Great Expectations, Failed Promises

Jackson: Like many e-retailers, Walmart.com is new to this game. We know that we're not going to be able to plop our whole assortment of goods, from toilet paper to tires, onto a Web site and effectively serve anyone. So we're concentrating on several small, incremental steps. We started by selling electronics online because we knew that Walmart could offer more valuable information about technology through our Web site than we could through our sales associates, who often don't have specialized knowledge about electronic goods. One by one, we are ticking items like this off our list and are growing our online presence according to our customers' needs.

We're all still learning. And we're just beginning to figure out how customers are going to use this medium. The more we can experiment, the more we can find out what value it is going to bring to them.

Rogers: Customers hate it when a company forces them to interact with its Web site, brick-and-mortar store, and 800-number in different, disconnected ways. A company absolutely must integrate all of its efforts if it ever hopes to meet its customers' expectations.

Audience Member: Integrating marketing messages across all platforms is critical. What's the implication of all this for advertising?

Jackson: Technology provides an incredible opportunity to market on various layers. It enables companies to give customers information at a point in time when they're ready and receptive to that information: when they're making a purchasing decision.

Rogers: The most important thing we can do right now is to generate feedback. Only when I get you to talk to me can I give you something that you can't get from anybody else. As we move further into the Information Age, we'll still run ad messages, but the purpose of them will change. Brands will continue to be important -- but they're the antithesis of a relationship, because they can't change. We'll also use advertising and other forms of low-cost, one-way messaging to talk to the friends and relatives of our best customers.

Amazon.com has been called brilliant at customer service. Are they really that good?

Rogers: When we all weren't looking, Amazon's book business began making money. And the company pulled it off in a very important way. Amazon was founded on the idea that if it could pick out the right customers, it could build a significant business, one that people couldn't get anywhere else. The idea was a business model in which the customers added value through their book reviews and ratings. If you shop at Amazon, the site starts learning what you need. It learns that my kids are getting older. I depend on it to tell me what I should be reading. Amazon's other differentiating practice was its delivery of customer service on steroids.

Sprint PCS is another company that is finding an innovative way to serve customers and stop them from jumping to another service. The company sets up a free voice-recognition system in which I can press a button and say, "Call Jeanne at home," and the phone will automatically dial my number. I set up a raft of numbers like that. So, when the contract for Sprint comes up for renewal, and I've added value and worked hard to make this phone smart, am I going to leave it for a better price? Or for a new phone that has the IQ of an asparagus? I don't think so.

Audience Member: It's very expensive to capture customer data, so many companies are only offering a superior level of customer service to their most profitable customers. How do we expand that kind of service to reach a broader audience?

Rogers: Amazon is mostly interested in getting loyalty from its most valuable customers. But it doesn't cost the site any more to service a less-valuable customer. In certain models, the cost of customer service goes down with more people. If the idea is that it costs money to set up a great Web site to capture this data, well, figure you have to spend that on the back-end to remain competitive anyway.

I know of a small company that took an innovative approach to customer service that didn't cost them a lot. Zane's Cycles, a small bicycle shop, read that Wal-Mart and a sporting-goods store were coming to town, and naturally thought that meant death to its business. The owner decided to get smart about building relationships, so he built a database of 27,000 names in the area by offering to do service for free. Then he used that information to cross-sell and up-sell. Now he has 69% of bicycle sales in his county and has doubled his business.

Jackson: It all goes back to the value proposition. You need one that stands the tire kicking. Sometimes the ability to get service weighs in on that value proposition. In other categories, it doesn't matter. Walmart sells only at the lowest price -- it doesn't offer service. But that's okay. You just need to know your value proposition and stick to it.