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Saturday, January 30, 2010

To improve service, don’t play the percentages.

Many B2B and B2C companies market their service delivery rate – fulfillment, up-time or on-time percentages – as an indicator of how reliably they perform.

These external claims usually reflect internal service quality metrics, independent of whether they are important to consumers or not. But while helpful for internal comparisons that lead to incremental improvement, these metrics provide a false sense of security about service quality and may actually impede true improvement.

Consider the following:

99.5% up time sounds great. Even at 95% fulfillment success on your core promise, you feel pretty good about things, right? But if your business had 100,000 customer interactions, service encounters or “moments of truth” yesterday and your delivery rate was that “A” letter grade of 95% - you’ve failed to deliver on your promise to 5,000 people.

5,000 times some level of disappointment yesterday. And, if your service is consistent, you know today that you’ll fail for 5,000 more people tomorrow.

Take that pure failure number in your core operation and add the performance in the interactions you have with customers in your customer service channel and at the point of sale. Take that number and apply it over the week. The month. The year. How many customers, as a percentage, had a defect-free year in dealing with your services? And that’s just basics – your satisfaction core. It doesn't consider any effort or need to provide customer delight.

To create a sense of urgency around improvement, report the failures in real numbers at the time you report your service performance.

Would that focus managers on finding root causes of defects in the core offering? Focus the service operation on fundamental change rather than incremental improvement? Focus marketing on finding the right customers and promoting them while finding the wrong customers and managing them out of your business?

The false sense of security that the percentages provide is the reason a vast majority of companies feel they provide outstanding service, while an equivalent number of consumers feel that service performance is low.

Percentages are important, but appreciate the personalized perspective, that measuring your success and failure in pure numbers provides you business, and the subsequent urgency it creates.

Wednesday, January 27, 2010

Rumors of demise, once again exaggerated.

A great interview with Henry Blodget of The Business Insider on the New York Times’ conversion to a modified paywall for their online news service.

Much has been written about the death of the print news industry. (Enough that it makes me wonder if it would have been as well covered if it were impacting, say, teachers, rather than journalists.)

While the final outcomes remain to be seen, I’m more interested in how the New York Times is shifting their business model around their product / service mix to retain value in the offering:

Most of the value in the tangible good, the newspaper itself, is going or gone. The tangible product was only ever a source of value for a few, and those customers will continue to buy print versions of anything as long as they can.

The content is also a good, and while it’s value is somewhat diminished due to the ubiquity of free content via the web, there is still value in quality content, or at least content a specific audience perceives has higher quality than what they get elsewhere. The New York Times has the benefit of both, as do a handful of other print publications. (The Wall Street Journal, The Economist, The Washington Post have proven this as their subscriber base has actually increased through this period)

Where it gets really interesting is in the less tangible, service aspects of the offering.

The value that comes from conveying knowledge through information still exsists. It may be somewhat diminished because of free content, but again, the quality content is still a source of value overall, and particularly for the dedicated core.

The value to advertisers may not be diminished at all, as they get high-quality, segmented impressions from the loyal subscriber base, and large volumes of eyeballs from the casual readership. As quality content is often a reference point, they may find advertiser value actually grows as more sites point back to them as a proovider of quaity content.

It is the value in the delivery aspect of the service (that makes the content or physical good available & timely) that is most diminished. Internet delivery is much easier to execute and done in near-to-real time. On the flip side, the cost of physical delivery is also removed, making the distribution model efficiencies available to the New York Times every bit as much as they are to an Internet-only publication. With little incremental cost to distribution, this may turn out to be a long run advantage, if a distribution network with a wider range can built on the backbone of their quality content.

Only time will tell whether this is the right strategy for The New York Times. It wouldn’t likely be for a number of their lesser peers.

Still, good service businesses (or good anything businesses) will continue to thrive by knowing their customer & the value they provide through their offering. By using the components of the services and products they provide to make a promise that is based on that value, and consistently keeping it.

Sunday, January 24, 2010

Follow-up: 2% additional effort, 100% customer impact

I’ve had a good run to start 2010. Or rather, the businesses I regularly interact with have, following up on recent transactions or past relationships, generally making me feel like a valued customer.

Of course, the company providing solid follow-up is usually the one that also provides the best service experience, hence (usually) the one I choose for an enduring relationship anyway, but the attention has been nice. Maybe 2010 will be the year business recognizes service as the critical differentiator after all.

Follow-up, inconsequential as it might seem as a service behavior, is one people pay for.

It improves assurance feelings by closing the loop on open interactions or by giving customers a feeling that a business is ‘thinking’ about them when not actively engaged in taking their money. It demonstrates empathy in recognizing how a customer would like to be treated and fulfilling that promise. Over time, it improves the perceptions of reliability, setting lasting expectations for a customer on how interactions are going to be handled. (This can be a burden also - if Nordstrom were to stop their regular and post-transaction follow-up, I'd definitely notice and see it as a dissatisfier.)

We all know of individuals in organizations who provide outstanding follow-up, and most of us can name a few organizations that have been able to institutionalize it in a “follow-up culture”. As much as follow-up works on an individual level, it is much more powerful institutionalized as a brand statement or part of the organizational culture.

So why do so few companies engage in systematic, organization-wide follow-up?

Follow up doesn’t have to be expensive. Sure, at the top end, it can be a completely CRM-enabled function, with all the capabilities to never miss an interaction opportunity. Still I’ve seen plenty of companies with expensive CRM packages fail on executing responses to unresolved service issues.

Truthfully, it can be as simple as the time to write an email or make a phone call, the card stock for a handwritten note and a business card, a 140 character tweet.

The investment comes in the form of a culture that fosters proper follow-up. The service orientation, the proper organizational / managerial support, tools, and time. It takes a willingness to step away from “measured behavior” - time spent on concrete operational tasks - and allocate it to fuzzier relationship-building.

Like most service, the tools can be relatively simple. It is the cultural orientation that is the barrier between average commodity interactions and those that are reinforced by positive follow-up.

Sunday, January 10, 2010

Service Rant: January at the Gym

January at the gym – the month where “resolutioners” – those people who make the promise to get back in shape, commit to a healthier lifestyle, eat better, etc. for the coming year – come to the gym in droves on newly purchased or gift memberships.

It happens every year, and it makes January is a capacity disaster at the gym.

Lines are stacked 3-deep at many machines with people waiting for a turn. Personal trainers and nursery slots are booked weeks in advance, and you have to palm the cleaning staff a fiver to find an open treadmill. The gym becomes a mixture of expert and novice users, with the former waiting while the latter read machine instructions for proper technique.

Because it happens every year, the gym’s annual unpreparedness is inexcusable.

I’m not saying the temporary increased interest in fitness is a negative. If more people made the commitment and stuck with it, our country would be healthier, lives would be saved, healthcare costs would decrease, and all manner of positive societal benefits would ensue. But the truth is, that most of the resolutioners will be gone by the time the calendar turns to February, and the gym has to shoulder some of the blame for it.

If they wanted to keep the new clientele, they’d make it more attractive for them to stay. Dedicate capacity to the new users to show them how hassle-free gym services are the other 11 months of the year. Deploy more instructors to shepherd new clients through their first few trips. If permanent staff is fully allocated, they could get creative and use a compatibility service to assign a current power user customer to a guide the “newbie” on how best to use the services. They wouldn’t act as a trainer, but someone who can give helpful tips on when to go, how to use the extended services, general etiquette, and so forth. It could be a reinforcing relationship for each party, and at the least would make someone new find what can be an elitist environment more comfortable. If the current user needs motivation for their time, offer something – training sessions, tanning sessions, free protein shakes for a month – for their troubles.

At the same time, create capacity to serve all clientele. Consider taking loyal customers out of the gym – arrange for an alternate facility, or better, a loyalty experience such as a series of hosted events – a hike or climb, ski trip, a members’ triathlon, an adventure race – something that rewards the most loyal clients for their loyalty and gets them offsite in January. For those that stay and put up with the wait on machines, reward them with free training sessions (AKA a free service trial for a potential future stream of revenue) in December or February as a thank you for their patience.

My gym – and most I’ve ever used - manages the annual January capacity shortage awfully, and deteriorates relationships universally, frustrating loyal customers while alienating new ones. It all sorts itself out when most of the new customers cease using gym services, and a few of the frustrated loyal customers change gyms, and capacity turns to normal. But it doesn’t have to. The gym could use the capacity shortfall creatively to reward loyal customers, welcome new clients with positive first experiences and customer-to-customer interactions. Of course, customer retention would create an ongoing capacity problem, and then the gym would have to deal with more revenue, profits, need for expansion, and other such successful business headaches.

Wednesday, January 6, 2010

The Coming Death of “The Only Place in Town”

Just concluded a horrible service experience with a tailor in the small town where we’ve spent our family holiday.

With the pre-holiday rush, I didn’t have time to get hemming done before heading away on vacation. My wife, ever helpful, suggested bringing the pants with us, get the tailoring done in a day or two, potentially to have available for an event early in the New Year.

Always one to listen to the local / expert recommendations, I asked around and took my business to the tailor several friends & family members suggested was the best option.

The initial service I found was less than overwhelming. Unresponsive to an un-staffed customer desk, I finally wandered into the work area to find someone to serve me. They pointed me to a dressing room, and as I was being fitted, promised far less than what I was expecting or used to. The timeline on a simple hem was going to be a week, if I had it rushed. (My regular option gets me in & out in a couple of days in all but the most exceptional circumstances.) The cost, in a small Canadian town, was going to be twice what I was normally charged at my highest-priced home option, the local Nordstrom tailor.

Though all sense told me to take my things back and just have it done at home, I decided that not having to bother with it early in the new year was worth the effort during my current "down time", and proceeded.

I happened by the mall the tailor was located in six days after dropping them off. On the off-chance they had exceeded their promise and neglected to take credit for it, I checked to see if perhaps they hadn’t finished a day early. Not surprisingly, "my tailor" was the only store in the mall not open on a Saturday.

I finally retrieved my clothes, though in a rush to catch an outbound plane, didn’t have the chance to try them on. Not surprisingly, when I finally did, they didn’t fit as I had asked.

Through every touch, the attitude was, “We’re as good as we need to be – where else are you going to go?”

It’s poor business, but the “captive market” attitude and service approach still persists in a lot of geographies and industries. For small-town tailors as much as for legacy industrials, the approach is becoming increasingly less viable and looks increasingly foolish / shortsighted to outsiders.

Business entry costs are coming down across the board. Business process / back office management outsourcing is allowing garage businesses to look & act like FORTUNE 500’s at a fraction of the scaled cost. The internet is making easier quality service companies and customers to find each other, and social media is making it easier to find 3rd party assessment of the goods / services companies provide.

There are fewer barriers to hide behind, even for the small-town tailor. Companies not providing service and value will be found out, and punished accordingly by their market.

How many service businesses are unaware how little time they have left to change?

Monday, January 4, 2010

Does your supply chain know what promises your brand is making?

A friend who knows me well gifted me a new service experience this holiday season.

He’d been telling me for some time about Bonobos, his favorite online men’s apparel retailer. While he was always pleased with the pants he’d ordered, it was their service that had won him as a long-term loyal customer. Early in his relationship with them, he’d had to return a pair, and was pleased at the ease and absence of cost of the return transaction.

Excited, I hit the site, ready for my service experience.

The first thing I noticed was their product line: few SKUs, simply arranged with mostly terrific classic styles, but a with some that offer much more flair than I’m used to wearing. As to the return process my friend had employed, Bonobos uses it directly as a positive experience tool, stating on the home page, “Any pant, any time, any reason. We'll pay for standard shipping both ways.” An acknowledgment that a certain amount of returns are expected in order to provide satisfaction on final delivery. Here they also set the expectation that the pants will be long and will likely need to be hemmed, and explain that it is more important

The next thing I found: They’re stocked out. Of almost everything. The site offered me the opportunity for one of their employees, (presumably customer service, though they go by the expectation-creating title of “Ninja”), to contact me when the product(s) I’m looking for come in.

I also noticed that their marketing is designed to be completely permission-based, and they structurally reward customers with savings opportunities for positive word-of-mouth. High marks for both activities.

I emailed the ninjas about their out-of-stock situation, and almost immediately I got a response from one of the ninja managers, essentially apologizing for their popularity and offering to inform me when what I want arrives in stock.

An exceptional service experience?

They're anticipatory in setting up-front expectations, make the experience simple for the user and are quick with an empathetic, personalized response. Those are core aspects of a tremendous service experience. So is day-to-day reliability. I’m also looking for fulfillment of the promise, and understanding and using your service supply chain is critical to creating consistency in the experience that creates a lasting brand impression. Even though I got what I was looking for, and will likely be a happy first-time and repeat customer, with so much out of stock, my experience had overtones of having had to settle.

Not likely what Bonobos intends as a business otherwise thoughtful about their experience and attuned to service and their customers.

Saturday, January 2, 2010

(Personal Interest + Emotional Tie) x Simple Execution = Memorable Experience

Memorable service experiences happen when someone satisfies an emotionally-intense personal interest with in a unique way. 20x200, with the simple mission of providing art for everyone via a simple internet distribution, qualifies - at least for me.

I love great art, but my limitations are those of many: I appreciate it when I see it, but I don’t often have the time to look for it. When I do happen upon it, what I find is often out of my spending range for something so completely discretionary.

20x200 offers a simple formula for selling limited edition art prints online: only a couple features per week so as not to overwhelm, provided in three sizes with three corresponding price points. The smallest is a 200-edition run of a $20 print, and works up to a 2-edition run of a $2,000 print.

What ties my interest to an emotional trigger is a personal feeling that art, like design, has become elitist, counter to the idea great design makes the underlying good – product or service – more accessible rather than less. (Universal accessibility is as much what makes the iPod an iconic as the usefulness & simplicity of the interface.) Building from the beautifully simple motto “(limited editions x low prices) + the internet = art for everyone”, 20x200 embraces accessibility of art wholeheartedly.

Many online retail sites that could satisfy my personal interest in affordable art. 20x200 is a memorable experience by doing so while helping me easily find something I’m interested in, make it accessible, and link their mission to an personally held belief.