The Pursuit of Customer Loyalty

I love speaking to groups so yesterday was a great day for me.  The setting was an internal planning meeting for one of our clients, the subject was creating customer loyalty, and the context was customer service.  I speak in front of groups fairly often and this one turned out to be particularly fun because the people were clearly passionate about the subject and were eager to jump into the conversation.  The title of my presentation was Five Assumptions that Drive Loyalty, and when I say assumptions I am talking about assumptions we need to make about the customer.  They are:

• The Customer is Smart
• The Customer is Well Intentioned
• The Customer Values Their Time
• The Customer Has Friends (power)
• The Customer Will Share With Them (will use it)

These assumptions are so obvious that they really don’t need much explaining.  However, they are not that easy to accomplish.  Making your customers wait in line is a clear way to tell them that you think your time is more valuable than theirs – and we all hate waiting in line.  Despite this, no one has figured out how to get hundreds of people onto an airplane without making them wait in line.

During the presentation I was also able to squeeze in two other of my favorite points:

• Customer / vendor relationships can only be in one of two categories (buckets):  “Unbelievably Great” or “There Has To Be A Better Way”.  There is no middle ground.  Any company that accepts the middle ground of “Good Enough” is only deceiving themselves – because their customers are absolutely in the “There Has To Be A Better Way” bucket.
• Companies must find structures for their businesses that naturally promote positive relationships.  Blockbuster’s late fees cause everyone to look for an alternate solution.  It is not that Blockbuster is unjustified in charging the late fees, because clearly they have to get their movies back.  It is that the late fees drive the customers away.  Netflix found a way to build a movie rental business without late fees – and their customers are very loyal as a result.  I suppose their amazing execution also helps.

In the discussion a number of very interesting ideas surfaced.  This of course is the most fun part about getting 150 smart and energetic people into a room – ideas just appear and there is a pretty good chance that no one might have come up such great thoughts sitting alone in a room.  Here are the three ideas I like the most in our conversation:

• Customers are loyal to companies that manage their information well.  In its simplest form this means not making the customer give basic information over and over, but rapidly accelerates to using customer history to improve the experience.  Log on to Amazon.com and you can easily see your entire purchase history, and Amazon.com is also using that data to make recommendations to you about what you might like to purchase next.
• Customers are loyal to companies that trust them.  If you lose one of Netflix’s DVDs, just tell them, and it is no big deal.  I bet many customers find the lost DVDs later and actually return them – even though they do not have to.
• Customers will pay.  Customers are exhausted by poor quality free things and are ready, willing, and able to pay for quality.

We ended the hour talking about the companies that do a great job creating loyalty in their customers.  The list included:  Zappos.com, Netflix, Apple, Amazon.com, and Starbucks.  Don’t be shy about adding to the list.

The Microsoft Thread in the News

Here is an interesting post from Computerworld about Linux losing its spark.  I wonder how much of the Linux movement was or is powered by dislike of Microsoft.  If Linux is losing its steam it could be because the anger or angst about Microsoft has declined.  The article I link to here does not propose such a thing as the reason -- instead it lists too many versions of Linux and the decline of the fat client.

Here is an insightful post by Robert Scoble with an interview with Starbuck's CIO, Stephen Gillett, about their new in store digital network -- now live in 6,800 stores and attracting 31 million users per month.  The overwhelming majority of users are on iPhones and Ipads -- so that means Safari browsers and no Flash and no dot net for Starbucks.  

Here is an article in the Wall Street Journal about Steve Job's not so candid appearance on the earnings call (it sounds like he is reading a statement to me) where he blasts away at a bunch of competitors, calls Windows the most open system in history, links Android to Windows and makes an effort to sweep Microsoft and Google away at the same time.

Admittedly, Microsoft is not the center of any of these events or coverage, but there is an interesting thread running through them all.  Collectively they cause me to ask the question:  As Microsoft fades in industry importance -- who is going to fill the void?  I would argue that there is no one ready to fill Microsoft's shoes and that is creating a vacuum that makes everyone uncomfortable.

It will be interesting to see what news comes out of the Microsoft PDC next week. 

The Bandwidth Debate: Not Boring Anymore?

Over the years, I have had to force myself to read stories about broadband deployment, net neutrality, and the FCC.  Highly regulated things drive me crazy in the first place, add in the lobbyists and long timelines to deployment, and I can always find something else to think about.

All of that changed on February 10, 2010 when Google announced their experimental fiber network.  This is a very creative way to get the debate unstuck from the mud in DC.  The FCC could be entering a new era of independence from the telcos:  they are actually installing 20,000 measurement devices in homes to see if the telcos are telling the truth about bandwidth delivered.  We already know the answer to that question.

Add to this Starbucks announcement this month of free WiFi -- their coverage map is quite impressive.  It is hard to know how fast these connections are going to be, and if it is going to be a winning business model for Starbucks, but the US is clearly waking up to the bandwidth debate.

The entrenched parties (telcos, gov, ...) have been slowing down and slowing each other down for so long that when these new parties zoom past the contrast in approaches will be quite dramatic.

The next thing to watch could be LTE.  This new wireless standard could deliver sufficient bandwidth for streaming HD TV.  This technology could be the enabler for a leap frog of the old infrastructure.  Let's hope it happens here in the US and not just everywhere else.

 (coverage map courtesy of Chandu Thota)