Disruption Tour --- Run To Survive

Don't Skimp on Customer Service in Tough Times
It's no secret that the economy is not in the best shape ever. A trip to
the gas pump is a reminder that costs are more costly today than they
were a couple of years ago. What strategies should small-business owners
take in order to maintain a healthy business? The strengths of small
business are specialization and customer service.
http://www.ecommercetimes.com/story/63871.html

The Big Company Doesn't Always Win

Techdirt.com

by Michael Masnick from the a-reminder dept

Our debates over the patent system, one message is repeated over and over again by those defending the patent system: that it's needed to prevent big companies from coming in and stomping out smaller companies. Unfortunately, the evidence just doesn't support this. Yes, it does happen sometimes, but there are so many examples of smaller companies outrunning bigger companies that the idea that a big company can easily beat a smaller company is just rubbish. In fact, the NY Times now is running an article noting how no large tech company has ever really been able to thrive through multiple generations of technologies. A smaller, more nimble "game changer" comes along and out-innovates the larger company -- in many cases because that larger company isn't just slow to react, but also because they have legacy lines of business that prevent them from fully embracing the cannibalizing nature of disruptive businesses. Once again, this highlights the the importance of the process of innovation, rather than just the idea. The big company with lots of money may get "the idea," but if it can't full embrace it, it won't do a very good job implementing it. So, while big companies do have some advantages, it's a clear myth that any big company can step in, take a smaller company's idea, and succeed with it. Microsoft outran IBM. Google outran Microsoft. Netflix outran Blockbuster. YouTube outran Google (and then got bought by it). The list goes on. Being smaller doesn't mean you can't win against a larger player if you do a better job providing what customers really want.

Why Zappos Pays New Employees to Quit—And You Should Too

http://discussionleader.hbsp.com/taylor/2008/05/wy_zappos_pays_new_employees_t.html

Posted by Bill Taylor

I spend a lot of time visiting with companies and figuring out what ideas they represent and what lessons we can learn from them. I usually leave these visits underwhelmed. There are plenty of companies with a hot product, a hip style, or a fast-rising stock price that are, essentially, one-trick ponies—they deliver great short-term results, but they don’t stand for anything big or important for the long term.

Every so often, though, I spend time with a company that is so original in its strategy, so determined in its execution, and so transparent in its thinking, that it makes my head spin. Zappos is one of those companies. Two weeks ago, I paid a visit to Zappos headquarters in Henderson, Nevada, just outside Las Vegas, and spent time with CEO Tony Hsieh and his colleagues. I could write a whole series of posts (and just might) about what I learned from this incredible operation. But I want to focus this post on one small practice that offers big lessons for leaders who are serious about changing the game in their field—and filling their organization with people who are just as committed as they are.

First, some background. As most of you know, Zappos sells shoes—lots of them—over the Internet. The company expects to generate sales of more than $1 billion this year, up from just $70 million five years ago. Part of the reason for Zappos’s meteoric success is that it got the economics and operations right. It offers customers a huge selection—four million pairs of shoes (and other items, such as handbags and apparel) in a warehouse in Kentucky next to a UPS hub. (If Imelda Marcos visited that warehouse she'd likely have a coronary on the spot.) It also offers free delivery and free returns—if you don’t like the shoes, you box them up and send them back to Zappos for no charge.

So the value proposition is a winner. But it’s the emotional connection that seals the deal. This company is fanatical about great service—not just satisfying customers, but amazing them. The company promises free, four-day delivery. That’s pretty good. But most of the time it delivers next-day service, a surprise that leaves a lasting impression on customers: “You said four days, but I got them the next morning.”

Zappos has also mastered the art of telephone service—a black hole for most Internet retailers. Zappos publishes its 1-800 number on every single page of the site—and its smart and entertaining call-center employees are free to do whatever it takes to make you happy. There are no scripts, no time limits on calls, no robotic behavior, and plenty of legendary stories about Zappos and its customers.

This is a company that’s bursting with personality, to the point where a huge number of its 1,600 employees are power users of Twitter so that their friends, colleagues, and customers know what they’re up to at any moment in time. But here’s what’s really interesting. It’s a hard job, answering phones and talking to customers for hours at a time. So when Zappos hires new employees, it provides a four-week training period that immerses them in the company’s strategy, culture, and obsession with customers. People get paid their full salary during this period.

After a week or so in this immersive experience, though, it’s time for what Zappos calls “The Offer.” The fast-growing company, which works hard to recruit people to join, says to its newest employees: “If you quit today, we will pay you for the amount of time you’ve worked, plus we will offer you a $1,000 bonus.” Zappos actually bribes its new employees to quit!

Why? Because if you’re willing to take the company up on the offer, you obviously don’t have the sense of commitment they are looking for. It’s hard to describe the level of energy in the Zappos culture—which means, by definition, it’s not for everybody. Zappos wants to learn if there’s a bad fit between what makes the organization tick and what makes individual employees tick—and it’s willing to pay to learn sooner rather than later. (About ten percent of new call-center employees take the money and run.)

Indeed, CEO Tony Hsieh and his colleagues keep raising the size of the quit-now bonus. It started at $100, went to $500, and may well go higher than $1,000 as the company gets bigger (and it becomes even more difficult to maintain the all-important culture and obsession with customers.)

It’s a small practice with big implications: Companies don’t engage emotionally with their customers—people do. If you want to create a memorable company, you have to fill your company with memorable people. How are you making sure that you’re filling your organization with the right people? And how much are you willing to pay to find out?

Editor's Note: We'll be recording an interview with Bill for the Harvard Business IdeaCast series on Friday, May 23. Do you have questions about Zappos you'd like to have him address during the interview? Please submit them via the comments feature below.

letting your down time work for you

Jon Burg

Future Vision

http://jburg.typepad.com/future/

Your brand has many storefronts.  Every marketer knows the importance of window dressing in retail.
After all, every impression may be a first impression, and in the words of one of my colleagues, "You don't get a second chance to make a first impression."

Whether it be In digital media, in social media, in traditional retail or CRM management, you are always creating first impressions. 

But what happens when your store is closed?  What kind of first impressions are your generating to your user when you are unavailable?

It is understandable that your services may become temporarily unavailable; you may have to close your storefront at night, your website may go down, your tools may occasionally crash.  But what kind of first experiences are you creating when you aren't available?  How are you marketing to them in this void?

Retailers know the importance of window displays during off hours.  But do service oriented companies appreciate that the same principles apply to their business as well?

This weekend, I spent nearly an hour on hold, waiting for AT&T customer service.  The hold music was an up-sell for addditional services.  This would have been frustrating on it's own, but was only exacerbated by  the fact that I was calling to get cell phones service back up and running.  There was no apology message for the hold time, there were only sales messages.  After nearly an hour, the rep finally came on the line and not only resolved the issue, but offered a complimentary compensation for my experience.

This was not my first interaction with AT&T.  But it was my 18 year old nephew's first exposure - as he was in the room throughout this experience.  There is only so much AT&T can communicate through paid messaging - and you can rest assured that the damage caused by their poor service fulfillment will far outweigh their media in influencing my nephew's mobile carrier decision.  All because of a laughably pathetic customer service call.

What do your out-of-service communications say about your business?

Steve Yastrow on the WE Relationship

brandautopsy.com

Posted: 10 May 2008 03:14 PM CDT

I love the premise from Steve Yastrow’s recently-published book, WE: The Ideal Customer Relationship. In the opening chapter, Yastrow writes …

Relationships have become powerful differentiators. Customers can’t tell is your product is better than your competitor’s product, but they can tell if they have a better relationship with you than with your competitor.

If relationships are such powerful differentiators, what is the most productive, profitable, and sustainable relationship?

The We relationship.

In a We relationship, you think less about what separates you and more about what intertwines you.

In contrast, if your customer’s view of your relationship is not “We” but “Us & Them,” he will focus more on what he can get from you—and on what he believes you get from him—and less on how you can collaborate to reach your goals together. [Steve Yastrow, SOURCE]

The Physics of Marketing - Conservation of Energy

DavideBowman.com

This week’s Physics of Marketing post is about energy. It is clear when someone has energy and more clear when they lack it. Starbuck’s has made a fortune on regularly selling me cups full of energy in the form of caffeine laden black coffee.

Energy takes many forms, and is probably best thought of in terms of change or motion. Both are forms of kinetic energy. Potential energy is less intuitive, but equally important. It is the boulder at the top of the hill, which if nudged would descend with tremendous momentum, crushing anything in its path. While at rest, it is potential energy.

Conservation of Energy means that energy is neither created or destroyed, but rather that it simply is transferred from one form to another. There is a finite amount of energy, but seemingly infinite manifestations of that amount. Energy is the E in Einstein’s famous E=mc².. Energy is a fundamental part of the universe, and again is neither created nor destroyed.

So, how does the conservation of energy relate to marketing?

Immediately I was drawn to the idea of the interaction between a company and the consumer. The product or service offering of a company is designed to address some unfulfilled need of the consumer. “Wouldn’t it be great if that were bigger, faster, better, cheaper, more, easier, smarter, less, …” You get the gist. The consumer chooses if the need is important enough to act upon, and if so, can choose to seek help from a particular company. This all represents potential energy. The goal of marketing is to convert this into kinetic energy - initially this is a sale. But it does not end there.

If the initial sale goes well, there is a good chance that more of the consumer’s potential energy is converted to kinetic energy. This may take the form of repeat business. If things go exceptionally well, the consumer may choose to actively participate in the conversion process by spreading the word to friends and family. This positive word of mouth can deliver more kinetic energy. This should ultimately result in cash for the company - potential energy. At which point, the company might choose to invest in future innovation - potential energy.

Conversely, if the sale goes poorly, the conversion of energy from potential to kinetic follows a different path. If the experience is mediocre, most of the potential energy will likely remain unconverted, or will be converted by another provider. The consumer goes away, and the transaction is a one-time experience. If things go very poorly, large amounts of potential energy will be converted - this time to the detriment of the company. An angry consumer in the digital age can spread negative word of mouth far, wide, and fast. In instances where others share a similar negative experience, the result for the company can be devastating. . Consumers will move to competitors, and the company will struggle to survive.
According to Abraham Maslow, all people have needs. These needs constantly change form but always remain present. Thus energy is always present in the marketplace. Marketing seeks out potential energy. Great marketing maximizes its conversion to kinetic energy, and then back to potential energy again.

What do you think? Draw your analogy between Conservation of Energy and Marketing. Join the conversation and leave your comments.

Marketing Lessons from Mud

Brainsonfire.com

posted by: Spike

I’m a dog person. And one of my dogs is an 8-year old, 100-pound Chocolate Lab very appropriately named Mud. He didn’t exactly get the brains of the litter, but I love him nonetheless. In fact, I think I’ve learned some things from ol’ Mud that I can apply to the marketing world:

Always be happy to see your customers. Whenever I come home, there he is – tail wagging, tongue hanging out, tap-dancing with excitement. He doesn’t know what kind of day I’ve had or if I’m in a good mood or bad. But there’s no hidden agenda. He’s ready to hang out. To listen. To just let me know that he’s there.

If customers kick you, always come back for more. Let’s make it clear that I’ve never kicked my dogs, but I think you get the idea. Mud is as loyal as the day is long. Sometimes he does get in trouble and he gets a stern talking to – but he always comes back the next time, tail wagging and ready to play.

Be ready to do just about anything your customers ask. Mud isn’t always happy about getting a bath or taking his meds, but he does it anyway. In the end, it’s the best thing for him and he knows it. So he does what it takes and listens to what I have to say to him.

Be prepared to grow together. Mud and I have learned about each other’s personalities, our habits (bad and good) and patterns. I guess that’s what naturally happens over time. We’re comfortable with one another, but it’s an investment of time and patience on both our parts.

So maybe the above points are a stretch and too simple, but there’s beauty in simplicity, right? And I would say there’s beauty in Mud, but that’s a REAL stretch.

Simplexity

There's a new word making its way into the lexicon of busy lives. It is a word that strikes a chord for those looking for less busyness. (and it's not lottery...)

Simplexity.

Wikipedia describes simplexity this way: Simple interfaces tend to improve the usability of complex systems.

Think of simplexity as simple solution to the complexity of convergence. It's something that you might not know you need. Let's take your phone life for example.

How many phone numbers can people reach you at? Of each of the phones you could answer, does the technology all share the same information? Can you access the phone list in your cell phone on your home phone? If your cell phone or address book were lost do you have a digital back up? Does the operating system at your work phone sync with your cell phone? Does your phone easily store inbound and outbound calls in a database for future use? Can you redirect phone messages to any phone or email address? Does your cell phone signal get four bars in your own home or office?

There are a thousand other functions and combinations I haven't even mentioned but you get the point. The more technology that we adopt in our everyday lives, the more complex our lives become. Wouldn't it be nice to simplify all this?

If your entire phone life was simple and unified you would save all sorts of time looking for numbers, calling information or checking messages on multiple lines. If you could have your phone life simplified, how wonderful would that be?

The phone, cable and digital satellite companies are well aware of this. And it's not all about making their customers happier. It's also about a share of your wallet. If a company could simplify your life with a suite of products then you are more likely to give all your business to them. There are offerings of wireless, video and broadband bundled with wireline voice. But simplexity has not come of age... yet.

For these companies looking for the solutions there are three simple steps. Step one, fire all the engineers that are convinced that more buttons means more value. Step two hire engineers who will embrace simplexity. Step three, stop and listen for the sound of leather satchels unfolding.

Ahhhh, if it were that easy. If it were, it wouldn't be simplexity.

Until next week it’s full speed ahead,

Vince Poscente
New York Times Bestselling Author
Speaker Hall of Fame and Olympian
April 30, 2008

How to Be More Positive

ProBlogger.com

@SmallFishMedia asks about ‘”How To Be More Positive On A Daily Basis”

What a great question and one I never expected to write about here at ProBlogger - it’s a little off topic but as I was asked it - here goes.

Firstly, I’m no expert on being positive. I’m a bit of an optimist (my wife complains that I can turn any situation into a positive one) though and like to be around other positive people.

For me it comes down to a few things. The first is being intentional about finding the positive things in your life. My parents taught me to be thankful and when I don’t feel thankful to find things to be thankful for anyway and to ‘practice being thankful’. Just like you don’t become good at anything without practice, sometimes being positive is something you need to learn to do and practice. Start with the small things - tell others about the, pray about them (if that’s your thing) but look for them and celebrate them in some way.

The second thing I’d say is to learn to turn problems into opportunities. My Marketing lecturer used to challenge us when we did projects to identify our weaknesses in business and turn them into strengths and to turn our threats into opportunities. This is somewhat counter intuitive but it’s a powerful thing when you do it right.

What do you think? Positivity can be an great thing to have as a blogger - how do you keep yourself thinking positively?

The Physics of Marketing - Newton’s Law of Gravitation

davidebowman.com

Sir Isaac Newton makes his second appearance in this series with his Law of Gravitation. Perhaps one of the most widely known principles of science is gravity. I say this knowing that while most people could probably not explain gravity very well, just about everyone understands the idea. This was Newton’s blockbuster idea. It explained ocean tides, comets, and even led to the discovery of Neptune.
So what is Newton’s Law of Gravitation about? Well, here goes…

Newton basically asserted that “every object in the universe attracts every other object along a line of the centres of the objects, proportional to each object’s mass and inversely proportional to the square of the distances between the objects.” This theory served to explain much of the earlier work of Kepler in one concise theory. While Newton’s Law of Gravitation was later proven not to apply to all objects (black holes and situations with extremely high gravity) by Einstein, his work is a foundational part of modern scientific thought.

So in my feeble mind it seems that Mass and Distance are the keys here. Now how to take these ideas and put them in the context of Marketing?

Because people are not always rational, I am not sure you can apply an equation to human behavior with much precision, but I definitely think that there are parallels to be drawn. Here is my first take. Think about customers. Big brands get big attention. People know Coke. People buy Coke. Coke is massive. Coke has pull.

So how do little brands stand a chance of getting some “pull” with customers. The answer lies in proximity - the other part of Newton’s Theory. Small companies must get close to the customer in order to stand any chance of survival. They can actually use this to thrive and exert considerable influence if properly executed. Would a proper analogy be the impact of the relatively tiny moon on the Earth’s tides as opposed to the sun’s impact on them? (I ask because I am not a scientist) The moon has huge pull on the Earth’s oceans, and impacts the tides because of proximity. Certainly it has far less Mass than the giant sun. Still it is close. So, continuing my example in the world of soda pop, (using both terms to be user friendly) Jones Soda has done a great job of being “the moon.” They decided to get close to consumers - actually putting photographs of them on their packaging. This has allowed them to build a loyal following of consumers who are engaged with their products. They conduct events that are designed to be built around the consumer as well. They have done a masterful job of utilizing this principle to create growth.

Here is the rub for most companies. How to maintain that proximity. Starbucks is feeling this pain, Jones is probably going through it as well. As you gain more mass, it is actually more difficult to remain close to the consumer. The proximity or closeness to individual consumers tends to suffer as companies experience growth. The distance increases, and they exert less pull. In summary the moon becomes more like the sun, just not nearly as big. Thus the advantage it enjoyed thanks to proximity is destroyed. Jones becomes more like Coke, but without the Mass to sustain the gravity.

Wonder why your favorite brand “sold out?” Well because they were faced with this dilemma. How to stay close and simultaneously get big. How to maintain or increase pull? “Selling out” is just a natural part of that. People inevitable pick Coke, because it carries a lot of weight. It has mass - and thus gravity. It pulls people back. To sustain that mass Coke invests in Mass media, mass distribution, mass exposure. It must sell a lot of soda pop to sustain that mass and gravity. This is why small companies don’t need superbowl ads to thrive. They need super customer service.

Marketing in my mind is all about the customer. You can have gravity through mass or proximity. You might be able to get both, but often you have to choose. There is no “right choice” but recognize that with that choice comes the implications of gravity. Growth for growth sake - more mass - might not always be the answer.

Alright, so that is my take on Marketing and Newton’s Law of Gravitation. What do you think? How does Newton apply to the modern world of Marketing? Please enlighten the world with your thoughts.