Marketing Mistakes: Measuring Customer ‘So What’

 

 

 

 

 

 

 

 

 

 

 

Does your marketing team measure what the customer values most about your product or service?

A post on the HBR blog today Call length is the worst way to measure customer service reveals that firms can obsess about the wrong metrics. Whilst they might give managers a sense of control they often have nothing to do with creating and delivering customer value.

The HBR post explains that many call centers focus on increasing the number of calls their operatives can handle by decreasing the time they talk with individual customers whereas the customer, spookily enough, wants helpfulness which might take the call operative to provide.

So what we have here is the commercial conundrum of providing customer value versus value appropriation for the firm. An optimum needs to be found. Get it wrong and either way your business suffers. Too much customer care and it costs you revenue too little customer care and it still costs you revenue because customers stop using the service.

Is there a formula for success? Probably not. There will be data that allows the firm to try out different approaches (much like a business game – if I increase my ad spend whats the impact on sales and profit). This will refine the overall approach for sure.

The point of the article however is use a metric to measure what you want to measure and don’t use a metric as a proxy for something else. Call length is call length and helpful for profitability measurement use an attitudinal measure to track the quality of your service experience.

Interaction, interdependence and relationships : creating small business customer value.

Last week myself and some colleagues from Sheffield Business School attended the IMP Conference on business to business marketing at Poznan University of Economics in Poland.

For over forty years the ideas of IMP research and thinking have influenced business study. In particular the IMP perspective explains how business works from a network perspective rather than a strategic management perspective. Central to this view is that business is all about interactions between different companies (and their people), interdependence between various businesses that bring products and services to customers and relationships that endure over the long term rather than one off transactions. When such networks work well value is created for all participants in the network 

So does any of this stuff really really happen in the practice of even the smallest of businesses I asked myself. To find an answer I looked at my son Alex’s Interior Design and Development business AJ Interior Developers Plymouth UK.

I was inspired to think about his business after viewing his Instagram pages and thinking how social media has shaped customer interactions and relationship building. It also helps with an idea from Service Dominant Logic which states that people like Alex can only propose the value of their service. The customer creates value afterwards through the use of the new home spaces he creates. The use of pictures of not only his finished work but work in progress too conveys to customers his skill and professionalism before they have experienced it for themselves. Instagram helps overcome the problem of service intangibility and invisibility.

His use of a Short Instagram video adds a different dimension to interaction as well because it brings some personality into play and stimulates the imagination of the customer to the possibilities for their own home.

In order for the customer to have a smart new home space Alex is plugged into a whole network of other people and businesses. Kitchen design companies like Wickes and Homebase, a referral network, specialist co-workers like gas engineers and building regulations, parts and raw material suppliers and so on. Everyone in the network is interdependent on the others. The situation is a lot more sophisticated than just ‘supplier – customer’.

The customer value that is created encompasses all of the dimensions of value that we talk about in our new book Value-ology. There is economic value regarding the price of the new space, perceived value regarding how the customer sees the new space such as their attitude to colours and fittings, then there is relational value regarding the service given by Alex and then there is experiential value that relates to how the customer feels about the installation experience and eventually living in and using the newly created space. 

So does the sophisticated thinking of IMP academics work in practice? For sure and that should hardly be surprising as the academics who form the IMP community are deeply interested in the everyday world of business and not just speculative theorising. Without real world business there would be no IMP.  For me Alex’s business is a classic demonstration of the IMP principals that underpin value creation for sure.

Is adding value to services a dumb idea?

One of my favourite quotes of the moment is by Shostack:

‘services are often inextricably entwined with their human representatives. In many fields, a person is perceived to be the service’

Shostack G.L. (1977) Breaking Free from Product Marketing, Journal of Marketing 41(2): 73–80.

This got me thinking about the unexpected and unwanted side effects of dreaming up supposedly added value service initiatives.

If the person is the service then the only way to add more value is to add more things for the person to do. Now you don’t have to be Einstein to realise that these things become additional burdens which can only dilute the primary purpose of the service.

Surely it’s better to invest in the capability of the primary service the customer is using rather than keep piling on extraneous service add-ons in the mistaken belief that this some how improves the service?  The implication here of course is that there is clear grasp of the fundamental value proposition of the service, that this is acknowledged by all who have authority to ‘add value’ and that adding value only happens if is resonates with the fundamental proposition.

Value adding seen from the perspective of ‘arbitrary added value ideas’ can therefore only result perversely in increased service ineffectiveness.

To paraphrase Drucker the thing about added value ideas is that they quickly degenerate into hard work typically for the ‘someone else’ who is the service!

Are we really customers in the eyes of rail company’s?

I had an interesting experience on my rail commute this morning.

Unannounced on the train I was given a demand to ‘see my ticket’ by a plain clothed Department of Transport official – reluctant to explain his purpose I asked ‘compliance and quality?’ – he merely smiled and said ‘yes, you could say that…’

Any clues what this is about peeps? The two chaps were very assertive and seemed very confident of their power and authority. The two plain clothed gentlemen whose only ID was a lapel badge challenged every passenger.

You will notice that I am not using term customer here as it seems that passengers only exist as customers in the rail-co fluff and rhetoric and not really what they sincerely believe.

Otherwise why would I as a paying customer feel unease at the unannounced exercise and reluctance to explain the reason for it. I was made to feel as if I had possibly done something wrong.

I’d prefer it if rail organisations were honest instead of drawing from a discourse of customer centricity to present a flawed impression of service reality. Behind the scenes it seems obvious that the rail companies don’t really believe we are customers.

If it is a ‘revenue protection’ exercise why don’t you simply tell us?

Best conspiracy theory gets a biscuit 🙂

Excellence In Practice Commendation Shows Co-Creation In Action

I was chuffed to bits to be part of the Sheffield Business School and Sheffield University course design and development team that have been commended by the internationally acclaimed European Foundation for Management Development following the roll out of an innovative leadership development programme to 65 participants in the Sheffield City Region Leaders Programme.

The aim was to develop a unique  leadership development programme emphasizing imaginative ways to co-create cross enterprise service design that delivered cost effective,  high value services to buyers and users. Participants have come from both public and private sectors and this combination is a key element of the programme going forward. In terms of empirical evidence of the principals inherent in Vargo and Lusch’s Service Dominant Logic the Sheffield City Leaders Programme is a clear example of value in use.

Lee Adams Steering Group Chair and Deputy Chief Executive of Sheffield City Council commented in The Local Government Chronicle. (subscription required) “The participants work together on practical projects. Examples include inter agency knowledge sharing on vulnerable people; delivering the city cohesion strategy more effectively; improving occupancy ratios in social housing; and consistency of provision in psychological therapies”.

The EFMD award placed the Sheffield team in the company of Microsoft, Apple, and ING and whilst we were not shortlisted amongst the five winners, we have been recognised as a “Highly Commended Case” and this is very prestigious.

The programme is accredited as a Professional Business Qualification that is designed for practicing managers who wish to underpin their experience with Masters degree academic qualification by the end of the full programme.

A Case of Bad Hotel Service

You might think that providing good service came naturally in the modern hospitality business.

Judging by my recent experience at a small hotel in Stafford part of a local UK brewery chain I can tell you that any hope that the principles of Service Marketing and Service Dominant logic might have found their way into this establishment is a folorn hope.

For those of you who are looking for a micro case in Service Marketing please feel free to use the following and distribute widely.

The Occasion
Myself and half a dozen old friends had decided to have a Polytechnic re-union in Stafford. The first time some of us had seen each other for over 25 years. I was sharing a room with my old flat mate.

The Problem
When we returned late (1.00 a.m.) from our night out and a meal at Pizza Express my room mate and I found we couldn’t get our room key from reception. This meant we had to sleep ‘rough’ in the reception area until 7.30 a.m. when the manager arrived.

The Context
I booked in first in the middle of the afternoon and was given a key fob with the back door key and the room key by the manager. I went to the room to unpack, and then handed the key fob back to the manager who explained that the bar shut at 11.00p.m. and that the key would be needed to get in after that time.

I hooked up with my friends, and my room mate met us at the pub without checking in. This meant that our key was in the hotel. The other members of our party had their key sets with them and so we believed there would be no problem in getting into the hotel.

We all returned to the Hotel and we got in using one of my friends keys. It was at that point we realised the Hotel didn’t have a night porter, their was no way of summoning staff at reception and notices or signage to guide us as to what to do. I was certainly not informed of this possibility when I handed my key set back earlier in the day.

The only option was to sleep in the reception area. I slept roughly on the floor or sitting at the table. My friend slept on benches.

At half past seven the Hotel manager arrived and the situation went rapidly downhill on top of the previous six and half hours sleeping as best we could.

The Service Encounter
When the manageress arrived on duty I explained that I had been unable to get to our room. She was bemused and even a little amused at our situation. As you might expect we were not in the most amenable of temperaments. I asked why there was no system for getting our key if it had been handed back to reception. The manageress said that we were told that we needed a key to get in after 11.00 which was quite correct. By ‘get in’ I assumed get back into the hotel. I then started to explain why we didn’t have our key set with us.

Her response:
i) We were irresponsible for not taking our key sets with us.
ii) We lacked common sense.
iii) We were incapable of using ‘logic’ to solve our problem.
iii) Why didn’t we ring the back door bell to get attention.
iv) We were abnormal because this had never happened in her experience.

My response:
i) Her process for key management was at odds with common experience in hotels. I had travelled the world on business for many years and never experienced such a problem.
ii) There was no indication that the outside door bell was the way in which to summon night service at reception.
iii) It was a wrong assumption on her part to believe that once inside the building we would necessarily think there would be a problem getting our room key.
iv) There was no signage or information clearly visible on reception about who to contact with emergencies or problems.

The Experience
This was a terrible experience. A bad nights sleep and a complete lack of concern from the manager.

This was complete mismanagement of a ‘moment of truth’
There was no apology.
There wasn’t a sincere acknowledgement of our problem.
There was no sympathy for the uncomfortable night we had experienced
Her attitude was patronising and sarcastic.
She was unable to accept any part she and her management team might have played in the problem.
There no grasp of the customer journey and where problems might occur.
There was no value added atonement
She would not listen to alternative explanations
She was intellectually incapable of grasping ‘how’ the situation had arisen and ‘how’ her guest management process couldn’t account for the situation that happened.

Significantly this incident demonstrated the impact of interpersonal skills. As if the ‘content’ of of what the manageress said wasn’t galling enough, her body language and tone were not exactly placatory. The ‘meta message’ of her communication was essentially one of contempt, and you could speculate that her approach to customers was mirrored in her approach to her staff. This was clearly someone used to having it her way and not tolerating different view points to her own.

The Outcome
The manageress was contacted later that day on my return. She was asked for the name of the person she was accountable to and replied by saying that she wasn’t accountable to anybody.

My room mate checked out after me. She offered 20% of the bill because he apologised to her for our part in the problem. We regard this as unnacceptable.

A formal complaint to the retail chain is being made.

What do you make of this?

Does Business School Thinking Affect Marketing Action?

Does business school thinking change the way that marketing executives do their job? Or do business schools simply look at how marketing done in the ‘real world’ and school business students in what already takes place?

I’m pretty sure that most marketing executives are unaware (and probably disinterested) in alot of the very specific and arcane thinking and research work of the majority of marketing academics. This is a fact that worries some academics as they perceive an increasing gap developing between what academics find ‘interesting’ and what marketing practioners would like to know in order to be better at what they do. There are many journal articles on this theme such as:

Musings on Relevance and Rigor of Scholarly Research in Marketing. Varadarajan, P. Rajan. Journal of the Academy of Marketing Science, Fall2003, Vol. 31 Issue 4, p368-376

Beyond the one-dimensional marketing manager: The discourse of theory, practice and relevance. Brownlie, Douglas; Saren, Michael. International Journal of Research in Marketing, May97

The Academy and The Practice: In Principle, Theory and Practice Are Different. But, in Practice, They Never Are. Pringle, Lewis C.. Marketing Science, Fall2001, Vol. 20 Issue 4

The concern in Business Schools is growing so much that the July 2009 edition of The Journal of Marketing leads with a guest editorial by David Reibstein, George Day and Jerry Wind called Is Marketing Academia Losing Its Way?

I’m not sure this is actually the case. At the moment there are two key interelated conversations taking place. One in Academic circles and the other in the digital Social Media space.

The mantra of the Social Media is all about connecting, collaboration, networks, open source, and influence. (At the extremes of course its about SEO or internet selling but the dominant theme is about the social dimension and serving your customers well.)

The hot topic in Business School marketing is Service Dominant Logic This is an idea put forward by Stephen Vargo and Robert Lusch in a 2004 Journal of Marketing article called Evolving to a New Dominant Logic for Marketing. In a nutshell it claims that a new ‘theory’ of marketing is necessary to explain how marketing is done in the 21st century. The authors emphasise its not simply making a case for the value of Service Marketing versus Goods Marketing its actually concerns a profound mind-set change that embraces, co-creation, collaboration, and networks.

So how much of what we read on blogs, airport lounge management books, marketing magazine articles and so on really comes from this original source? and how much is the work of Vargo and Lusch simply a reflection of what is happening ‘out there’ in the real world? Perhaps it becomes self referencing. Marketers seeking out ‘academic’ verification and a pat on the back for things they are up to. A sort of co-creation is good because Pine, Gilmour, Vargo and Lusch say it is and overlooking the possibility that these writers might be simply making sense of what they see not actually prescribing something marketers should do!

As for Academia the Vargo and Lusch article has ruffled feathers. Not everyone has bought into the appeal of a new marketing logic that replaces the old ‘wonky’ one of Levitt and Kotler. In particular John and Nicholas O’Shaughnessy have claimed in their January 2009 Vol 43 no.5/6 European Journal of Marketing article The Service Dominant Perspective:a backward step that the Vargo and Lusch approach is a crude attempt to provide the impossible. They imply that seeking on absolute theory of marketing is based on a ill-founded positivistic assumptions. The idea that ‘out there’ there is an ideal form of Marketing just waiting to be discovered. They favour a multi-perspective approach. There are many ways to explain marketing.

Now how relevent this debate is for every day marketing is a moot point. It seems on the one hand we have a desire to improve the decision making and problem solving capability of everyday marketers and the other we have curiosity in marketing as a social phenomenon.

Maybe just maybe the muti-persepective approach is what Marketing really needs because versatility of perspective encourges innovative thinking. So think again when you read blogs and tweets about the service dominant imperative. Are you un-thinkingly being forced done one channel of thought. Are you sure you really know which marketing school is influencing what you do!

Why Won’t Sainbury’s Let Me Alone?

A friend recently reported a shopping experience irritation during a visit to Sainbury’s. In the middle of a rush shopping trip she was stopped hassled by a member of Sainbury’s staff asking if she could if she was adequately insured.

All in the name of service no doubt. Or is it? When does a marketing philosophy become a marketing mantra? When does a marketing philosophy become a convenient gloss for the real intention of the organisation?

Kurt Lewin said “There is nothing so practical as a good theory”
In other words ideas drive actions.

So what is the idea that is driving the action of Sainbury’s? Back in 2004 Stephen Vargo and Robert Lusch wrote an article in the Journal of Marketing called “Evolving To A New Dominant Logic of Marketing”. In this article they pulled together streams of thought that had been developing over previous decades concerning ‘Service Marketing’ (Gronross et al).

This ‘theory’ has sat in the background quietly influencing marketing strategy and justifying marketing actions. We no longer trade ‘goods’ they argue we are focussed on “intangible resources, the co-creation of value and relationships” So the man in aisle isn’t ‘selling’ anymore he’s establishing a ‘service relationship’ in order that value can be co-created between the moment your tin of tuna is taken from the shelf and placed in the trolley!

Sainsbury’s have evidently bought into the ‘service dominant logic’. Or have they? The rhetoric is about service the reality is exchange. I have something that I want you to buy from me. You have money in your wallet and I want it to be mine, all mine. The ‘sales dominant logic’ of Sainbury’s simply can’t be hidden from view that easily. Psychologically it’s an ideal situation to sell to somebody. The rationalising defences are down because you are focussing on your regular house hold shopping and the distraction of the service stalker makes you amenable vulnerable to sales messages (clever! see Pratkanis The Science of Social Influence)

Surely when someone goes shopping its in their time? What right has a retailer to take your time and take advantage of you simply because you are on their premises? The argument that it simply making you aware of additional services seems rather hollow.

Now, as part of the Brass Glasses service to readers, I’d like to offer you a solution to the in store stalking problem. Of course as critical thinkers you’ll know what I’m up to. So here it is:

The amazing new Garbo badge. Imagine walking around Sainsbury’s without interruption, simply wear this badge and Sainsbury’s staff will know that you “vont to be let alone”

Update October 2009:
Witnessed an OAP approached by an in store sales person selling insurance. The chap was a bit confused. Hardly surprising he was doing his shopping not thinking about insurance. The gentleman was then obliged to discuss his financial affairs in the aisle next to the tinned tuna. How lacking in empathy and courtesy.

I believe this is an unwarranted intrusion into shopper privacy and just because you have walked onto the premises doesn’t mean you should be a target for unsolicited sales propositions.

This is something different I don’t want to try thanks!