When Tony Hayward gave his final press briefing shortly before departing as Chief Executive of BP he said that BP had shown itself to be “a model of corporate social responsibility” but it was “not a great PR success”.
On the face of it BP has done most things right: they have managed to cap the worst of the spill, they managed to keep most of the oil from washing up on the beaches, have paid over $300 million in compensation to the US locals whose livelihoods have been affected; So why then the furore and criticism heaped on BP and its CEO?
A failure of authenticity
I believe that the failure was one of authenticity; a failure on the part of BP leaders, past and present, to be genuine in their support for the positioning of the brand. BP, although embracing ‘green’ credentials and purporting to be the fuel brand most closely identified with sustainability, when put to the test drilling for oil off the Florida coast, seemed to act first and foremost as an energy company concerned with maximizing its profits rather than an experience brand concerned with delivering on its promise.
Unfortunately, Hayward has taken the rap for his previous boss, Lord Browne, who when Chief Executive drove the company to earn ever greater returns for shareholders.
We are just finishing the research for our new book ‘Bold’ and one of the characteristics we have seen shared by the brands we have researched is authenticity. You can’t succeed unless you are genuine, true to yourself and absolutely honest with your customers. This is challenging for those people in business who believe that as long as you promote 5 corporate values on your web site (usually the same ones your competitors promote as well), it’ll be enough to get by. And as long as you say the right things to shareholders and customers in your annual report, advertising or PR about CSR, then, short of committing a criminal act, it doesn’t much matter the extent to which you actually practice what you preach as long as the profits continue to roll in.
Authenticity comes from people’s own values
Authentic companies are run and largely staffed by people who care passionately about what they do because they see it as an extension of their own values. And that means when you make a promise for your brand you have to deliver it: you can’t force it, fake it or fudge it.
By forcing it, we mean that sense of trying too hard to be something you’re not. The Geek Squad has its competitors who try to take a similar approach but it doesn’t require too much first-hand experience of those competitors to know that the values come from the advertising rather than the heart.
“Customers can smell a fake a mile off”
By faking it we mean when your marketing department see an opportunity to align your brand with something like sustainability, for example, but management continue to focus primarily on profitability and the behaviour of the organisation is aligned with this focus. Joe Pine and Jim Gilmore in their book ‘Authenticity’ make the point that customers can smell a fake a mile off. Consumers demand authenticity from their brands today and especially from the people who work for them.
By fudging it we mean those moments of ‘on the one hand but on the other’ that brands often fall into – promising you the earth in the headline copy only to caveat their offers in the small print. Brands like O2 have opened up the telecommunications market by introducing transparency and ‘no strings’ products like its ‘Simplicity’ offer.
So what should BP have done? As well as taking the necessary engineering steps which it did well, it should also have seen this as an unfortunate, but wonderful, opportunity to dramatise its brand promise: to really make its green credentials apparent. As well as fixing the leak deep on the ocean bed, which was largely unseen by customers, it should have over-indexed its public response. It is hard to hate an organisation when it has a ‘face’ to it. Now BP would say, perhaps rightly, that is what they did; they got their people involved in the effort, but what I am talking about here is a massive effort from hundreds if not thousands of BP branded employees working in the community.
What Patagonia did
Patagonia founder Yvon Chouinard
Patagonia, the environmentally friendly clothing brand, had employees working on the beaches (wearing Patagonia clothing of course) because they care deeply about the environment . Patagonia also sponsors the ‘Louisiana Bucket Brigade’ a voluntary organisation set up to support the environment and deal with oil spills.
Yvon Chouinard, the Patagonia founder, had this to say in an interview in 2004,
“I’m not in the business to make clothes. I’m not in the business to make more money for myself, for Christ’s sake. This is the reason Patagonia exists — to put into action the recommendations I read about in books to avoid environmental collapse. That’s the reason I’m in business — to try to clean up our own act, and try to influence other companies to do the right thing, and try to influence our customers to do the right thing. So we’re not going to change. They can go buy from somewhere else if they don’t like it”
Now that is an authentic leader.
If you are an executive of a medium to large organisation and would like to receive an executive summary of our new book ‘BOLD’ , all you need do is to go to the following website and complete the short survey that you will find there:
Shaun Smith speaks and consults internationally on the subject of brand delivery and customer experience. He has been voted one of the top business speakers in the UK and is a Fellow of the Professional Speakers Association.
His first book co-authored with Andy Milligan, ‘Uncommon Practice- people who deliver a great brand experience’ investigates how leading brands differentiate, Shaun’s second book ‘Managing the Customer Experience- turning customers into advocates’ is considered to be a landmark text book on how to create branded customer experiences. Shaun and Andy’s latest book ‘See, Feel, Think, Do – the power of instinct in business’ investigates the role of instinct and innovation in customer experience.
Shaun works with leading brands around the world through his consulting company Smith+co.
At the Farnborough Air Show this weekend, Britain saw its first Boeing Dreamliner (above) – on which the company has bet its future. ‘Parked’ alongside it in the civil airliner area of the air show is Boeing’s European rival, the latest Airbus. But, amazing, high tech aircraft that they are, when it comes to creating a flying customer experience, these multi-million dollar aircraft will fast become mere commodities.
So, let’s take a look at how you would take your multi-million dollar commodity aircraft and build a unique customer experience around the flight itself. And to do so we have to look, of course, to the masters of creating an airline customer experience – Virgin. We’ve looked elsewhere in this blog at how Virgin crafts a unique experience for its passengers on the ground, before they even reach the plane. This post focuses on the bit that happens up in the air.
Create ‘difference’ in the experience
Like all other airlines, Virgin Atlantic used Boeing 747s for its long-haul flights. In a real sense, the multi-million dollar plane was a commodity – all the airlines had the same plane. The difference in the guest experience came from something Richard Branson dubbed ‘Virgin flair’. To ‘be different’ – because they knew that being surprising was what made the passengers remember their Virgin flight – Virgin started serving small ice creams during the in-flight movie. Because people often enjoy an ice cream in a cinema.
That’s your first learning point in this blog post: when you are crafting a customer experience, don’t invent everything anew; be creative in crafting the experience by borrowing little popular snapshots of experience from other sectors. This increases the chances of acceptance by customers of a service innovation – because they are already familiar with it in another context.
A Virgin cabin attendant called Sue Rawlings took the creation of a unique, memorable customer experience one stage further. In the galley, before serving the ice creams, she would smear some ice cream around her mouth. As she walked down the cabin with the ice cream tray, handing out the little gifts as the movie was about to start (big screens in those days) she would say loudly, so that people across the cabin looked up at her,
“People tell me these ice creams are delicious, but I’m on a diet and never touch them. Enjoy!”
As passengers looked up, they saw the ice cream around her mouth and the smile on her face and a ripple of laughter followed her down the plane. Other passengers looked up to see what people were laughing at and joined in the laughter.
Difference attracts customers
The passengers who experienced Sue Rawling’s ‘Virgin flair’ told all their friends and family and the story rippled around the world, becoming viral. Because it was MEMORABLE and FUN and SURPRISING (excuse the upper case – three important words in crafting a customer experience, of course, so I shouted them at you). People who had never flown Virgin heard about it. And when they had to book a trans-Atlantic flight and got to choose between Virgin and BA, they went for Virgin. Because they wanted the ice cream. And maybe they’d meet the zany flight attendant.
How much does an ice cream cost compared with a Boeing 747? How much did that free viral story-telling by the customers themselves – people trust referrals from other customers more than they trust a supplier message, remember – cost compared with a glossy advertising campaign? There are no little things in the customer experience. There are memorable things. And that will often come from your people.
A post-script to the story
That story, above, comes from our associate at smith+co Phil Dourado, who checked the detail with a senior manager at Virgin Atlantic. The manager confirmed it was true, named the flight attendant and said she was a ‘legend’ at the airline. Phil adds that he was on the way back from Shanghai to London earlier this month, after a one day visit – fly in one day, work at a conference the next, fly back the third day.
Obviously Virgin don’t do the ‘big screen and ice cream’ combo now, to mimic a cinema experience, as all the movies are on demand and viewed on the seatback screens. But, he did notice one innovation that we don’t think any other airline offers: on Virgin flights you can text other passengers, via their row and seat number, using the entertainment console handset. This innovation is intended to heighten the interactive experience of the flight – so you interact with the technology and your fellow passengers. More impressive than that, though, Phil reported, was the human touch.
Customer recognition – still a powerful thing
One of the Virgin cabin staff said to him on the way back: “You were on the flight out with us, weren’t you. Gosh you’ll be tired with two long-haul flights in three days.” A bit later her colleague appeared with a sleep suit (it was the morning and the flight had only just started) and said “We give these out later, but my colleague says you might want this earlier than everyone else. I’ll leave it here in case you do.” Then a third attendant, serving the meal, said “Oh, hello! (as if Phil was an old friend) I remember you from the flight out from London. Now, let’s see if I can remember what wine you like…”
She didn’t. But, Phil says he was amazed at the passenger recognition, and that she had even tried to remember what wine he liked. Virgin flair again, I guess. No, he doesn’t remember the multi-million dollar plane they were flying in – Maybe an Airbus he said. But, he did remember the attention. And yes, it made him want to fly with them again.
“A key obstacle cited by many (61 percent) for measuring the customer experience is the difficulty of monetizing the value of investments for improvement – despite the fact that it does make a significant difference” Source: Experience Maturity Monitor SAS Institute Inc and Peppers and Rogers Group 2009
We consult with many leading brands on the customer experience and find that one of the first things we have to do is to convince them that their investment will be returned. The question is how can you do this when customer behaviour lags the change in performance? This is not a new issue as the Peppers and Rogers Group quote, above, found.
In response to this need, we recently developed a tool that can help you convince your board of the value of customer experience management.
The CEM+ Calculator™
We call the new tool our CEM+ Calculator™. It takes real data from client organisations – number of customers, their purchase behaviour and current levels of advocacy – and then projects the impact on revenues of what will happen if you increase advocacy through changes to the customer experience. It also allows the costs of the improvement to be factored in, allowing the ROI to be calculated.
The benefit of this approach is that it allows organisations to estimate to a fairly accurate degree (given the many variables affecting organisational performance) the impact on their revenues and profits of investing in the customer experience – making the decision no different to any other form of capital investment. This allows the Customer Experience Officer to talk to the Chief Financial Officer in a language he or she understands!
Satisfaction is not enough
So, why is such a tool necessary? Why not just rely on customer satisfaction data to show a return on investment?
Traditional measures of customer satisfaction have little to do with customer experience, or financial performance, for that matter. According to research, 80 percent of customers who switch suppliers express satisfaction with their previous supplier. Rather than just satisfaction, revenue growth has everything to do with ‘advocacy’, the extent to which customers or clients prefer a supplier and then refer friends and colleagues to you. For example, First Direct, the UK retail bank, has the highest level of customer satisfaction in the market and is recommended by its customers every five seconds gaining over one third of all new business from referral. Advocacy translates into increased share of market and higher levels of retention, all of which mean good news for your bottom-line.
What is customer advocacy?
The dictionary definition of “advocate” is “Plead for, defend, champion, recommend, support”. When Steve Jobs, the CEO of Apple introduced the iPad at the annual Apple convention (see blog post below), the reaction of the audience was more akin to a religious meeting than a product launch. Apple customers are passionate champions for the brand in a way few other technology users are. How does this translate into money? Satmetrix research in the computer hardware industry found that Apple advocates generate revenues of $4,500 each compared with their competitors who earn just $2,600 from their best customers. The difference is the emotional connection with the brand: Apple customers are willing to pay more, repurchase more frequently and refer other customers.
The Advocacy Index
For those organisations wishing to increase margins by driving down sales costs whilst driving up revenues, advocacy is the answer. Advocacy requires you to know who your most profitable customers are and to consistently deliver a customer experience so as to create a high degree of trust in your brand. Only then will these loyal and highly profitable customers be prepared to recommend your organisation to others.
In his classic HBR article ‘The one number you need to grow’, Frederick Reichheld argued that the only measure of performance that really matters is the ‘Net Promoter Index’. This is the result of subtracting those customers who are dissatisfied from those who are highly satisfied. Our term for this is the ‘Advocacy Index’ and our CEM+ Survey™ measures this to determine the extent to which your firm will grow organically through attracting and retaining profitable customers via positive word-of-mouth.
Focusing on your most profitable customers
We did research in the mobile phone market and found that the top 5% of customers represented a significant proportion of the profit and were worth several times more than the average customer to the mobile phone providers. Yet these customers were not treated any differently to reflect their high value and increase their likelihood to stay loyal and become advocates. In fact in most instances, new customers got better deals than the long standing customers.
It was this insight that led the mobile network operator O2 to focus on rewarding these valuable customers. O2 established a separate call centre and more highly trained employees for these high value customers. Their loyalty rose significantly as did the profits.
This is still true in financial services where new customers are routinely offered more attention, deeper discounts and better deals than long established customers. In loyalty terms this is madness. In his book The Loyalty Effect, Frederick Reichheld says that loyal customers are more profitable because the costs of sales are amortised over a longer period, they increase their purchases and percentage of spend with you, cost less to administer, refer others and are willing to pay a premium.
By focusing on delighting highly profitable customers, companies keep them loyal and eventually turn them into advocates who attract others who value the same things and thus in turn become advocates themselves.
Shaun presented some of these ideas with Simon Groves – Head of Strategy and Customer Experience for O2 – at the Satmetrix Net Promoter Score Summit in London on June 17th 2010. It has since been announced that O2 have topped a poll of European consumers asked to score their customer care experiences with mobile phone networks. O2 achieved a rating of 24% compared with the industry average of only 3% (MyCustomer.com has more details).
The Luxury Institute issued a press release last week saying that our client Burberry has been found by independent research to be offering the best customer experience of any luxury retailer by some margin. The survey found; “The top three factors that shoppers consider before recommending a brand are merchandise, service and store atmosphere. Two standouts across several criteria are British fashion house Burberry and French luxury outfit Louis Vuitton, with 77% of shoppers saying they would recommend Burberry to family and close friends, and 74% saying the same about Louis Vuitton.”
It is no accident that Burberry has also outperformed its competitors in terms of sales over the past year or two. Christopher Bailey, Buberry’s Chief Designer has created some wonderful ranges but the brand has realised that creating an in-store experience is the best way of showcasing them. There is a revolution quietly taking place in retailing.
The new face of retail banking
Umpqua is a fast growing bank in the US with a tremendous reputation for service. But Umpqua really isn’t a bank at all-it’s a store.
It looks like a fashion store with its bold images and layouts that invite you in.
It feels like a store because its people are mostly hired from retail and understand what it means to provide service than simply process transactions.
It acts like a store because it provides goods and services so that you can pop-in and go-line and do some shopping while you have a coffee. In fact Ray Davis, the bank’s President, told me that most customers who visit are not there to bank at all.
Umpqua came from an insight that Ray had 15 years ago when he realised that banking should be much more like retailing. In the aftermath of the banking crisis I predict that a lot of UK banks will be waking up and smelling the coffee too and realising that they will not survive long unless they start learning from their high-street retail neighbours.
Umpqua Bank – redefining the retail banking experience
You can’t say exactly when stores offering experiences started. But, when buying a donut became a multi-sensory experience was a significant step along the way. Andy Milligan and I wrote about Krispy Kreme a few years back now in our 2002 book Uncommon Practice – People who deliver a great brand experience. We highlighted how the company had changed the retailing of a donut into…something else. In their flagship stores customers watch the product being made through panes of glass, the aroma is wafted out to them to heighten the experience and so on.
From selling product to selling an experience
What we were describing was one stage in the evolution of retail, as shops – or stores for our US readers – have begun learning how to sell a complete experience, not just a product.
The smartest exponents in recent years of what CK Prahalad and others call ‘co-creation’ and what Alvin Tofler originally referred to as ‘prosumerism’ – where consumers want to be involved increasingly in the production experience, and the barrier between producer and customer blurs - are the people behind the Build A Bear workshops.
You can buy a toy bear anywhere for maybe $10-$25. (There is a collector’s market where limited editions sell for hundreds of dollars but that’s a different market entirely from the kids’ bear market). But, when a child and its parent walk into a Build A Bear Workshop (it’s not really a store) they may spend an hour assembling their own bear, including choosing its heart, and spend anything upwards of $100 – $ 200 for the privilege of having done the work themselves.
Is this retail? Not as we know it or knew it.
Here come the big guns
I’m writing about this now because the big guns are getting in on the act. Apple, whom we’ve blogged about recently, have made their stores pretty cool places to hang out by creating the Genius Bar – where you can find out how to make your Apple stuff work better by chatting to resident Apple geeks. Apple now have 283 stores worldwide with an incredible 50million visitors annually; they have recently announced an ambitious store opening programme in China. Is Apple a manufacturer or retailer?
Microsoft is considering going the same route by making its stores ‘experiential’. After all, is there anything duller or more stressful at the moment than going into a branded computer store and trying to find what gadget you actually want?
IBM is developing a retail innovation centre at Hursley in the UK where IBM and selected partners bring to life smarter retail solutions. This includes a multi-channel CEM demonstration based on a combination of Smith+Co methodology, Cincom’s Synchrony software and IBM products. The new facility will illustrate how retailers can operationalise a CEM+ strategy to enable a better sales experience at every touchpoint, resulting in higher customer retention, value, loyalty and advocacy.
Imitation is the sincerest form
Best Buy will shortly enter the UK market with their award winning consumer electronic stores complete with the full Geek Squad technical support service to help you ensure that when you walk out with your new purchase it adds value to your life rather than stress. The Geek Squad have already appeared in the UK as part of the Carphone Warehouse offering. The only people who will be worried are PC World and Curry’s executives, who have cobbled together a copycat service called The Tech Guys to try and steal some of the Geek Squad’s thunder.
But, the real big guns are Disney. And their plan to turn their 340 retail outlets into ‘Imagination Parks’ is what sparked off this blog post, as that is really bold; and my conviction is that, increasingly ,to stand out in any market, you need to be the one taking the bold step.
The cost is thought to be about $1 million per store over five years and would involve Disney making its stores more like its theme parks – rather than what they have been for so long, mere merchandising outlets. Disney’s always been great at brand extension – its live action stage musicals based on its movies – The Lion King, Beauty and The Beast, for example – have become massive money-spinners. But, until now, it’s largely ignored the potential for extending those experiences into its stores. Now, the plans include in-store kiosks where customers can experience virtually, and then buy, Disney cruise line and Disney World park packages and other crossovers.
A tour of the model store that is being piloted is described in a blog post here. It’s the latest news to emerge since the original plans were announced in October 09 (see more).
It’s time for retailers to follow suit. There are outdoor clothing stores that have built climbing walls into the store so customers can test their climbing boots before buying, and drench showers that mimic tropical downpours so customers can test their rainwear before buying. Porsche has an innovative ‘experience centre’ at Silverstone where you can put the product through its paces before you buy.
For retail, it’s time to be bold. What about for you and your sector – what are you doing to engage your customers with the product and reinvent your customer experience?
I had dinner recently with Greg Gianforte, CEO and Founder of RightNow Technologies, who was telling me about his mantra ‘fix it or feature it’. In other words either improve a software or product characteristic or turn it into a product advantage and feature it as a selling point.
A great example of ‘fix it or feature it’ is the need to wait for Guinness to be poured in two stages and then wait for the head to form. This cannot be ‘fixed’ so Guinness ‘feature it’ as part of the proposition.
‘The wait’ as Guinness marketing people call it, is part of what makes ordering Guinness in a bar or pub unique; the wait was turned from an inconvenience into ‘good things are worth waiting for’, which taps into (pardon the pun) the emerging feeling among consumers in recent years that too much of life is a rush and that moments need to be savoured.
The great thing about Greg’s phrase ‘fix it or feature it’ is it helps you home in on every aspect of the customer experience and make a decision about each one. This analysis of your product, service or experience in a detailed way – deconstructing the experience so you can examine the detail – is a powerful discipline for ensuring that everything about your customer experience that is in your control is examined and a decision is made about it.
Can we fix this issue so that the customer is not even aware of it, or do we turn it into a ‘brand hallmark’ that differentiates us from competitors? So Ikea’s infuriating requirement for customers to navigate around their stores before finding the check-out is not only a fundamental part of their business model but also a hallmark of their brand experience.
There’s another, different application of the ‘fix it or feature it’ equation, however. And this is one that can damage you if you don’t deal with it in the way we are suggesting. If your product or experience contains a feature that is in serious need of fixing and you ignore it, then your competition can feature it as a way of attacking you to win market share.
So, ‘feature it’ can also be used by your competitors to focus attention on a feature that is perceived as a weakness for you, as in this Audi commercial that appears to be targeted at Toyota.
Traditionally, when communicating the benefits of a product or experience, marketers focus on just that, the benefits, downplaying features that are harder to interpret as a benefit or that can be seen as a weakness. So, the ‘fix it or feature it’ mantra is a powerful reminder to think about creating an experience that is memorable for all the right reasons.
