I have something to get off my chest - I love Southwest Airlines.  The significance of this statement is I’m an airline snob - for approximately 10 years I traveled frequently for corporate America on the big airlines, accumulating miles (as well as a threshold for pain) and holding the smaller discount airlines in disdain.  And then last year my eyes were opened to a whole new world in the sky - a world where customers are treated as customers - where the words “we appreciate your business” are backed by service that actually makes me feel appreciated as a customer.

Having developed this affinity towards Southwest I started to contemplate their business model and success.  What struck me is the both the genius as well as the simplicity of their model.  Genius from the standpoint that they were able to innovate by addressing the emotional needs of customers while their competitors where focused on the functional needs (this may be a stretch) and relied on monetary loyalty systems to increase attachment (certainly Southwest’s regional expansion strategy helped them to stay under the radar and gain scale but from my perspective this is not why they are still in business).   Simplicity from the standpoint that there model is based on basic common sense - people like to feel treated well, and if we’re paying for service we expect to be treated well.  And while simple, Southwest’s model is darn near impossible for their competitive peers to replicate because it’s rooted in their culture (one of the most challenging areas for a company to change) and the premise that happy employees = happy customers.  This manifests itself across every touch point I have with Southwest - from the gate agent, to the flight attendees (while I may not always find their attendant performances over the PA system necessarily funny or entertaining I certainly respect the effort - it adds one more personal, human element to the experience) and pilots, to the personalized Southwest stories of exemplary service in their monthly magazine.

While there is no doubt I’ve been converted and am an advocate of Southwest - their success, and the success of others like Zappos, begs the question of which industry and what companies are next to be caught sleeping at the wheel - i.e. do not truly understand their customers and their motivations?

I’m thankful to Kenneth Weiss for sharing a chapter from his book Slightware - The Next Great Threat to Brands through a brand strategy forum on LinkedIn.  I took a quick read through the chapter and was intrigued enough to do some follow-up reading on Kenneth’s site.  His book serves to not only put a name and face on the challenges (and misuse) brands face in a digital world, but also to remind marketers about fundamentals in customer engagement.  Slightware is best defined in the following excerpt:

Brand building is fundamentally changing from a one-way transmission through media and marketing to a two-way transaction powered by software.  Once again, the initial step of brands into this new era of technology will not go well. Brand and software will not be entwined gracefully. Done poorly, digital experiences will be slightly “off brand.” Done very badly, the brand will be slighted. This is the age of Slightware.

We’ve blogged about and done client work around the area of online brand engagement.  There’s so much to be said about this area and yet there are so many examples of major brands stumbling their way through it.  At its heart, it comes down to whether marketers are thinking of (and executing) their online presence as a campaign or a conversation.  Weiss does a great job summarizing this point in the visualization below:

So, as marketers in a new era of customer engagement (and customer power), we need to at times honestly evaluate our efforts and ask the question of whether we’re talking at, to, or with our customers.  Often, that simple exercise helps assess the need to switch tactics or re-allocate resources.

I encourage you to check out Weiss’s work and examples of Slightware.  Really good food for thought.  Do any of his examples seem familiar to you…either as a marketer or as a customer??

While companies don’t purposely look to alienate customers and subscribers, many do so by inadvertently developing policies and touchpoints that are inwardly focused rather than designed around customer expectations. As a follow-up to my previous posting, and in honor of what David Pogue initiated through his “Take Back the Beep” Campaign, I’ve come up with my own list of practices that companies need to address in order to truly win over customers.

Don’t resolve customer issues
Do your customers dial into customer service and get transferred several times until they get to the “appropriate” person who then doesn’t have the ability to resolve their problem? Consider analyzing the top reasons for transfers and adjust procedures to allow general bank agents to respond to issues without transferring. If it has to be done consider how to use warm transfer hand-offs among key segments, e.g. those at risk to churn or high-value customers.

Only tell partial truths
How upfront is your offer messaging? As a customer there’s nothing worse than when you find out you weren’t told the truth. It makes you feel like you’ve been duped or taken advantage of by someone who says “we appreciate your business.” Strive to reduce fine print by simplifying offers. For cases where it’s not possible, find ways to educate and inform prospective customers upfront. The act of being honest can build goodwill and increase your brand’s equity with both new and existing customers.

Treat customers like a number
What do you do to manage your customers like people rather than account numbers? Some brands provide customers with a direct number so they can call the same service agent, helping to build a personal relationship with the brand. It not only differentiates your experience from others, but you can better track good agents from bad agents.

We’re not advocating you turn the reins of your company over to customers but for many organizations it’s important to break from the status quo. Think about just using the old five “whys” method. As you peel back new layers with each answer ask yourself if you’re prioritizing your organization’s issues or are you taking into account customer needs? The answer may surprise you.

Don’t you ever wish that sometimes you could just simultaneously reply to all of your emails with a simple yes or no?  But what would happen if you did?  That’s what Jim Carrey finds out in the movie Bruce Almighty.  He’s given God’s powers and ends up having to answer everyone’s prayers.  After pulling an all-nighter he decides to reply yes to all of them.  Then all hell breaks loose, no pun intended.

As marketers we face the same dilemma.  Our customers place demands on us and we’re not about to say yes to every request but we need to self-reflect and ask ourselves do we reply “no” too often?  While we all hate to admit to this, we sometimes make decisions that anger customers.  But over time, this anger can swell and drive customers away, or worse, incite revolt against your brand.

We should ask ourselves if we unintentionally design touchpoints that put our internal needs before those of our customers.  What perceptions do we need to avoid in order not to alienate customers and lose subscribers?

Take for example the firestorm that David Pogue of the New York Times recently ignited with his “Take Back the Beep” Campaign.  He simply questioned why customers didn’t have the option to bypass the automated message you hear when you leave a voicemail for someone on their mobile phone.  The post has generated enormous attention and has started conversations again around why companies should listen more to their customers.  One blog posting title captured it really well, “Customers are talking: Why do companies continue to do such dumb stuff?”

For us it shows why analyzing your customer experience from the customer’s perspective and making little changes can go a long way to differentiating yourself from your competitors.

Marketing works to communicate a brand promise to their customers, but if the brand experience does not consistently and reliably deliver on that brand promise, it will not be believed. As we all know, business value is directly linked to customer value - the closer we meet customers expectations, the more value is created. Simple right? So, why does this so often breakdown?

One of the biggest reasons is the disconnect between what a company thinks they are delivering in an experience, and what the customer actually experiences. A study by Bain & Company found that 80 percent of companies surveyed believed they delivered a “superior experience” to their customers. However, their customers only rated 8 percent of these companies as truly delivering a superior experience.

Do you know if each of your customer interactions is living up to your brand promise? Are you providing a more consistent and relevant customer experience than your competitors? Is there a disconnect between what you think you are delivering and what your customer experiences?

In a recent article by CMG Partners, we discuss the importance of establishing a baseline of the customer experience by looking at your business through the eyes of your customers. It is only through active management of your customer touchpoints and deep customer insight that you can begin to close this gap and turn your customers into believers.

It seems there are still weekly if not daily reminders of government bailouts and interventions, which isn’t helping several industries including retail financial services. This has unfortunately further embittered customers as well as eroded their confidence and their trust in financial institutions such as banks, brokerages and insurance companies.

But if you review the latest JD Powers retail banking survey, it appears that banks in particular face the most arduous uphill challenge in mending customer relationships. The results show that just over a third of banking customers are committed to their current banking institution, and what’s worse is that it’s dropped 6 points over the past three years.

In a paper CMG Partners recently published, we make the case that retail financial services should shift their resources to excel at customer intimacy rather than products or operations in order to succeed within this seemingly new paradigm.

But to pursue customer intimacy strategy requires addressing four areas:

1) Shift focus and power from product lines to customer relationships
Too often product groups or sales dictate decisions that affect customers, misguiding firms to emphasize internal benefits such as cost savings that customers may not value. Customer intimacy is about placing customer needs before those of the organization.

2) Make customer insights a primary driver
The best way to become more customer centric is by developing mechanisms that make customer insights a key input for all business areas. More importantly, it’s critical to find ways to activate customer centricity; for example find ways to eliminate red tape and empower customer-facing employees to respond to issues on the fly.

3) Focus on holistic customer-centric messaging
Move towards tailored messaging in order to deliver greater relevancy through marketing communications. A critical component that needs to accompany messaging is an effective customer segmentation scheme such as a lifestage model, but be sure that your bank, especially branch offices can effectively execute against the scheme.

4) Build a seamless differentiated customer experience
Focusing on customer intimacy and ultimately customer loyalty requires a customer experience to support this relationship. This means adjusting and aligning touchpoints to work in accordance with the messaging and segmentation strategies you’ve developed.

According to a recent Wall Street Journal article Starbucks is revamping its brewing process to bring the aroma of fresh ground coffee back into the shop. This return to their roots is happening in the name of injecting “romance and theatre” back into the Starbucks experience to win customers over from chains now offering a cheaper cup of Joe. I’m not sure regularly rotated brewing cycles are enough to convince recession-weary Americans to pay an extra buck for romance, but I applaud the move anyway. It appears as though it’s being done for the right reason – to reinforce the sensory elements that in part drew customers to Starbucks in the first place.

Can the smell of fresh ground coffee bring Customers back to Starbucks?

When I read the article I couldn’t help but wonder what led Starbucks to make the change. Was it customer research? Howard Schultz intuition? Or part of a larger undertaking to turn profits around? It struck me that this effort at its core is about marketing – focusing on your customers and delivering the Starbucks brand experience. But the matter-of-fact details in the article brought the nuts and bolts of this goal to life, describing the 24, 12, or 8 minute alarm-controlled brewing cycles that will be behind that fresh ground coffee smell.

While these details certain ruin some of the magic Starbucks is gunning for, they also caught my attention. As a marketer, the interesting point in all of this is being able to map how a simple change to the customer experience can require the cooperation of so many parts of the organization. It is this complexity that makes the art of delivering a great customer experience such a challenge, and yet, without it the brand promise is never fully delivered. Customer experience is a favorite topic of ours at CMG because it’s so critical to building loyalty, reinforcing your brand and ultimately driving sales. But customer experience can also be one of the thorniest areas we help clients with.

To pull off a change like this Starbucks likely needed collaboration from marketing, sales and retail, and countless other teams to revamp process, create new training, make changes to product and install the equipment for these new brew alarms, all in the name of the Starbucks experience. While this one switch is probably not a silver bullet, I’m impressed to see Starbucks doing the heavy lifting to reclaim their differentiation.

• Brand: failure to recognize the impact of a company’s culture on their brand and overall customer experience. An area that we are passionate about, and what we refer to as activating the brand (essentially employees embodying the brand), is critical for a brand to achieve its full potential and appropriately manifest itself in the marketplace across all stakeholder touch-points.
• Marketing & Sales alignment: inability for marketing and sales functions to respect each other, collaborate, and align in the best interests of the organization in order to accelerate and improve the purchasing process. An age-old business challenge that can only be addressed if there is mutual respect and understanding of how each function can best collaborate to deliver on the overall organizations goals.
• Marketing performance: lack of respect for marketing analytics/operations to measure and improve marketing performance. We whole-heartily believe that the best companies measure, learn and improve over time and this requires having an appreciation and belief in the science of marketing as well as the art.

The learning that I would pass on is when faced with a business challenge first ask yourself if there is a cultural problem associated with the challenge. In many cases without addressing the cultural aspect, all of the fancy planning and strategery will undoubtedly fall short of expectations.

We were intrigued recently with a LinkedIn poll to members of the group, Chief Marketing Officer, requesting members’ one sentence definition of ‘what is marketing?’

We were even more intrigued by the range of answers from CMO’s, marketing VP’s and marketing leaders.

Before we jump into the responses and our thinking we thought it would be worth sharing what the marketing thought leaders from academia say:

• Marketing is the social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.  - Philip Kotler
• Marketing is the whole business seen from the point of view of the final result, that is, from the customer’s point of view. Concern and responsibility for marketing must therefore permeate all areas of the enterprise.  - Peter Drucker
• Marketing is a tightly integrated effort to discover, create, arouse, and satisfy customer needs.  - Ted Levitt

While reading through the posted answers we notice two themes that were present in each answer:

1. The first theme was associated with what marketing’s purpose is, which primarily fell into two camps; either internally focused (i.e. driving sales and profitability) or externally & internally focused (i.e. satisfying the customer that in turn delivers business results).

2. The second theme was associated with the practices of marketing, (i.e. what does marketing do) and with this respect we found answers that ranged from siloed focus of only including communication to what we think of as an integrated effort involving the full marketing mix (we really do think this regardless that Levitt states this as well).

As we are consultants, we’re obliged to look at these two dimensions in the old two by two matrix, and we thought it would be interesting to map the participants answers back into these four quadrants.

While we are not necessarily surprised by the results of this little exercise we are interested in the correlation between the respondants answers and what this means for their respective businesses. Our hypothesis, and what we have experienced with our clients is that those companies that view marketing as an integrated set of activities (think 4P’s including customer service) to satisfy and retain customers perform stronger then those that view marketing as purely a communication function (i.e. advertising) and or purely to drive internal business results (which in our view comes as a result of satisfying a customers need).

What this means for 74% of respondents to this survey is there is an opportunity to deliver more meaning and value to their respective organizations through either shifting their focus to delivering on their customers needs and satisfying them day in and day out and or shifting marketing’s sphere of control to encompass all aspects of their business that impact their customers’ experience and satisfaction.

In full disclosure, one of our partners, Russ Lange weighed in with the following; Marketing is the sum total of everything a company does, intentionally or unintentionally, that affects current and future customers, competitors and partners.

This is the fifth in a series of short posts related to The CMO Agenda research. Informed by recent CMO conversations and CMG Partners‘ collective experience helping top marketers develop marketing strategy, we have compiled a list of seven ideas or jump starters for further conversation. These are meant to spark discussion, ideas, and action as we all enter a difficult 2009.

Many industries and sectors have seen new growth opportunities shift from products to services. For example, take the classic case of IBM and the switch from product to services, which is cited many times over as what saved the company.

“Experience” might be next frontier as customer service is now becoming a qualifier for purchase decisions versus an order winner. Differentiating on an experience could range from engaging all the senses in industries like travel and leisure to providing simple surprise and delight moments in less experiential industries like technology or manufacturing. The Experience Economy by B. Joseph Pine and James H. Gilmore is a source for much more to think about along these lines.

Recently, I worked with a luxury travel company on defining a new set of products for the high net worth baby boomer market. Through focus groups we learned that boomers were craving experiences. The example that sticks out most was a person stating: “I want to be guided by a well know chef through the Moroccan spice market, hand select ingredients for dinner, then participate in the cooking process — culminating in the meal itself.” Oh.. and research shows that they are willing to pay through the nose to get this!

For a more grounded example…
Not too long ago, I opened a college savings/investment account for my newborn daughter.  I picked Scottrade because I had previously opened a brokerage account and was satisfied.  Within 4 hours of applying for an account online, the local branch office, one mile away, called to make sure everything went as planned and to see that any questions I may have had were answered.  It was a simple yet effective point of differentiation, and I loved it.

Whether meandering through a spice market or simply calling your customers to make sure they had a good experience, marketers need to think beyond the widget or service offering of today. How will your company or industry take advantage of this opportunity to win or retain customers with a unique experience?

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