expenses that must be closely managed. The experience that results from a focus on cost vs quality is often inconsistent and usually unremarkable (unless of course it’s really bad). Some companies recognize their experience problem and try to address it with training and/or initiatives to “change the culture”. But when you have turnover of 40 – 50%, the results of those initiatives quickly fade. The old adage “you get what you pay for” certainly holds up here.

Treat Me Like I Matter

Contrast this with the individual proprietor who’s competitive edge comes from their ability to deliver a more personalized experience. Finding and keeping quality employees who can deliver the same experience as the owner is the top priority. They don’t have the time or the budget to replace and retain employees every couple of months so they often pay a little better and treat the employees like family resulting in lower turnover.   More importantly, the relationships those long-term employees build with customers over time are a big part of the loyalty equation.

Without long term employees interacting with customers every day, it’s very difficult for big retailers to build those personal relationships. They try to compensate with CRM systems and loyalty programs, but in the end, “personalized” marketing is not substitute for the personal touch.

Customer Service Hall of Shame

I came across an interesting article today on MSN Money. Last April, MSN asked their readers to tell them about their worst customer service experience and within 24 hours, over 3000 responses came in. Seeing an opportunity in those kind of numbers, MSN has partnered with Zogby International to create conduct an online national survey that gathered feedback on the 20 companies most mentioned in the original response. The results of that survey have been published as “MSN Money’s Customer Experience Hall of Shame”.

Not surprisingly, Sprint Nextel came out on the bottom with a whopping 40% of respondents who had an opinion of Sprint’s customer service saying it was poor; and this was before Sprint made news last July for firing their customers. The remainder of the bottom 10 all had poor ratings of 20% or more.

The article goes on to point out that the bottom 10 all share one thing in common which is that their customers have very few alternatives. I discussed this same concept following the Sprint story last summer: Companies who have little competition in the marketplace aren’t compelled to differentiate on customer service. Interestingly, most of the “Dishonorable Mentions” in the Hall of Shame are retailers who’s markets are highly competitive with increasingly downward pricing pressure. In other words, a group focused on cost cutting.

As part of the Hall of Shame survey MSN invited CEOs from the companies to respond. Predictably, most of the responses listed in the article are defensive and tout the investments the companies are making to improve. Sprint touted their new billing system which arguably saves them a load of cash by reducing paper costs. But they also discussed the “Buzz About Wireless” community site which includes a customer-service-focused message board where customer can “rant” about their experiences. They also set up a mailbox in response to the MSN Hall of Shame for customers to share their experiences via e-mail.

So it appears that Sprint is finally listening. If you are a Sprint customer, I’d love to hear if you’ve seen any improvements since last July. After all, actually making real changes in the customer experience is what really matters. Listening is just the first step.

Companies Without Conversation

This past week gave us several great examples of companies demonstrating their obliviousness to the changing world around them.

scrabble_v_scrabulous.jpgHasbro / Mattel

You know Scrabble. Created in 1933, the classic wordplay board game has been a favorite worldwide for decades. So when Calcutta-based developers Rajat and Jayant Agarwalla created a Scrabble knock-off application called “Scrabulous” for the social networking site Facebook, people started signing up like crazy. As of today, Scrabulous has 600,000 daily users but that’s only a quarter of the number of people who have signed up to play it. You’d think Hasbro & Mattel, who together own the world-wide rights to the game, would see an opportunity here and find a way leverage these social media passionistas to further promote their product. Sadly, they don’t see it that way and have issued a cease and desist order trying to get Facebook to take the game down.

From a legal standpoint, Hasbro / Mattel are well within their rights and in fact, as Shel Holtz points out in a response to Matt Dickman’s excellent post on this topic last week, companies must consistently go after intellectual property infringement cases to make future charges stick. Moreover, if the Agarwallas had simply printed a copy of Scrabulous and sold it as a board game, there would be little controversy about whether it constitutes a copyright violation.

Back in the days before consumers had a voice, there were really only two parties to consider in these types of cases: The IP owner and the IP infringer. The lawyers would shut the infringer down and that would be the end of it. Unfortunately for companies like Hasbro / Mattel, the world has moved on and, as demonstrated by the Scrabulous case, the consumers now have a seat at the table. They can’t impact the legal outcome of the case, but they can make the PR fallout into a big deal. Hasbro / Mattel either didn’t see that coming or felt it was not as important as defending the IP. What I and many other observers are suggesting is that a little creative thinking between the lawyers and the marketers could have resulted in an outcome that both satisfied Hasbro / Mattel’s legal requirement and managed to tap into the 2.5 million potential evangelists playing Scrabulous. This case is far from being closed and it will be interesting to see where it goes.

Target

Amy Jussel is a blogger focusing on media & marketing’s influence on kids. She sent a letter to Target’s Corp Communication dept regarding a billboard in Times Square that some people have found offensive. The good news is that target responded. The bad news is that this is what they said:

Good Morning Amy, Thank you for contacting Target; unfortunately we are unable to respond to your inquiry because Target does not participate with non-traditional media outlets. This practice is in place to allow us to focus on publications that reach our core guest. Once again thank you for your interest, and have a nice day.

target.jpgTarget “does not participate with non-traditional media outlets”?? Huh? Then what are they doing on Facebook and what’s that Rounders program all about???? And just who do they think their “core guest” is. I shop Target at least once a week and I bet millions of other people who “participate with non-traditional media outlets” do too. Perhaps if Target understood who their “core guest” really was, they would know that some of them can be quite vocal. Word of this “policy” spread like wildfire through digital communities and bloggers like Julia Roy quickly responded. With one sentence to one person, Target managed to offend an important segment of their customer base. What’s astonishing to me is that Target, which portrays its self as being cool and hip, is apparently clueless about how to engage with the “non-traditional media” segment of their customers. They don’t understand the brand evangelism opportunity that can be had from engaging with them (and I don’t mean in a Rounders sort of way). There will likely be some PR backpedaling on this one, just as there was just a few months ago with the Rounders debacle, but whether Target will make some fundamental changes in their approach is yet to be seen.

In a follow-up to his post on Scrabulous, Matt Dickman wrote about engaging with “non-traditional media” types. He asked:

When you look at your brand’s social media universe, are you looking for criminals or evangelists?

I think the first question for many companies should be Are you looking at your brand’s social media universe?

Is part of Your Operation Not Living Up to Your Brand Image?

apple-bandaid.jpgLast Spring, I wrote about opportunities for improving your brand by focusing on the customers experience in areas that may not be directly under your control. The main point of the post was that what the customer sees as the total experience may be broader that what you think it is. It doesn’t matter if the customer encounters a problem outside of “your” area of responsibility; to them it’s still part of the overall experience and can reflect poorly on your brand. These experience extensions are often delivered by third parties who don’t necessarily have the same customer objectives as you, but sometimes, inconsistent customer experiences can be due to a problem internal to an organization. A recent personal experience with Apple makes for a good case study.

Apple excels at designing great technology experiences. They completely dominate the portable media player market. They have redefined what a cell phone is and sales of Mac computers is growing faster than any other brand in the US driven by a highly effective and popular ad campaign.

Apple has also done an amazing job expanding from a technology manufacturer to a retail powerhouse. On average, Apple stores generate over $4000 per square foot per year. That more than four times what Best Buy produces. Apple has invested heavily in creating a retail shopping experience which is both innovative and compelling.

This Christmas, I was compelled to purchase a MacBook as a present for my daughter. The sales experience was simple and fast and I walked out feeling really good about the purchase. My daughter, who loves to create and publish videos, was thrilled with her new computer. That is until it died five days after Christmas.

I was a little surprised. This was after all, a Mac. They’re better than PCs; they just work, right? In fairness, all technology products have their share of defects and from my research, Apple makes some of the most reliable computers on the market, so I don’t think this failure is indicative of a general quality problem. My first response was to go to Apple’s website to see if it held any information about the series of beeps that we got trying to boot. Surprisingly, I didn’t find any there. I then checked Google and quickly discovered that the beeps indicated that the RAM wasn’t being detected.

I spent the next hour and a half on the phone with about an hour of that time being on hold. The tech that I was working with could not diagnose the problem and kept putting me on hold to consult with product managers. He eventually sent me to one of those project managers who, after twenty more minutes on hold, told me that I had (surprise) a memory problem. I’m no “genius”, but 90 minutes to tell me what I already knew doesn’t seem very smart. The product manager then told me that he would give me an address where I could ship the computer to be repaired. That came as an unexpected and downright irritating surprise….

WHAT!?!? It’s only five days old, it’s dead and you want me to ship my daughter’s new Christmas present off for a couple of weeks to be repaired?? I’m thinking, “How does this experience support the Apple brand?”

OK I didn’t say any of that, but I did ask if I couldn’t simply take it back to the store. The product manager responded (and I’m not making this up) “Yeah, you could try that. They might have some extra memory laying around”.

I told him that I wanted to try that option first. Having previously dealt with a defective iPhone, I knew that I would have to make an appointment or risk waiting at the store for a few hours on standby. With my iPhone, AppleCare made the appointment for me so I asked the product manager if he could schedule an appointment for the computer. He responded by telling me that I could only schedule appointments for the current day since I had not paid the $99 fee that gives me the right to preferential treatment. Apparently my $250 extended warranty doesn’t get me any preferential treatment like it does at other CE retailers. Given that it was after store hours on Sunday, he told me that I would have to try to make the appointment myself early the next day.

On Monday morning, I went to Apple’s website at 7:30 am only to be informed that my store didn’t have any availability. At 10:00, I called the store to see if I could get an appointment, but the recorded message told me that they are unable to schedule appointments over the phone. The only option for tech support was to transfer me back to AppleCare. I did that hoping that they could possibly schedule stand-by appointments. No such luck as the AppleCare people could only see the same screen that I saw.

Finally after investing over two hours in this process, I got in the car and drove to the store with the dead MacBook. Entering the store, I was immediately approached by a very helpful employee who was able to get me scheduled with a genius in about 20 minutes. I told her about the problems I was having trying to schedule the appointment and she told me I “could have just pressed 5 when I called the store and they could have scheduled me over the phone.” (Doh…) I started to explain that the recorded message said otherwise, but just let it go.

Thirty minutes later, the problem had been diagnosed as both bad memory and a bad disk drive. I ended up getting all the personal data and software loaded to a new machine.

So here’s how I perceive the Apple brand based on this experience:

  • The user experience design for Apple’s technology is excellent.
  • Apple’s in-store retail customer experience both before and during the sale was excellent.
  • The AppleCare phone support experience was terrible on several counts.
  • Apple Retail’s in-store tech team was highly responsive and deserves the credit for salvaging a bad experience.

Apple, like many organizations, operates a number of divisions who each contribute to the success of the business. When all of those divisions are equally focused on delivering great customer experiences, the brand image is enhanced. But when one or more don’t deliver a great experience, the brand is diminished.

Make a point to regularly examine all of your customer experience touchpoints to ensure that they are consistently deliver experiences that enhance your brand.   Then act quickly to turn those deficiencies into opportunities for enhancing your brand image.

Your Brand is Defined by the Customer Experience, Not the Slogan

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When the 2007 holiday season kicked off a little over a month ago, US-based electronics retailer Circuit City introduced a series of TV commercials focusing on the simplicity of the digital lifestyle. With the ads, Circuit City introduces their latest moniker “Simplicity Guaranteed“. According to Circuit City’s Chief Marketing Officer, the new spots “illustrate how Circuit City makes it simple to Shop (on-line), Buy (in-store) and Enjoy (firedog services) your digital lifestyle this holiday season and beyond”. ”Simplicity Guaranteed” is the latest in a series catch phrases used by the retailer over the last few years. Previous slogans have included “Imagine That” (2000-2001), “We’re with You” (2001-2004), “Just What I Needed” (2004-April 2007) and “Circuit City Makes it Simple” (2005 Christmas Season)

All of these past slogans describe brand perceptions that Circuit City aspired to but failed to achieve. Why? Because a company’s brand is not defined by its catch phrase, logo, aesthetic style or culture. A company’s brand is ultimately defined by the experience they deliver to their customers and Circuit City has been unable to consistently deliver experiences that supported those brand promises.

The latest revival of the Simplicity theme is part of a larger strategic framework that I helped develop for Circuit City a few years ago (you can hear about it here). Making it Easy for customers to shop, buy and enjoy is one of the four key ingredients to the vision my team proposed. We also recognized that delivering experiences consistently supported the “Make it Easy” idea would require significant changes in processes, culture and internal success measurements. Almost two years after those recommendations were made, Circuit City has “re-branded” many of the same operational features that they have been touting for years with the “Simplicity Guaranteed” label, but has not done any of the heavy lifting required to support the long-term strategic vision of sustainable growth through exception customer experiences.

Marketing strategist Scott Glatstein suggests five steps for building a strong brand and optimizing customer experience:

  1. Identify your reasons to believe.
  2. Identify customer touchpoints.
  3. Determine the most influential touchpoints
  4. Design the optimal experience
  5. Align the organization to consistently deliver the optimal experience

Reasons to believe are those things that the customer experiences that support the brand promise. Circuit City has decided that Simplicity is one of their reasons to believe, but they have not executed any of the other steps suggested by Glatstein. Without those crucial components, the customer experience can easily fall short of the brand promise. Here’s an example:

nano.jpgOn Christmas Eve, we decided to purchase an iPod for a relative. In the weekend tab, Circuit City was advertising a free $15 iTunes card with purchase of a Nano priced at 149.99. Electing buy on-line and pickup in the store (A feature that usually does live up to the Simplicity promise) we went to the web to place the order. We were surprised and delighted to see the web price of $142.49, but noticed that there was no mention of the free iTunes card on the web. Here is the first indication of a problem. The tab touchpoint and the web touchpoint are not aligned in terms of the offer. This generates confusion and apprehension for the customer.

nano2.jpg

We made the purchase and left, with tab in hand, for the local store. When we arrived, the iPod was waiting for us as promised, but there was no $15 iTunes card. Our concerns about the conflicting offers are validated and we are now entering confrontation zone.

We showed the tab to the customer service associate who wasn’t sure how to deal with the situation. Someone else was brought over to correct the problem. He suggested to “return” the web order and resell it to get the iTunes deal. The CSA did that, but in doing so, the price went back to the advertised price of $149.99. The CSA called the assistant back and the process of “fixing the order” began. At one point, we were told that we owed another $0.70. At another we were going to get $).09 back. Clearly, the front line associates; the ones that come face-to-face with the customers every day, are not prepared to deal with this problem. The processes have not been optimized to deliver a great experience.

With the line backing up behind us, the CSA team finally found a way to make deliver the transaction with the free iTunes card at the price advertised on the website. The total in-store transaction time was over 20 minutes. Our expectations were not met and the other customers in line behind us got to share our experience as well.

So did Circuit City satisfy their 24/24 guarantee. Technically, yes as the web order was ready in less than 24 minutes. Did the experience reflect “easy to shop, easy to buy”? Absolutely not! Circuit City has not identified and evaluated all of their touchpoints against the “Simplicity Guaranteed” reason to believe. They have not designed optimal customer experiences that include these touchpoints, and they have not aligned the various channels and business functions to deliver an optimal experience. This may sound like an isolated incident, but it is not. Where else is dealing with Circuit City not Simple? How about rebates, scheduling an in-home service or getting a product repaired under warranty if you didn’t buy the extended service plan?

Circuit City was once a retail powerhouse. They practically invented the “Specialty Superstore” concept. Today they are struggling to remain relevant in what has become a commodity market. They have to compete with mass marketers like Wal-Mart and Costco who can price aggressively, niche players like Gamestop and Verizon who can beat them at the “authenticity” game and web marketers like Amazon and eBay who can always deliver a better selection and competitive prices. At $4.62, their stock price is trading a 52-week low and is flirting with a 5-year low. Circuit City will have to find a way to build a truly differentiated brand if they are going to survive. Simply adopting a new slogan that says you “make it easy for me” isn’t going to cut it. They must also consistently deliver a customer experience that supports the claim. Without that, the slogan only serves to set expectations that won’t be met and further erode the brand.

Many of you may have shopped Circuit City in the past couple of months. I would love to hear about your experiences and your ideas regarding how Circuit City could improve the customer experience.

People Don’t Want a Drill…

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Today, I have the honor of guest blogging over at Drew McLellan’s Marketing Minute. The post is titled “People Don’t Want A Drill…”

Here’s a sample…

“…people aren’t looking for that thing you are marketing; they’re looking for the best tool to get a job done. Unless your product is some sort of “collectible”, your customers are only buying your product because they believe it will help them achieve that objective. Product features and functions may change at an ever increasing rate, but the things that people want to accomplish in their lives don’t change that quickly. Brands that help customers accomplish their objectives more effectively and conveniently than their competition are the ones that will be successful.”

Check out the whole post here

Update: Here’s the complete text:

In his book “The Innovator’s Solution: Creating and Sustaining Successful Growth“, Clayton Christensen writes:

“How do you create products that customers want to buy–ones that become so successful they “disrupt” the market? It’s not easy.

Three in five new-product-development efforts are scuttled before they ever reach the market. Of the ones that do see the light of day, 40% never become profitable and simply disappear.

Most of these failures are predictable–and avoidable. Why? Because most managers trying to come up with new products don’t properly consider the circumstances in which customers find themselves when making purchasing decisions. Or as marketing expert Theodore Levitt once told his M.B.A. students at Harvard: “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole.””

Put another way, people aren’t looking for that thing you are marketing; they’re looking for the best tool to get a job done. Unless your product is some sort of “collectible”, your customers are only buying your product because they believe it will help them achieve that objective. Product features and functions may change at an ever increasing rate, but the things that people want to accomplish in their lives don’t change that quickly. Brands that help customers accomplish their objectives more effectively and conveniently than their competition are the ones that will be successful.

Given this, why do so many companies attempt to market their products and build their brands using an approach focused internally on the thing and not externally on the customer’s need? They conduct focus groups, assembling panels of customers to ask if adding this bell or that whistle to their thing would make it more appealing. They do extensive demographical analysis to determine those target customer segments that will find their thing appealing and then spend lots of resources convincing those customers to buy their new and improved thing. Sure, they get clear inputs on what customers want, but don’t typically take the time to understand what customers were trying to get done for themselves when they use the company’s thing. And this approach isn’t isolated to just manufacturers. It carries over to retailers who are focused on the products they are selling and not what the customer is passionate about or the “hole” they are trying to make.

Consumer Electronics retailers (my background) are particularly guilty of this. They are constantly telling customers that they have “all the great technology you want (or need) at prices you can afford“.

The fact is, very few people “want (or need) technology”. Customers don’t just wake up one morning and decide they need to go down to Circuit City to pick up some great new technology.

They DO want to have an incredible theater experience in their home. They DO want to capture and share family memories. They DO want to be able to print documents from any computer in their home.

How do the marketers respond to these needs? They dish out specs like 1080p, HDMI2.3, megapixels, and 801.11B, G or N. Whatever the latest spec is, that’s what you want. For the customer, none of this hype guarantees a great experience. Marketers who choose to promote their things this way will have a hard time building a powerful brand.

Marketers who understand what customers are really looking for will succeed by focusing on the experience enabled by their brand. Apple is, of course, the often-cited poster child for this. The iPod has never been the best in class from a technical standpoint, but the way Apple enables the music listening experience is what has put their brand miles ahead of the competition. In fact, the term “iPod” is often used generically in place of “MP3 player”. Customers looking for a portable media player will almost always think of Apple and iPod first.

My friend Ryan Karpeles wrote a great post on what he calls Reverse Branding which echoes this idea:

“People rarely think of your actual brand first. They think about what they want. Then they decide who, specifically, can fulfill that desire. Being that “who” is the essence of Reverse Branding.”

Getting customers to drive your brand in this way is the holy grail of marketing. To get there, you first need to understand that it’s the hole they want, not the drill. Once you get that, focus your efforts on being the best damned hole maker in the business.

 

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