The New Importance of Customer Service As A Business Model

Last week, Tony Hsieh, CEO of Zappos .com, gave a record PSAMA luncheon audience of over 300 attendees an inside look at his own company’s approach to customer service, and says there is no doubt in his mind that “Delivering Happiness” (his description of customer service) is, indeed, a route to building a long term sustainable business.

Based on his New York Times bestselling book, Delivering Happiness: A Path to Profits, Passion and Purpose, Tony shared his philosophy on why customer service and delivering the best customer experience for customers, employees and vendor partners can pay dividends. After all, he sold Zappos to Amazon last year for over $900 million.

But Tony is quick to stress that delivering a WOW customer experience is about much more than financial success. It’s about personal fulfillment and pride. It’s about having a passion for your job that builds a fierce loyalty to do the right thing every time. And it’s about having a company culture that strives to make every person in the company feel that they are part of something bigger than selling shoes. Happiness is a framework for business that can produce profits, passion and purpose both in business and in life.

At Zappos, they let their customers do their marketing for them.
Tony describes the Zappos approach to business this way, “at the end of the day, we aren’t in the selling shoes online business, we are in the stories and memories business. If we can create a WOW customer experience every time someone interacts with our brand, then those customers become our best marketing effort.”

To create and sustain that WOW experience, Zappos constantly asks these important questions:

1. What do customers expect?
2. What do customers actually experience?
3. What emotions do customers feel?
4. What stories do they tell their friends about us?
   

Answers to those questions led the way for Zappos to offer free shipping both ways and a 365-day return policy. It’s also why their website features a 1-800 number at the top of every page on the site. Tony says “we want our customers to talk to us, so we can build a relationship with them and better serve their needs”.

At Zappos, the telephone is their number one branding device.
A big part of the Zappos experience involves interaction with customers on the telephone. To make each call a special experience, there are no rules, no pre-set scripts, and no attempts to make calls more efficient by limiting the amount of time a call center employee spends on the line with the customer.

Zappos wants their customers to say “wow” when they get off the phone”. Tony offered several anecdotes on call center efforts to deliver that special experience to their customers, including a very funny story involving a 3:00 AM desire for pizza and the Zappos call center employee who took it upon themselves to find open pizza restaurants that would deliver at that hour. How many of your employees would go out of their way to satisfy a customer to that extent?

If we get our culture right, the WOW customer experience will follow.
Tony stressed more than once that company culture is the number one priority at Zappos. Their attention to maintaining a consistent culture begins with the employee interview process, which involves two separate interviews – one to determine skill set and a second interview to determine the cultural fit. They also offer five weeks of training before anyone is allowed to interact with a customer, so that everyone is on board with the core values of the company and how to express those core values to customers.

Tony related an interesting twist to their employee hiring process. Midway through the training period, employees are offered a $4,000 bonus to quit. That’s right. They will pay you to quit on the belief that if you are only working for the money, it’s unlikely you will be a good fit with the company culture.

Other culture builders include an annual “culture book” where employees are allowed to provide unedited comments on how they are “delivering happiness” in their own departments. And they also use Twitter to provide an opportunity for employees to get to know each other better and to share their experiences.


As he concluded his talk, Tony re-emphasized his belief that a strong, high touch customer service experience was a successful business strategy. But he also stressed that his message was not to adopt the same core values as Zappos in order to be successful. But rather, it was to say that it doesn’t matter what your core values are as long as you commit to them. That’s the real secret for business success.

So what does customer service and delivering happiness have to do with new business prospecting? Everything if you believe that the future of the agency business is a partnership with clients to help them build a relationship between their customers and their brands. Clients aren't looking for someone to do a new ad for them. They are looking for help. Smart agencies should know that help comes in many forms.

At Zappos, their secret to long term success is to deliver happiness through the best possible customer experience. What’s your agency's secret? Or is it a secret?

How marketers are using digital media to create a 24/7 conversation with their customers.

At a recent PSAMA Executive Luncheon, I was able to get an inside look at how some marketers are leveraging customer insight and marketing technology to grow their business.

The presentation by Joel Book, Principal of the Marketing Research and Education Group at Exact Target, was titled “Fueling the Conversation: How Smart Marketers Use Digital Media to Attract, Convert and Retain Customers”. In addition to facts and figures on the growing power of email, social media and mobile marketing to attract customers and drive sales, it featured real world case studies to demonstrate how email is being integrated with social media and mobile marketing to dramatically improve response rates.

His discussion was based on what Mr. Book calls “The Triangle Offense of Direct Marketing” – email, social and mobile. Citing a 2010 study by Fair Isaac Corporation which concluded that consumer offers that are personalized, timely and relevant significantly outperform generic offers, he shared real world examples to show us how national and local marketers are using digital technology to deliver personalized offers to customers with dramatic results.

Email is the backbone of customer engagement.
Email is being used as an effective tool to reach customers at every stage of the life cycle. Whether your marketing goal is to attract, engage, convert, serve, renew or reward your customers, email has proven to offer tremendous value. A recent study found that 50% of consumers have made a purchase due to email.

Mr. Book shared eleven case study examples from national and local marketers demonstrating how email is being used to deliver timely relevant messages and offers. Some highlights of these studies included:

• How Scott’s Lawn Care is using email and mobile apps to teach consumers how to use their products by delivering personalized targeted soil and grass treatment recommendations based on the geographic region of the customer.
• How Best Buy uses a pre-planned series of three emails to build customer loyalty and purchase. Email #1 at the time of purchase provides education and help on how to set-up and use the item(s) you just purchased; Email #2 at 7-14 days provides special offers on accessories and services to complement or enhance the enjoyment of the item(s) you purchased; Email #3 at 21-28 days invites you to share your opinions to help other shoppers through reviews and ratings.
• How Volvo Construction Equipment uses a monthly email newsletter to nurture leads, aid decision-making and support their dealer network.
  

Marketers are discovering new ways to integrate email + social media to fuel the conversation with their customers.
With 500 million active users on Facebook, 190 million active users on Twitter and 70 million active users on LinkedIn, social media offers a great potential to build relationships with current and potential customers. Case studies in this section of the presentation included a look at how Papa John’s Pizza uses email in combination with Facebook fans and special event sponsorships like NCAA March Madness to drive brand loyalty and sales. Other case studies showed how user-generated content is being used by an outdoor recreation service to build excitement for their river rafting trips, and how Whole Foods is using email and Twitter to deliver daily special offers by store managers for their local store and customer base.

Email + mobile can drive instant awareness and instant sales.
One of the more interesting case studies presented by Mr. Book was a test promotion at three Major League Baseball parks for Scott’s Lawn Care. Scott’s used direct response text messaging to drive subscriptions to their Lawn Care newsletter through an in-game announcement offering a free Groundskeepers Guide to anyone who wanted their home lawn to look as good as the outfield grass in the park. Fans were asked to text a special number to have the Groundskeepers Guide and newsletter waiting in their inbox when they got home that evening. Not only was that promotion successful in attracting new subscribers, Scott’s was contacted by a national home improvement chain to develop customized versions of their grass seed – Fenway Blend in Boston, Riverfront Blend in Cincinnati, etc.

Behavioral modeling allows email to deliver personalized messaging to drive retail sales.
In this section of his presentation, Mr. Book shared case studies from Best Buy, The Home Depot, Johnston and Murphy and others to demonstrate how analytics are being used to personalize offers relevant to consumer profiles and past purchases. He also made a strong case for using analytics to re-market to online customers who had abandoned their shopping cart without completing a purchase. He cited a January, 2010 study which concluded that 69% of e-commerce purchase transactions are abandoned before checkout completion and then showed findings from an MIT study which found that “real time re-marketing to website abandoners yields up to 50% conversion of those who had abandoned”.

Mr. Book concluded his presentation with a re-statement of his introductory premise –smart marketing today requires a 24/7 conversation with your customers. We are living in a new era of direct marketing where “serving has become the new selling”. As noted in a 2010 report from Booz Allen Hamilton, “The mix of media channels has shifted from a one-way broadcast model to a set of dynamic two-way media forums”.

Tomorrow’s most successful marketers will be those who recognize and respond to the need to market to a segment of one, with messaging and offers that are personal, relevant and timely.

Email, social media and mobile marketing offer a variety of ways to begin and carry on that conversation. Are you encouraging your clients to talk with and listen to their customers 24/7?

Understanding the post-crisis consumer.

As marketers, we spend a lot of time and effort monitoring and analyzing the long term effects that technology will have on our media consumption habits. But I wonder how much time we’re spending monitoring and analyzing how the economic crisis will impact our buying and consumption habits?

The Wall Street slide, mortgage meltdown, jobless rate, etc. are obviously affecting our spending habits today, but what happens when all of the dust settles? Do we go back to our old ways of buying and selling in a post-crisis world that many feel will be characterized by a jobless recovery and more limited purchasing power? Or is this new economy creating a permanent shift in the way we evaluate and buy products and services.

That thought hit me this week as I was reading the just-published book, Spend Shift: How the Post-Crisis Values Revolution Is Changing the Way We Buy, Sell, and Live. Authors John Gerzema, Chief Insights Officer of Young & Rubicam Group, and Pulitzer Prize winning journalist, Michael D’Antonio offer an interesting perspective on what they term “a revolution in the making”. Their conclusions suggest that people are redefining their lives and reviving core values; things like hard work, thrift, fairness and honesty are enjoying a major renaissance. And that redefinition will have a lasting impact that marketers must take into consideration as they plan their post-crisis business strategy.

From mindless to mindful consumption.
To make their case, the authors draw on hundreds of interviews with social-science experts, CEO’s and entrepreneurs, as well as proprietary data from Y&R studies and their own observations and anecdotes from eight bellwether states. Their conclusion that the economic crisis has spawned a movement in society where the majority of American consumers are embracing both value and values isn’t really new news. We can see evidence in almost every business sector that purchase behavior these days is less about materialism and buying stuff for stuff's stake. The fact that our current economy has created a "less-is-more” impulse" among buyers has been well documented in the media.

The interesting part from a marketers’ perspective are their conclusions that consumers are also "voting for values with their dollars” and this rebirth of values is here to stay. In a well-written, insightful Foreword to the book, marketing guru Philip Kotler says this “values-led consumerism is not a small, isolated target market. Over half of the U.S. population is now embracing these value shifts”. He sees overwhelming evidence that consumers are buying into brands with meaning—brands with integrity, social responsibility and sustainability at their core. They are seeking better instead of more, virtue instead of hype, and experiences over promises.

The new consumerism is creating an unexpected side effect - optimism.
Despite declining economic power, consumers are actually wielding more power as these new attitudes require that companies improve their product quality and value to remain in the brand purchase consideration set. And an interesting side effect is a new found optimism and purpose for many people.

Seventy-eight percent of respondents from a national survey on “Changing Consumer Values” report they are happier with a more down-to-basics lifestyle. Eighty-eight percent report they buy less expensive brands than they used to, and report that possessions do not have much to do with how happy they are.

Interestingly, this sentiment of a growing aversion to status brands is higher among people who earn $100,00 or more who say that keeping up with the Jones’ has been a stress they don’t need or want. And I was surprised to learn that two very different generations - people aged fifty to sixty-four and the generation between eighteen and twenty-four- share the same aversion and interests.

A shift in spending is really a shift in values that marketers need to understand.
There can be no doubt that America is moving away from excess and debt-fueled consumption and towards savings and investment.

And from the scores of interviews and thousands of data points they have collected and reported on, the authors identify ten take-aways they believe the post-crisis values revolution has spawned that will change the way we buy, sell and live:

1. We are moving from a credit to a debit society.
2. There are no longer consumers, only customers.
3. Industries are revealed as collections of individuals.
4. Generational divides are disappearing.
5. Human regulation is remaking the marketplace.
6. Generosity is now a business model.
7. Society is shifting from consumption to production.
8. We must think small to solve big.
9. America is an emerging market for values-led innovation.
10. Everything will be all right.

Space limitations don’t permit me to expand on each of these points in this post. But I can tell you that I found each of these take-aways well reasoned conclusions from a very thorough and thoughtful approach to a complex issue.

And I believe, along with the authors, that all are changing the way we buy, the way we sell, and the way we live.

What's in a name?

Shakespeare was wrong. A rose by any other name just wouldn’t be the same.

A recent issue of Bloomberg Businessweek carried an interesting article titled The Twitter Effect: The struggle to create the next perfectly weird company name.

As I read the article, I agreed with the author’s premise that “the corporate name game” is difficult. There are more than a million names, slogans and logos registered at the U.S. Patent and Trademark Office. And, according to VeriSign, a global domain name registry, 11 million Internet domain names have been registered in the last 12 months, a 6 percent increase versus a year ago. VeriSign says that 193 million Internet domain names are now owned or in use.

So how does a company go about choosing a new brand name? The author chose Twitter as a brand name to illustrate his point that a brand name must be “weird” to stand out in today’s crowded marketplace. The author also cited Google, Verizon and Häagen-Dazs as made-up “weird” words that are successful brand names.

Where I disagree with the author, however, is that the name has to be weird to be successful. Different? Okay. Unique? Yes. But weird? Not necessarily.

I’ve always felt that a successful brand name carries something extra. It should communicate what the brand is about – it’s values, it’s benefits, it’s reason for being. Unless you have a lot of time and cash to seat the name in the customer’s mind, a name that carries some connotation of what the brand is about is essential.

Too many brands today are based on invented, meaningless words. A brand name that connects to a known idea and your brand promise is much more powerful.

Pollywog, a Minneapolis-based branding agency says this about naming a brand, “Unlike naming companies and consultants, we understand what a brand name needs—instant meaning, impact, emotional connections, nuance—to go beyond being merely an identifier to becoming a brand building force. Pollywog publishes an annual list of Best and Worst Brand Names. Here are their 10 best for 2009:

1. Rolls-Royce Ghost
Who would give a new product a name that reminds people of haunting, horror and death? Rolls-Royce bravely did when it introduced the 2009 Ghost. Though the name is likely a nod to the British automakers 1906 “Silver Ghost,” this is a car for the unapologetically intimidating, with a ride that’s smooth as mist drifting over a moor.
2. Droid
Verizon licensed this name from the “Star Wars” universe for the cellphone it hopes will lead a rebellion against the iPhone empire. Droid was probably worth whatever Mr. Lucas charged. It communicates extremely advanced technology, yet it’s familiar and a little bit cute—it makes the phone seem like a pocket-sized C3PO or R2D2. How could gadget geeks resist?
3. Mars Fling Candy Bar
At 85 calories per serving, Mars’ new candy bar aimed at women promises a brief, mostly harmless indulgence. Summed up by its fitting tagline, a Fling is “Naughty, but not that naughty.”
4. Hunch
This online decision-making tool learns about you through your answers to a series of preference questions. Then Hunch makes suggestions about what you might like—from movies to travel destinations to what you should eat for lunch. The name is apt, human and engaging, and it refreshingly under-promises the service’s accuracy.
5. Shard
Looking like a small, pointy chunk of metal, this new multifunction keychain tool from knife manufacturer Gerber is appropriately named the “Shard.” Though the Shard has no actual blade and is officially airline-safe, the danger implied in the name adds to its appeal and is likely a key factor in the flurry of online chatter from customers who can’t wait to get their hands on the soon-to-be released tool.
6. Envy
Only a laptop as slim, sleek, smart and sexy as this glossy-screened beauty from HP could pull off the name “Envy.” Even Apple may be turning a little green.
7. Fever
The first in a new category of drinks dubbed “stimulation beverages,” Fever claims to enhance feelings of euphoria and even stimulate the libido thanks to its mix of several herbal ingredients. The name communicates excitement and a physical effect on the body, without crossing into the risqué.
8. Thinair
Thinair is a wind turbine with just one blade. In severe weather, the Thinair turbine parks its blade horizontally, with the narrow edge to the wind to minimize damage. We like the slightly mysterious quality of the name and how it communicates the blade’s ability to effectively vanish from destructive winds.
9. Peek
The Peek is a pocket-sized device that sends and receives email and text messages. That’s it. No phone, no calendar, no music, no camera. A device with such limited capabilities needs a proportionately modest name. Suggesting a quick, casual look, “Peek” hits just the right note for customers who don’t want to fuss with complicated hardware.
10. SweetLeaf
Three stevia-based sweetener brands—Zevia, Truvia and PureVia—made our Top Ten Worst Brand Names of 2008 list because of the similarity of their unimaginative, contrived names. So it was nice to see SweetLeaf enter the market this year with a name that conveys “natural sweetener” using—duh!—natural words.

While I agree with their thinking on building an emotional connection to the brand and its benefits, I disagree with one of the brand names they listed as Worst – Bing. When I first heard the name Bing, I got a sense of immediacy and impact. I envisioned snapping my fingers. These are images that reinforce the basic brand premise, that Microsoft’s search engine does something specific . . . it gets you to the answer in a hurry.

So what do you think? Would a rose by any other name smell as sweet?