Geeks and Shrinks

May 9, 2008

The service in customer service

Filed under: Customer dialog, Reputation — Tags: , , — rvenkate @ 10:09 am

Consumerist explains why it’s now completely impossible to sell a laptop on Ebay. Not only was the experience of the seller negative, but the customer service experience was clearly not a two-way dialog – how would anyone with the power to effect change obtain the information that things are not working, without the bad publicity first?

In the first 170 comments, there isn’t any response from an Ebay representative, either, and this is a site with an Alexa rank of 5,480. A reference to the story is in WSJ buzz links as well, so it’s likely to get more traffic.

May 8, 2008

Plugging the holes

Filed under: Customer dialog, Reputation — Tags: , , , — rvenkate @ 10:20 am

Mark Brownlow writes that “email marketing is like trying to fill a bucket with holes in it,” and describes the two schools of thought on how to solve the problem – either fill the holes (better retention), or use more water (faster acquisition).

In my experience, it’s not limited to email marketing. The “new economy” forces companies to make a choice – either supply superior products designed based on deep customer understanding at the best price, or move to a commodity business and supply products at the lowest price through those with deeper customer relationships.  The former requires a sustained trustful brand relationship, and (surprise) fits best with better retention, rather than faster and faster acquisition.

There’s another aspect to consider: good advertising inventory (online or offline) is scarce, and as a result the real price has tended to increase, even online. If a marketer pursues the “faster acquisition” path, is it sustainable under these conditions?

May 7, 2008

Are you listening?

Umair Haque wrote about the new economics of brands, describing how Google and Nike are “choosing to invest in consumers, instead of carpet-bombing them with advertising.” But what is the return on this investment? “The decision to invest in consumer is also a decision to listen to consumers – instead of talk at them.”

One of the most difficult aspects of being a shrink is obtaining the Voice of the Customer, particularly in an unbiased fashion. Part of the problem is that surveys and focus groups only manage to take a snapshot, even though there are some solutions that provide continuous information, and it’s difficult to anticipate the entire spectrum of responses when designing the survey.

If a company makes the decision to listen to customers, as Umair described, the full richness of consumer reaction comes through, as long as it is implemented at all levels. For instance, in email marketing, it is possible for an individual to reply to an email. Some companies (still) have addresses that they do not monitor (occasionally leading to embarrassing results), some send them to call center/customer service for disposition – but how many segment the replies appropriately and use them in the product development process?

The ability for a company to connect with a large number of customers in a unprecedented personal(ized) fashion is a feature of the new economy. Those that exercise that ability will be able to obtain crucial information for fulfilling customers’ needs and enhancing their brands, and those that choose to ignore seemingly minor customer communication can end up with censure in public view.

May 6, 2008

Trust and information sharing

Filed under: Email list rental, Reputation — Tags: , , , , — rvenkate @ 12:09 pm

JP wrote about trust a short while ago, from the perspective of transmission of information, particularly when the ownership aspect isn’t clear. However, there’s another aspect of information ownership that wasn’t in scope for his post, which is that the trust relationship that he refers to also grants license to use that information only for specific purposes (which may or may not include transmission).

One example that comes to mind is the usage of email address information. Clearly, directly selling the contact information falls into the territory that JP referred to. However, what about the usage of that information without actually passing it on? For instance, many of our customers send advertisements to subscribers on behalf of third parties (aka “list rental”). They don’t pass the contact information on to those third parties; they just enable communications. It could go even further, combining all available information sources for more precise targeting.

The key is to remember that building a reputation is expensive in time, money, or both. Regardless of the legal contract (or absence thereof) under which the information is collected, the short-term gains of selling the information are usually small compared to the acquisition cost of new customers (or new employees, new suppliers, etc.) with a tarnished brand. Without considering both aspects, it’s not possible to determine the NPV of an initiative.

May 5, 2008

Trustworthy brands

Filed under: Reputation — Tags: , — rvenkate @ 11:57 am

Robert Reich, in The Future of Success, describes two essential roles in the new economy: the geek, who understands technology in depth, and the shrink, who understands users in depth. As someone who aspires to be proficient at both, I’m sure I will have more to say about those roles, but I’d like to start with a quote from the same book about the role of large enterprises instead:

Trustworthy brands are becoming consumer guides through the jungle of the new economy… in the new economy, businesses depend on economies of trustworthiness. Their economic value comes not from assets they own, or employees they supervise, but from the domain of trust they’ve established with buyers. The only thing the new large enterprise needs to control and continuously enhance is its most valuable asset – its reputation for getting customers the best buy. The more customers who come to rely on it, and are delighted by what they receive, the greater is its reputation for leading buyers to the best deals, which in turn attracts more buyers. The largest enterprises will thus be the brands that enjoy the largest economies of trust, which translate into large profits and high market value.

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