Ernan’s Insights on Marketing Best Practices

Monday, June 27, 2011

Customer Service: Are You Paying Your Reps what they Deserve?

THE PROBLEM: Most companies still do not provide good quality customer service.
THE SOLUTION: Start by re-evaluating whether your customer service reps receive the pay, training, and respect they deserve.

Recently, my team and I were working with the CEO of a major financial services company. This particular meeting was not a happy one; the CEO was reviewing customer satisfaction scores that indicated serious problems.

One of my team members asked the CEO: "How well are you paying your front-line customer service people?"

There was a long silence. It was broken by the CEO's rueful admission that the best-paid members of the critical team interacting directly with the company's customers earned an annual salary of $32 K to $35 K. That CEO had just experienced an "A-HA" moment. Given the tens of millions of dollars these front-line people impact every day, what sense did it make to underpay and hence ... undervalue their role?

Unfortunately, this CEO is no exception. Countless enterprises are handicapped by treating front-line service people as among the lowest paid individuals in the entire organization.

This dangerous practice is incompatible with the realities of today's "empowered consumer" era. How can marketers acknowledge that a single social-media-savvy customer can impact the reputation of a company ... yet perpetuate a system which underpays and undervalues the critical customer service role?

arrow Give front-line service people more authority and respect within the organization. For instance, you might give front-line personnel the autonomy to spend up to a certain dollar amount to resolve a consumer problem ... and then offer public praise to employees who spend those corporate dollars effectively.
arrow Re-examine your compensation plan. If the pay is not commensurate with what your company says about its belief in good customer service ... then you won't attract top notch people to deliver on that promise!
arrow Create an effective "soft skills" training plan. Very often, customer service people know all about the various technical and product/service feature issues ... but have not received thorough and on-going training on people skills and effective customer engagement.
arrow Re-evaluate the fundamental skill set of the people you're putting on the customer service phone or face to face front lines and expecting to interact effectively with your customers. If some of those people are simply not cut out for the empathetic, "people-first", task of hearing customers out, making them feel heard, and cheerfully solving their problems, you need to reassign them to other departments or, part company with those employees.

Monday, June 20, 2011

The Gap Between Your Wishful Thinking and Real Customer Experiences

THE PROBLEM: Many companies think they are doing a far better job of engaging with, serving, and supporting customers than they are.
THE SOLUTION: Take a hard look at your Customer Sat process. Is it self-serving, subject to manipulation… or brutally honest?
The following incident prompted me to write today's blog. Recently, I called to arrange a cab from my home to the airport. This task is always a challenge, as the cab company has a virtual monopoly on taxi service from my hometown to the airport.
I expected the poor service I usually get from this company: no call to alert me when the cab was on the way; late arrival; and a surly attitude from a sullen, monosyllabic driver. I may have to use this company, but I would never, ever recommend it enthusiastically to a friend.
This time, however, I was amazed to discover that I was being treated to a higher level of service than usual. I received an advance call to confirm the details of my pick-up time. They were on time…and, I even experienced a pleasant attitude from the driver!
I soon found out why: This was a new driver who had just started working for the company!
My good feeling evaporated when I realized that I had been used to terrible service for so long that these positive interactions actually seemed like luxuries!
They weren't. What I had experienced was actually the bare minimum for professional-level airport transport.
This company doesn't "get it" when it comes to customer service. They had somehow managed to hire a driver, outside their norm, who "got it". The underlying culture of disregard for the customer was still well entrenched. I found that out when I made my return trip!
Yet ... when I see the owner of the company, he delights in telling me about their customer-centric practices and high satisfaction scores! He tells me that his business philosophy is rooted in listening to customers! And he truly believes it. But from direct personal experience, I can assure you that, of his thirty or so drivers, precisely one was capable of delivering a minimally acceptable customer experience!
Here's the point: Most executives tend to think that they are doing a far better job of engaging with, serving, and supporting their customers than they really are.
I call the difference between your wishful thinking and real customer experiences ... the Customer Gap.
Too often, marketers hold their customers hostage, because they believe that there are few or no viable options available to consumers. In an age of rapid technological change and sudden, transformational market shifts, this is an extremely dangerous game.
Often without realizing it, companies get complacent about the dangerously wide gap between what consumers have been promised and what they actually experience in the real world. They stop communicating effectively with their customers, and they get used to delivering a barely acceptable (or even an unacceptable!) level of service.
In an age of empowered, social-media-savvy consumers who can be expected to tell a global audience exactly how they feel about our brand, is that really where we want to be?
arrow Take a hard, honest look at your Customer Sat Process, including the metrics and questions which determine “satisfaction”.
arrow Evaluate whether those metrics are telling you what you want to hear, or what you have to know?
arrow Ask customers for in-depth feedback regarding their experiences with your company and the potential gap between what they expected ... and what they actually experienced.

Monday, June 13, 2011

Facebook Users Concerned About Providing Access to Marketers

THE PROBLEM: Social-media driven offers that should be igniting sparks with younger consumers are underperforming.
THE SOLUTION: Learn about the rapidly changing concerns of your target group regarding privacy, sharing data, and providing access to their identity, online. Their level of concern has grown exponentially in the past 12 months.

Marketers have been fooling themselves into believing that someone under 35 who uses Facebook will automatically open up and share personal information ... with little or no concern for the safeguards that govern how that information will be used.

Younger consumers may, as a group, be more comfortable using the social media tools than older consumers - but they may be more worried about the ramifications of giving access to themselves, their world, and their data.

Thanks to heavy usage of social media channels, they are more likely to have been burned in the past. With more complex networks of online social relationships than older users, they are more likely to think twice about how disclosing information will affect those relationships.

In a recent interview, my son Elias Roman, CEO of the social music service Songza.com, said "We have conducted Voice of Customer, (VOC), research with younger consumers and identified a clear pattern: People are deeply concerned about saying 'Yes' to services that ask for permission to interact with their Facebook account information. They say, 'I'm afraid marketers will use my information in ways that I don't approve of. I'm afraid I will see things on my Facebook wall that I don't want. I'm afraid that my friends will think I'm spamming them."

Elias adds, "So, there are both personal security and social responsibility concerns."

Songza management concluded from the VOC findings that, despite the promise of 'instant personalization' afforded by accessing the deep data stored in a user's Facebook account, connecting to Facebook was not an acceptable "first date" experience for prospective customers. Leveraging 'instant personalization' platforms like Facebook is an important part of the long-term value delivered by Songza - which is to quickly and easily build users a sharable streaming music collection based on their friends and their interests- but, like any other opt-in, the consumer must first be shown why giving Songza access to their data is in their best interest.

In Songza's case, this meant starting with whatever 'preference indicators' it already had - sometimes as little as a preferred artist and the user's location (as determined by IP address) to show how relevant information about the user would lead to better personalized recommendations. Once that was established, requesting that the user connect to Facebook would be perceived much more positively, if presented correctly. For example, "Connect to Facebook!" is not a compelling call to action. "Getter better recommendations and trade playlists with your friends by using Facebook Connect", provides a clear benefit.

But that is only part of the equation. An equally important part of earning a user's opt-in is to give them a clearer understanding of the company's commitment to safeguard their data and use it in ways that will not carry negative social implications.

In particular, Songza got a positive response to providing a link to the administration section of the user's Facebook account that would let them 'disconnect' Songza at any time, for any reason. The message Songza sent was "We're so confident we'll use your information the way you want us to, that we'll make it super simple for you to take that permission away if you're ever unhappy."

THE RESULT: Within 60 days of implementing site changes driven by Songza's VOC research, average visit length on Songza.com increased by over 50%, to above 42 minutes, driving a corresponding increase in average monthly revenue per user.
arrow Don't make assumptions about social media acceptance or tolerance.
arrow Gather voice-of-customer guidance from your customers and prospects. This is a volatile channel. Find out the concerns/sensitivities about sharing personal data ... especially if that group includes younger consumers.
arrow Learn the value they expect to receive in return for giving you that data. Find out whether a “first date” experience is necessary to earn their trust.

Monday, June 6, 2011

Customer Retention: Too Many Missed Opportunities

THE PROBLEM: Customer attrition rates are increasing and so is the cost of new customer acquisition.
THE SOLUTION: View customers as a precious resource which cannot be squandered. Greater focus on creating Reciprocity of Value-based relationships will generate significant financial returns.

Carol Krol, Editor-in-Chief of Direct Marketing News recently invited me to write an Opinion piece regarding marketer’s prevailing lack of focus on customer retention. For many companies, priorities and budget allocation still focus too heavily on customer acquisition, at the expense of customer retention.

The article below is from the Opinion piece which appeared in Direct Marketing News on June 1st.

I hear many marketers complain about the escalating cost of acquiring customers in our fragmented, distracted media environment. Having paid the price, having invested all that time and effort, and having finally won the business, marketers talk a great deal about the importance of engaging, interacting with and retaining those customers. How well do we walk our talk?

Marketers love to throw around terms like "relationship marketing," "customer relationship management" and "one-to-one marketing." It would be nice if large numbers of marketers actually did those things, but the proof that most of us don't is in how budgets are allocated.

Most companies still allocate significantly greater portions of their budget to customer acquisition than to customer retention. Most sales teams reward "hunters" far more generously than they reward "farmers," and…the compensation for customer service representatives generally has nothing to do with their critical value in retaining customers.

The lesson we continue to ignore is that it costs far more to win a new customer than to retain an existing customer. This is not exactly new information.

Many years ago, while I was working on a consulting assignment for AT&T, my contact pulled a sheet of paper from a file and handed it to me. It was a carbon copy of an internal study conducted by AT&T which stated that it cost five times more to generate a new customer than it did to sell to a current customer. The memo was written in 1918. Almost 100 years later, the lesson still holds true, except that the cost of acquiring, rather than retaining, is now on the order of 10 times higher.

Yet our metrics, compensation plans and organizational structures are still often driven by the "cult of acquisition." If we are serious about achieving the goal of true relationship marketing, we have to change how we allocate our budgets. We need to focus more clearly on the financial value of retention and lifetime customer value, and that has to be reflected in our metrics and budget allocation.

The best way to achieve increased customer engagement and retention is to create what I call Reciprocity of Value-based relationships with our customers. These are relationships in which customers trust us to deliver increasingly relevant and personalized online and offline customer experiences, based on the in-depth preferences they opt-in to share with us.

The quality of the information customers choose to share with us during these reciprocal value exchanges is a game-changer from a competitive point of view, but it's also something more. The presence of that opt-in preference data that consumers have chosen to trust a company with is the best real-world indication of a marketing organization's willingness to walk its own talk when it comes to true customer engagement.

arrow Create Reciprocity of Value-based relationships with customers. Make increased customer engagement and retention a reality.
arrow Deliver increasingly relevant and personalized online and offline experiences. Define a trusting relationship with your customer, based on the in-depth preferences they opt-in to share with you.
arrow The power of the opt-in, preference driven database you will create will astound you!