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Customer Service – For the Recession and Beyond

by Ron on Tuesday, February 16th, 2010

Here at Zavee we spend a lot of time thinking about what smaller businesses can learn from larger ones. We also think a lot about customer service. The current recession seems to us an excellent time for businesses to focus on customer service. Commentators seem to agree. Their reasons may be obvious, but they make sense nevertheless:

  • Retaining existing customers costs far less than acquiring new ones
  • When competing for customers, businesses often have to choose between offering more value (e.g., by improving service) or cutting prices
  • A good customer experience makes future purchases more likely, while a bad experience does the opposite

These posts focused mainly on larger companies, many of which have downsized their customer service staffs. There are anecdotal indications, if nothing else, that customer service has suffered as a result.

City Light customer account operators, 1945

City Light customer account operators, 1945

On the other hand, some larger companies are maintaining or even improving customer service. We think that these companies will be well positioned after the economy recovers because they will have generated loyalty and improved the value of their brand at a time when some of their competitors were cutting service or hiding from customers. Some are using technology: Comcast and Best Buy are by now well known as pioneers in the use of Twitter to learn about and respond to customer care issues. Other companies, such as Southwest Airlines, maintain high levels of customer satisfaction by making service part of the organization’s DNA (although no one is perfect). And I have had at least one potentially negative experience with a rental car company turn positive simply because a well-trained senior manager was on the scene and jumped in with the right approach and a fair solution.

Smaller companies have both a harder and an easier time maintaining customer service in a recession. Harder, because increasing expenses during a time of weak revenues may be difficult to swallow. Easier, because the cost-benefit analysis is much clearer. Some large companies may believe they can afford to exchange so much in sales for so much in customer service expense, but most small companies don’t think that way. Although there certainly are exceptions, most small companies realize that they can’t afford to give up sales to save money. They also realize that good service builds repeat business and long-term loyalty. Finally, they should also realize that customers talk – which means that good customer service can generate referrals: the least expensive but most reliable way to acquire new customers. The good news for small companies is that maintaining and improving customer service doesn’t have to be expensive. Here are some low-cost approaches to customer service that businesses can start now and keep in place even after the economy improves:

  • Listen to your customers. There are many ways to listen: you can use applications like Facebook and Twitter; you can send surveys to customers by email; you can call them on the phone; and you can chat with them at the point of sale. As long as you are sincere and open you will learn a lot about what you are doing right and how you might improve.
  • Empower your associates. Your customer-facing employees should be encouraged to engage with customers at every point of contact and empowered to offer solutions to at least some concerns or complaints. Anything that can’t be handled at their level should be referred to the appropriate person and dealt with promptly.
  • Use technology wisely. At Zavee, we use a third-party application called Zendesk to help us manage customer service. Clicking on a “Help” link from anywhere on the Zavee site opens our Member Services page, from which anyone (even non-members) can read our content, engage with others in a forum or contact us with a question, comment or complaint. This system creates a numbered “ticket” for every interaction, which is automatically flagged for followup by Zavee but also gives the user a way to follow up with us. It turns everyone in our organization into a customer service agent, because we never know in advance who will be the best person to handle the next ticket that comes in.
  • Don’t go it alone. In addition to blogs and other online resources, local chambers of commerce are a great source of information from businesses like yours in your own market. If you are located in South Florida, we invite you to join Zavee. Our marketing tools help merchants understand their customers better and our networking tools improve their ability to communicate with and learn from customers.

The Zavee takeaway:

  • If you think the recession is time to double down on customer service, you’re right. If you think it’s time to cut back, think again.
  • It may be easier for you to provide excellent service than a larger competitor, because you are closer to the customer. That’s a key point of differentiation – make the most of it.
  • Customers talk. Make sure they have only good things to say about you.
  • Don’t stop once the economy improves.

Update (2/18/10): “Poor Customer Service Costs Companies $83 Billion Annually” provides a useful summary of an impressive global research report (pdf) on the high cost of poor customer service.

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The Other Super Bowl

by Ron on Tuesday, February 9th, 2010

How did you like the big game? No, not the one with the Saints and Colts – the one with the Snickers and Doritos. The phenomenon probably began during the first dot com boom of the late 90s, but in recent years the commercials that air during the Super Bowl have attracted almost as much attention as the game itself.

Drew Brees, Jan 7, 2010

It’s fun for those of us whose marketing budgets don’t include the $2-3 million it takes to buy a spot or even the mid-six figures it costs for production.  It’s like going to the marina to gawk at the hundred foot yachts.  Still, there are some things small business people can learn from the big game.

One thing is the value of leverage, getting extra value out of your marketing dollars.  Long before the game is played and the commercials run, there are stories in the media about different marketers’ strategies and even teaser clips of upcoming spots. Using public relations to generate interest ahead of the air date makes sense because it’s a low-cost, effective strategy for increasing awareness and impact.  This year the story lines included Pepsi’s decision not to advertise on the Super Bowl, Budweiser’s decision not to feature its iconic Clydesdale horses (a decision that was ultimately reversed) and CBS’s decision to air a “pro-family” spot featuring Florida QB Tim Tebow.

According to most commentators, this wasn’t a vintage year for Super Bowl ads. “There were no standouts,” according this post on AdRants that summarized industry and consumer reactions to the ads. Seth Stephenson of Slate agreed. Bob Garfield of Advertising Age liked Audi’s “Green Police” ad, the “men’s liberation” themed spots from Dodge and FloTV, and not much else. Barbara Lippert of AdWeek and Slate’s Stephenson liked Google’s simple, effective execution that combined narrative with product demonstration – and cost next to nothing to produce. But just about everyone seemed to like the Snickers spot in which young athletes played like Betty White and Abe Vigoda until they ate a Snickers bar.

As always, advertising insiders took their shots at USA Today’s Ad Meter, which records the real time reactions of a panel of consumers to each of the spots as they run during the game. The Ad Meter can drive professionals nuts – especially since 2007, when CareerBuilder fired its agency after a poor Ad Meter showing. The Ad Meter doesn’t measure strategic insight or clarity of message – it’s the People’s Choice Awards of advertising, and it was won this year by the Snickers ad.  Lippert observed that “[t]he spots that do well on the Ad Meter are the ones that feature the kind of tricks viewers have been trained to expect, like man-on-man violence and/or cute animals. It’s like teaching to the test.”  Garfield called the consumers on the panel “AdMeter-ocrities.”

Another takeaway of interest to small business is the increasing impact of Social Media on conventional media.  While insiders might not like it, Social Media makes consumer reaction to advertising easier to track, and agencies are starting to see the value in doing so. In addition to the Ad Meter and Ad Bowl (another panel-based ranking), Social Media provided a way to gain insight into consumer reactions to the ads. Ad agency Mullen and Social Media monitoring firm Radian6 tracked Twitter feeds to determine the top brands coming out of the Super Bowl (Doritos, Google and Focus on the Family took the top three spots). Several other firms had similar strategies.

As for me, my Super Bowl Sunday was made by Google, Snickers and E-Trade (I know, but imagine another category that has room for both trash-talking babies and Sam Waterston).  And the Saints. Definitely the Saints.

The Zavee takeaway:

  • Make your marketing part of your company’s story – it will make your marketing budget do more and go farther.
  • You can do it inexpensively – conventional PR is one way, Social Media is another.
  • The most distinctive and creative way to tell your story doesn’t have to be the most expensive.

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Can Social Media Help Toyota Repair Its Reputation?

by Ron on Tuesday, February 2nd, 2010

As most of the world now knows, Toyota’s US unit has announced the recall of approximately 2.3 million vehicles to repair a condition that has resulted in gas pedals sticking while the car is being driven. Safety issues are perhaps an automaker’s greatest threat, and Toyota clearly is taking the situation seriously. The company has even halted production of the affected vehicles until the problem can be solved. Nevertheless, according to auto blog The Truth About Cars, the Japanese business publication Nikkei (think Wall Street Journal) claims that the crisis “is seen as a major dent in the side of the leading Japanese automaker’s reputation as a builder of reliable automobiles.”

The Toyota issue is the largest product recall since the rise of Social Media, but it is not the first. In November, 2009, UK stroller manufacturer Maclaren recalled approximately one million strollers after reports that children were getting their fingers caught in the folding mechanism. The company put recall information on its web site, which, according to the New York Times, promptly crashed. Like Toyota, Maclaren’s stellar reputation resulted in a case of “the bigger they are, the harder they fall.” Time reported that parent blogs were merciless toward the company. Maclaren posted a video PSA to YouTube announcing the recall and the availability of a repair kit, but apparently did not take advantage of either Facebook or Twitter to communicate with parents.

Moving Forward?

Moving Forward?

Toyota is already receiving some criticism for being insufficiently engaged with its customers. The company has a page on its site dedicated to the recall, with links to FAQs and a video news release consisting of talking head sound bites from COO Jim Lentz along with ad-quality footage of the cars and the factory. The video is disappointing: Lentz’s comments sound blandly reassuring but never manage to engage. Today’s Ad Age reports that Toyota’s video is now on the company’s Facebook page, where it is said to have been well received. If the video is posted on the Toyota page, however, the company has not made it easy to find. Most of the wall postings appear to be from car owners and most are in the “I love my Toyota!” genre (it’s not called a fan page for nothing). There appears to be no company-supplied content relating to the recall (unless that video is there somewhere) and certainly no conspicuous attempt to leverage Toyota’s 70,000+ Facebook fans.

Toyota does have a presence on Twitter, but until yesterday the company was using the feed to point to information on the company’s web site. On Monday afternoon Lentz spent 20 minutes fielding questions on Twitter. The Q&A was announced only shortly before it began, and greater lead time might have yielded more participants. However, car bloggers such as @jalopnik and its editor @raywert were on the feed as well as several Toyota dealers. Although this was not the smoothest exercise, it strikes us as a good first step toward engaging with customers, not just making announcements to them.

Toyota is using a wide range of media to announce that it knows how to repair the faulty parts. Now let’s see how Toyota uses Social Media as it tries to repair its reputation.

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NBC, NYT and Loyalty

by Ron on Tuesday, January 19th, 2010

In the course of an entertaining post about NBC’s current “two hosts, one spot” late-night nightmare, Dean Bairaktaris asks, “Where is everyone’s Brand Loyalty? Is it with NBC, Leno or Conan?” This is an insightful question, because the expensive and embarrassing contretemps has been presented largely as Jay vs. Conan, Old Guard vs. Young Turk, homespun vs. hip.

via mashable.com

via mashable.com

The potential impact on NBC as a major media channel has largely been ignored, except in posts like Dean’s, as Conan is widely presumed to be able to shift his audience, more or less intact, to Fox or another media outlet. But it’s fair to ask whether the broadcast networks actually have brand equity apart from the shows they carry. Is there an “NBC-ness” to the Tonight Show (or any other NBC program) that would not carry over to another network? That arbiter of absurdity, The Onion, would certainly say no.

The soon-to-be-announced decision by The New York Times to put some or all of its content behind a pay wall also involved a debate over the brand equity of the Times versus that of its content (in this case, the paper’s prominent columnists). An outstanding article in New York Magazine details some columnists’ concerns that in its pursuit of subscription revenue the Times would be sacrificing its position as a leading online news brand, giving up both traffic and influence (as well as premium advertising rates, apparently).

I think the two situations have a lot in common. In both cases, the underlying question was whether the locus of customer loyalty is the channel (NBC and NYT) or its content (shows and columnists). I’m not sure the answer is the same in every case. I don’t think broadcast TV networks are differentiated enough to generate brand loyalty, but I’m not sure that’s equally true of newspapers (I grew up reading the New York Times so I might be biased – or just conditioned).

For small businesses, the lesson is to think about what aspect of your brand your customers are loyal to, and not to assume that all customers are loyal to the same thing or for the same reason. You want the locus of loyalty to be your overall brand so that customers will stay with you as your business changes, whether those changes involve staffing, product assortment, location or even store closings. However, until you have the conversation with your customers, you can’t be sure that they are loyal to your brand or to your personable store manager, convenient location or frequent sales.

As a smaller business, you have the ability to engage with customers directly and provide an overall customer experience that embodies your brand’s unique promises and values. Larger brands often (but not always) provide a product experience that is not as closely connected to the brand. This is an advantage for smaller businesses which, unlike large brands, should never need to market brands and products separately. To leverage the direct connection with customers, treat loyalty as a two-way street. There are many ways to demonstrate your loyalty to customers, but the easiest is to listen to what they have to say.

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The Count of Social Media

by Ron on Tuesday, January 12th, 2010

Imagine having that on your business card! In a world of Brogans, Vaynerchuks and Mashables there is no shortage of candidates worthy of the title, but this post isn’t about any of them.

Anyone who has kids, or who was one fairly recently, will remember Sesame Street’s Lugosi-eque math whiz, Count von Count. The Count would count anything, anytime, anywhere. And he was much better at it than, say, The Spanish Inquisition:

Imagine, then, what the Count – let alone the Inquisition – would have to say about this: a Flash-based application that provides a real-time count of Social Media activity. Courtesy of Gary Hayes’ Personalize Media blog, here is Gary’s Social Media counter:

Visit Gary’s blog if you want to know about his sources, but the details are almost beside the point. Spend even a minute watching the numbers cascade and you are sure to be convinced – if you weren’t already – that Social Media is a communications channel (or group of channels) that marketers cannot afford to ignore. If you are marketer with a small company and a small budget, Social Media is perfect for you. If you are just starting out, take the simple advice that you’ll get from everyone: listen first.

And if you would like to learn about a Social Media marketing program exclusively for local merchants, feel free to get in touch with us here at Zavee.

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New Years Resolutions – And Lies

by Ron on Tuesday, January 5th, 2010

What would the first week in January be without a post about New Years resolutions?  Mine aren’t of the “get to the gym” variety. Instead, my plan for 2010 is to use the web – especially Social Media – more effectively.

In part this means learning to avoid what Penelope Trunk calls The 4 Lies About Social Media. (In her post these are more “myths” or “mistakes” than lies. I don’t know why she calls them lies but being provocative is a good way to get noticed. It helps your Google page rank, too. Hence the title of this post, which originally was just “New Years Resolutions” – and another resolution: to get better at writing for search engines.)

In my quest to improve my social media skills this year I am very fortunate to be surrounded by a team of well connected and highly creative colleagues. I want to make it clear that my skills (and deficits) are my own; Zavee, collectively, is poised for the leadership you expect of us. Another way of putting it is, my real New Years resolution is to become as smart as my staff! With that caveat in mind, here are some of my Web-related resolutions for 2010:

  1. Take better advantage of Linkedin. Penelope says that Linkedin is a great scorecard for the size of one’s network but it’s a “lie” to say that it’s useful for building a network. The scorecard aspect is useful (e.g., for employers who want to learn about how connected a job candidate is).  However, Linkedin is not for conversations, so it is not a good way to build a network. I see her point about conversations – it may be the only thing you can’t do on Linkedin. On the other hand, Linkedin provides many opportunities to get found, get noticed and get followed. Unfortunately, I haven’t really figured out how to use Linkedin efficiently and proactively – how best to use features such as starting discussions and asking questions. Fortunately, my marketing people don’t have that problem. So my personal resolution is to follow their guidance so I can understand Linkedin better and use it more effectively.
    2. Stuart Pilbrow via Flickr

    Happy New Year!

  2. Build our brand with Twitter. Penelope says that networks require conversations but it’s a “lie” that Twitter is the place to have them. She says Twitter is better for finding and following people with similar ideas and interests. We do use Twitter to keep up with tweets about Social Media, loyalty marketing and other topics that interest us, and tools such as TweetDeck and HootSuite make it easy to manage different accounts, searches and lists. However, I know that I have a lot to learn about creating a presence on Twitter and achieving the kind of scale that will enable us to use Twitter to leverage the Zavee brand. Fortunately, our community manager has a great deal of experience with Twitter. My New Years resolution is to learn from her how to build a brand with Twitter.
  3. Make Zavee Thinking more relevant. Penelope says that blogs are networking tools, not personal journals, and I certainly agree. I think I’ve been disciplined in how and what we write about on this blog.  I write from the small business perspective, whether I am posting about trends and concepts or about tools and techniques. For 2010, however, I intend to focus a bit more on practical solutions for merchants, including by posting about how merchants can get the most out of Zavee. Even this post, which is superficially about me, is really about how I can better be the “lead blocker” for merchants who are trying to make progress with unfamiliar tools and concepts.
  4. Use our Facebook fan page to help build our member community. Penelope’s fourth “lie” is that social media is no place for business. In fact, businesses are finding new and interesting ways to use social media all the time, and social media channels are constantly developing business-oriented tools and features. One example is Facebook’s fan page. We have one, and we want it to be the destination for our Zavee community. One way to do this is to use Facebook to extend the content we can deliver on the Zavee site. Facebook is great for managing events and user-generated content, both of which are important to us.  We will have more to say over the next few months about our member community and how Facebook fits into our strategy. For now, we’ll just say that our final resolution for 2010 is to build our community as we build our business, which includes being smart about Facebook.

See? Nothing too difficult there! Maybe I have time to hit the gym.

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2010: The Year of Social Shopping

by Ron on Tuesday, December 29th, 2009

As we come to the end of a most unusual year I’d like to provide an update on Zavee’s progress, as well as offer some additional thoughts.

Our most important news is that Zavee is almost ready to go live. We are finalizing the launch release of our software and expect to begin processing transactions by mid-January. We began our merchant sales efforts in November and already have signed up scores of local businesses in our South Florida launch market. Our consumer acquisition program will begin in January and ramp up over the next several months.

Shopping with Friends

Shopping, Socially

One of the most gratifying – and, frankly, amazing – things about the process of creating Zavee is the extent to which people who know what they’re talking about are saying the same things we are about Zavee’s core concepts. In short, Zavee is in the right place at the right time.

When we describe Zavee as a “social shopping” platform we recognize that this is a new concept for most consumers and businesses. Social media marketers, however, say that social shopping is poised for growth:

“Social shopping is really still in its infancy,” said Andy Lloyd, CEO at Fluid, an e-commerce technology company. This means retailers and solution providers are still thinking about how people connect with other people around buying decisions in an online environment and how they can facilitate those gatherings. “The challenge is people don’t know what social shopping is or what it does,” Lloyd continued, which is why the adoption rate isn’t very high yet.

Search professionals have been quick to see the advantages of social shopping for merchants, including advantages we discuss with merchants constantly: the ability to connect with customers, enhance credibility and leverage word-of-mouth.

From a consumer perspective, social shopping taps into basic principles of human behavior. Marketers increasingly recognize the potential of social shopping and are aligned with Zavee’s perspective on integrating social networking functionality with search and review capabilities:

In social shopping, you see recommendations and reviews that your friends have shared. You see items that your friends have purchased or brands that your friends have shopped with. This matters a lot when you’re shopping for a digital camera and are stuck deciding between three different models. Of course, the last 10 years’ worth of people’s purchasing histories and written reviews on Amazon may help you narrow your choice – if you can filter out the noise. But those reviewers are entirely anonymous to you, even though they may use a real name and have a rating history with the site.

We believe that 2010 will be the year in which social shopping comes of age. This clearly is good news for Zavee. We believe that our social shopping platform, which also integrates a cash-back rewards program and a mechanism for raising funds for local civic and charitable organizations, offers a compelling value proposition for merchants, consumers and causes. We can’t wait to prove it.

From all of us @Zavee, a happy, healthy and prosperous New Year to all!

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Understand Your Customer, But Understand Your Business First

by Ron on Tuesday, December 22nd, 2009

In a recent post on Conversation Agent, Valeria Maltoni argues that brands shouldn’t “Try to Be All Things to All Customers”.  She argues for “picking one thing and sticking with it” rather than trying to do it all.

Valeria points out: “The more audiences and segments you have – which depend on your product or service lines – the higher the complexity in delivering to all the same standards when it comes to meeting customer service expectations and communication needs.” [Emphasis in original]

I agree with this point completely, and I think it’s especially relevant for smaller businesses.  Smaller businesses may not have the capacity (in terms of human or capital resources) to try to do too much, but if they do try and fail the consequences can be disastrous.

However, with a nod to branding expert Al Ries, Valeria cites this post on Branding Strategy Insider for the proposition that “Citigroup got bigger and weaker because the brand was stretched in so many directions [by its acquisitions in insurance, investment banking and brokerage]. As a result, the brand lost its meaning.” I agree that Citi’s experience is relevant to marketers – but for a completely different reason.

via dealbreaker.com

via dealbreaker.com

In an earlier life (20+ years ago – yikes!) I was an attorney for one of Citi’s law firms (my opinions and recollections are, of course, my own).  Back then, Citi concentrated less on consumers than on commercial and wholesale banking, on a large and often global scale.  From the institutional perspective, which (I believe) is how Citi approached them, brokerage, investment banking and insurance are indeed adjacent businesses and it made sense to take advantage of the regulatory changes that permitted the acquisitions.

I believe the problem was that entering these businesses forced Citi to be more consumer-focused than it knew how or even wanted to be.  None of its acquisitions brought world-class consumer marketing to the table and as far as I know there was no in-house culture that would or could have turned Citi into a consumer-centric institution like Commerce (now TD Bank) or even Wells Fargo (bear in mind that the bank’s tagline is still (or again), “The Citi never sleeps”).

My takeaway from Citi is not that it spread itself too thin but that it misunderstood what it was buying.  Specifically, Citi underestimated the inherent consumer component of its new businesses.  If I’m right, Citi found itself suddenly in need of large-scale consumer marketing capabilities that it didn’t have; it’s been trying to catch up ever since.

For smaller businesses, with so much less margin for error, it is vital to fully understand any new business venture – and from the perspective of the customer, not just the business owner.  Remember, Citi thought it was buying synergistic institutional finance businesses only to find out that it was buying consumer businesses, too.  The key question is whether – and how – your interactions with customers of the new business will differ from what you are doing now.  Will you need to spend more time with the customer?  Know more about the customer?  How much training will your associates need?  Can you use your current associates at all?

So my lesson from Citigroup is this: Understand your customer, but understand your business first.

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You Can’t Buy Customers. You’re Lucky If You Can Rent Them.

by Ron on Tuesday, December 15th, 2009

In a recent post on his “positive disruption” blog, Tom Martin makes the point that “You Can’t Buy Customers. You Have to Earn Them” and asks for reactions.

His basic point is that with few exceptions marketers who deliver a substandard experience are no longer able to hold consumers captive. One reason is that new and better products are easier and cheaper to develop than ever. The other reason is that it’s now so easy for consumers to inform and influence each other that bad experiences have nowhere to hide.

My list of exceptions may be longer than Tom’s. His example is AT&T and the iPhone but it’s easy to think of others: How many cable providers can you choose from? How many electrical utilities? How many airlines fly the route you want to travel?

I’m also not completely sold on the notion that good, new products can rapidly drive out bad, old ones. I think that probably depends a lot on the category. The barriers to creating, say, a new social network application, which we have done at Zavee, are not the same as the barriers to creating a new car.

Where we agree completely, however, is on the importance of access to information. It isn’t just that media companies are no longer the gatekeepers and large marketers are no longer the only ones who could pay the price of access. It’s that the web is finally sorting itself out as a communications medium, with public micro-messaging streams (a la Twitter) as the primary focus for disseminating and accessing information such as links.

So, does an environment in which consumers have lots of information and lots of options mean that they are hopelessly fickle and not worth talking to? Does it make sense to invest in a brand if consumers are making purchase decisions based on information and reviews from each other rather than messages from the marketer? What are marketers actually paying for?

I think that a strong brand is more important than ever in today’s environment. First, consumers who maintain for themselves a highly efficient information market are being rational, not fickle. Marketers need to participate in that market, not resist it. Second, consistency with the brand promise is one of the things that consumers will test for themselves and tell each other about. This favors brands whose promise is clearly defined and well communicated, something that still requires investment. Third, consumers want – and now can demand – relevance.  This, too, favors brands that are strong and highly differentiated. Finally, as Tom himself has persuasively argued, there is always a place for brands that inspire passion.

Bill Hanifin recently wrote about Chick-fil-A, a brand in a highly competitive category (fast food) that uses a mix of quirky advertising and old-fashioned promotion to build passionate loyalty. And while Bill refers to Chick-fil-A as an offline brand, the company’s  Facebook page, which isn’t updated very often (the Events section doesn’t list the opening Bill attended) has more than 1.23 million fans.  It would not take much for Chick-fil-A to leverage these fans into a powerful online community.

Marketers never “bought” customers. At best they took advantage of inefficiencies in the information marketplace, inefficiencies that are rapidly disappearing. Marketers now should look to “rent” customers long enough to prove their relevance, demonstrate their value, inspire loyalty and deserve passion. It’s a tall order, but as Chick-fil-A shows, it’s possible – and worth it.

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A Few (More) Words About Word of Mouth

by Ron on Tuesday, December 8th, 2009

Recently on Zavee Thinking we posted about how word of mouth (WOM) is simultaneously very powerful yet very fragile. It’s powerful because there is no stronger influence on a purchase decision than the recommendation of a trusted, knowledgeable individual. It’s fragile because so much can intervene to prevent that recommendation from being made and acted on. This post is about how merchants can make WOM less fragile by increasing the chances that a recommendation from the right customer will reach the right shopper at the right time. (Apologies in advance for the length of the post – this is something we think about a lot.)

The obvious place to start is at the point of sale, where the merchant has the most direct ability to influence customer satisfaction. Here we are talking primarily about intensity and latency: how strongly an emotion is felt and how long the feeling lasts. One clear way to increase the intensity and latency of customer satisfaction is to provide an over-the-top, mind-blowing, truly unforgettable experience at the point of sale (can we call it an OTTMBTUE?). That will certainly keep things top of mind! Unfortunately, the OTTMBTUE has a few drawbacks. First, not all categories and not all interactions are equally suited to blowing the customer away. Second, the typical means of providing an OTTMBTUE involves some form of payment to the customer, such as an upgrade or a free item. While merchants often have to make such a payment to an unhappy customer to right a wrong, applying that strategy in the hope of making a happy customer ecstatic can get very expensive – especially when the customer determines that she should be treated that way at every visit.

On the other hand, it is possible for creative merchants to create extremely high levels of customer satisfaction without giving away too much margin. One of my favorite examples is Tesco, the UK grocery chain. Stuck between a premium chain and a discounter, Tesco repositioned itself as a service-oriented brand. From 1995-2004 the company produced a campaign starring Prunella Scales and Jane Horrocks that used the tagline “Every Little Helps” (we would say, “Every Little Bit Helps”) to demonstrate Tesco’s commitment to the customer. If you’ve never seen this spot you’re missing a treat.

Another way to increase the latency, and perhaps the intensity, of customer satisfaction is to communicate with the satisfied customer early and often. Car dealers and some hotels, among others, get this half right: they email surveys to customers almost immediately but rarely follow up. If a customer gets a phone call after submitting a survey, it is more likely that the customer had reported a good experience or a bad one? Of course it’s important that merchants address issues raised by customers – but surveys may not be the best way to keep a delighted customer both happy and talkative. If a merchant can identify a very satisfied customer at the point of sale, a phone call several days later – just to chat, not to sell – can reinforce the feeling of satisfaction that the customer took away from the store. (Having conversations on social media is also a good idea.) The customer feels special because in fact she is being treated special. The merchant can’t treat everyone this way, and it may require an investment to learn which customers should be treated this way, but reinforcing customer satisfaction can increase the length of time the positive emotions remain top of mind and may even add to them.

Latency and intensity are both about time: the longer the customer’s intention to recommend the merchant remains top of mind the greater the likelihood that the customer will encounter someone who will act on the recommendation. Another factor is confidence. In order to act on a recommendation, the potential customer must have confidence in the recommending customer both generally and within the specific domain. If a customer is not someone who inspires confidence generally there is not much the merchant can do about it, but the merchant should know better than to treat that customer as a source of potential WOM.

via iproclaim.com

via iproclaim.com

However, the merchant can help a customer become more knowledgeable about the merchant’s domain and thereby increase the likelihood that a customer’s recommendations will be taken seriously and acted upon. Domains where the inherent level of difficulty is high are natural categories for this, and, indeed, internet legend Gary Vaynerchuck (almost 850,000 followers on Twitter) got his viral start posting how-to videos about wine on YouTube. Imagine a customer who leaves Gary’s store not just having received solicitous attention and paid a fair price for good wine but who has received an education, too. That customer not only is more credible as a recommender in the wine domain but probably has wine (and Gary’s store) top of mind for a longer period of time than otherwise.

The final point at which WOM is fragile also involves time: the person who receives the recommendation must be at or near the point of intention if he is going to act on it. Even if everything else lines up – a delighted customer leaves the store and immediately meets a friend who trusts her judgment generally and her knowledge of the domain specifically – the recommendation will not be acted upon if the friend has no intention of making an imminent purchase in that domain. Is there anything the merchant can do in this situation? It depends. If the friend has no interest in the merchant’s domain there is really no point to the recommendation. If this is not the case, however, the merchant can try to capture the friend’s contact information and leverage the recommendation as a reason to communicate with the friend (if the friend opts in). If the friend is disposed to trust the customer’s recommendation the merchant may be able to convert the friend to a customer the next time the friend is near the point of intention based on the prior, unsuccessful recommendation. Finally, by continually communicating with the satisfied customer, and indeed by repeatedly providing a positive experience, the merchant increases the likelihood that the customer will again encounter the friend (or perhaps a different one) closer to the point of intention.

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