Survival of the Fittest--Marketers, Media, Agencies

I saw the Digital Darwinism article in Booz & Co’s online Strategy+Business magazine a few weeks ago. I read it, thought it summarized important ideas, then pushed it to the side of my desktop where it languished until a couple of days ago. When I received an email that it had been republished as a Resilience report I reread it and was again impressed with its insights.

Part of the reason is some good case studies; author Christopher Vollmer talks about HP and there are sidebars written by Carolyn Everson of MTV Networks and Ajaz Ahmed of digital agency AKQA. That represents their three key players in this struggle for survival; businesses, media and agencies.

The report identifies 5 behaviors that the fittest will use to survive:

1. Getting close to consumers. Hardly a surprise! The point is to “activate” consumers, making them “prosumers.” I think we used to call that brand advocates, but whatever we call it, it’s hard to do.
2. Stimulating conversation. Again, not a surprise. Advertising is out; listening and dialog are in.
3. Recognizing that content and context are inextricably intertwined. This puts a premium on careful media choice and integration.
4. Making better use of customer data and insight. In this fragmented media environment we lack integrated metrics to measure the progress of our efforts.
5. Building new, more collaborative relationships. This is where marketers have to work in close collaboration with their agencies and media to create the kind of meaningful, two-way dialog that will “activate” customers.

This report is essentially analysis of the fall Marketing and Media Ecosystem 2010 report, which I've written about a couple of times previously. While there is nothing startlingly new in the analysis, it is cogent, focused and a good reminder.

A friend commented to me recently that a brand of our acquaintance didn’t seem to have the basics in place. Good point. These are the basics. If your company/your brand doesn’t have them in place your chances of survival in a challenging environment are seriously diminished!

Customer Service Still Rules!

A new customer satisfaction survey report from Accenture just crossed my desk. It’s about customer service generally, not on the Internet specifically, but that’s ok. As the report points out, we live in a multichannel world. That makes excellent customer service at all customer touchpoints essential.

Overall, the report sees three important trends:
• Globally, the perceived quality of customer service declined in 2007, although it is still rated as “good” in many countries, especially developed economies
• Customers say their expectations of quality customer service continue to increase. This is especially true in developing economies.
• Two of three respondents reported they had switched patronage during the year as a result of poor customer service; half had switched patronage in multiple industry segments as a result of poor service?
Is the Internet at least partially responsible for rising service expectations and increasing ease of switching suppliers? I think so.
And customer service does still rule. In most of the countries where data was collected, poor customer service trumped lower price as a reason for switching, often by a large amount. The exceptions were Germany and France. Interesting.
This somewhat complex chart gives more detail. It shows the importance of various factors to respondents who did switch and did not switch. Most of these factors are almost equally important; that’s worth thinking about, especially in light of the satisfaction data. It’s also worth noting that the two most important factors have to do with company representatives—their knowledge and their courtesy.

Equally important—and even less surprising—is that the higher the level of satisfaction, the less likely respondents were to switch. But look carefully. The levels of satisfaction are not that different between respondents who switched and those who did not. That’s not a new finding, but it should be worrisome to marketers.

Besides some general issues about satisfaction that we already knew, what should we take away from this study? First is that satisfaction is really important, but it doesn’t keep people from switching. And it often was not price that caused them to switch. So what did?

Two things are worth thinking about. First, the switching data looks at individual customer service factors; is it the overall customer experience that really makes the difference? Second, “price” may not capture the effects of powerful promotional offers, whether price-based or not.

Accenture’s summary points to the importance of individual customer service factors but relates it to overall customer experience. They say:

Accenture’s high performance business research has found that leading organizations enhance customer loyalty by mastering specific activities. Of these activities, our research shows providing a consistent, differentiated customer experience has the most impact on customer loyalty, which in turn contributes to growth, profitability, and shareholder value.

I’m still betting on overall customer experience as the determinant, but the power of a single really good feature—or even more one really bad aspect of customer service—cannot be denied. I suggest that this research provides a good framework for thinking about customer service and customer experience and there’s more useful data in the full report (download from this page). However, it can’t substitute for research that gets very specific about what causes customers to switch in your product category or for your own brand, as discussed in the recent post on Forrester's customer experience survey. And what if the importance factors still don’t differ a great deal? Then marketers are going to have to set some priorities based on where they are loosing customers or where they have the most chance to exceed customers’ expectations and create real loyalty. No one ever said that exceptional customer service was easy!