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Great Expectations, Failed Promises

Why do so many customers feel betrayed today? How did the vision of great service fade? Our RealTime panel of experts considers those questions and offers advice for keeping the Net’s promise to your customers.

The new economy was supposed to bring a bright, new day for customers. The customer would be king. The customer would be delighted. Customer-service excellence would be the standard by which a company measured its success.

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How could such good intentions go so wrong?

Fast Company’s panel of customer-service experts met at RealTime Philadelphia earlier this week to explore the promise that went off the rails. Jeanne Jackson, CEO of Walmart.com and former CEO and president of Banana Republic; Martha Rogers, partner at Peppers and Rogers Group and coauthor of The One to One Future: Building Relationships One Customer at a Time (Doubleday/Currency, 1997); and Hal Logan, president and CEO of Manheim Interactive, the leading wholesaler of used cars on the Net, joined Fast Company senior editor Polly LaBarre for a fast-paced round of shared stories and good advice from the front lines of the customer-service revolution.

We listened in as they debated what works and what doesn’t when it comes to getting and keeping customers.

What’s the biggest misconception about the Web and customer service?

Logan: The greatest misconception is that technology makes customer service easy. In many cases, technology makes the provision of service more difficult, because it introduces entirely new ways of recording information that are not compatible with yesterday’s techniques.

Jackson: Several years ago, I remember hearing someone say, “The current channels for getting goods to customers are grossly inefficient; the Net is going to make life easier.” In reality, a lot of the current avenues for delivering goods don’t necessarily provide customers a broad view or in-depth information about products. The Net alone is not better. But the Net coupled with new thinking is phenomenal.

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Rogers: We expected technology to save us all on its own. We thought that we could keep chugging along and that technology would help us move faster. Many of the recent e-commerce failures occurred because companies didn’t fully utilize the technology. They failed to fundamentally change the way they did business, and they bombed.

But keep this in mind: At the beginning of the 20th century, there were 300 car companies, 297 of which ultimately failed. Regardless of the failure rate, cars have changed our entire culture and way of life. We can’t assume that it’s all over now because times are tough. Technology will fundamentally change the way we view customer service. No question.

What do customers really want?

Logan: Customers today want the same thing they wanted 20 years ago: people who will listen to them, take them seriously, and solve their problems.

Jackson: And the Internet can help us solve problems faster and more efficiently some of the time, but not all of the time. The means don’t matter. The solution does.

Rogers: The fact is, customers want what they want. That sounds obvious, but it hasn’t always been. We spent most of the 20th century creating things that people somewhere might like. Then we broadcast messages to find those people and get their money. Today, instead of giving people a lot of choices and taking orders, we are beginning to serve customers better by getting to know them. A company that knows what I want has a great advantage over a company that offers me a slew of choices and makes me sift through them.

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What are the challenges associated with serving customers through various channels?

Logan: At Manheim Interactive, our customers are used-car dealers, people who are not typically found at the bleeding edge of technology. They treat the Web like any other tool that, if used correctly, will make or save them money. If it doesn’t address their needs today, they have no interest in it whatsoever. Our challenge is to integrate Manheim’s face-to-face automobile auctions with the technology to make the process of buying and selling cars run more smoothly.

Specific information becomes increasingly more important the older a car gets. After three years on the road, no two cars are exactly the same. And if we mess up, the used-car dealer who bought a car from a Manheim auction is not going to call our 800-number, he’s going to complain to the auction manager, who probably can’t solve his problem. That question of accountability and responsibility is one we grapple with constantly.

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.

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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.

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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.

Before we close, why don’t you each share one tool or tactic that you can’t live without.

Logan: You have to understand what your customer is looking for, and you have to build your business around that customer need.

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Jackson: In creating a coherent experience from the company, you often have to please the customer and sort out the financials later. Conflict is inevitable wherever money and resources are involved. But that internal conflict should never affect the customer experience.

Rogers: We’re in the covered-wagon stage. Customer service isn’t just about the technology. The whole idea of building relationships can’t be installed — it has to be adopted. We have to adopt a culture that puts customers, not company-oriented values, first.

I find it both challenging and exhilarating that we’re leaving a period in which products are incredibly differentiable. We’re moving into an era in which our biggest long-term advantage is being able to track customers across time and channels. We have seen some real success stories, in both new- and old-economy businesses. There’s real return on investment if we do things right. Great companies do something for their customers that other companies cannot or will not. As long as those great companies can keep the customer talking to them, they will win.

Anni Layne (alayne@fastcompany.com) is the Fast Company senior Web editor. Linda Tischler (ltischler@fastcompany.com) is the Fast Company managing editor of new media.

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