Image by Getty Images via Daylife

No, I do not have any stock in Apple — first disclaimer.

Let me tell you about a super customer service experience I had with the Apple store.  The shame of it is that I cannot tell you similar stories about my retail experiences this holiday season.

My MacBook Pro hard drive collapsed one evening several weeks ago.  I tried several approaches I found from the Apple and other support web sites and nothing seemed to work.  I couldn’t remember if I still had a support plan or not, but decided to call the help line anyway.  When I got the person on the phone, he told me that I did not still have a plan (mine had expired) and that he had to charge me $49 for the call.  However, he said, he wanted to ask me three quick questions, and depending on the answers, he would not charge me, but would book me with a repair location instead.  He transferred his notes to the store records to save time.

Imagine that, no charge if I didn’t need it!  That’s #1.

Sharing information to save me time!  That’s #2

Then he quickly found out that he could not help me directly and booked me with an Apple store for repairs, scheduling a time to come into the store, still that evening.  Well, I wasn’t feeling too well that night and went to the wrong Apple store in another mall.  When I arrived, it was 5 minutes before closing and I was worried that I then had to drive to the other mall to get the darn thing fixed.  “No problem,” said the man at the “genius bar” — “you will not have to go to the other store, I will take care of it.”  In no time, he found the notes from the other store, diagnosed the problem, booked the computer for repairs at the store and told me when I could expect the computer back.

Wow!  Stayed late to solve my problem and saved me LOTS of time — That’s #3

It does not get too much better.  Now, I know that many retailers and e-commerce managers do not have the information sharing technology of Apple, but it is not the technology that got to me - it was the attitude.  Saving me money, saving me time, saving me work — that is the mantra that often decides value-added purchases.

I have told this story more than 5 times and now many of you can read it too.  I have become an Apple evangelist at no cost to the company at all.  How much is that worth?

We all know that the economy will be challenging in 2009.  As the economy slowly turns around, customers will begin to regain their purchase momentum with their favorite retailers.  But the economic breakage in 2008 also fractured relationships between customers and their traditional shopping venues.  For the first time, many customers began to actively question the relationship between price and value of the products and services they receive.  Many chose to postpone purchases, but others also began to experiment with lower priced options, evaluating whether those options could fill enough of their needs to get by.  Some of those customers found out that lower-priced options worked just fine for them.

Those customers will be slow to return, if at all, to their old purchase patterns.

What can you do to restablish your value proposition with customers who experimented with lower priced alternatives in the past 3 months?

More and more, we find we can fool the consumer less and less. Transparency on the web, combined with some real economic pressures, have led consumers today to be more savvy than ever. So, with consumers who are aware of competitive offers and motivated to seek them out, how do we actually provide the case for them to purchase from us?

First of all, the “same old, same old,” will not work. That is not to say that what you have offered in the past will not work today, just that what you offered in the past will not work today, IN THE SAME WAY OR FORM. Take what you have offered in the past and reinvent it by combining it with services or product add-ons that help consumers solve problems. Focus less on margin and more on customer growth. Remember, you cannot save your way to prosperity, especially in this economy.

One example is an outdoor sports products company that began to offer free tuning of their products at the end of th season to the customer. Lousy margins in the very short term, but such outstanding retention and cross-sell that the difference was more than made up in 6 months. Another client is offering storage of a digital form of their product, which permitted the customer to access the products 24×7 from any computer as well as order more versions on-line. Results still pending, but I would anticipate add-on sales from those consumers to exceed a control group by a wide margin.

Simple combinations here, but the main point is (1) focus on solving customer needs and (2) target customer repeat and retention as the goal — do not let AOV be the driver. Otherwise you will act for the transaction and the customer will treat you just that way, as a transactional vendor, not a partner in solving life’s hard problems.

Image by monstro via FlickrIn a blog post by Kevin Hillstrom on his excellent site, www.Minethatdata.blogspot.com, called “Substance,”he discussed the scarcity of approaches that really have helped retailers work their way out of tough economic times. Here is my response:

Let’s get down and dirty and help out some of those retail/e-com marketers who are struggling (which is most of them):

1. Solve real problems — consumers will still make purchases that solve real problems — problems with organization, with making smart choices quickly (and impartially), with making the RIGHT economical choices without cheating themselves.
2. Reach consumers when and how they want to be reached. Repeat carefully/selectively for a time and then leave them alone — they don’t want it then anyway. You cannot bludgeon them to make them buy.
3. Provide service to make the experience of purchasing as accurate and simple as you can. Use service to “add value beyond the sale” and differentiate.

More on actually how to do this in my next post.

In Bryan Eisenberg’s article, “Attaching a dollar value to marketing efficiencies,”, in FutureNow, he writes about the best ways to market in a down economy, when traffic has begun to decline in e-commerce for the first time in years. Bryan correctly believes that it is critical to maintain spending in strategies that prove their marketing worth, such as pay-per-click, as long as you can track it back to actual sales and measure the effectiveness. He is also correct that, since marketing does a poor job of tracking spending to results, their spending is often the first area cut.

However, remember that the focus ideally should be on customers, not on the strategies as a whole. All customers are not created equal — they do not have the same relationship nor the same historical and potential value. Using a customer-centric approach, by focusing spending on the right customers (those who are retained and have the greatest potential to increase spending) and creating a customer experience that reflects a relationship focus, the metric ROI for strategies converts to ROC — return on customer.

Once you have developed some sort of customer grouping (I will call them segments in this posting), the key is to take action on them. Otherwise, the segments are academically interesting, but that is all. What you have done is to identify customers who behave similarly. Now you can begin to create a customer experience for those different segments, to optimize the opportunity.

How do you use these segments to build a customer-centric organization? By giving responsibility for the different segments to different marketing teams and them empowering them to do what it takes to grow the revenue, margin and customer count in their segment. In effect, to create accountability, you have to create metrics and then use them. After all, “what gets measured is what matters…”

I recently read an article on the Chief Marketer blog entitled “Customer Centricity Unlocks Advertising’s Future,” which brings out some critical issues in building a customer-centric marketing team. In this articel, the author brings out a distinction between direct marketing and advertising and suggests that advertising must learn to leverage database marketing insights to target the new addressable media (interactive advertising and mobile advertising).

Now the article does get some things right, such as the importance of understanding not only customer behavior but also their attitudes to gain a complete picture of customer groups. Starting with behavior and then grouping by attitudes is a critical success factor in segmentation.

Yet, his distinction between database marketing and advertising suggests that database understanding is part of a separate area called “database marketing,” which is separate and distinct from advertising.

The key part missing is that database marketing is ALL of marketing in customer-centric marketing departments — not just a department within the whole. The knowledge from the database must be used for addressable media as well as direct mail, email, web site and product development.

The parts are not parts at all, but merely different channels for reaching the customer who is described in the database

The hardest part of building a customer-centric business is converting data into actions, but we will discuss that later. Right now, I want to focus on the data, because understanding customer behavior is the first step to segmenting customers, which is necessary to create personalization of customer experience. That personalization of experience is critical to retention and loyalty.

So first, you need to identify purchase patterns of customers, in terms of frequency, seasonality, product mix and average order amount. Once you assemble and group that data, the patterns usually come flying out at you. You will a mix of:
* 1-time customers who are just browsing
* others who purchase only seasonally
* some that purchase only on sale
* others who focus their purchases on a particular product category

You can do some level of descriptive modeling (clustering, decision trees and the like) to make sure that you are identifying customer groups accurately. Then you have to go deeper, into their attitudes and their pockets. Typically, you will begin to understand customers by their relationship with your brand, the size of their wallets and the share which your company has. When you combine this information (typically assembled through email and website surveys), you begin to create true segments, reflecting not just what is on the outside, but what is on the inside as well.

The knowledge becomes the base of building the customer-centric retailing business. Actually, it becomes the base for any customer-centric organization, whether retail or business-to-business.

Today, I read a blog by Jeffrey Eisenberg called “Gut Check for Retailers” where Jeffrey, a noted columnist for grokdotcom, predicts that most retailers will continue their old “pile it high and watch them buy” promotion-driven marketing efforts, in order to drive revenue in this challenging economy. The old siloed retailer structure, divided into silos, makes fragmented experiences and purely promotional marketing at the product level almost inevitable.

In contrast, Jeffrey talks about retailers who focus on customer experience and improving sales conversion rates. I would like to suggest an expanded focus —designed on the customer from analytics to marketing and sales to measurement. By designing the organization around specific segments of customers (divided not just by behavior but also by attitudes and preferences), a retailer can begin to build a focus on delivering the customer experience to a unique group. If that focus is maintained over time, then the retailer can actually begin to build a relationship, as well as increase revenue, profitability and enhance the value of their brand

Image via Wikipedia

Even today, with all the information out about importance of retaining profitable customers, it is not uncommon to encounter situations where employees blatantly ignore customer data and key customer trends.

Let me give you an example. Much has been written about the economic crisis that is occurring among community colleges and smaller institutions of higher learning. The highest-ranked schools turn away more than half of their applicants, while the lesser-known schools struggle to fill their classes.

You would think that key members of the staff of smaller universities would be aware of these issues, and committed to delivering outstanding customer service, in order to maintain or grow enrollment. However, academia being what it is, you occasionally encounter astonishingly poor service that clearly illustrates market that when employees are divorced from company data and mission. Check out the experience that Sue Holstein encountered at West Virginia University at Parkersburg.

Now, this kind lady (disclosure — she is a connection from my good friend Mary Garrett and was referred to me after her first disastrous service encounter) simply wants her son to attend college. But check out at happens when the boy runs into a service issue between his university and the VA on his college benefits http://grannysu.blogspot.com/2008/08/bad-bad-service-wv-university-at.html.

Now, this story has a somewhat happy ending — when Sue checked with the VA the following day, “miraculously” the problem had been solved. http://grannysu.blogspot.com/2008/08/follow-up-to-bad-service-at-wvu-p.html. But did solving the problem really solve the problem?

Just another example of poor customer service at universities, you might say. But I would ask you, given the challenging situation faced by smaller universities across the country, how much do you think this is embarrassing example will end up costing West Virginia University at Parkersburg in lost enrollment by the time this is over?