Let’s all differentiate together.

Forrester's State of the Customer Experience, 2010 found that fully 80% of companies want to use the customer experience as a differentiator.

Is this possible?

80% seems like a lot of differentiating based on the experience, but it depends on what companies mean when they make the statement. If “differentiated” means a company’s customer experience is demonstrably better than their competitors, the concurrent improvement of the competitors’ experience ( at least the rest of the 80%) would mean that as all experiences get better, they would remain every bit as undifferentiated as before. The bar on table-stakes service levels would be raised considerably and the customer would win, but the companies would add cost for the same revenue opportunity.

So should this 80% of companies abandon their objective of differentiating on the customer experience?

Not necessarily, and not because a dramatically smaller percentage than 80% will correctly pursue differentiation along the customer experience.

Differentiation doesn’t have to mean a better experience for everyone – it just has to be a better experience for someone. If a company were to select a customer that represents their ideal and change their business model, the service operation, marketing and support processes to attract and serve that customer better than anyone else possibly could, then would be achievable, more difficult to replicate and worthy.

Every market would have a customized set of offerings in every space, and customers would choose the type of experience they prefer, rather than most current markets where choice consists of extremely similar variations of the same service. In air travel, for example, you might have “the singles airline”, “the families airline”, “the business airline”, “the green airline”, “the exclusive airline”, “the low-cost airline”, and so on, with service experiences tailored to the specific travel scenario.

The problem is, most companies are undifferentiated because they serve the “everybody” market. For these companies, the intention to “differentiate on the basis of the customer experience” is meant as revenue growth initiative in their current model, not the selection of a new service and business model that would truly allow to carve out a sustainable, defensible market and serve it better than anyone else. This kind of experience differentiation would require companies to downsize service operations, intentionally cull customers and expend service enablement and marketing dollars in order to attract and better serve their ideal customer.

The service business willing to identify their market in real terms and size to it is also the one with the freedom to change their service model to differentiate on the basis of the customer experience.

Thousands of loyal customers in just minutes a day.

I was at my local bank branch yesterday, and while engaged in discussion with an associate, I caught a glimpse of the mousepad on her desk. It had been designed as an internal communication piece – the type (usually distributed by corporate marketing) that takes an important business concept and creates a mnemonic device out of an associated word by aligning a meaningful phrase on a specific topic from each letter.

This one spelled S-E-R-V-I-C-E, with appropriate phrases meant to remind associates how they must keep the customer at the center of what they do.

It might be the cynic in me, but these communications devices are usually a sign of an organization that is not service oriented. For my bank, it certainly applies.

They’re a marketing response to a service problem, and are usually devised by a senior exec who, after reading a report on the positive impacts of loyalty, determines that a shift to a customer-centric organization is the key to retaining and growing revenue. They decree that all that needs to be done to create competitive advantage through outstanding service is to engage marketing to educate the front line how important customers are and what types of behaviors they should exhibit, through the chosen medium of boxes of $.065 mousepads sent to every branch.

(It is also these people that, years later when another executive suggests a similar tactic, inevitably says, “We tried internal engagement around customer loyalty and it didn’t show any results.”)

These tactics are the customer service & loyalty equivalent of “seven-minute abs”, “make $7,000 per week from home using the internet”, or “get thousands of Twitter followers in days” – easy, no commitment promises that ultimately fail to deliver.

There is no marketing solution to organizational service deficiencies.

Marketing – particularly internal marketing – can be a key component of a whole-company solution to service orientation and improvement, but the leadership, support and line management must be equally committed to helping the service organization make the right promises to the right customers and enabling those promises to be delivered by front line service providers.

Anything less is a waste of effort and resources.

Apparently February is for LUV-ers.

Anyone who follows this space knows I’m a fan of Southwest marries their business model with their service ethos.

But in the February issue of Southwest Spirit, Gary Kelly misses badly in his “Gary’s Greeting” section entitled, “The Meaning of LUV”.

In it, Gary states that February is meaningful to the LUV airline, and goes on to describe what LUV means to him (apart from the airport abbreviation for Love Field and the SWA stock ticker) as:

1. LUV is going the extra mile for our customers.
2. LUV is letting bags fly free.
3. LUV is having FUN.
4. LUV is giving back to our communities.

A critical piece of corporate symbolism stands for a fiscal reward differentiator that didn’t exist as recently as two years ago? I’m hoping Gary didn’t read this before it went to press and undermined one of the more tangible brand positions in any service market. Here’s my rewrite. It may seem “too honest”, but it reflects what Southwest customers know anyway:

1. LUV is running the most operationally efficient airline in the world. Sometimes that means minor inconveniences in the execution of the experience, but we think they’re worth it. With the money we save through sound execution, we take care of the people who matter to us. We pay employees well, make money for shareholders and pass savings along to you through lower prices.

2. LUV is co-opting our customers to co-produce the service experience. We’ll go the extra mile for you, but want you to go the extra mile for us too. We’ll ask you to do more work on our behalf than anyone else will, but you’ll get cheap fares, planes that take off and arrive on time, and the occasional drink on us. We think it’s a fair exchange.

3. LUV is having FUN. You can’t work is hard as we do and not be having fun. You work hard making our shared experience successful, so we’d like you to have fun too. Our atmosphere is as casual as possible because it is the most efficient way to get things done, and we’re not particularly fond of boring people, unless they pay full fare and don’t ask for extra peanuts.

Too straightforward? Maybe, but if the Southwest culture is defined on the pillars of A Warrior Spirit, Servant’s Heart, and a Fun LUVing attitude, this seems much more consistent than suggesting that the corporate symbol stands for a value-added service they don’t happen to charge for, a differentiation the fell into as their competitors made bad decision follow bad decision.

Service Rant: Sprint Wireless

Some service companies are exceptional at making customers productive resources (Southwest) and some are not. I generally place wireless companies into the latter category.

So when I activated my wife’s new smartphone this week, I was disappointed - though not surprised - at the experience.

My intuitive first act to activate the phone was to turn it on and dial “0”, assuming that the network would recognize that the phone wasn’t active and connect me with an automated service that would help set me up.

As so often happens when I assume an intuitive service interface, I was wrong. The network recognized that my phone wasn’t activated, but rather than taking me through an activation process as I had expected, it pleasantly informed me that to activate the phone, I would need to call Sprint customer service. Of course, while I was told to contact customer service, the prompt didn’t give me the customer service phone number. I hung up, perplexed. Luckily, just before hopping online to find the customer service number, I notices a small message on the smartphone screen informing me that customer service is “*2”. Thinking I had the answer to my problem, I input *2, only to be met by my familiar autoservice voice. This time, however, it informed me that I couldn’t activate my new phone from that phone.

Bewildered at the unnecessary complexity, I called Sprint wireless from my landline, and spent the next 26 minutes with a live agent activating my phone.

It was completely inefficient interaction, needing 3 calls on my part, requiring me to have a different phone to activate the one I wanted to use, and taking almost ½ hour of live customer service time that could have been completely avoided with technology enabling the right engagement process.

Wireless companies are amongst the most criticized service experiences. As businesses, they routinely struggle to retain customers and maintain profitability. In a single interaction, there were several opportunities for the customer to serve themselves and increase success and satisfaction while decreasing cost. And that was just the first interaction.

Service innovation wears a straitjacket.

Last night I watched a rerun of Anthony Bourdain’s No Reservations Vancouver episode, drawn in by images of familiar restaurants and street corners from my 4 years living in on Vancouver Island. In the episode, he visits Sooke Harbour House, a renowned restaurant unique in its commitment to local ingredients, sourcing 95% of ingredients from within a 30 mile radius.

Bourdain makes an interesting comment to chef Ed Tuson, observing that their self-imposed straitjacket must be creatively enabling. Tuson provides an example of having to "create" coconut for a dish using shaved carrots, ginger root, flavors from petals of some local flowers and a few other ingredients.

A severe self-imposed restriction forces him to see ingredients not as they are, but in new terms of what they could combine to become.

Businesses have the ability to do the same thing.

Yesterday I wrote about how great service companies win fans by choosing one service attribute to be absolutely obsessive about. Obsessive focus on that self-identified business model driver is the same sort of obsession that Bourdain talked about using to enable creativity.

Consider Southwest, whose early obsession with minimizing gate time by turning planes in 10 minutes forced them to look at their ground operations completely differently than other airlines. When Southwest had made all the productivity improvements they could from its employees, they turned to their customers as productivity coproducers. Cattle call seating, travelers helping tidy the planes, the online check-in process, even the plug-ins and club chairs – all are intended to get travelers to help Southwest turn a plane as fast as possible.

In return for productivity gains, Southwest is willing to provide coproducer value. Southwest knows that separating the loading of luggage and travelers speeds the departure process. In return for the inconvenience of checking, they reward travelers with no fees for checked baggage. (And flights that arrive on time)

It's likely that few of these innovations and productivity gains would have been realized if they hadn't obsessed about service model to the point that it forced them to think creatively about expanding their productivity resources.

For great leaps in service innovation, embrace the obsession straitjacket to creatively look at the service model the way that those without it can't.

Obsession is a service virtue.

Businesses have their own central tendency, moving toward the mean of the market they serve.

It makes sense. Capture the largest available market by making your service as good as possible in all aspects. Communicate how good you are at everything, and gain a large enough portion of the ‘everyone’ segment to make you successful.

But a service company representing ‘everything’ can’t represent anything specific, making them average and unmemorable. Presenting its bland, median self and demanding the same of line employees, companies make it impossible to engage customers on beyond a superficial level.

Great service companies, however, are obsessed about one aspect of their business. Maniacally obsessed. To the point that any 'good' businessperson sees their behavior as going too far. What outsiders don’t grasp is that they have chosen a service aspect representing the core of the problem they want to solve for their customers, and focus all their energy on it.

Southwest obsesses about the operational efficiency involved in turning a plane, deploying every available resource to that end – technology, marketing, employees, and even customers. Wisely, they use a casual, fun environment as the mechanism to make all the work you’re doing for them tolerable.

Ritz-Carlton obsesses about the individualization of the service experience.

FedEx obsesses about time, and what it represents in terms of reliability.

Early Starbuck’s was obsessed with the in-store experience of the “American 3rd place”. Late Starbuck’s seems obsessed with quarterly numbers. The interstate is lined with Starbucks off-ramp signs, and you can buy 20 branded products in your local supermarket. The people who wanted the experience long ago ceded the territory to freelancers who don’t want to conduct business from their basements.

Service is intensely personal. It can’t represent an “average of good” and expect to be seen as exceptional by anyone. For it to be meaningful, it has to discriminate. It has to be exceptional for some, and exclude the needs of others.

Great service has to be obsessive.

Service marketing SUCCESS in 60 seconds.

Super Bowl Sunday was advertising’s biggest night (I won’t go so far as to say it was marketing’s biggest night) and while ads were memorable for a good reason, for a bad reason or worst – not memorable at all, product dominance continued in Super Bowl ads.

The US economy is 70% service-based, yet by my unofficial count, just over 40% were for services. (I included the Census ad, but excluded the NFL ads and all movie ads. An argument could be made that some or all are services, though the latter were advertising the product rather than the experience.)

If we buy more services than products, use more services than products and are more likely to work for a service company than a product company, why the disparity?

Despite our familiarity and use of services, we still have problems effectively describing them because of their intangibility. It’s easier to effectively position a product around a set of desirable attributes than convey the feeling a consumer should have after using a service. As such, Super Bowl ads are tilted toward product positioning, but they don’t have to be.

Using the SUCCESS formula from the Heath brothers, writers of Made to Stick, I had Google's "Search Stories" as the best ad of the night. The message was so Simple that the ad really could have been considered a Google brand ad rather than a plug for their core search engine service. If there is a criticism, it that little in the ad was Unexpected as it progressed in straightforward fashion. It certainly was Credible. Google played to their core strength as the owner of the market for search, a fact everyone vaguely familiar with the service need would acknowledge. It was the most Concrete ad of the night, consisting of a full product demonstration. While it didn’t have the obvious laughs that many others did, it touched on Emotion through the development of a loving relationship, told as a Story through the mechanism of iterative Google search terms.

Super Bowl ads for service companies, are rare. Good ones even more so. Sticking to the SUCCESS paradigm, with emphasis on ways services solve problems uniquely – using people and processes in an experiential environment – would make for far more meaningful, and successful, service company ads.

Nontraditional value exchange, or a plain old good time.

Services come in all shapes. Some you pay for with money, while others you pay for with effort.

The components are universal. A promise is made, enabled, and kept. Both provider and customer have a role in successful production. The service is concurrently produced and consumed. The end result is more intangible than tangible, and the customer often has to look for visible cues as to a successful outcome.

Brainzooming’s Mike Brown asked me to participate in his hosted #BZBowl yesterday – a twitter-enabled live analysis of Super Bowl XLIV ads from a group of seasoned marketing, branding, and social media observers.

Being “more Bud than Bowl” as Mike puts it, I was happy to participate in what was one of the more pleasant service experiences I’ve had in my still brief venture into social media.

Mike’s event – his semi-public service – promised an opportunity to connect with some like-minded people, expand my network, share with them and learn from their perspectives on big-event marketing, branding and social media. Twitter and the Brainzooming site enabled what was a lively and engaging (not to mention exhausting) discussion about the Super Bowl ads as they appeared. Each of us involved produced commentary as we consumed both the ads and each other’s commentary. My takeaways – the value that I received - were unbelievably rich, having met an enormous number of like-minded marketing professionals in a very short period of time and learned from their collective perspective & experience.

Though a nontraditional exchange of value, Brainzooming promised everyone involved an opportunity to reach beyond their existing network in a fun environment and learn from the marketing perspectives of others. With the co-production effort of everyone involved, it was a tremendous success.

Social media-enabled business is making this type of exchange not only more valuable to businesses and individuals that use them, but much more common.

Does your marketing find high-performing customers?

Social media is making a long-standing marketing deficiency much more evident.

The objective of most corporate marketing departments has long been in getting more customers. Find a customer (segmented or not – you can always “fit” them to a segment later), make them aware of your offering, promote or incent trial, convert to a regular user, and work on increasing share of wallet.

Not nearly enough attention is paid to marketing that ensures a prospective customer will be presented with a offering that is right for them, or that they will be a right fit - a successful, and yes, productive, user of a company’s services.

With customer-company engagement ever more enabled by social media, poor company-customer matches stick out like a sore thumb, and marketing will be held accountable.

Service businesses – all of them – require the customer to fulfill a role as co-producer of a successful outcome.

All those role-related issues your marketing currently ignores – how difficult it is for the customer to learn their role, how much time you spend educating them, how willing are they to accept their role – today come back as frustration that your customer service or service operations organization sees firsthand. Your marketing research may have a sense of where these deficiencies reside in your organization.

Social media is changing that for good, and quickly. Poor customer performers – those unwilling or unable to be productive resources, those that do not contribute to service quality – are going to make themselves known. The court of public opinion will find you at fault for lousy service, when in truth you may have been providing outstanding service to someone who didn't fit your service model.

More focus than ever is coming to the quality of the customer fit that marketing produces. It is not a volume game anymore, so much as it is a value game.

The truth is that it always has been.