Apparently, it's the contract.

Verizon Wireless is defending the implementation of a $350 “early termination” fee for customers who purchase smartphones and switch service providers before the end of the agreement, explaining that the fee covers the costs and the risks of providing high speed internet.

I understand their perspective. All wireless providers have dramatically reduced the cost of phones and other devices to attract customers and get entice them to sign long-term service agreements. The service philosophy in play is that the cost to serve an existing customer is dramatically less than the cost to acquire a new one, and with a contract, they can count on users as a reliable stream. They get frustrated when this strategy is short-circuited by customers who aren’t as loyal as they would hope, leaving the provider without penalty for a better deal, better service or both.

Instead of customer behavior that needs adjusting through penalty, perhaps it is their retention model that needs correction. Rather than using contractual verbiage and fiscal penalty to retain customers, why not use outstanding service supported by compelling products to make people want to stay?

The strategy of holding a consumer to a contract is tough to enforce at the best of times, and it’s difficult to start charging for something that previously came free.

More suspect is the logic that justifies signing a client to a contract for service and holding them to their obligation not to defect, while not performing their own end of the agreement to provide a quality service. Effective service agreements (and client relationships) tend to work in both directions. If the company isn’t providing service levels customers expected when they entered into the service agreement, customer defection should be facilitated, rather than restricted.

If their ad claims are accurate, Verizon would have little to worry about.

Where is our Gift-Giving Pandora?

Gift cards have increased popularity as a holiday shopping alternative because they improve satisfaction on both ends of the vast majority of gift-giving experiences.

Immensely portable or even virtual, they reduce a giver’s search costs to almost zero. More importantly, they allow the giver to fulfill their desire (or social requirement) to give a gift while relieving them of the increased anxiety over having potentially given a bad gift, or even a suboptimal gift, as it transfers most of the burden of choice to the receiver.

Gift cards improve the satisfaction on the receiver end as they provide the receiver some personal choice over the gift, while allowing them an additional pleasurable service experience as they engage in shopping with treating themselves as the goal.

Traditionalists see gift cards as impersonal, which, to some extent, they are, but they're used so frequently because in a majority of cases, traditional gift giving is an inefficient activity requiring scads of time and providing suboptimal satisfaction results.

Before I’m chastised for that last sentence let me defend that I know it’s the thought that counts. But why can’t the thought and the result be equally exceptional?

Where is our Pandora for giftgiving? We can’t be far away. Between facebook updates, Foursquare mentions, tweets, LinkedIn networks, contacts and reading lists, Amazon and other sites’ compiled wishlists, we’re aggregating enough data points on ourselves to create a personal preference profile that will spit out timely, relevant gift choices and link people to a retail experience to obtain them. The music genome project attempted to “capture the essence of music at the fundamental level" using about 400 basic attributes to describe songs and an algorithm to organize them. I love Pandora because it takes what I know and suggests similar relevant material – some of which I know and some I don’t.

Surely we’re at the stage where there are enough data points on each of us in the social networking, online and offline retailing spheres to compile our personal preferences and do the same.

The Most Wonderful(ly Exhausting) Time of the Year

The holidays are busy for service businesses. People spend more time out of their homes rushing between appointments and finishing to-do lists. Engaging more frequently in retail experiences, but also in other service that support their schedules and social calendars – haircuts, dry cleaning and babysitting for holiday events, coffee & restaurants for refueling on the go, air travel – the list goes on.

It surprises me there aren’t more services designed specifically for the mega-event the holidays have become, catering to weary people as they as they get busier and have to contend with too many activities, too little time, and throngs of additional traffic everywhere they go.

My gym nursery has a “drop & shop” service for parents that need to shop for gifts away from the inquisitive eyes of their kids. Personally, I envision scores of 4-year-olds already hopped up on holiday candy turning into a Lord of The Flies re-enactment, but this is exactly the sort of service that I’m talking about to give just a little time and space to someone at the busiest time of the year.

Most malls & major department stores have a gift wrapping service, but how about a porter (a gift valet?) to shuttle purchases to my car as I make them. Extending the delivery angle, a service that takes my shopping from multiple places and aggregates a delivery at my home? (if ever a viable grocery delivery business were to launch, the holidays would provide the delivery density needed more than any other time.) How about a personal holiday concierge that acts as back office support for the holiday project, arranging schedules, picking up groceries & drycleaning, and acting as a temporary domestic personal assistant?

Perhaps this is just wishful thinking from someone caught in the same time trap we all face this time of year. Businesses do well during the holidays as people increase their use product and service companies alike, but is there an opportunity to make the time & effort of consumption easier on people as they engage in the production of the major domestic event of the year?

What your self-service technology says about your business.

An automated call directory experience from a company with which I’m about to begin a business relationship:

Press 1 to speak with someone in sales
Press 2 to for customer support
Press 3 to leave a message
Press 4 to dial your party by name.
Press 5 for the operator

So…you’re most interested in selling me something. If I’m not willing to be sold today and I don’t have a service problem, you’d prefer I leave a message for someone to get back with me.

Every touchpoint sets customer expectations for the service they receive. They indicate to customers, suppliers and partner what the organization is focused on and point towards their overall quality as a business.

Without ever having had a business interaction, this company told me they were more interested in taking my money than serving me, would rather I leave a message than conduct a live service interaction.

If they’re exceptional, they might recover, but the expectation has been set. For now, I’m just glad I’m not paying the bill on this one.

A service-recovered customer tells how many people?

Imagine you screwed up your most important business day of the year by shutting your customers out of your store at the time their demand was at its highest. That’s what Cyber Monday is to retailers, and that’s what outdoor apparel retailer MooseJaw did yesterday, when its “5X Rewards” promotion brought the entire site down.

Effective service recovery acts quickly, admits the mistake and acknowledges the appropriate level of consumer hardship, and presents a fair resolution to fix the problem. Going a step beyond is the company that makes a customer a little more than whole for their troubles.

Here’s MooseJaw CEO Harvey Kanter hitting all three. I didn't shop MooseJaw yesterday, but I'm in their database, and I got the email.

At Moosejaw, we're committed to making shopping as much fun as backpacking the Chilkoot trail or playing red rover. This morning, we didn't live up to that commitment when our site went down due to problems caused by our 5X Rewards Promo and high traffic volume.

Long story short, we've fixed the issue by removing the promo code. Now anyone who checks out WITHOUT entering a promo code will get the 5 Times Rewards Points when we process the order. The deal is still good until midnight PST, so if you missed it earlier today, there's still time.

Love the madness,
Harvey Kanter, CEO
Moosejaw

The paradox in service recovery holds that a customer well recovered from a failure is often more loyal than a customer that never had a failure in the first place.

It’s likely that MooseJaw lost a lot of revenue yesterday, but by correcting quickly and removing the requirement of the promo code in order to receive the benefit, hopefully they gained a few more loyal followers.