The customer experience blog

“Spreadsheets only reflect the past, not the future”
Richard Reed, innocent Drinks

As we emerge from the recession, business leaders will once more be thinking of revenue growth rather than cost cutting, market share rather than share price, and finding the right people rather than ’right sizing’. Well that’s fine then, we can put the recession behind us and resume business as usual. Well no, not really. The economic crisis and failure of banks like Lehman Brothers; the environmental crisis and criticism of major brands like BP; the explosion of social media and the emergence of brands like Twitter, Google and Facebook; all are creating seismic shifts in the world of business.

A different breed of organisation is emerging in this world. They succeed because they have the courage, confidence or just sheer chutzpah to pursue a purpose that is beyond profit. They engage, entertain and educate their audiences, and see their customers and employees as members of a like-minded community. They create an almost cult-like following around their brand – both within and without their organisation – and are not just different but dramatically different, pushing to the extremes the consequences of their desired positioning and strategy. They have a BOLD vision and are committed to making it a reality…

So what is a BOLD vision?

What characterises the approach these BOLD companies take to their ‘vision’? We think it is four simple but profoundly challenging things:

1. Their vision is based on a clearly defined brand/customer promise
After about four years of being in business, the leaders of Zappos (the fast growing on-line retailer) asked themselves, “What do we want to be when we grow up? Do we want to be about shoes, or do we want to be about something more meaningful? And that’s when we decided we wanted the Zappos brand to be about the best customer service and the very best customer experience.” That brand promise made it possible to challenge their business model and create the success that Zappos enjoys today.

2. They are willing to trade short-term profit to achieve their long term vision
Having defined their purpose as providing the ‘very best customer service’, Zappos then took the decision to stop its ‘drop-ship’ business model, whereby products were shipped straight from manufacturer to the consumer. This business represented 25% of sales and was the most profitable part of the business, but the decision was taken because Zappos could not control the customer experience and that was their priority. Tony Hsieh (CEO of Zappos) said: “We’re willing to sacrifice short-term revenue and profits if it’s in the long-term interest of our brand.” So what motivated that action? – The need to ensure their strategy and customer experience delivered their brand promise. And that takes us to our next point…

3. They align the strategy, the brand and the customer experience so they are inseparable
Harvard Business Review research found that those companies whose customers believed they had become more differentiated realized a stock-gain of 4.8% on the year, whereas those that were considered less-differentiated saw a loss of 4.3% over the same period. One brand that has done this brilliantly is the Geek Squad, the technology support company. The brand has gone to enormous lengths to ensure that the customer experience, the brand and the strategy operate together to create a highly distinctive offer. Roberts Stephens (the founder) says “This is where companies go wrong; they don’t take a BOLD enough point of view. That’s what brands are for, to make you distinct from other entities.”

4. They always use their vision as their ‘compass’

It is probably true to say that most organisations start off with a purpose – a vision or mission, an idea that drives them. However it is also true that as many organisations get bigger, the sense of purpose gets lost – trodden down by financial metrics which begin to drive the organisation instead. One organisation that has focused on its vision for the brand is Burberry.

During the recent recession, the luxury retail market declined by 30%, yet Burberry continued to grow and recently announced a 30% year on year increase in sales for the second half of its 2010/11 financial year. It achieved this result by not letting go of the vision for the brand. As Angela Ahrendts (CEO of Burberry) says: “There is always this balance between hard and soft strategies, investment and intuition, but if you have a greater purpose, it becomes relatively easy to make those calls.”

Let your vision and purpose guide you

Seafarers have known through the ages that the way to navigate through dangerous waters is to have a clear course to steer – one that leads to the ultimate destination whilst avoiding immediate hazards. Unless organisations have this same clarity of purpose they will find themselves continually tossed about in the continuing turbulence ahead. The point that Richard Reed was making is that we cannot navigate our business solely through spreadsheets that are essentially records of where we have been – we also need a compass to know where we are headed to. That compass is our purpose.

By Shaun Smith and Andy Milligan

‘BOLD – how to be brave in business and win’ is published by Kogan Page and available to buy now.

To see a video of the app being used go to www.boldthebook.com

Apple and the Apple logo are trademarks of Apple Inc., registered in the U.S. and other countries. iPad is a trademark of Apple Inc. App Store is a service mark of Apple Inc.

“Marketing is a tax you pay for being unremarkable”
Robert Stephens, The Geek Squad

Marketers face enormous challenges today. Targeting, locating, communicating and maintaining any form of reliable relationship with customers or consumers has never been more difficult.

Digital, mobile and web technology has transformed the media landscape into a bewildering array of possible channels and means of communication, many of which are beyond the control of anyone but the consumer. Social media is being used to punish brands or force them to change everything from supply chain policies to marketing tactics; even – as in the case of Gap – an expensive logo change.

Increasingly marketing-savvy and empowered consumers demand authenticity and consistency from their brands. And the ability for competition to nimbly and rapidly copy, outsmart or outmanouevre each other means that consumers have plenty of choices as to where to move their hard-earned spend. Customer churn rates in many industries are too high, net promoter scores in some markets are a miserably low 3%, and the fact that marketing budgets remain under threat during straitened times is evidence that it still struggles to prove its worth in many organisations.

And the speed at which everything is happening is deeply unsettling for marketers.

The BOLD approach to marketing

So what’s so different and remarkable about the BOLD companies? What lessons can we learn from the way they approach marketing?

In two very important aspects, our BOLD companies are old-fashioned: they stay extraordinarily close to their customers and they ensure that they brand everything they do so that customers give them the credit. However, in many more ways they take a dramatically different approach.

For them, marketing is primarily a way of engaging and entertaining customers or consumers, not a way of persuading them to buy a product. They see marketing as an integral part of the customer experience – the marketing of the product and the product itself are one. They intentionally and relentlessly do the following:

• Clearly and honestly communicate the brand promise and values to customers. A key task of marketing is to get your proposition over to the market as powerfully as possible. These brands are both bold and authentic in the way they do this. They don’t use weak or watered-down promises of quality, or bizarre and incomprehensible slogans. They use dramatic language that fixes clear expectations in customers’ minds. Whether it is Burberry ‘democratising luxury’, Zappos’ ‘Powered by service’ or the Geek Squad’s slightly pithier ‘We’ll save your ass’, these brands are honest in their communication and engaging in their tone.
• Actively involve customers in helping to create/improve/protect the brand. BOLD brands do not believe their products are so perfect that customers can’t improve them. Nor are they so frightened by competitors stealing their ideas that they won’t release anything until it’s foolproof. They see the involvement of their customers in the development of their products as a key part of marketing them. Virgin Galactic redesigned its space craft following feedback from its early customers. innocent invites its customers into its offices to suggest ideas and improvements as well as allowing them to recommend and create new recipes. The Chairman of JCB changes the smallest details of his diggers – like the way the petrol cap rotates – because customers tell him that it matters.
• Use innovative viral marketing techniques to reach target customers. They use social media and their websites to create customer communities. innocent does this through the simple words they use on their packaging that has encouraged people to ‘spread the word’ about the brand; Burberry uses 3D high-tech broadcasting of their runway shows; and Chilli Beans uses music and events to involve customers in the ‘Chilli Beans world’.
• Foster active customer communities that support the brand. Communities of ‘fans’ validate these brands; they help to reinforce them, inform them and sometimes even to forgive them when they get things wrong. The passion of Apple fans giving feedback enabled the brand to overcome teething troubles with its 4th Generation iPhone that could have sunk lesser brands.
• Achieve high levels of customer advocacy or ‘fandom’ to drive referral business. O2 specifically measures fandom, it is how they judge whether they are genuinely delighting their customers. It’s a bold call as most companies would be happy with satisfied customers, some might even want them to be happy. But the BOLD brands focus on creating fans.

Fans – © O2, 2011

Perhaps most significantly, they recognize that their people are the most important element of the marketing mix. Therefore, they are obsessed with the story they want to tell their people. They want their people to go to work to put on a performance, not to perform a task.

And they do all this at speed, whether it is Chilli Beans launching 10 new products a week, or JCB’s obsession with the ‘urgency of now’, they all live by Nigel Bogle’s mantra: “Be quicker to embrace change.”

“It only works when it all works” – Ronan Dunne, O2

There has long been a belief in business that, put at its simplest, growing your reputation and revenue (usually through sales and marketing) could be separated from protecting your assets and profit (usually through operations and finance). However, BOLD organisations believe that, not only is there a clear causal link between what you communicate, how you operate and how you protect your earnings, they are in fact interdependent and you can’t get any one right unless you get them all right.

The point that Robert Stephens is making when he calls marketing a tax ‘for being unremarkable’ is that, if you focus your entire business on entertaining and engaging your customers and brand the experience they have, you don’t then need to waste additional marketing dollars on fancy or phoney campaigns trying desperately to persuade people that you are different or better. You will already have a growing legion of advocates telling everyone how remarkable you are – and accelerating that ‘word of mouth’ effect is the great opportunity that digital, mobile and social media offers.

By Shaun Smith and Andy Milligan

‘BOLD – how to be brave in business and win’ is published by Kogan Page and available to buy now.

To see a video of the app being used go to www.boldthebook.com

Apple and the Apple logo are trademarks of Apple Inc., registered in the U.S. and other countries. iPad is a trademark of Apple Inc. App Store is a service mark of Apple Inc.

Gutenberg invented the printing press 570 years ago and the reading experience hasn’t changed much since. Almost every other form of communication has changed beyond recognition, yet we still read in largely the same way as our ancestors did in medieval times.

But what about the Kindle, the iPad or, indeed, any of the other forms of e‐publishing? Surely they are very different from the books we grew up with. But although the medium has changed, the user experience has not. Usually, books are simply converted into a digital format and people read them on their e‐reader in largely the same way as they would a print version: sequentially and chapter‐by‐chapter.

The battle for bookshelf space

As a means for communication, publishing is very inefficient; there are estimated to be 11,000 business books published every year in the U.S. and yet the average U.S. non-fiction book sells less than 250 copies per year and less than 3,000 copies over its lifetime. According to some estimates, only a small percentage of the books bought will actually be read cover to cover. There is a huge supply of some 250,000 plus business books fighting for limited store space and it has been calculated that the average book now has
less than a one percent chance of being stocked.

And the situation will get worse. The major bookstore chains have seen a 12% sales decline between 2007 and 2009¹ and some have gone out of business as a result. Publishers’ distribution centers are projecting a 25% volume decline over the next five years. There will be more consolidation leading to store closures and less net store space in the future. Of course, the growth in online retailing will fill some of this void. Nevertheless, an increasing number of books are vying for an ever‐shrinking market.

If you put all of this together – a poor user experience, inefficient distribution, and a broken commercial model – you begin to see that we are at a moment when significant change is needed. My co‐author and I have just finished two years of research into brands that are transforming their markets. The culmination of that research is our new book called ‘BOLD – how to be brave in business and win’, and it tells the story of 14 brands that are doing things dramatically differently – from AirAsia X re‐inventing the economics of long haul aviation to Zappos transforming the online retailing experience.

Creating a BOLD new reading experience

What struck us about these brands was their ability to challenge conventional wisdom and completely reinvent their business models. As we discussed the book with our publishers we said: “Why don’t we do the same and turn the reading and publishing experience on its head?” We therefore decided to take a ‘bold’ approach to publishing the book and create a dramatically different user experience.

We began with a blank sheet of paper and asked ourselves: “Forgetting what reading is like now, what should the user experience of reading be like in the future?” From this initial question we derived a series of principles:

• It should be interactive. Most reading experiences are passive; a well written book may evoke a reaction in you but you cannot really interact with it. We decided to create a way for the reader to interact with our content and relate it to their own experience by comparing their responses to those of the brands we studied.
• It should offer content tailored to the interests of the reader. Some books are read cover to cover if they are very good, but more often they are only dipped into if they are not exceptional or if the reader is seeking the more interesting or relevant content. We decided to make the reading experience customized and potentially different for every reader by ‘curating’ the content based on their organisational needs or their own functional areas of interest. In other words, suggesting content that we believe is likely to be of greatest relevance to the reader based on our research and their profile.
• It should be sold on value, not price. A book is usually sold at a recommended retail price or at a deep discount via retailers such as Amazon based on how much the retailer wants the title to ‘move’. This commoditizes the market and results in slim returns for both publishers and authors. But what if, instead of regarding the book as a single item, we looked upon it as a bundle of content, some of which would be of greater value to the reader than the rest? This scenario provides the opportunity to price the content according to the value it represents to the reader rather than the price the retailer wishes to sell it for.
• It should offer additional material that allows the reader to engage at a deeper level. When an author writes a book, he is essentially making a decision about how much, or how little, the reader needs or wants to know about the subject at hand. Yet people vary enormously, so we decided to create a facility for the reader to be able to browse ‘e-features’ – links that take the reader to videos, web pages, and even music that relate to the people and brands that we wrote about and that resonate with the interests of the reader.
• It should tie into the digitally connected world where people use social media to share their thoughts, preferences and recommendations. We wanted people to talk about our book and, if they like it, recommend it to their friends. We therefore added a social media function to our wish list as well as the opportunity for the reader to send feedback to the authors.

Having determined our goals for the reader experience of our book, we then met with our publisher, Kogan Page, to review how we might achieve them. Fortunately, they shared our vision and passion and a joint brainstorming session led to the decision to embed the book entirely within an iPad app, as well as to offer it in the conventional printed and e‐pub formats. We felt that the terrific functionality of the iPad along with its rapid adoption would make it an ideal platform for an enhanced reader experience.

The BOLD App

The result of this collaborative approach is an iPad app and book of the same name: ‘BOLD – how to be brave in business and win’. The app includes a self‐assessment tool that users can complete to assess how bold their organisation is compared with the 14 brands profiled in our book. It then highlights those areas on which the reader needs to focus and offers useful recommendations and tactics to improve performance.

Most importantly, the app makes it simple for readers to choose content that is curated for them. They can purchase individual chapters specifically recommended based on their organisational profile or on their job function and then view the selected chapters immediately within the app. The reader simply uses their iTunes account to unlock the entire book or individual chapters that are already resident within the app – no additional downloads, no hassle.

This custom‐tailored content experience is the basis for premium pricing the curated chapter recommendations and offering, in effect, content on a sliding price scale. The recommended chapters are cheaper than the whole book, but more expensive than they would be on a pro rata basis because of the greater value of the content and relevance to the reader. If the user then goes on to purchase other chapters, the sliding scale pricing automatically adjusts so if users ultimately purchase all of the chapters, they will never pay more than the recommended retail price, just as if they had purchased the complete book straight away. We believe this is the first time book content has been offered in this way.

The reading experience is further enhanced by the e‐features in each chapter that suggest multimedia content to the reader. And if the user takes a break from reading, the homescreen displays a slideshow of images and quotes from each of the brands featured. Finally, the app allows users to email their ‘BOLD profiles’ to themselves or colleagues and to share their views via Twitter or Facebook from within the app. We believe that the publishing world needs to take a bold approach and utilize the functionality of the new platforms to re‐think the reader experience allowing people to interact with the content, customize it to their interests and then share their views and comments via social media from within the book.

The future of publishing?

Ray Davis, President of Umpqua Bank and one of the leaders we interviewed said: “When you put customer experience in a design where it can flourish, you have something incredible.” We believe the innovative approach we’re pioneering with our book, married with the functionality of the iPad and other platforms, will create an incredible new reading experience and offer the potential to put new energy into the book market. The ‘print and pray’ approach to publishing is showing its age and it is clear that marketing efforts will have to become much more focused and imaginative if publishing is to overcome the malaise in the market. This in turn will require a new business model whereby the parties share risk, reward, time and effort.

If the printed works are to survive against the easily digested micro‐content offered by blogs, Twitter, YouTube, and the like, the reading experience has to become much more exciting, engaging, and valuable. This is not the time for business as usual, and authors and publishers need to reinvent their relationships with their readers. We believe the approach we have taken is perhaps a first attempt at creating a new model for publishing. We hope Gutenberg would approve!

¹ Publishers Weekly, April 12, 2010

‘BOLD – how to be brave in business and win’ is published by Kogan Page and available to buy now.

To see a video of the app being used go to www.boldthebook.com

Apple and the Apple logo are trademarks of Apple Inc., registered in the U.S. and other countries. iPad is a trademark of Apple Inc. App Store is a service mark of Apple Inc.

This is the season when retailers publish their trading results for the Christmas and New Year season; it has made for gloomy reading. HMV, the UK music retailer, has announced the closure of 60 stores across the UK due to disappointing trading figures, and it is not the only retailer that has suffered from a combination of poor weather and the increasing trend for consumers to spend on-line.

But there are those brands that are bucking the trend and reporting their best ever results. One such brand is Burberry, having recently reported a 50 percent growth in like-for-like sales for 2010 and a bumper Christmas. So why the difference? Maybe because this brand invested in improving the experience offered in-store and on-line whilst its competitors were busy cutting costs. In November 2009, Burberry launched a website called artofthetrench.com and invited customers to upload images of themselves wearing the brand’s iconic trench coats. Within the first week 400,000 people from 191 countries had done just that. Within nine months the site had been visited 9 million times. Delighted with these results, the brand started a Facebook page and now has five million followers. This traditional British brand has embraced the opportunities offered by digital marketing and social media and made its on-line experience just as distinctive and ‘branded’ as its in-store experience.

The ‘Twitter Effect’

In June 2010, RightNow published a landmark report: ‘The Socialisation of Customer Experiences’¹. It found that in April 2010, Britons were spending 884 million hours on-line, and of that, 23% was accounted for by social networks and blogs. There is no doubt that we are now beyond the ‘tipping point’ in terms of the importance of e-commerce and social media to organisations.

Perhaps that is why a recent Forrester forecast predicts that spending on interactive marketing will reach $55 billion by 2014². This will be driven by spend on social and mobile marketing that will see compound annual growth rates of 34% and 27% respectively through 2014.

There is no doubt that marketers are excited at the potential for reaching new audiences in new ways and positively influencing consumer word of mouth on a grand scale – the ‘Twitter effect’. However, the reality may not be as seductive as the hype. As Google guru Avinash Kaushik tweeted: ‘Social media is like teen sex. Everyone wants to do it. Nobody knows how. When finally done there is surprise it’s not better.’

¹The Socialisation of Customer Experiences UK. RightNow 2010.
²The State of Customer Experience 2010. Forrester.

The BOLD approach to digital marketing

We have just completed two years of research for our new book ‘BOLD – how to be brave in business and win’ (www.boldthebook.com), due for release in early April. It tells the story of 14 brands that are redefining their markets through the delivery of dramatically different customer experiences. Many of the brands we studied – for example AirAsia X, O2, Burberry, Zappos and Chilli Beans – have differentiated through creating engaging experiences for their customers on-line just as much as off-line. How have they managed to do this? By having a holistic view of the customer experience and using a systematic process for ensuring it is consistent across channels.

We have found that using a customer experience model really helps our clients to approach this integration in a systematic way. If you are interested in knowing more about the approach smith+co uses, please click on the following link to download an article that outlines the steps that you need to take to ensure that your customer experience is integrated across channels.

Creating customer experiences in a digitally connected world

To accompany the launch of the book of ‘BOLD – how to brave in business and win’, we have also developed an iPad app which is FREE to download from the App Store℠, just search for ‘BOLD business’ or click on the logo below. The app will enable you to compare your organisation with the BOLD brands and comparison companies and will offer suggestions for how you can become bolder. Based on your profile it will even recommend those chapters which are most relevant for you. You can then purchase these individually and access them within the app so you can start reading straight away – no need for additional downloads!

Apple and the Apple logo are trademarks of Apple Inc., registered in the U.S. and other countries. iPad is a trademark of Apple Inc. App Store is a service mark of Apple Inc.

The atrium / lobby at the Al Bustan Palace Hotel in Muscat, Oman

There is a saying in the US: “Don’t nickel and dime me”, which means to accumulate money in small amounts. There are examples of this in many areas of customer service and it is one of the business practices that drives many consumers crazy.

And it’s what drove me crazy at my recent stay at the Al Bustan Palace, one of Oman’s top hotels…

The immediate experience is one that envelops the senses: the soaring atrium and huge lobby area filled with the smell of incense; the ground-floor rooms with direct access to infinity lagoons so that you can literally swim outside your room; the beautifully kept grounds.

Sure, the hotel is expensive, but I expected that and when you book a top hotel you expect to pay a premium. However, what I didn’t expect was to have to pay steep charges for internet access for both our computers even though they were used in the same room. I didn’t expect to pay for using the catamarans when every other water-sports centre I have ever experienced provide these for free, and I wasn’t anticipating the sky-high cost of breakfast.

Now InterContinental, the managers of the Al Bustan Palace, would argue that if you stay in a luxury hotel you should expect to pay top prices and I would agree with them. But what I find irritating is to pay top prices and then find I am ‘nickel and dimed’ on services which are provided as standard in much lesser hotels. As far as I am concerned, internet access is more important to me than having access to the TV and hotels don’t charge for that, so why should they charge for internet?

The problem with this ‘nickel and dime’ approach is that you are continually reminded of how much you are paying throughout your stay – that is not what you want the guest to focus on.

The five rules for creating a great Customer Experience

Richard Chase and Sriram Dasu are behavioural scientists and they investigated what influences our perceptions of the customer experience. They suggest five rules for creating a great experience which help us to ensure that customers focus on the high points of their experience and overlook the low points:

1. Finish strong. Finish on a high – do something unexpected at the end of the experience; perhaps give a small gift as a souvenir at check-out. The Banyan Tree Hotel and Resorts give guests lovely little stuffed fabric turtles as a memento of their stay for example. Giving a small gift (providing it isn’t tacky) helps to create a positive moment at the very point you are asking the customer to part with their cash.
2. Get bad experiences over with early. If customers have to do something onerous, get it out of the way as quickly as possible. In the case of hotels, pre-register guests online so that their first experience of the hotel isn’t one of lining up at the front-desk and filling in a registration form with exactly the same information they provided when they booked.
3. Segment pleasure, combine the pain. Spread the pleasure along the touch-line. So provide those little touches of fresh cookies served with coffee, cold face-towels on the beach etc. They cost very little but create little ‘spikes’ of pleasure. Combine the ‘pain’ by bundling internet and other facility charges into the room rate so that you experience them in one step rather than every time you wish to use them.
4. Build customer commitment through choice. Give guests full information about your charges (like water-sports) on your web site so they are transparent and expected. Guests can then make informed choices about the package they need and, most importantly, won’t be surprised by them.
5. Stick to rituals. Create on-brand rituals that customers associate with their stay with you. For example, whenever I stay in the Mandarin Hotel in Hong Kong I always anticipate and appreciate the welcome Chinese tea that is served in the room whilst I am unpacking.

Source: ‘Want to perfect your company’s service? Use Behavioral science.’ Chase and Dasu. HBR 2001

Don’t be remembered for the ‘dimes’

What behavioural science tells us is that the customer’s memory of an experience is formed at every touch-point with a brand. Generally speaking, the greater the number of positive or ‘branded’ touch-points, the more positive the experience is. When you ‘nickel and dime’ customers you create little moments that jar with the customer and if these happen at the end of the experience that is what they will likely remember.

For example, some years ago I stayed at the Mandarin Oriental Hotel in Bangkok which has been voted the best hotel in the world on a number of occasions. It was a wonderful stay but what do I remember most? There were some Mandarin Oriental Hotel postcards provided in my room which I sent to friends and family to tell them about my stay (and in so doing advertise the Mandarin Oriental). So imagine my surprise at being presented with a charge of $5 for these few postcards when I checked out. Now $5 represented a few ‘dimes’ when compared with the many dollars that my stay cost, but it was the dimes I remember.