In his “Fight Off Your Heavy User Obsession: What About Noncustomers” article, David Aaker observes that firms are “trained to look to the heavy user, where the money (and competition) resides. But there can be a substantial market that is lying dormant because there is a deficiency or omitted feature in the current offerings that prevents these people from buying.”

David proposes turning this heavy user obsession on its head by identifying and addressing the barriers that prevent noncustomers from buying your product.  Shimano is one case in point:

“Shimano, a top bike components manufacturer, talked to some of the 160 million Americans who did not ride. These people generally had fond memories of childhood biking but believed the sport had become too complicated, expensive and even intimidating. To respond, Shimano developed and defined the experience of a “coasting” bike — wide seats, reachable ground, backward-kick braking, upright handle bars and no controls. The gear box, hidden and controlled by a microprocessor, automatically shifts between three gears. Fueled in part by the Shimano Coaster and by an increased desire to commute with bikes, coaster bikes started to take off.”

See also: Can courting so-so customers be good for business?

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I found this WSJ article on the Patagonia Common Threads Initiative fascinating.  Please note particularly:

 “Last November, on Black Friday—the unofficial American holiday of consumer gluttony—Patagonia took out a full-page ad in the "New York Times" with the bold-face headline "Don't Buy This Jacket." Below a picture of the fleece jacket in question, the ad copy listed, in grueling detail, how much water was wasted and carbon emitted in the course of its construction.

"I've never seen a company tell customers to buy less of its product," marvels Harvard Business School professor Forest Reinhardt. "It's a fascinating initiative. Yvon has the confidence to pull it off." In fact, Chouinard says the ad boosted Patagonia sales—though he argues it didn't drive more overall consumption, but rather stole existing customers from his competitors.”

Can you sell more by telling your customers to buy less?

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This instructive US Airways’ Wally case study was included in this New York Times story about Nuance.  Please particularly note the highlighted parts:

MEMBERS of US Airways’ frequent-flier program who have registered their mobile phone numbers are greeted by name by “Wally,” an interactive voice system that Nuance created for the airline.

One day last month, Wally was talking to Kerry Hester, a senior vice president at US Airways, who had called to check on her own flight.

“Hello, Kerry, I’ve matched your mobile number to your Dividend mileage account,” Wally said. Her flight from Phoenix to Los Angeles, Wally reported, unprompted, was “still scheduled to depart on time at 11:20 from Gate A23.”

If Wally’s voice sounds familiar, that’s because it belongs to Wally Wingert, the announcer on “The Tonight Show With Jay Leno,” who prerecorded all the words that callers hear.

US Airways introduced Wally last summer, as part of a relocation of its offshore customer service call-in operation back to the United States.  Nuance designed the system to anticipate callers' requests.  Wally, for example, can automatically tell frequent-flier members their seat assignments or report whether they have received upgrades.  It also converts people's speech to text, so that, should customers ask to speak [to] a live operator, they don't have to repeat their original request.

Wally, Ms. Hester says, has reduced the number of customers who ask to speak with agents, as well as the average length of customer calls. “Without the system, we would have had to hire a couple hundred more agents,” she says.

Wally, which never lets on that it is an automated system, seems so personable that many people say “thank you” before hanging up, Ms. Hester says.

“I think that tells us that they were satisfied,” she says. “I think it tells us that they felt they were interacting with a person.”

Will voice technology change the customer service game?

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The evidence on the return on investment in retail employees is becoming more and more substantial.  See particularly Zeynep Ton's work on QuickTrip and Mercadona:

“By investing in employees and giving them more responsibility, QuikTrip enjoys a competitive advantage in service and benefits from continuous process improvement.”

“For Mercadona, investment in employees is part and parcel of process and product improvement. In 2008, the chain invested four weeks of training time and €5,000 for each new store employee. "In the United States," Ton points out, "the norm is only seven hours, and the difference shows."

See also Marshall Fisher’s work on the same topic:

“On average, revenue increased by $10 for every additional dollar of payroll added to a store, and for some stores that were particularly understaffed, the revenue lift was as high as $28. At the 40% gross margins this retailer was earning on revenue, adding payroll was highly profitable, and fully supported by the numbers, once you had the right numbers.”

If investing in employees yields such big dividends, why don’t more retailers do it?

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I found this Paying when patients wait story very thought provoking.  Please note particularly:

“The Daily had an interesting story on a handful of doctors who are paying their patients — either explicitly in cash or in the form of a gift — when they make their patients wait past their appointment times (Their Wait in Gold, Mar 19).

There’s a promising new trend afoot in doctors’ offices around the country: With average wait times growing in recent years, some physicians have begun offering goods, services and even cash to waylaid patients.

“Why is my time more important than my patients?” asked Dr. Cyrus Peikari of Dallas. “True service can only come when we put our egos aside.”

To make up for canceling some appointments last year, Peikari mailed each patient a check for $50.

Dr. Timothy Malia of Fairport, N.Y., keeps a supply of $5 bills on hand. He dispenses them to patients if they’ve been made to wait past their appointment time.”

Should you pay your customers to wait for you?   Can this concept be practically applied to customer service?

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Barclaycard just introduced the Barclaycard Ring credit card.  The concept is deeply customer focused in many ways.  See for example:

“The Barclaycard Ring MasterCard card will have one, low interest rate of 8 percent for all balances, no balance transfer fee, no annual fees and simple, easy-to-understand terms.

For the first time, through a virtual cardmember community, cardmembers will have visibility into the card’s financial profit and loss statements. An online framework will provide cardmembers with the ability to influence decisions that impact how the card is managed and serviced and a unique Giveback(SM) program will enable the community to share in the profit generated from its collective decisions.

Using social media, the community will also provide a forum where cardmembers can exchange ideas, share knowledge and provide direct feedback to Barclaycard US to help determine future features of the product.”

Is the beginning of the future of credit cards?

!

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I found this video describing The Norwegian Bank (DNB) letting The Norwegian Broadcasting Boys Choir sing their automatic [IVR] telebank menu very inspiring:

“DNB is the main sponsor of The Norwegian Broadcasting Boys Choir. We wanted to promote the sponsorship in a relevant setting, letting The Choir do what they do best: Sing. In December 2011 they sang every word of the automatic telebank menu if you called DNB BANK. Merry Paycheck everyone!”

!

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Walmart just launched the “Get on the Shelf” program to enable producers to receive space on the Walmart shelf:

“How does it work? Pretty simple actually. Submit a video of your product to Get On the Shelf and then, when voting starts, rally your family, friends and fans to vote for it. The product video with the most votes wins.”

Is this practice likely to become more and more prevalent?

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I found this Shin and Sudhir study on “When to Reward Your Customers” very thought provoking. Please note particularly”

“The award-winning paper helps to reconcile a contradiction between marketing theory and practice. Marketing scholars have generally held that in order to maximize profits, firms should attract new customers with low prices, rather than giving discounts to current customers to reward them for their loyalty. But such rewards for existing customers are common in practice.

Shin and Sudhir found that rewarding your own customers can be justified in industries where two conditions apply. First, heterogeneity in customer value is high; that is, a small group of customers provide a large percentage of profits. And second, stability of customer preferences is low: customers can easily switch to competitors.”

Should you reward your own customers or your competitors' customers? [or is this a false choice?]

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I found this AP article on customer feedback fatigue thought provoking.  Please note particularly:

“Surely, it's nice to be courted for input, at least sometimes. But some consumers say they're fed up with giving time-consuming feedback for free, don't like being drawn into a data web used to evaluate employees or feel companies don't act on the advice they get. Others say they simply don't have anything revelatory to impart about, say, ordering a shirt or buying a package of pens.” 

Do your customer surveys breed feedback fatigue?

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Delta recently introduced the Ideas in Flight concept to: “inspire thought, facilitate collaboration and identify great ideas to continue to enhance the travel experience”.  The program was introduced in collaboration with TED.  TEDTalks videos are used to prime Ideas in Flight conversations.  The program is featured on Delta’s facebook site.

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I found this Frances Frei and Anne Morriss perspective on [customer service] excellence refreshing.  Please note particularly:

“In their new book, Uncommon Service: How to Win by Putting Customers at the Core of Your Business (Harvard Business Review Press), coauthors Frances Frei and Anne Morriss (MBA ’04) maintain that it is possible for organizations to reduce costs while dramatically enhancing customer service. That win-win approach involves “looking at your biggest buckets of cost and rethinking those strategically in ways that give your customers something they value,” notes Frei, the UPS Foundation Professor of Service Management.”

Following are several of the tough choices organizations must make to achieve customer service excellence, according to Frances and Anne:

• How do customers define “excellence” in your offering? Is it convenience? Friendliness? Flexible choices? Price?

• How will you get paid for that excellence? Will you charge customers more? Get them to handle more service tasks themselves?

• How will you empower your employees to deliver excellence? What will your recruiting, selection, training, and job design practices look like? What about your organizational culture?

• How will you get your customers to behave? For example, what do you need to do to get them to treat your employees with respect? Do you need to make it easier for them to use new technology?

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I found this Schumpeter Too much buzz article on the big opportunities and big problems provided by social media very thought-provoking.  Please note particularly:

"Responding quickly to bitter tweets sounds like a nifty way to soothe angry customers. But there is a risk that companies will concentrate on a handful of activists (who tweet a lot), while neglecting average customers (who don’t). They may also ignore non-customers (who are the biggest potential source of growth) and the elderly (who seldom tweet)."

Do companies over concentrate customer service on a handful of social media activists?

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The following article outlines several major design considerations for developing effective customer loyalty programs:

1) Define the Purpose and Objectives of the Program

From the company perspective, loyalty programs should be designed not only to improve customer retention but also to improve the performance of customer acquisition, new customer engagement [or onbording], customer development, and customer winback.  This end-to-end customer lifecycle approach will extend and multiply the impact of the program.

From the customer perspective, loyalty programs should offer customers an opportunity to benefit from enhanced product or service value propositions.

2) Design the Program to Attract the Right Customers

 Loyalty programs should focus of attracting the “right” customers.  High-value “secondary customers” will prove particularly attractive candidates for loyalty programs.  These secondary customers divide their purchases in the category among two or more providers.  They are also however the least likely to join the program.

3) Design the Program to Enhance the Value Proposition of the Product

Customers will ultimately base their “loyalty” decision first and foremost on relative value considerations.  Loyalty programs that directly enhance the value proposition of the product or service will therefore prove more effective in influencing customers’ loyalty decisions.

4) Design the Program to Facilitate Incremental Customer Behaviors

Loyalty program should be designed to motivate customers to produce new or “incremental” behaviors.  Loyalty Programs that rewards customers mostly for “mindlessly” producing the same natural customer-as-usual behaviors will have limited impact.

5) Develop a Strategy for Engaging Customers in the Program.

Companies should also develop an adjunct strategy for engaging customers in the program.  The strategy should include customer participation, introduction, and engagement elements.

6) Develop a Strategy for Measuring and Improving the Effectiveness of the Program

Loyalty programs defy easy measurement.  Companies need to particularly develop an approach to adjusting the measurement process for any “selection effect”.  Loyal customers will find the program more attractive than less loyal customers.  Customers who participate in the program will typically be more loyal than customers who do not partly because of the sheer selection effect.

Additional readings:

Collected Works on Customer Loyalty Programs that Really Work

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The JWT’s trendspotters recently included The Rise of Shared Value in their Top Ten trends for 2012:

“The Rise of Shared Value: Rather than simply doling out checks to good causes, some corporations are starting to shift their business models, integrating social issues into their core strategies. The aim is to create shared value, a concept that reflects the growing belief that generating a profit and achieving social progress are not mutually exclusive goals.”

Following is Michael Porter's perspective on Creating Shared Value:

“A big part of the problem lies with companies themselves, which remain trapped in an outdated approach to value creation that has emerged over the past few decades. They continue to view value creation narrowly, optimizing short-term financial performance in a bubble while missing the most important customer needs and ignoring the broader influences that determine their longer-term success.

How else could companies overlook the well-being of their customers, the depletion of natural resources vital to their businesses, the viability of key suppliers, or the economic distress of the communities in which they produce and sell? How else could companies think that simply shifting activities to locations with ever lower wages was a sustainable “solution” to competitive challenges?”

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This inspiring Zazzle video brings the Mass-Customization and Co-Creation concepts to life:

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“From my vantage point [on a Café Nero in a train station] just opposite the entrance, I was able to observe customers coming and going. I was fascinated to see how many of them came and went — without buying anything — because they took one look at how long the line was and abandoned their coffee mission then and there. Intrigued, I started to count. Fully 3 people looked at the line and bailed on the thought of purchasing for every 1 person who actually made a purchase. Imagine — the café would have increased its business by 300% if everybody who thought they might like a coffee had been converted into a coffee buyer. And this is at a train station, where people risk missing a train if they stand around!”

How Many Customers Did You Lose Today?  Do you have a way of knowing?  Can you see them from your vantage point?  Do you conduct exit interviews with several of these lost customers?  Do you know why did they leave?  Do you know where did they go to? 

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I found this New Your Times story on L. L. Bean’s new social media team very insightful.  But in my mind, the two more interesting stories are the stories behind the story on the “social” nature of the L. L. Bean call center and on the [still] relatively small numbers of social media interactions relative to the number of call center interaction:

“WHEN the phone rings at a call center inside a former department store here, it’s as much story time as sales time. As in: I was in Maine four summers ago. What’s it like in the winter? Or: Our dog ate my husband’s favorite slippers. Can you help me replace them before he finds out?

As the holiday orders pour in, some 3,600 L. L. Bean employees in this old mill town and elsewhere in Maine work the phones, answering questions, taking orders and, quite often, listening to warm, fuzzy stories. Customer service is a hallmark of this venerable Maine retailer, which turns 100 next year.

But this Christmas season, there’s a new twist: in addition to traditional phone orders, L L. Bean is wading boot-deep into social media. A 10-member team was recently created to interact with customers on social media platforms like Facebook and Twitter.”

“Apparently, L. L. Bean customers are becoming converts. In a recent month, the company recorded 50,000 social media mentions on Twitter, blogs, Facebook and YouTube. Still, it’s a far cry from the 100,000 phone calls a day. [3,000,000 calls a month].”

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Ross Dawson directed my attention to the Commonwealth Bank IdeaBank designed to include Commonwealth’s customers in designing the future of their bank:

“We know the ideas that will shape the future of Commonwealth Bank won't come from us, they'll come from you. So we've created Commonwealth Bank IdeaBank - your place to share, discuss, inspire and be inspired.”

Please compare to the first direct lab designed for similar purposes:

“The first direct lab is all about getting you involved. It's a place where you can view new ideas and test-drive brand new first direct innovations before we release them, so you can tell us exactly what you think and have your say right from the start. After all, who better to test new ideas than the people they're aimed at... you?"

[See also the RBC case in the comment below...]

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