Saturday, February 28, 2009

Customers are talking - candid customers won't give you 100%

Two things happened to me recently that got me thinking about online product forums.

In the first instance, I was looking for an inexpensive hotel in Las Vegas. Deals abounded, but complications arose when I looked into the customer comments published for each hotel. Here's an extreme example:

Room was not in the main tower, it was right by the parking lot and the tunnel you had to walk through to get to the room smelled like puke and urine, also very hot. The door to the room beside us looked like it was ajar so I gave a little push, on the bed was a naked man laying there. Looked like he was waiting for someone to come into the room. I quickly closed the door and retreated back to our room. A few minutes later I looked back out and the door was ajar again. I think he was for hire. Was very scared because there was an adjoining door. It was very late and were very tired so tried to get some sleep. NOT! So much noise. Twice that night someone tried to open our door. Very scary. Cockroaches in bathroom in morning. Also very squeeky bed springs in room above that continued sqeeking for a long time (must be Viagra) Funny coincidence the room number was 169. This hotel is the seediest most unsafe disgusting place I have ever had to stay in. Never ever would go back.

Needless to say, I stopped looking for the lowest-cost deals after reading stuff like this.

Soon thereafter, I was one of a number of folks who received the same email from a friend, who had just opened a new business in town. She felt that a user review in, which had some criticisms, needed to be countered. To my friend, the negative statements were damaging. To me, as someone who works with helping companies listen to customers, the feedback was valuable and could be useful to her.

These two examples underline that even if you're the Ritz-Carlton (never mind the hotel with the naked man on the bed), you will not get a perfect score from your clients. Not if they're being candid with you. They will point out things that bothered them, that didn't go perfectly, that are chronic weaknesses. Ignoring these forums or getting defensive is not only unwise, it's self-defeating.

I wrote to my friend who has opened the local business. I told her that the Yelp review, while not 100% positive, did say many positive things (among which was that the reviewer had visited several times and planned to go back again--a strong testament). The negative things were accurate and, happily, could be easily addressed.

I recommended to her rather than try to debate the reviewer, take her comments to heart, act on them, and invite her back for another look.

I don't know what to say to the owner of the hotel described above. Suffice it to say I won't be staying anywhere near it.

Friday, February 27, 2009

Facebook, smacked down again, invites customer input

Facebook always does the right thing by their customers... once their customers have beaten them up for a wrong first step. A year and a half ago they stirred up the wrath of their community by proposing an ad-targeting system leveraging its users' profile data, then backed down.

Now they've done it again. Facebook changed their terms of service, igniting another storm of outrage on blogs, Twitter and, yes, Facebook. They relented, returning to their prior terms of service, and yesterday announced that they will be seeking user input on community questions such as terms of service, and be more transparent, including this statement:

Transparent Process: “Facebook should publicly make available information about its purpose, plans, policies, and operations. Facebook should have a town hall process of notice and comment and a system of voting to encourage input and discourse on amendments to these Principles or to the Rights and Responsibilities.”

It's easy to make fun of Facebook for their public embarrassments, but they do get the message their users are sending. Furthermore, they are pioneers in engaging with their users. There is no template they can follow. Facebook's users, because they give personal and sensitive information to the service, is very sensitive to its use, and the web2.0 nature of Facebook means that its users are comfortable using web2.0 means to communicate. Quiet they are not.

It will be fascinating to see how more traditional companies deal with assertive user bases. As consumers find their voices on line (and efforts like VRM give users powerful tools to manage and communicate with their vendors), we'll be reading more stories like this one. Will other companies learn from Facebook's painful lessons?

Related post:
Zuckerberg learns

Wednesday, February 25, 2009

P&G, in moving into services, can learn lessons from Disney

NOTE: We will stop posting new material to this blog location as of Friday, Feb 27. Please visit our new home, which also contains the complete archive of posts. If you'd like to update your RSS reader, here's the feed for the new place.

I read with interest the recent HBR Editors' Blog posting speculating on the difficulties Procter & Gamble might run into in its effort to create a chain of car wash franchises, called Mr. Clean Performance Car Wash.

When I read the post, written by marketing professors Neeli Bendapudi, Randle D. Raggio and Tassu Shervani, we were in the midst of a vacation in Orlando, Florida, at the various Disney parks. So, the connection between what P&G is trying to do now and what Walt Disney kicked off some fifty years ago came to me instantly.

The upshot of the HBR post is that product and services businesses are dramatically different, in particular the need for a service business to deliver an experience over and over again, consistently and of high quality, despite the innate variability of people, locations and customers.

With this in mind I monitored my Disney experience for the rest of the week for lessons that could help P&G.

  1. Brand gets people to try your service; blocking and tackling gets them to return. The Disney properties flaunt the characters, movies and TV shows at every turn. Yet after an hour at the park, you notice that trash cans are always close by, so that if you have an empty cup or candy wrapper, you don't end up holding it for more than a few seconds before finding a place to discard it. As a result, the park is exceptionally clean for a place holding tens of thousands of guests.

  2. No detail is too small. Kids are royalty at Disney (a significant differentiator compared to most places where they are seen as messy, noisy attention-seekers--which, of course, they are). The bag checkers, waitresses, salespeople--in short, every "cast member" we encountered--took special care of our kids.

  3. Consistency reduces stress. Each of the four Disney parks we visited had a similar parking scheme, shuttle bus protocal, and entry design. Which meant there was very little standing around head-scratching and wondering which gate to go through or which bus to board.

  4. Customer recognition builds loyalty. Everywhere in the parks I saw guests wearing buttons saying "My First Time!" or "It's My Birthday Today!" These simple gestures to recognize guests made their experiences special, built warm memories, and encouraged them to return.

I'm rooting for P&G in their Mr. Clean car wash project. The above lessons are like much good advice--easy to understand, hard to implement. Whether P&G can execute, and the marketplace and the economy cooperate, only time will tell.

Tuesday, February 24, 2009

Customers are talking - Tropicana hears feedback, brings back old carton

Sometimes the roar of customer feedback can force a multi-million dollar capitulation. Today, the New York Times reported that Tropicana, a unit of PepsiCo, was responding to a wave of negative customer feedback to its recent change in packaging. The Times writes:

Redesigned packaging that was introduced in early January is being discontinued, executives plan to announce on Monday, and the previous version will be brought back in the next month.

Also returning will be the longtime Tropicana brand symbol, an orange from which a straw protrudes. The symbol, meant to evoke fresh taste, had been supplanted on the new packages by a glass of orange juice.

The about-face comes after consumers complained about the makeover in letters, e-mail messages and telephone calls and clamored for a return of the original look.

Some online reaction to the new Tropicana package is here and here. (And, to be sure we stay fair and balanced, here is a rave review of the new package.)

One wonders what kind of testing process Tropicana used for the new packaging. I would hope that they used the approach that online services use today--which is to roll out new looks to a limited audience and listen carefully to the feedback before rolling things out across their base. But if so, they would have gotten this feedback far faster and before it became a national news item.

Packaged-goods companies tend to be secretive with their makeovers, often keeping details hidden until a widely publicized, nationwide rollout. The result of this strategy, though, is not hearing feedback, positive or negative, until a great deal of investment has been committed. Meaning a rollback, like Tropicana's doing, is terribly expensive (and highly-publicized).

I wonder how Tropicana will handle their next packaging change?

Monday, February 23, 2009

Last Week for Shop Talk at this address!

Shop Talk is moving to a new location at the end of this week.

We'll be closing the doors on this location on Friday. There won't be any new posts after that. The older archives will remain, however.

Please head over to our new home, which also contains the complete archive of posts.

If you'd like to update your RSS reader, here's the feed for the new place.


Time for a humbler, more focused, wireless wholesale market

The US MVNO market is the greatest missed opportunity I've seen in my wireless career, stretching back almost 20 years. Through carrier resistance and MVNO hubris, a business model that works very well in Europe and Asia has floundered here. Strong, focused MVNOs, which manage their costs and market excellently, improve services and value for wireless users in many places outside the US.

Yet there may be a light flickering in the US market. It's been several years since the meltdowns of Amp'd, Disney Mobile, ESPN and other high-profile players. The iPhone and its imitators have demonstrated the value of a (relatively) open architecture and application environment. And the carriers are still no better at rolling out truly innovative services than they have been.

Plus, nationwide carriers #3 & 4 (Sprint & T-Mobile) trail far behind the leaders in market share. This creates a strategic scenario where a customer acquired by a Sprint or T-Mobile reseller is relatively unlikely to poach the direct business of the wholesaler (and in Sprint's case, they should welcome retaining customers by any means, even if they are transferred to an affiliated wholesaler). Therefore, the perceived opportunity cost of a full-on push into wholesale by these carriers is lower.

Who will be tomorrow's resellers? Those that are laser-focused on markets unserved by the carriers. They will be smaller but profitable, with excellent, low-cost distribution channels. They will be true innovators, bringing high-value applications to their customers. They will have customer bases who purchase phones without subsidies. They will be able to create win-win agreements with the wholesalers.

In a perfect world, a Sprint & T-Mobile push will force AT&T and Verizon to re-enter the wholesale market. Then there will be a strong, vibrant, competitive market where resellers will have some control of their destiny.

And the biggest winner of all will be... the customer. You and I.

Thursday, February 19, 2009

Ten Bucks

When I was a teenager, the stores in our town stayed open late on Thursday nights between Thanksgiving and Christmas. In 1978 I worked at one of the local hardware stores and I was on duty one of those Thursdays. I had earlier that day cashed my paycheck. Around seven or so, business was slow and I asked the manager if I could take 15 minutes and walk up to The Gramophone Shop. I went in and bought a record I had had my eyes on for a number of weeks: Dire Straits' first album. It cost, by my recollection, $8.98 plus tax.

Was that album worth ten bucks? It's a stupid question. That album was part of the soundtrack of my late high school years. It was probably worth $100 to me.

Now it seems that people who spend ten bucks on music are stupid. Free mp3's are everywhere, legitimately or otherwise. Subscription services and internet radio stations offer everything at the touch of a browser button. There's a sea of music out there, just waiting for a listen.

But paying ten bucks for an album caused you to make a decision. (Not that those decisions always worked out. For example: the Knack's second album.) You had to hear enough songs to get a good assurance that the album was decent, or take a risk that the one great song you heard was a pattern for the rest of the album. (Also not foolproof; see Sniff 'n' the Tears.)

Carrie Brownstein's recent post on NPR Monitor Mix brought this to mind. Carrie lamented the decline of the record label, in this case the decision by Touch & Go Records to stop distributing the work of smaller labels. Wrote Carrie:

We are careening toward a paucity of experience and a paucity of means with which to evaluate music. I mean, can we really engage with art on a Web site and in a vacuum, without ever bothering to contextualize it or make it coherent with our lives or form a community around the work? If we never move beyond the ephemeral and facile nature of music Web sites -- and let's not lie to ourselves, that's where it ends for a lot of us these days -- then that makes us worse than blind consumers; it makes us dabblers. We have become musical tourists. And tourism is the laziest form of experience, because it is spoonfed and sold to us. Tourism cannot and should not replace the physical energy, the critical thinking and the tiresome but ultimately edifying road of adventure, and thus also of life.

To me, the process of getting recommendations, listening to a friend's record, hearing something great on the radio (or a podcast), then making the decision to plunk down real money is, in Carrie's words, an adventure--and one of the great pleasures in enjoying music. If everything's at your fingertips, undifferentiated, you can sample, skip and flit around. You're, as Carrie said, a tourist.

And to me that's a bad thing. Free music isn't only bad for musicians, it seems. It's also bad for the audience.

Wednesday, February 18, 2009

Guest post by Denise Lee Yohn - The Economy Made Us Do It

I'm delighted to present today a guest post by Denise Lee Yohn. This is the first time we've done a guest post. I'm curious about people's thoughts on this--if you have an opinion, leave it in the comments. regards, John

It seems today's tough economic climate has become the ultimate scapegoat for pretty much everything.

This past week's New York Times Sunday Styles section included a piece describing the cleverness with which people have used the economy to get out of social obligations. From firing the nanny to avoiding a dreaded family reunion, the recession, it seems, provides a convenient excuse for folks who can't bring themselves to deliver an honest, yet unpleasant message.

And Business Week just ran an article about how companies are trying to get out of contracts by arguing that the economic crisis should void legal obligations. Although the troubled economy isn't technically addressed by force majeure clauses, companies in tight situations aren't letting technicalities stop them from trying to pull one over their creditors and business partners.

Such behavior seemed somewhat comical to me until I found myself on the receiving end of a similar excuse yesterday. It came from a service rep who relayed a change in the company's policy by saying, “We've been hit hard by the economy so we had to cut some of our services and that was one of them.” The momentary sympathy I felt for the company was quickly replaced by indignation against it for trying to excuse the change by blaming the recession. And my questioning of the wisdom of such a tack soon followed.

Now, I understand that economic pressures have forced companies to change the way they do business. They're cutting back and by definition that involves tough decisions. I get that. What I find curious is executing the changes in a way that smacks of a“victim mentality.” Why would any business want to give the impression they’re helpless and desperate?! Companies weaken their brand perceptions with a thoughtless --sorry, it's the economy -- excuse.

If companies want to retain any measure of respect and trust with their customers (respect and trust being key drivers of brand equity), they should assume responsibility for the decisions they make and use these tough economic times as an opportunity to reinforce their relationships with customers. A message along the lines of the following would be a good first step in taking a proactive, brand-building stance: “Please accept our sincere apologies for making a change that we know adversely affects you. We are diligently working on ways to improve and will resume the suspended service as soon as possible.

Communicating this type of message -- and delivering a customer experience consistent with it -- has the power to transform brand perceptions. Instead of being perceived as a weak player that’s relinquished control of its destiny, the business is portrayed as a brand with the integrity and customer commitment to come out of this economic storm even stronger.

With excuses to be found everywhere these days, I certainly hope we're not seeing the beginning of a trend that makes adopting an excuse culture”-- an acceptable way companies do business --– but I fear it may be. After all there's an excuse, it seems, for everything from criminal acts to indiscretions by politicians. But business leaders should realize excuses erode brand credibility and equity.

Simply put, excuses are bad for business.

Denise Lee Yohn is an independent brand as businessTM consulting partner who inspires and teaches companies how to operationalize their brands to grow their businesses. World-class brands including Sony, Frito-Lay, Burger King, and Nautica have called on Denise to maximize brand impact. She can be reached through her blog, brand as business bitesTM.

Monday, February 16, 2009

From "Think Again," a book about decisionmaking gone wrong - Marc's mistake story

"Think Again" is a great new business book in which authors Sydney Finkelstein of Dartmouth University and Jo Whitehead and Andrew Campbell of Ashbridge Business School describe research in cognitive science and behavioral economics to explain how the decisionmaking process goes awry and, even more importantly, how our minds obscure the mistakes we make and keep us from understanding the weaknesses in our decision processes. [The authors also have a website for the book, including pointers to some of the underlying research and other goodies.]

The book is full of great storytelling, and this one in particular, about an executive named Marc, seemed very appropriate for the Mistake Bank:

Marc was the managing director of the French subsidiary of an international manufacturer of packaging machinery. He was considering whether or not to acquire a company that had a near-monopoly on manufacturing a specialized type of food packaging machine. While the company had a strong position in the market, there were several warning signs that it was a risky investment. The business was highly dependent on sales to one large meat processing company. Because the machinery was a form of capital investment, sales tended to be highly cyclical. The management team had recently lost some of its more talented designers and marketers, and performance was flagging. The current owners of the business were keen to sell.

These risks were particularly an issue because Marc had committed to his head office that he would deliver relatively stable performance. The previous year, Marc had personally persuaded the head office to provide additional investment to his subsidiary for low-risk acquisitions, and so his reputation was at stake.

As the transaction progressed, some members of Marc's supervisory board voiced their concerns about the proposed acquisition. Despte this, Marc went ahead. A few months later, following the discovery of bovine spongiform encephalopathy (BSE), or mad cow disease, in French cattle, the meat-processing customer announced that it was putting discretionary capital expenditure, including the packaging machines manufactured by Marc's company, on hold. The management team was unable to deal with the dramatic drop-off in demand. Profits plunged into the red. Marc's superiors were shocked, and Marc's career received a large black mark.

Marc described why he thought he had made a flawed decision. "I was under pressure to do this deal for my own interest. If I went ahead, then the costs incurred in auditing and due diligence of the company would be capitalized and added to the cost of the investment. If I backed out, then they would all be charged to my office as an expense. Because we had been pursuing this company for a while, those costs were quite significant--and I guess I was influenced by that. I had an annual target to hit--and the charge-off would occur at the end of the financial year, leaving me no time to find a way to avoid a big loss. Of course, in the end, doing a bad deal was much worse for my position. I guess self-interest clouded my judgment."

Reprinted with permission from Harvard Business Press. Copyright 2008 Sydney Finkelstein, Jo Whitehead, and Andrew Campbell. All Rights Reserved.

Wednesday, February 11, 2009

Shop Talk relocating! Everything must go!

As I mentioned last week, Shop Talk is moving to a new location at the end of the month.

In the meantime, we've sold our entire stock to a liquidator, so expect deep discounts, especially on 2006 and 2007 posts, which have been languishing in the warehouse for quite some time.

Please head over to our new home and stay awhile, and if you'd like to update your RSS reader, here's the feed for the new place.


Frontiers of innovation - Netflix demolishes own business model

We've been Netflix customers for several years, and generally like the service. But we're like a lot of their busy customers. We don't turn DVDs over fast enough and end up having months go by with the same two movies sitting on the television.

But last week we bought the Roku box and now use it to view Netflix movies streaming over the web on our flat-screen TV. It's cool, easy, the quality is good and it's a great antidote for our laziness with the movies. Plus, you don't have to wait for the DVD to arrive in the post.

It's not perfect--there aren't enough titles yet. But it's a product that will only get better and more useful. And put Netflix in place as a contender to lead the integration of TV and the internet.

[Aside: I drove through Cerritos, California, today. In 1987 GTE, my former employer, trialed interactive television in Cerritos. Needless to say, they were too early--bandwidth issues, lack of content, and, frankly, the lack of a powerful vision of sharing and openness a la Tim Berners-Lee, doomed the project.]

What's so impressive to me about this is that Netflix is investing in technology and partnerships expressly designed to make their old business model obsolete. When I think about how much they have spent, in dollars and time and thought, on the sending-videos-through the mail model, I wonder how they were able to make the leap to say, "We have this process optimized, but it's not the future. Time to build a new model"--meaning internet streaming.

There's a word for this kind of behavior, and it's not a nice word: cannibalization.

One of the most repugnant terms in the language--referring to one of the greatest human taboos--is used when a company's new products take sales away from its older products. Perhaps this helps explain why companies go to such great lengths--even imperiling their long-term success--to avoid it.

The problem is, the marketplace is a bit like the jungle. If you don't eat your own, someone will eat them for you. And this has happened again and again. One example: GM's abandonment of the EV1 electric car just a few years before Toyota introduced the Prius. To survive, companies will have to get rid of that taboo against cannibalization and act more like Netflix.

[Another aside. I keep wondering if the Kindle is a similar eating-your-own innovation. But something tells me Bezos always knew he was going to get deep into distribution of electronic content, even back when he was just selling books.]

I have a suggestion for marketers. If you want to get approval to introduce a better product, instead of referring to "cannibalization," call it "upselling."

(Photo: crushed EV1s courtesy of EcoBlog)

Tuesday, February 10, 2009

Customers are talking: is a customer-service dialogue a story?

Some of my work recently has been applying narrative-sensemaking techniques to customer service dialogues (typically recorded phone calls), which is a fancy way of saying helping companies find patterns in what customers are saying about their products and services, and to use these patterns to drive changes that will help them sell more products and/or make their existing customers more satisfied.

This is a little different from the more traditional approach of eliciting stories via interviews, anecdote circles or web forms. In those circumstances, carefully-crafted questions help generate stories ("this happened, then this, and then this"). Customer-service calls are not elicited--they are spontaneous expressions--and don't follow the story format. They are simply two people talking.

So a question is, I guess, can you get useful stories out of mere dialogue?

In thinking about this question, I've been reflecting on the novels of William Gaddis, an American writer who published only a handful of books from the 1950's to the 1990's. I've read two of them, "JR" and "A Frolic of His Own," and both have barely any exposition at all. 90+% of the text is dialogue, barely puncutated, overlapping, and often confusing.

"JR" is a very forward-looking book about a junior-high-school student who speculates his way into a multi-million dollar fortune (on paper). Given that it takes place in the mid-70's, JR does his trading via the payphone in the school hallway. Today, he'd be on TD Ameritrade.

"A Frolic of His Own," written in the 1990's, takes issue with the (again very present-day) issues of litigiousness and intellectual property. In addition to dialogue, hilariously-deadpan legal briefs help move the story along.

Reading Gaddis' books is a lot like listening to those customer service calls. A bit disorienting or hard to understand, often touching, sometimes funny. Always humanizing. And always stories.

Monday, February 09, 2009

A music affinity group emerges on Twitter

One of the most fun things about messing around with Twitter is to see interesting things emerge. It's such a general tool that it's a lot like those college greens that architects leave without pathways, allowing students to develop their own patterns over time.

I've recently started seeing the emergence of a music affinity group on Twitter (one of many, probably). It occurred to me this is happening yesterday, when I got a follow from @peteyorn, a musician that I like but didn't even know was on Twitter.

How he found me, I don't know (perhaps Mr. Tweet does). Maybe it's my connection with @francisten from West Indian Girl, or @kmueller62 of WXPN (or even @fotteson, a local bass player). Maybe it's that I write about music a fair amount (including live Tweeting the My Morning Jacket New Year's Eve concert or my musical crush on NOMO).

At any rate, I've gotten follows now from @madalynsklar, @talkmusicnow and @sxsw. You can see the pattern emerging. And I like it. I want to know what musicians and music fans are tweeting about. I'll learn about new music & perhaps see a bit of the faces behind the records. It'll be fun to see how this group evolves over time. (And if you're a musician or music lover, give us a follow at @jmcaddell and I'll follow back. You can join the conversation then.)

Just another way @twitter is changing how we interact and learn.

Friday, February 06, 2009

Creative Destruction? #3

This series of posts began in September when I photographed a couple of recently-vacated retail spaces. I've returned a couple of times since, most recently this week, to see how/if reuse of the sites is progressing. As you'll see, not much change yet. Here's Joseph Schumpeter's famous "creative destruction" quote from Capitalism, Socialism and Democracy:

The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as U.S. Steel illustrate the same process of industrial mutation–if I may use that biological term–that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in. . . .

32nd and Market Streets, Camp Hill, PA, 3 Feb 2009

There have been recent newspaper reports that there will be a Rite Aid drugstore built on the above site. And there is a construction sign posted out front (not pictured).

Carlisle Pike, Silver Spring Township, PA, 3 Feb 2009

The lease sign is the biggest change here. Otherwise, no activity.

Other posts in this series:
Creative Destruction? Sep 2008
Creative Destruction? Nov 2008

Thursday, February 05, 2009

"Goals Gone Wild" - a bracing indictment of the business objectives culture

"What's your MBO?"

That was a frequent question at one of my past companies. MBO meant management by objective, and was a way of asking someone what their goals were for that year. It's funny, thinking back on it, that the goals culture was so strong that we never gave MBOs a second thought. And who doesn't sit down with her manager at the beginning of each year to set out objectives?

In a new working paper by Max Bazerman, Lisa Ordonez, Maurice Schweitzer, and Adam Galinsky of Harvard Business School ("Goals Gone Wild: The Systematic Side Effects of Over-Prescribing Goal Setting"), the authors take a fresh look at the goals culture and see that, rather than be a driver of effective performance, "goals gone wild" have caused much damage in the business world. Here are a few examples:

Enron's growth objectives created an out-of-control culture inspiring market manipulation and outright fraud.

Ford's goal to build a small car weighing less than 2000 pounds and costing under $2000 by 1970 caused the Pinto to be rushed to market, with safety checks unperformed or ignored. The car's gas tank was prone to rupture in an accident and, as was learned, the car tended to explode on impact from the rear.

Sears' goal to increase auto service sales in the early 1990's to $147/manhour resulted in overcharging and unnecessary repairs.

Bazerman's work on behavioral effects in negotiation (including one of my favorite books of 2007) and decisionmaking is uniformly excellent and insightful. In this paper, he and his co-authors survey research showing how challenging goals, while creating a powerful incentive, also create significant negative side effects, including:

- focus on short-term results over long-term benefit
- favoring the easy-to-measure over the difficult to measure, independent of importance
- goals creating performance ceilings (e.g., the salesperson who stops selling after reaching her quota)
- reduction in cooperative behavior
- reduction in learning
- unwillingness to experiment and innovate
- decrease in intrinsic motivation ("Show me the money!")

It's not a pretty picture. I doubt after reading this that anyone would be more eager to set goals for their employees. It does a great job in laying out the risks of overreliance on goals. There's more work needed on how to deploy goals effectively, because that's the question that we're left with at the end.

Wednesday, February 04, 2009

Customers are talking - Apple hangs up on the wrong customer

It's getting harder and harder to get telephone support, especially with online products, but there are some times you need to talk to a person--you can't find what you're looking for in the forum, for example, or your question doesn't fit neatly into a category.

Cluetrain Manifesto
co-author Doc Searls called Apple to get support for MobileMe (a paid service, by the way), and a synthesized voice summarily directed him to the website. Then, "click."

The irony is that Searls heads a grass-roots effort called VRM, Vendor Relationship Management. Requiring adequate support for paying customers seems like a basic tenet of VRM.

So Searls blogged about it, including a recording of the Apple call. Check it out here.

A Business Owner's Novel Response to the Financial Crisis

A local entrepreneur who's in the physical therapy/rehabilitation business told me about his approach to dealing with the financial crisis:

First, he gave up his lease on a large office and moved into a smaller one, cutting his overhead substantially. That's a tactic that would be at the top of anyone's list.

Then, he did something unexpected... he raised his prices. As a result, he lost some clients. But because of the lower overhead, and the higher contribution margin of the remaining customers, he's making more money.

As he said, "Basically, people who weren't valuing the service don't come anymore. The clients who are left really care about their health and are willing to invest in it. For them, the price is reasonable."

Anyone can cut costs. But cutting costs and raising prices? That's an innovative prescription.

Related post:
If you can raise prices, don't hesitate

Tuesday, February 03, 2009

Shop Talk is moving!

Hi, all,

We've loved being here at Blogspot for the past three years, but it's time to move on. Given the economic situation, the landlord over at gave us a great deal to consolidate our space over there, so off we go.

We'll keep adding new posts here for the next couple of weeks, but after March 1, we won't be posting new material to this space any more.

Please head over to our new home and stay awhile, and if you'd like to update your RSS reader, here's the feed for the new place.

Thanks for shopping!


Customers are talking: @comcastcares - not just conversation

I recently spent some time with Frank Eliason, known to the Twitter community as @comcastcares. Frank has become a minor internet celebrity in the last year because of the work he and his team do resolving problems for unhappy Comcast customers who tweet or blog their frustration with Comcast.

His work is fascinating to me because Comcast is a gigantic, engineering-driven company and one which you wouldn't have expected to embrace a "customers are talking" approach.

I think there are two reasons Frank and his team stand out. One is novelty. There aren't a lot of companies who have prominent profiles on Twitter (Dell and Zappos are two others). That won't last, of course, as more and more companies jump on board.

The second reason is more sustainable. The term "conversation" is everywhere in social media. It's all about the conversation. Not for users of products and services. When they talk about products and services and companies on Twitter, it's not just to have a conversation. In many cases, it is to highlight a problem.

The Comcastcares team doesn't just engage in conversation. They solve problems. Here's an example (for readability, these tweets are ordered from earliest to latest--the opposite of how you would read them on Twitter):

The biggest reason for me Frank and his team succeed is that they are customer-service and tech-support people, not PR people. Frank in particular has years of call-center experience, and therefore is able to skillfully engage with unhappy customers, listen, and, best of all, get them a quick resolution. In other words, your company can say it's serious about social media, but actually using it to help people is better than the best messaging in the world.

Did you see from the example above that this problem was reported in the hour before the Super Bowl and was resolved before kickoff?

Monday, February 02, 2009

Customers are talking: turning points in telephone sales calls

I'm working on a project to listen to telephone sales calls and help the client find patterns explaining why some calls end up in a sale and others don't. Each call is a story, complete with emotion, conflict, and turning points. Listening to dozens of these, pictures begin to emerge of how people buy, and how, even when they like the product and may want to buy, don't. And it has nothing to do with logic.

One turning point I've experienced is the moment when a call turns from being headed to a close, to not. On the calls, it's very subtle: a pause, a change of subject, perhaps an additional question from the prospect. But afterward, a call that seemed to be heading toward a sale instead is, at best, a promise to call back.

The best way to explain it is to relate a personal story.

I've been a customer of Verizon Wireless for more than five years. I got a telemarketing call from them today, offering inducements to renew my service contract early. I've been evaluating this for a while now (this is a subtext of my posts on the Blackberry Storm), and after discussing it at some length with my wife, we're headed toward renewal.

This call, then, could have been Verizon's way of closing the deal. I was pretty ready, although I was thinking of doing this in March. If the deal was good enough, perhaps I would pull the trigger today. The call went something like this:

"Mr. Caddell," the rep said, "we are offering some extras today if you want to renew your contract early. You might be able to get a discount on a new phone."

"When does my contract expire?"

"The end of July."

"I thought it was the end of March."

(turning point 1) "That's the time when you are eligible for an early equipment upgrade. Your contract expires in July."

"OK, what are you offering?"

(turning point 2) "100 extra minutes per month." (This wasn't attractive to me at all. We don't use the minutes we have now.)

"How much off the phone?"

(turning point 3) "Well, you'll be eligible for that at the end of March."

"Earlier you said I could get a discount off a phone." (I didn't tell her that Verizon had already sent me two mailings offering me phone discounts for renewing now.)

"I said you might be."

There was no way was I going to renew then. At each turning point, in fact, I became farther from renewing than I had been before the call. Instead of feeling happy, encouraged, eager to get a new phone, I felt frustrated, annoyed, and that I had wasted time even picking up the phone.

It wasn't the rep's fault. She was given a difficult product to sell (competing, in fact, with the company's own mailings). When I began to ask pointed questions, the pitch fell apart. There was probably no rep on earth who could have closed me with that offer.

Which is a significant learning from this project for me. Selecting and training reps is only a part of the formula for success in telesales. The product must be useful, and the offer must be made attractive. And that work happens far outside the call center.