AmEx: High Value Customer Service Drives Shareholder Value

The Challenge: Businesses that do not recognize the power of high quality customer service, increase the risk of revenue loss and decreases in market valuation.
Businesses that treat customer service as a cost center, relegate it to an operations function and focus on manufacturing metrics such as reducing the time per call.

Innovative marketers like QVC treat service as an opportunity to build strong customer loyalty. For them, service isn't a cost;it's a revenue driver.

Jim Bush, Customer Service Czar at American Express, has pushed the envelope even further. For him, service is a major driver of market valuation and shareholder value.

Like many innovative marketers, Bush shifted the focus of his service team from reducing call time to building engagement. He discussed his reasons, and the results, with Fortune Magazine's Geoff Colvin. These are some of his innovations:

Authentic Conversations
Reps too often sound robotic. They need to conduct authentic conversations which are based on empathy and personalized data. According to Bush, "We present the profile of who that customer is and other information relevant to that particular interaction. That allows the care professional to be conversant and pull out their personality and match it to the personal needs of the customer."

Optimize for Customer Loyalty
Dropping "low call time" as your service goal doesn't mean ignoring key performance metrics. Bush's team optimizes for Bain's "Net Promoter Score”. “For every servicing transaction we ask, How can we get the customer to feel better about American Express and recommend it to a friend? That’s a promoter.”

Heed the Voice of Customer
Bush clearly recognizes the importance of the Voice of Customer (VoC): "Think of the power of the voice of customer now. Verizon introduced a $2 fee, the voice of customer screamed loud, and it turned that around 24 hours later. We need to appreciate customer centricity and the value it creates."

Results
The results have been dramatic: According to Bush, "For a promoter who is positive on American Express, we see a 10% to 15% increase in spending and four to five times increased retention, both of which drive shareholder value".

KEY TAKEAWAYS FOR MARKETERS

→ Use Customer Service to Drive Personalization
Customers today expect a higher level of personalization than ever before. Bush emphasizes the role of service in personalization: "I thought about the opportunity of capitalizing on every interaction and moving away from being a cost of doing business to being an investment in building relationships. Every one of those moments of truth is an opportunity to make a difference to customers in a personalized way."

→ Train Call Center Employees to Engage with Every Call
Solving customer problems is crucial, but it's not enough. The service team at AmEx focuses on "how you create the relationship and build it through humanity, conversation, and engagement". To do those things effectively, call center employees need the right training.

→ "Serve customers, not transactions."
Bush's quote above should become a mantra for all businesses. Call center employees should serve customer’s desires and needs, and customers should be the ones to determine how long they need to be on the phone.

Have You Forgotten About the Value of Direct Mail?

The Challenge: All businesses want to engage in sophisticated multichannel marketing, but many are forgetting about the power of direct mail as a vital element of their media mix.

Multichannel Integration: Online And Off
As we reported earlier this year, a recent Direct Marketing Association study found that 93% of marketers using multiple channels indicated they have attempted to integrate their messaging, but only 27.4% of these said their efforts are ‘effective’...”

Experienced marketers know that relevance means sending the right message to the right person at the right time. But they neglect a key aspect: that message must be delivered per that individual's media preferences.

According to a recent Epsilon study, "Consumers use and trust certain communications channels more than others”. While the general point may not be surprising, at least one detail will be a surprise to a number of marketers: 50% of U.S. consumers prefer direct mail to email.

Out With The Old?
Data-driven marketers shouldn’t ignore the evidence: consumers want direct mail to be part of their multichannel mix. Many common objections to this channel among “digital-only” marketers are at odds with the evidence:

Consumers Prefer Mail
Epsilon's study found that, "despite direct mail's reputation for being 'old school' or expensive, it is the top choice of U.S. and Canadian consumers for the receipt of brand communications in almost every category, ranging from 'health to household products, to household services, insurance and financial services.'"

Young Consumers Prefer Mail
Nor is this true only for technophobes: Epsilon found that "the preference for direct mail also extends to the 18-24 year old demographic."

KEY TAKEAWAYS FOR MARKETERS

→ Deliver Content Per Consumers' Media Preferences
Search and social media allow us to send the right message to the right person at the right time, but the right channel isn't always online.

→ Email is not Always the Most Cost-Effective Channel
Extensive testing for clients by our company determined that while the Cost per Piece is clearly much higher for Direct Mail than Email, the yield from direct mail efforts are often far greater, i.e., sales per 1000 names. Therefore, total sales from direct mail are often significantly higher than email.

→ Seriously Consider Direct Mail As Part of Your Multichannel Mix
Forward-thinking marketers should evaluate the potential value of direct mail as a component of their multichannel mix. It may not be effective for all businesses, but it just might be right for yours.

Instagram: 4 Lessons on Optimizing for Engagement

The Challenge: Instagram's billion-dollar exit was not an anomaly. It was a lesson about the value of “engagement” that every marketer must heed.

Since the advent of social media advertising on Facebook, Twitter, and other platforms, "engagement" has become a mantra for marketers. But despite the media buzz, many businesses remain hesitant to embrace the new reality.

Search marketing is clear: optimize ad spend for conversions (i.e., revenue). But what is the value of "engagements" and "likes"?

Then, Facebook put a value on engagement: $1 billion. That was the price they paid for photo-sharing site Instagram: a company with no revenue―and very impressive engagement metrics.

Google and Facebook introduced AdWords and "Sponsored Stories" years after launching their sites. They began by building customer loyalty and engagement, and found their revenue streams later. With 30 million users in only two years, Instagram is on the same path.

Speaking with Bloomberg, Instagram VC Chris Sacca identified two keys to the site's success:

1) High Percentage of Engagement
According to Sacca, a high percentage of photos shared on Instagram lead to user engagement, most often in the form of "likes." That promise of feedback brings users back to the site, repeatedly.

2) The "Dopamine Effect"
"That engagement creates the dopamine effect that leaves users feeling fantastic and coming back for more," Sacca told Bloomberg. Photo sharing without engagement won't lead to the dopamine effect―though it might lead to a narcoleptic one.

4 Imperatives for Engagement-Optimized Marketing

1. Build Mechanisms for Engagement
Give your users a way to share, tweet, like, or "+1" your content. You can't optimize for engagement if you don't facilitate it.

2. Create Engaging Content
If you want customers to engage your brand, you need to produce a significant volume of high-quality content. Creating that content is a business-critical function; staff and budget for it accordingly.

3. Reward Customer Evangelists
The journey to a million user engagements begins with one "like." Early evangelists are among your most important customers. Target them with custom messaging and special offers―and keep them engaged.

4. Don't Stifle Engagement by Chasing Short-Term Revenue
When customers start engaging your content, build on that momentum. Don't cut it off with premature "asks." The easiest way to kill engagement is by selling.