StratChat: December 2011

Tuesday, December 27, 2011

Rebranding CRM as customer experience management: The road to ruin?

While some firms are rebranding CRM operations as customer experience, there is also misappropriation of CEM by CRM software vendors. Colin Shaw believes it will only end in tears.

Many firms consider customer experience management (CEM) the successor of customer relationship management (CRM). One of the most dangerous pitfalls of this assumption is that senior leadership simply rebrands preexisting operational functions as paradigmatic of CEM. Because the 2011 Beyond Philosophy Global Customer Experience Management Survey uncovers that most 'CE' professionals lack any formal background in CEM, it’s time to clearly distinguish CEM from CRM, discuss some of the key drivers of CEM and offer suggestions.

In order to properly understand CEM, however, you must first truly understand the definition of what a customer experience is. In our last book, Customer Experience: Future Trends and Insights, we shared our definition:

"A customer experience is an interaction between an organisation and a customer as perceived through a customer’s conscious and subconscious mind. It is a blend of an organisation’s rational performance, the senses stimulated and emotions evoked and intuitively measured against customer expectations across all moments of contact."

As you can see, to manage a true customer experience management program is a cross-functional role that requires the following elements to be included and addressed:

Implementation of organisational transformation.
Engagement of corporate culture, especially at the senior levels.
Fostering a customer-centric philosophy from the top-down.

The threat to customer experience management is obfuscation in the fields of CRM, customer service or marketing.

As our definition shows, CEM is an eclectic discipline: it draws upon work in consumer psychology, experience management, customer delight, brand association and even neuroscience. Specifically, we argue that CEM is a project-based framework to productively manage the holistic customer experience.

So while CEM draws upon techniques and methodologies from marketing, customer service and customer relationship management, it alone engages inter-functional integration between these disciplines. For this reason, it makes sense that the most commonly asked question in our survey of CE executives is “how should we implement customer experience?” One of our survey participants speaks to this point, when identifying the endemic nebulosity of CE:

“There is major confusion…so CE=CS. [There also is] confusion with user experience, so things about web, user interface, design and user experience. Techies think [CE is] user experience, and business professionals think [it is] customer service, meaning survey tools and workforce automation.”

As this expert’s quote shows, the understanding of exactly what customer experience is varies greatly according to department. The risk this incurs is a fragmented adoption of “CE” initiatives, lacking a cohesive, unified vision. Secondly, CEM means engagement of corporate culture.

Rendering CRM obsolete

The trend to rebrand service and marketing operations as CE occurs side-by-side with another issue: misappropriation of CEM by CRM software vendors. CRM creates a data deluge of discrete, statistical information about customers. However, when CEM is properly understood, it entails a qualitative, rather than a purely quantitative, approach to customer metrics.

Without a strong holistic customer focus within an organisation, CRM and other operational initiatives are simply rebranded as CEM. This misunderstood effort, which proves uneven and ineffective, thus renders CEM obsolete. Our survey results are in line with this point because the second most commonly asked question by CE executives is “how can we measure the financial return of CE?”

Returning to our original definition of CE, this question 'answers' itself. Customer experience appeals to the rational, emotional and subconscious elements of all moments of contact. It is possible to prove ROI against all these measures.

Customer experience, by definition, requires qualitative measurements. Experience itself is multi-dimensional and situation-specific. In fact, research shows that the 'numbers' alone don’t tell the full story of the customer experience. Meaningless differentiation in consumer products shows that frequently the trivial, non-utilitarian features of a product can and do determine real outcomes. Procter and Gamble, for example, sells Folgers’s Instant coffee by advertising 'flaked coffee crystals', implying that the flaked crystals improve taste. In reality, the shape of the coffee particle only matters for ground coffee and is irrelevant to instant coffee. As this example and many others show, the subjective aspects of experience carry a tremendous amount of weight and force in the decision-making process.

A CE expert in the US told us that:

“Most [members of the senior leadership] would not go to emotions. Most people come from an analytical service management route rather than a brand emotional viewpoint. No more than a handful use the language of emotion (e.g. by employing anthropologists to look at user experience).”

Facing a lack of CE training, more and more CE executives reach their positions unprepared to collect the relevant types of data required for a customer experience project.

A final consideration is that CE initiatives are successful when they develop as a customer-centric philosophy realised from the top-down and across the board. Since customer experience is an organisational strategy based on a holistic approach to the customer (where emotion is a key differentiator), successful CE means the organisation must become more customer-centric.

Customers interact with firms via more channels than ever before: on the phone, in person, by email, using instant messaging and even via social networking – and they even switch back and forth between these channels to address a single concern.

While leadership can see 'customer experience' as a component of CRM, contact centres, marketing or the customer service interface, customers see one thing: the organisation. As technology allows more companies to expand globally, customer experience is likely to fall through the cracks if it is not treated as a valuable constellation of strategy, integration of technology.

The greatest single threat to customer experience is the trend to rebrand it as 'customer service' or 'customer satisfaction'. In order to be successful, customer experience change initiatives need operational synergy created from the culture within a company.

From the customer’s point of view, a company’s mistakes measure its worth, so inconsistent CE policies mean failure, plain and simple. Since CE utilises a full, rich and holistic understanding of the customer, it is critical to have properly trained staff in the positions critical to CE transformation. A faulty definition of CE will create company-wide vulnerabilities with respect to customer experienced-based initiatives, engagement of the senior leadership team and establishing a customer-centric corporate culture.

CE is more important now than ever before. With the increasing commoditisation of products and services, even traditional B2B industry verticals are seeking ways to differentiate themselves from competitors. The stakes are high for the CE industry, but the opportunities are priceless. Developing a clear understanding of what CE is and what it isn’t is the first step to launching a successful initiative. Putting the right people in place to follow through on it will drive high quality standards for your program and will steer the CE ship away from the iceberg just as it’s beginning to set sail.

Colin Shaw is founder and CEO of Beyond Philosophy.

2012 Customer Experience Predictions: Positives and Pitfalls

A new calendar year gives us a new threshold to cross, providing an opportunity to look back at what we've learned, and to look forward, leaving often bleak times in the past. As I look forward to 2012, I see a global business landscape filled with hope. But I won't run carefree into the New Year, and neither should you.

Building on the experience I've acquired, the news reports I've followed and my understanding of the global economy through the client work Beyond Philosophy has done, 2012 also will be pockmarked with pitfalls that can devastate business plans and damage entire industries. What are the highlights? The dangers?

Beyond Philosophy is approaching 2012 with the following predictions in mind:

Business leaders will finally accept that the world financial crisis is here to stay – at least for the next few years
No matter where you are in the world, you have seen bleak news reports outlining the financial malaise we're suffering through. It's not going to get better anytime soon. The "good old days" are behind us; the next few years will be rocky and it's our job to adapt and get through it as smoothly as possible.
Innovation is in the air
Around the world, governments and corporations alike have caught the "austerity bug," meaning leaders have a strong reluctance to invest in capital-intensive projects while simultaneously cutting costs. The austerity bug, for some businesses, has meant resignation, complacency and defeat – but I choose to look at management's increased drive for cost-savings as a positive. Austerity, as it turns out, is a friend of innovation.
More than ever before, when it comes to spending management has to take a hard look at resource allocation. Businesses are caught between the mass commoditization of their products and services and the need for austerity. Commoditization created a need for increased competition, resulting in the development and growth of the customer experience management industry.
In a period of economic recession, it might seem to make sense for companies to cut back until the economy recovers, but this prolonged recession is anything but ordinary. A client recently explained to me, "we've been cutting back, but it gets to a point where the competition is so fierce that we have to invest in improving our customer experience so we don't lose all our customers." Consequently, being stuck "between a rock and a hard place" increased competition and austerity has turned leaders toward the customer experience as a cost-effective way to drive business value, retain existing customers, acquire new customers and improve the organization's competitive edge.
In Beyond Philosophy's 2011 Global Customer Experience Management Survey we found that in spite of the recession, CE growth is increasing in high-maturity markets in the wake of commoditization. CE growth in high-maturity markets (especially in certain niche sectors like manufacturing), combined with the drive for CE as a competitive response in mid-mature markets, provides a compelling case for optimism.
Organizations will loosen the purse strings and start spending cash reserves
Once the Eurozone crisis settles down – probably in the second half of the year – the time will be ripe to invest cash reserves organizations have built out of economic concern into customer experience initiatives. Given what we know through our research and through client interactions across the globe, CE is poised for growth.
Analyst Thomas Hirst, writing for FundWeb, critically observes that "while holding cash during uncertain times might appear a prudent policy… [it] acts as a drag on equity returns." Companies like Apple, Inc., that are sitting on billions of dollars of cash, are only contributing to the economic malaise. We will see more forward-thinking organizations invest some of their cash into CE initiatives. By deploying cash to capture customer experience as a new avenue for growth, these companies will reap significant long-term benefits.
Investment in emerging markets will increase substantially
I've been taken aback by the truly global scope of the customer experience. The world, it seems, has caught on to the power and results a great customer can deliver. In fact, in 2011 Beyond Philosophy engaged with clients and responded to requests from such far-flung regions as South Africa, Uganda, Nigeria, Dubai, Kuwait and Egypt. In mid-mature countries, there is a strong push within retail to for the emotionally driven "luxury" experience of Western brands among the burgeoning upper-middle classes. The BRICK countries (Brazil, Russia, India, China and South Korea) are also top players in this scene. On the bright side, these regions have not been as badly affected by the global economic crisis as regions in the west.
Understanding and acceptance of customer experience as a business strategy will improve
Growing numbers of leaders are beginning to understand the opportunities they're losing by just focusing on the rational experience. They are validating the emotional aspects of CE as a vital component of their organizations' identities. Embracing the cultural change required to deliver a world-class customer experience means converting the customers and employees into emotional stakeholders in your organization.
Commoditization in saturated markets has been responsible for the increasing demand for irreplaceable, one-of-a-kind interactions between producers and consumers. We try to ferret out the best examples, including Volkswagen's Transparent Factory, Tesco South Korea's QR code-enabled subway station grocery store and Spain's perfume-selling restaurant, Cellar de Can Roca, in our blog.
But the news isn't all good. As we also identified in our recent study, there are threats to the customer experience industry that must be addressed.
The definition of customer experience will continue to be misunderstood
There is a profound lack of conceptual clarity among organizational leaders regarding what does and does not comprise customer experience management. For organizations that are taking the lead by investing their reserves on customer experience initiatives, misunderstanding of the term represents a grave threat to both the success and the future prospects for the practice.
Customer experience initiatives are not instant fixes, but they can provide significant, long-lasting results when executed properly. Through customer experience management, one of our clients improved its Net Promoter Score by 25 points in 18 months. The danger is when organizations think they are focusing on improving their customer experience when all they're really doing is "putting lipstick on a pig." In other words, they're continuing to do the same things, rebranding those activities as customer experience, and blaming the concept of customer experience when things don't work.
The consequence is that a poorly designed CE program will destroy any future value for a promising and properly-implemented initiative. Compounding the issue is a loss of staff confidence in the effectiveness of CE as a value-driver, building resistance to any future CE program.
I recently wrote an article entitled "Rebranding CRM as customer experience management: The road to ruin?" which offers an overview of how misappropriation of CRM as CEM by software vendors contributes to this misguided practice.
Net Promoters Scores will continue to be the primary judge of customer experience initiative effectiveness
Let me first say that I like Net Promoter Scores (NPS). I think they provide good feedback that organizations can use to understand their current positions and determine where they can improve. But relying solely on NPS to judge the effectiveness of a customer experience initiative is a danger to which too many organizations succumb. NPS is a good foundation, but organizations must overlay other measurements in order to build a complete CE picture. While it's been a challenge in the past, more organizations will begin to appreciate this fact.
Opportunities for growth will exist in 2012
Regardless of your outlook, be it optimistic or pessimistic, opportunities for business expansion through CE as an avenue for growth will exist in 2012. One implication of the financial crisis is the importance of customer retention versus customer acquisition. In an a spending environment marked by low interest rates and high inflation, a focus on building great customer experiences with your existing client base is a smart move, particularly since the cost of retaining customers is far less than the cost of acquiring new ones. In a spend-thrift driven recession, retention is an ideal strategy. In general, 80% of your profits come from 20% of your existing customers.
Mobile devices will grow in market share and CE importance
In addition to prioritizing customer retention, the digital world is the next frontier for CE in 2012. Mobile devices and tablets drive one third of our web traffic. In 2010, consumers spent more than one billion dollars ($1028 million USD) on Cyber Monday. What's even more shocking? In 2011, consumers spent 22% more, or approximately $1.251 billion online.
Social media will continue to drive online CE
Social media bolsters the digital customer experience as companies receive direct feedback from customers in real time. The prevalence of mobile and tablet devices, online shopping and social media sow the seeds in a fertile ground for CE growth in mobile technology in 2012.

In economic times like these, I'm reminded of a scene from an old black-and-white movie I saw many years ago that illustrates the reason we need to stay committed to CE, even in the post-recession world. In a high-speed car race, the lead driver had a major collision. When they interviewed the winner at the end of the race, he was asked about whether slowed down in the wake of the accident. He responded, "No, I actually increased my speed because I knew all the other drivers would slow down and this was my opportunity to win."

The financial crisis is our race. The key question is, "which you will drive?" Will you slow down or speed up? Necessity is the mother of invention, and 2012 will be the year in which the customer experience will continue to grow in importance around the globe, despite the problems the world faces.

Colin Shaw

Colin Shaw is founder & CEO of Beyond Philosophy, one of worlds first organizations devoted to customer experience. Colin is an international author of four best-selling books. Beyond Philosophy has a proven track record. They provide consulting, specialised research & training from Atlanta, Georgia and London, England. Follow Colin Shaw on Twitter ColinShaw_CX

Understanding Net Promoter Score (NPS) with an example

Beyond Philosophy, a global customer experience consultancy, and Hachiko, an Indonesia-based customer loyalty consultancy, partnered to conduct a Net Promoter Score study among more than 2,700 respondents in Indonesia.

Respondents were first asked how likely they are to recommend each of the main competitors in a range of sectors. Next they were asked to rank the extent to which they feel certain emotions toward each of these companies. The results were then benchmarked against Beyond Philosophy's database of more than 25,000 interviews.

The results were interesting from both a local market and an international perspective. The most intriguing result came from our analysis of emotional profiles by industry sector. When broken out by sector, we saw far better numbers when comparing them to our Overall Business Index (an index of more than 25,000 interviews across a variety of sectors and countries).

For example, Figure 1 illustrates that if we compare Net Promoter Scores in the banking sector in Indonesia with our overall financial industry index, the positive emotions (the greens) are at the 7-8 point range for Indonesia vs 4-6 point range for the financial services index (the black line), while at the same time the negative emotions (the reds) are felt to a much lesser extent in the Indonesia banking sector compared to the financial services index (the black line).

Figure 1

If people in Indonesia are saying that they feel the positive emotions to such an extent and almost don't feel negative emotions toward businesses in Indonesia, you would expect that they would be willing to recommend those businesses. This, however, is not the case.

As you can see in figure 2, when we asked individuals how likely they were to recommend a brand, 76 percent were passives (responding between 7 and 8) vs. 29 percent of those in our global NPS index. However if we compare the NPS scores, we'll see that they are almost the same: -4 percent for Indonesia vs -3 percent for our global NPS index. Therefore, there seems to be a cultural bias in Indonesia for people anchoring their responses toward the 7-8 range on a 0-10 scale, being shy to give a low score but also equally shy or not convinced enough to give the highest score.

Figure 2

Implications for Market Research

The implication for marketers is that if you ask people what they think of a certain product or service, you may well get encouraging results, but you shouldn't be fooled by them.

However, we don't recommend avoiding market research; you just need to dig deeper in order to uncover the drivers of consumer behavior. That's what we did, and we found interesting results when we applied a proprietary analysis method using structural equation modelling (SEM), which is used to identify causal relationships, not just correlations. We looked at:

the main touch points in different sectors,
the customers' emotional response to them, and
the value outcomes businesses seek (e.g. spend, likelihood to recommend, likelihood not to discourage someone from using a brand).

We found "Warm welcome and goodbye" to be a driver of value for the banking sector as a whole. Businesses in Indonesia should not overlook this point, and businesses across the globe should consider that this may or may not be the case for the banking sector in their markets.

In the Automotive sector, we found that "timeliness of product delivery" was an important factor in the experience, as often there have been delays dues to shortage of stock. An interesting finding in the SUV car sector showed the importance on focusing on emotions that drive value. The interactions with employees were making people feel "safe," "cared for" and "pleased." In other words, Indonesian automotive sales managers were emphasizing these emotions in the SUV sales process. However, those emotions were not driving value in the SUV sector. The emotions that were driving people to recommend a brand and spend more were "happy," "interested," "stimulated" and "valued."

In the telecom sector, we found that the feeling of indulgence was a particular driver for the market leader.

Other key differentiators for the sector market leaders were the timeliness of delivery and their company promises. The former relates to the notion of a trustworthy relationship, while the latter gives subconscious clues about the organization. Overall, the biggest driver of spend across all industries was interactions with employees. Again this brings to the surface a key cultural peculiarity – in Indonesia people highly value personal relationships, and once they're in place business will follow.

The message is clear: regardless of the market, it's of utmost importance to take local cultural differences into account when conducting your market research, when designing your experience and when doing business. If you consider the cultural biases you may find in your research, think about cultural perspectives when assessing your key touch points, and make sure you understand which key emotions drive value for your business in that region, you will eliminate a multitude of factors that can hurt your business and set the stage for success.

Zhecho Dobrev

Zhecho Dobrev is a lead consultant and project manager for Beyond Philosophy. He has worked with a wide array of blue-chip companies, including American Express, Maersk, du (UAE), Aflac and Pfizer. Zhecho's expertise includes conducting customer research, performing sophisticated analysis on what drives customer behavior, customer complaints management and journey mapping. He holds an MBA and Master’s degree in International Relations.

G.L.U.E - Give Little Unexpected Extra

“This morning I had breakfast with my friend and marketing colleague Stan Phelps, Chief Solutions Officer at Synergy Events. Stan and I were talking about The Purple Goldfish Project, an almost two-year book venture of his that he’s trying to wrap up for an early January publishing date.

For the book, he’s compiling 1,001 examples of marketing lagniappe, which he terms ‘Purple Goldfish’. A Purple Goldfish is when a company “gives little unexpected extras” (G.L.U.E.) as added value. It’s Purple Goldfish that become the stuff of positive word of mouth.
Stan is in the high 900’s toward his goal of 1,001 – but time’s growing short. I decided I’d do my best to help get him there. If you think it’s easy to come up with examples of Purple Goldfish, it’s not! I wracked my brain all last evening and it took me till half way through breakfast to come up with one that made Stan’s eyes light up.
Here it is:
Some years ago I went to get into my car in my parking garage to find it had been hit. A Good Samaritan had left a note on a scrap of paper on the windshield saying they’d witnessed the hit and run. They gave me the make, model, color and license plate number of the car.
I duly made a police report and informed my insurance company of many years, State Farm. The representative I spoke with obtained the police report and ok’d my claim less my $500 deductible, which I paid.
Several months later I received a call from State Farm’s investigations department asking if I had any documentation about the incident other than the police report. I had kept the original windshield note in my accident file and faxed a copy.
Six months after that, I received a check for $500 from State Farm. There was no explanation, so I called before depositing it to be sure there was no mistake. Here’s what I was told:
“When you gave the investigations department a copy of the witness’ note, they saw that the police officer had gotten one number of the license plate incorrect on his report. We were then able to track down the person who hit your car and go after his insurance company for reimbursement of your claim and deductible, which we refunded to you.”
WOW!! If that’s not a Purple Goldfish, I don’t know what is! I can’t tell you how many times I’ve told this story over the years. The positive word of mouth has, I’m sure, gotten State Farm far more than the $500 that I never would have known about, were it not for their proactive, honest customer relationship building – not to mention their persistence.

Today’s Lagniappe (a little something extra for good measure) – Here is a moving tribute from the folks at State Farm in partnership with Director Spike Lee for the 10th anniversary of 9/11:

How do you stand out in the sea of sameness and go the extra mile like State Farm? How do you win repeat customers and influence word of mouth? Are you Giving LittleUnexpected Extras?

What’s Your Purple Goldfish?

Download the FREE eBook here

Republished with author's permission from original post by Stan Phelps.

Why will analytics be the next competitive edge?

Analytics is becoming a competitive edge for organizations. Once a "nice-to-have," applying analytics is now becoming mission critical.

An August 6, 2009, New York Times article titled, “For Today’s Graduate, Just One Word: Statistics” reminds me of the famous quote of advice to Dustin Hoffman’s character in his career breakthrough movie The Graduate. It occurs when a self-righteous Los Angeles businessman takes aside the baby-faced Benjamin Braddock, played by Hoffman, and declares, “I just want to say one word to you – just one word – ‘plastics.’” Perhaps a remake of this movie will be made and updated with the word analytics substituted for plastics.

This spotlight on statistics is apparently relevant, because the article ranked in that week’s top three e-mailed articles as tracked by the New York Times. The article cites an example of a Google employee who “uses statistical analysis of mounds of data to come up with ways to improve (Google’s) search engine.” It describes the employee as “an Internet-age statistician, one of many who are changing the image of the profession as a place for dronish number nerds. They are finding themselves increasingly in demand – and even cool.”

Analytics – just a skill, or a profession?

The use of analytics that include statistics is a skill that is gaining mainstream value due to the increasingly thinner margin for decision error. There’s a requirement to gain insights and inferences from the treasure chest of raw transactional data that so many organizations have now stored (and are continuing to store) in a digital format. Organizations are drowning in data but starving for information. The article states:

“In field after field, computing and the Web are creating new realms of data to explore – sensor signals, surveillance tapes, social network chatter, public records and more. And the digital data surge only promises to accelerate, rising fivefold by 2012, according to a projection by IDC, an IT research firm. … Yet data is merely the raw material of knowledge. We’re rapidly entering a world where everything can be monitored and measured, but the big problem is going to be the ability of humans to use, analyze and make sense of the data. … (Analysts) use powerful computers and sophisticated mathematical models to hunt for meaningful patterns and insights in vast troves of data. The applications are as diverse as improving Internet search and online advertising, culling gene sequencing information for cancer research and analyzing sensor and location data to optimize the handling of food shipments.”

The application of analytics is becoming mainstream, but will senior executives realize it?

Business analytics are the next wave

Today many businesspeople don’t really know what predictive modeling, forecasting, design of experiments or mathematical optimization mean or do, but over the next 10 years, use of these powerful techniques will have to become mainstream, just as financial analysis and computers have, if businesses want to thrive in a highly competitive and regulated marketplace. Executives, managers and employee teams who do not understand, interpret and leverage these assets will be challenged to survive.

When we look at what kids are learning in school, that is certainly true. We were all taught mean, mode, range, and probability theory in our first-year university statistical analytics course. Today children have already learned these in the third grade! They are taught these methods in a very practical way. If you had x dimes, y quarters and z nickels in your pocket, what is the chance of you pulling a dime from your pocket? Learning about range, mode, median, interpolation and extrapolation follow in short succession. We are already seeing the impact of this with Gen Y/Echo boomers who are getting ready to enter the work force – they are used to having easy access to information and are highly self-sufficient in understanding its utility. The next generation after that will not have any fear of analytics or look toward an "expert” to do the math.

There is always risk when decisions are made based on intuition, gut feel, flawed and misleading data or politics. In Babson College Professor Tom Davenport’s popular book,Competing on Analytics: The New Science of Winning, he makes the case that increasingly, the primary source of attaining a competitive advantage will be an organization’s competence in mastering all flavors of analytics. If your management team is analytics-impaired, then your organization is at risk. Analytics is arguably the next wave for organizations to successfully compete and optimize the use of their resources, assets and trading partners.

Substantial benefits are realized from applying a systematic exploration of quantitative relationships among performance management factors. When the primary factors that drive an organization’s success are measured, closely monitored and predicted, that organization is in a much better situation to adjust in advance and mitigate risks. That is, if a company is able to know – not just guess – which nonfinancial performance variables directly influence financial results, then it has a leg up on its competitors.

Republished with author's permission from original post by Gary Cokins.

Gary Cokins

Gary Cokins (Cornell BS IE/OR, 1971; Northwestern Kellogg MBA 1974) is an internationally recognized expert, speaker, and author in advanced cost management and enterprise performance and risk management systems. He is a Principal of global business advisory services involved with analytics-based performance management solutions with SAS and can be reached at gary.cokins@sas.com .

FedEx learns Social CRM lesson, the hard way!

Here’s an excellent example of the importance of responding to a Social Media crisis before it is too late. On December 19th, 2011, a YouTube user (username “goobie55″) uploaded video of a FedEx delivery person throwing a video monitor into his/her yard.

This YouTube video has created a Social Media storm of sorts and as I write this post, it has been viewed 3,576,412 times for this one YouTube post alone. I have seen it on my local TV news too here in Dallas, Texas.

Well, before it was too late (remember United Breaks Guitars YouTube video), FedEx posted its own response to customer’s video with the following statement by Matthew Thornton III, Senior Vice President, US Operations, FedEx Express:

“Along with many of you, we’ve seen the video showing one of our couriers carelessly and improperly delivering a package the other day. As the leader of our pickup and delivery operations across America, I want you to know that I was upset, embarrassed, and very sorry for our customer’s poor experience. This goes directly against everything we have always taught our people and expect of them. It was just very disappointing.”

(YouTube video response by FedEx embedded below):

This incident of Social Media brand crisis underscores the importance of having a Social Media Crisis Management Plan. It should clearly highlight roles and responsibilities, procedure and protocols to be followed in the event of a brand crisis. Because the first step in solving any crisis is to identify and respond to it, and respond FAST when it comes to Social Media as FedEx seems to have done here. What do you think?

Saturday, December 24, 2011

Singapore Girl – you’re a cheap way to fly…or are you? Making the low cost Singapore Airlines brand work

I have to admit that I’m a big Singapore Airlines (SIA) fan, and when someone says “you’re a great way to fly”, I can almost sing the SIA melody in my head. But even I was surprised when SIA announced that they will be launching a low-cost long-haul airline, on the lines of AirAsia X and Jetstar.

Yes, Singapore Airlines is no longer the most profitable airline in the world (Cathay Pacific took over that title), and yes they’re losing market share to the likes of Emirates and AirAsiaX (to a lesser extent), but to go with a business model that’s hardly proven was a surprise move for a brand that’s been risk-averse of late.

While the initial reports stated that a good amount of analysis has gone into the decision and a “largely untapped market” exists, it’s safe to say that SIA is playing catch up in a market carved out in its backyard by AirAsia X and Jetstar. While the key success factor for SIA till date has been its endearing Singapore Girl brand, that’s exactly the dilemma they need to address – whether to extend the brand to the low cost airline or not.

WILL THE SINGAPORE GIRL FLY BUDGET? PROBABLY NOT.

One big question everyone is wondering about is whether the Singapore Girl would fly this new airline. For those who’re familiar with SIA, they know that the airline is very protective of its brand icon. And multiple questions will be raised if the same Singapore Girls walk the aisle of the new airline.

How to ensure that people know SIA and the new LCC are different, yet have the same flight attendants?
Will service failures like flight delays or cancellations be dealt in an SIA manner, or Tiger Airways manner?
Will SIA Economy Class passengers transferring on to the LCC be offered free meals and amenity kits?
What baggage allowances will people get if they are transferring from one airline to another?

Close brand association between the two airlines might prove to be too risky for both brands. Hence, it’s likely that SIA will dis-associate itself completely from the new brand. For example, when things went bad for Tiger Airways in Australia, no one boycotted SIA – the latter still holds its reputation for impeccable service. SIA’s greatest leverage will be that they’ve run a long haul airline successfully, with a very low cost base.

LEARN FROM THE COMPETITION, THEN FIGHT ON YOUR OWN TURF

While SIA’s track record is an asset, it is also a reason for concern. The airline already has a very low cost base – how would they reduce it further, if operations are to be based in Singapore? One of the reasons for the success of AirAsia X and Jetstar have been the feed from their short haul operations. Interestingly, SIA is a purely-long haul airline, hence feeding the network for this new long-haul airline would depend on SilkAir and Tiger Airways. These and other factors will require SIA to re-think its commercial strategies for the new airline, learning from the competition.

SIA till today only sells airline tickets on its website (trying to book a hotel will take you to an external site). Whereas on AirAsia’s RedTix website, I can even buy Justin Beiber concert tickets! So the new LCC SIA sets up must re-evaluate what businesses it gets in and how best to leverage the brand
SIA’s frequent flyer program, Krisflyer, also currently only allows burning or miles on SIA flights. This is in stark contrast to Qantas’ Frequent Flyer program, where I can redeem and earn miles by shopping for groceries! Krisflyer will also have to evolve, just like Jetstar has been introduced into the Qantas’ program.
SIA’s new long-haul LCC can expect very stiff competition from AirAsia X and Jetstar. Moreover, the competition has one year to sharpen its knifes before SIA launches the new airline. While Jetstar would want to start routes Melbourne-Singapore-Athens flights sooner, the Malaysian government has even more reasons to grant AirAsia X coveted routes like Sydney. SIA needs to run two steps ahead to out-think the competition.
SIA also needs to learn from mistakes made in its Tiger Airways venture – running the new airline like a Ryanair may not work, especially in long-haul. They need to ensure high customer service standards, like they have with themselves.

A GOLDEN OPPORTUNITY TO CO-CREATE THE BRAND WITH THE CUSTOMERS

To provide exceptional customer service, SIA will also need to understand that the customers of the new airline more like those of Tiger Airways’ than its own. And they need to deal with them in a different manner. What do I mean?

Currently, SIA has no official Facebook fanpage. No official Twitter account. Or any other new medium engagement channels. All this when AirAsia, right next door, has become the first airline outside the US to reach 1 million Facebook fans. Tiger Airways’ social media interaction isn’t something to speak of either.

SIA needs to hire manager who believe that the brand is no longer about control. Rather, it’s about influencing a certain behaviour, and engaging with customers using mediums they’re familiar with (I still have to fax in certain requests to Krisflyer!). They can no longer be in a state of educated nonchalance about these new ways of building a brand, as I had mentioned earlier.

Singapore Airlines has a rare opportunity to involve the potential customers in the brand creation process of its new low-cost long haul airline brand. For starters, they can look at how the best airlines in the world are crowd sourcing ideas. And then wholeheartedly embrace the customer.

Given their track record, I think Singapore Airlines is going to do a good enough job setting up this new airline – what remains to be seen is whether they are able to sustain profitable operations in the face of changing customer realities and fierce competition. Exciting times ahead! What do you think?

(Special thanks to Khoa Huynh and Anthony Prsakasam – my two aviation geek friends who helped seed some of the ideas in this article)

Friday, December 23, 2011

Nielsen's Best-Liked TV Commercials of the Year

A little boy in a Darth Vader costume and a guy sucking Doritos crumbs off a co-worker's fingers were among the main characters in the most-liked TV commercials of 2011, according to a report released this week.

Nielsen surveyed TV viewers to find out which ads they liked best. It assigned the ads a "Likeability Score" based on the results. "The best-liked ads reflect the enduring value of traditional ad elements that have withstood the test of time -- strong creative, simple and engaging messaging, and a solid emotional connection," the company said.

Nielsen explained the methodology:

The Likeability Score is the percentage of TV viewers who report to like "a lot" an ad they were exposed to during the normal course of viewing TV (among those recalling the brand of the ad). These scores are then indexed against the mean score for all new ads during the period (Likeability Index). 100 equals average.
Read as: With a Likeability Index of 231, the top-ranked Volkswagen ad has proven to be 131 percent better-liked than the average new commercial during the measured period.

Nielsen also discussed the most remembered brand integrations into dramas and sitcoms, as well as the top primetime programs with product placement activity. The Big Bang Theoryand Desperate Housewives had particularly memorable brand integration, but reality TV shows held nine of the top 10 slots for product placement.

Turn the pages for videos of the top 10 commercials.

Brand: Volkswagen
Likability Index: 231
This is a heartwarming ad that plays on family values. It fits a theme in automotive marketing that we've discussed a couple of times at The CMO Site: Millennials don't respond to car ads that talk about how powerful and sexy cars are. They are more responsive to messages that talk about how a car is a comfortable, fun place to relax and hang out with friends. (See: Traditional Auto Marketing Runs Into a Millennial Ditch and Learning From Hamsters.)
This commercial doesn't seem to be aimed at millennials, but it strikes at similar themes. The car here brings joy to the family and brings them closer together.
This clip is the one-minute version of the ad. Nielsen cites a 30-second version for its scoring.

< PREVIOUS PAGE 2 OF 11 NEXT >

Brand: Oreo
Likability Index: 201
Another ad that describes how the product brings families closer together. I like that the dad here seems grumpy at first about being woken up in the middle of the night.
After watching these two commercials, I'm bawling like a five-year-old. I'll present the remaining ads without commentary. Watch them while I compose myself.

Brand: St. Jude
Likability Index: 191