The Big Picture

Influence – Power exerted over the minds, behaviors and actions of others; it can be received unconsciously or consciously.

Customer Relationships – The value that customers derive from interactions with a company rather than the utility of their products, and the value the company derives from this influence.

Web 2.0 World – The Internet has evolved FROM being websites displaying information about a company and its products…

TO a content rich network of information and people that enables much more participation by customers. Customers now generate content, share experiences, engage in discussions. When they search for information and guidance they are influenced by one another.

A Growing Buyer-Seller Disconnect – Changing business dynamics are contributing to a growing disconnection between what business practices are serving-up and what today’s customers’ value. The net result—businesses are losing influence with customers and their products are more rapidly becoming commoditized.

Two powerful examples of this disconnect:

Eighty percent of business executives believe they are doing a good job in serving customers. Only 8% of customers agree!  Bain & Co., 2006.

Consumers rank companies, their executives, employees, marketing and products in the bottom third of trust scales. They rank peers near the top.
2006 Edelman Trust Barometer.

Communities of Interest & Influence – Customers are increasingly relying on social networking and social media to establish interactive relationships. “Social” is used here as a relational connection that motivates customers to participate and contribute. These relationships help customers extract more value from present experiences and provide guidance in dealing with a fast-changing and increasingly complex world. These networks and communities have lasting influence in customers’ lives.

Shifting the Focus of Customer Relationships – Companies that focus on shifting the focus of the relationships with customers can regain influence. The shift needs to be from selling and servicing “things” to building trust and credibility with customers. These are the interactions that help customers extract greater experiential value and predispose them to meaningful relationships.

Online and Offline Strategies – Companies that embrace the interactive, networked nature of a Web 2.0 world can regain influence with customers and online and in physical world interactions.

Click the link to get our full white paper on this topic: Customer Relationships in a Web 2.0 World

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Over the past few weeks I have been posting my blogs on other sites. I apologize for neglecting you. Stay tune, more posts are coming to “www.OnCustomers.com”

Here are the links to those posts. There are some interesting issues.

The Evolution of Customer-to-Customer Relationships

Co-Creation of the Fiat 500

The Facts on Word of Mouth

Do Customers Care About Your Green-ness?

The following are on The Perfect Customer Experience Blog - scroll down to the date

7/26 - What’s of Value and What’s Meaningful—the Customer’s Perspective

7/20 - Web 2.0 Marketing: Look Before You Leap

7/18 The Language of Customer Experience

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Top performing auto dealerships are three times more profitable than the average. This comes from a McKinsey Quarterly report (June, 2007). Three times more profitable!

I believe there is an important lesson here for business in other industries.

Here are the key factors that differentiated the Top from the Average:

• Employees - Top performing dealerships put more energy and resources into employees—selecting them, training them and providing long-term incentives.
• Customer Loyalty - Customer loyalty strategies were put into action in a more comprehensive way by top performers. Strategies that helped customers understand the value of maintenance, how to get the most our of the dealership, and ways that simplified the process for the customer.
• Competitive Differentiation - The relationship between the automaker’s representative and top performing dealership was much stronger. They spent much more time coaching and long-term business planning all directed at addressing that dealerships’ unique challenges.

The top dealers were more profitable because they had lower acquisition costs and made more profits from services.

When I take an integrated look at the key factors I see a concerted effort to deliver a compelling customer experience.

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Apple Inc. sold more iPhones in its first 3 days than the first month of sales of Motorola Razr phones. How? Motorola spent a lot of money on traditional marketing and advertising. But Apple leveraged word-of-mouth and the power of networked communities of interest to create customer based buzz.

One week after the iPhone hit the market a spontaneous community of engineers, designers, entrepreneurs and iPhone users are meeting to add features and functionality that customers want to the technology. Dubbed “iPhone Developers Camp”, the event is not sponsored by Apple. It is supported by many other businesses. Adobe Systems is providing space for about 300 people to meet in their San Francisco office. Red Bull and Kettle Chips will provide nourishment. Yahoo will be buying some of the meals and other local businesses are kicking in.

This should be a big wake-up call to business leaders and marketers who are not proactively leveraging online and offline communities of interest. The message should be clear. When customers are engaged they fuel desire, passion and conviction.

Traditional advertising and product-centered marketing cannot compete. But it doesn’t engage customers, nor does it ignite passion, commitment, and advocacy.

Check out our new enewsletter: Hooked: The Psychology of the Customer Experience where we will be covering this topic in more detail in the coming weeks.

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Apple Inc. sold more iPhones in its first 3 days than the first month of sales of Motorola Razr phones.

Apple did very little advertising and promotion in the traditional media. One guy (Steve Jobs) talked about it in January and let the world know it would be available in June. The word-of-mouth by Apple product advocates took over and fueled a vigorous conversation in both online and offline communities.

The traditional media picked up on the buzz and gave the iPhone a lot of free publicity, included heavy coverage of the lines forming outside Apple Stores the day before the iPhone when on sale.

Online communities are more prominent today than when the Razr phone came on the market so it is not a pure test of marketing strategy. Nontheless, in my opinion, Motorola missed the mark. Motorola doesn’t have enough customer mindshare and consumer passion to fuel this type of marketing strategy.

This is a wake-up call to Motorola and other product-focused companies—start shifting the focus of your customer relationships. Build trust and credibility with a passionate base of customers so they fuel the fire and passion for your innovation.

Check out our new enewsletter: Hooked: The Psychology of the Customer Experience, we will be dealing with this issue in more detail in the coming weeks.

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Keeping operational cost down is an essential part of staying profitable. However, there is a paradox in play. Streamlining operations can undermine the customer experience, reduce the value customers see in your offering and miss out on an opportunity to increase customer loyalty.

When the Atkin’s and South Beach diets encourage people to reduce there intake of carbohydrates many restaurants felt compelled to charge extra for substituting items on the menu. “Could I have a few sliced tomatoes in place of the hash browns” lead some to reprint their menus with the extra charge clearly note.

Seeing the glass as half full! There seems to be a growing number of people who are discovering they are gluten intolerant and must avoid all wheat products. Then there are others who prefer whole grain products. Café Pomodoro chose to turn this into a welcome sign. At the top of their menus they state “We gladly substitute whole grain or gluten-free pasta at your request.”

Sure, delivering on this requires a little more effort and cost on their part, but consider the benefits. First, both the gluten-intolerant and whole grain enthusiasts can dine-out at an Italian restaurant without being made to feel awkward. Second, they seldom dine alone so at least one other person now sees Café Pomodoro as a favorite. Then there is word-of-mouth. Not only do those with special diet needs become vocal, so do their dining partners. And, they tend to tout other aspects of the Café Pomodoro dining experience as well.

Interested in learning more about related issues? Check out our free newsletter, Hooked: The Psychology of the Customer Experience.

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How do you create engaging customer experiences that:

• Are so desirable customers will work to participate?
• Create word of mouth draws in new prospects?
• Encourage existing customers to evangelize your virtues and draw the less engaged into a deeper relationship with your company?
• Have a multiplier effect that continues to attract new prospective customers?
• Give free publicity that further builds your reputation for engaging customers in experiences they find compelling?

You take a lesson from St Supery Winery in Napa Valley California.

This past Saturday I joined 29 other enthusiasts on an early morning photographic adventure. For me, this meant getting up around 5:30 am and driving 50 miles. For one group, it meant traveling about 800 miles from Oregon. By 8 am we were all mingling with anticipation in the winery parking lot.
 
What motivated us? The opportunity to gain open photographic access to St. Supery’s Dollarhide Ranch vineyards hidden away in Pope Valley. Wineries don’t normally let 30 people wander freely through their precious crops.

Here’s the lure that attracted two passionate groups. St. Supery announced their “Shutterbug” event in their enewsletter and in the local newspaper. Word-of-mouth did the rest as the 30 available slots filled quickly.

The first group was wine enthusiasts who loved St. Supery wines and wanted an opportunity of get behind the scenes. The second were committed wine country photographers who relished the opportunity to add the prestigious Dollarhide Ranch vineyard to their portfolio.

Both groups are invited to exhibit their best photos in the Winery Gallery during the month of December and participate in a wine reception. Each participant is responsible for printing and framing their own work and all signed a waiver allowing St. Supery to make use of their photos without charge.

As an amateur photographer I will be spending many pleasurable hours making sure my photographs measure up to the more professional group. And, I am fantasizing about out-doing them and taking home the first prize of 6 bottles of award winning wine. Of course, all of us will be inviting friends to the reception.

I am not sure if St. Supery planned for the lively interactions that started in the parking lot and continued all morning. Those of us who had a relationship with St. Supery evangelized not only their wine but their other experiential events like the hands-on blending contest held during a wine release party.

I got some great photographic tips and look forward to seeing what the more accomplished photographers do with the same subject. I won’t have to wait until December since the “pros” will be exhibited on websites and in local galleries in a few weeks.

Want to learn more about the art and science of customer engagement? Download my latest paper – Why Customer Engagement Pays Dividends?

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Interested in gaining provocative insights, learning about the latest research and gaining practical strategies for dealing with today’s customers?

Our new enewsletter,

Hooked: The Psychology of the Customer Experience

gets into the mind of today’s customers and discusses what they value and how they make decisions. It will give you a sound basis for engineering compelling customer experiences—ones that get customers’ Hooked and build committed relationship.

Here are some of the topics we cover:

The Trust Barrier
Why Engaged Customers Equals Competitive Advantage
Do Customers Care About Your “Green-ness?”
When Emotions Rule

To give it a try: subscribe

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Until recently, Safeway has been one of my whipping boys when I contrast the indifferent and engaged buying personalities. It appears I will have to change my story.

My old story goes like this. I am the food person in our household. I buy the food and cook the meals. When I buy basic ingredients I am look for the best trade-off between price and convenience. I am indifferent to the store and brand. Safeway gets about 80% of this business because they are only three blocks from my house. However, if Albertson’s catches my attention, I will sometimes go the extra few blocks to save a couple of dollars.

In contrast, when I am planning a dinner party, I will routinely drive 35 miles to a specialty store. For example, I might buy Bomba rice imported from Spain and willingly pay 3 times as much as I would for rice at Safeway. Why? The specialty store where I get it doesn’t just sell me ingredients, they serve up inspiration, get me engaged or fuel my desire to pull-off a great dining experience for my guests.

Up until now Safeway get none of this premium business or the associated loyalty and advocacy.

In recent years, traditional grocery stores like Safeway have felt increased competition from two directions. Big box stores like Wal-Mart and Costco have increased the pressure for them to compete on price. More alluring specialty stores pull away the growing premium business. Recently, Safeway remodeled its stores in an effort to make them more experientially appealing and to capture some of the premium business. I must admit that the meat and seafood counter is attractive and the stores are offering more prepared meals. However, this didn’t win me over. The store changed but our relationship didn’t.

In my view, to shift the focus of a relationship from buying and selling “things” to one where the relationship matters requires a deliberate process. Relationships matter to customers when the vendor helps them become emotionally engaged in a compelling experience. To make the shift from selling things, like Safeway has been doing to me, they need to instill “hopeful trust.” They need to do something that gives the customer “hope” that by becoming involved in a relationship with the vendor, they will gain something meaningful or of value. That is, they will gain something beyond a commodity that delivers utility.

“Hope” is the attractor. If the vendor delivers on the desire it stimulates, real relationship value could emerge. And, if it does, the value in the relationship will lead to commitment and fuel advocacy.

Ok, so what sparked “hope” in my mind? What might cause me to shift my transactional relationship with Safeway to one where I value the relationship and become less price focused—the summer edition of Every Season: Recipes and Solutions From Safeway.

This 50 page publication is extremely well done. It has an appealing design, enticing photographs and great copywriting. That’s what kept it from going directly into the circular file. Here’s what gave me “hope” and drew me in emotionally. The whole magazine (yes, magazine) comes off like it was designed and written for me. I seek inspiration and great food experiences. I wants health related information from respected sources and I value “how to” tips and suggestion. Every Season delivers. Most importantly, it signals that Safeway wants me get more meaning and value out of my food experience. The signal is clearly win-win as content and emotional appeal make up well over 85% of the publication. The remainder draws you to Safeway products that can help you make it happen. In this context, when Safeway tells you their peaches are picked for peak flavor—they are credible and believable. The heavy-duty branding typical of grocery store flyers almost doesn’t exist. The Safeway logo is small and only appears on a few of the pages. Instead, you find tips for preparation, suggested wine and food pairing, and of course they do suggest some of their premium products.

Every Season comes off like a food focused issue of Sunset magazine without the advertising, and I willingly pay for my Sunset magazine subscription. Well, the fact is, Sunset produces the magazine for Safeway. In my mind this only adds to Safeway’s credibility and my willingness to shift the focus of our relationship. Kudos Safeway!

Check out the online version at www.everyseason.com.

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I believe the customer experience is the vehicle for building customer equity. And, with customer equity comes sustainable sales and much more—a relationship that customers value, are committed to and will advocate.

Putting this principle into action means more than bolting on a customer experience module to existing sales, marketing, and customer service practices. It means shifting the focus of the relationship. To do this the company needs to make the customer experience their priority. It can’t simply use a delightful sales process to get the deal and use customer service to smooth things over when things go wrong.

A recent One to One Weekly interview with the discount brokerage Scottrade’s shows just how committed they are to putting this concept into action.
 
Scottrade conducts most of its business online but their CMO, Chris Maloney, says “that doesn’t stop the company’s personal connection strategy. When a user registers via the website, Scottrade takes that information to customize direct mail, and triggers a call from one of its 300 local branches.” Scottrade doesn’t have a customer service department; all 1700 employees are customer service representatives. And they start building the relationship before they go for the sale.

According to Maloney, “The value of the individual transaction might not be worth the price of the customer’s call, but the long-term value of the relationship is well worth it.”

This “relationship first” focus pays dividends because customers tend to become more active traders, are more loyal to the company and they become passionate advocates who recruit other active and loyal customers.

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