Read an Excerpt
DOMINATE YOUR MARKET BY WINNING THEM OVER WHERE IT COUNTS THE MOST
By BOLIVAR J. BUENO
The McGraw-Hill Companies, Inc.Copyright © 2012Bolivar J. Bueno
All rights reserved.
What You Don't Know Can Hurt You
Customers are skeptical. They've been lied to by just about everyone who's had the opportunity to do so. From role models who can't keep extramarital affairs from wrecking their golf game to behemoth corporations betting against their own customers' investments to politicians regularly resigning for engaging in the very activities they legislated against, no one has been telling the truth. You need an element of trust to get genuine customer buy-in, but we've spent a generation and a half teaching the public to trust nobody.
This creates a problem for today's business leaders. How do you connect with these empowered, educated, skeptical consumers? This is a question of some urgency. If you don't have the answer, you have to figure it out now, and you have to keep your business thriving at the same time. There's absolutely no time to hesitate. If you cannot connect with your customers in a meaningful way, you will become irrelevant to them. When you're irrelevant, you're replaceable, and your customers will inevitably replace you with a brand that they do feel connected to.
Irrelevancy arrives in those still moments when an organization is facing uncertainty. These are the times when the company is trying to figure out what to do. Choosing the right course is difficult: if you opt for the wrong direction, you'll saddle your company with the burden of invisibility when you're least prepared to bear it.
Let us show you how that happens.
Do You Want Fries with That?
Initially modeled on European cafés, Starbucks had a good thing going. We find Starbucks absolutely fascinating as a company. At the beginning, it made some excellent decisions from a brand-building perspective: Starbucks became a strong, and arguably an iconic, brand. Yet in the wake of this success came a series of inexplicably bad decisions that could imperil the brand's dominant position.
Starbucks captured its initial fan base by offering an experience unlike any other that was commonly available in America at the time. Customers responded to and valued the fact that Starbucks offered a unique experience. Starbucks's interpretation of the coffeehouse as a comfortable, upscale "third place" where customers could relax, self-actualize, and gain valuable social currency was irresistible. Neither work nor home, Starbucks provided a place where people could spend their leisure time, socialize, and connect.
The success that Starbucks enjoys is due in no small part to its amazing creation of an organization-specific culture. Customers understand that you can't order a small regular coffee at Starbucks. Instead, you have to ask for a For Here Single Grande White Chocolate Mocha.
Starbucks is about far more than selling coffee. It sells community. Specifically, Starbucks sells exclusive, aspirational community. Starbucks was special because it wasn't for everyone.
While clearly Starbucks hasn't abandoned that initial concept, it has made some choices that seem to be aimed at pursuing what appeared to be low-hanging fruit. There's a chance that this will fundamentally hurt the Starbucks brand over the long term.
When customers were confronted with drive-through windows, a move toward automating in order to serve more customers, and price-driven promotions, they found that they weren't having a unique experience anymore. They were simply buying more expensive coffee in a setting that was eerily reminiscent of the fast-food joints they'd been trying to avoid— and now those fast-food joints have pricey coffee drinks of their own. Starbucks has lost its differentiator.
What makes organizations go off track?
Can Anybody See Me?
What type of person are you least likely to see in a Burger King? Yes, hard-core foodies won't be there, but for a long time, 18-to 35-year-old males, the core demographic of the fast-food industry, weren't there either. Instead, they were at McDonald's. Why?
McDonald's had rapidly adopted the concept of the third place and focused on the experience that its customers got along with their large order of fries. Burger King had chosen to focus on the quality of the product.
There was only one problem with that approach: the largest part of the desired audience didn't actually care all that much about the quality of the burgers they were wolfing down. It's not that Burger King's "have it your way" campaign was bad, per se— it's that it featured a message that the customers had no interest in hearing. The brand became irrelevant. Even now, Burger King is undergoing a convoluted dance to discover that sweet spot where it becomes a default choice for the drive-through diner once again.
What's the best way to recover lost market share from your competition?
You Can't Reach That Bar?
Managing customer expectations has long been considered the Holy Grail of marketing. It's certainly an elusive goal. We'd say it's impossible to achieve if you don't take one critical piece of information into account: customer expectations are not forged by your company; they're created by your competitors.
The customer who is in your store is not judging your merchandise, service, and ambience strictly on their own merits. Your business does not exist in isolation. You do not have the first website your customers have ever seen. Yours is not the first tech support call line they've ever called. You have not hired the first receptionist they've ever met.
In particular industries, the standards have already been established in the minds of many customers. You know the names. Every industry has its own IKEA, its own Harley-Davidson, its own Rolex. These companies have established the baseline for excellence. Every retailer wants its customer service to be considered just as good as Zappos'. Harley-Davidson defines what it means to be a motorcycle. Rolex is synonymous with luxury watches.
These organizations are continually creating the world's view of a category. They are shaping the perceptions, images, and memories that create leading brands. These are the standards your customers have been exposed to. This is what they have in mind when they develop their expectations.
Apple resets the customer expectation bar on an almost daily basis. Stepping into an Apple store is a markedly different experience by design. The Genius Bar, with specially trained employees who will answer any tech question—over and over and over again until you're happy with your ability to use your Mac, iPhone, or iPad—is a powerful draw. The stores look different. Apple has eliminated cash registers from some of its stores because it doesn't want customers to view shopping at these stores as the typical retail experience.
Customers have responded to this to a degree that exceeded even Apple's own expectations. Stores that were projected to earn $1,000 per square foot earned four times that amount.
Compare that to those businesses that are providing the typical technology retail experience. Witness the demise of Circuit City, or Best Buy's recent decision to slow its expansion plans. These companies are not merely falling behind, they're standing still in the road watching the dust cloud moving farther and farther away. Customers who have experienced what Apple is offering—and note that so far we're talking only about the customer experience, not about the actual products—find the typical experience wanting. Good enough isn't good enough when there's someone else who is continually doing better.
Apple's impact, of course, is on customers, not categories. The customer who has been trained to expect a certain experience when shopping for computers will have those same expectations when shopping for apparel, jewelry, gifts, and electronics and when selecting service providers, medical care, financial guidance, and so on.
The challenge for business owners is great. If you're not providing your customers with a unique and satisfying experience, you are perpetually failing to meet the bar set by an organization that is.
How do you meet that challenge?
Fast, Cheap, Good: Pick Any Two!
Domino's Pizza had built an empire on the promise of fast, cheap, good pizza. However, while it delivered on the fast and cheap portions of the equation, the pizza fell far short of being good. Customers who had equally priced options available were abandoning the brand in droves until, forced into a position of desperation, Domino's did the unthinkable: it started a campaign that told the public that what it had been doing was terrible, and that it was time for the company to improve its product. It solicited customer feedback, asking for pictures of its pizzas. Then it used those images as part of an ongoing "Mea Culpa" campaign, promising improvement and encouraging customers to be part of its turnaround.
Reinventing the pizza from the crust up may in reality turn out to be nothing more than dumping some new spices into the sauce mix, but it speaks volumes about the lengths to which an organization can be forced to go if it is to recover after it has failed to perform in the way the customer expects.
How do we prevent catastrophic failures in expectation management?
What Else Is Happening?
Every situation we've talked about so far has one thing in common. There is one trait that unites all of them. From Starbucks's awkward foray into the fast lane through Circuit City's shuttered doors and Domino's fundamental failure to provide good pizza, we're looking at scenes that play out in public, in real time on the world stage, visible to all. Anyone who has access to the business pages or is stuck in the airport watching CNN for long enough will hear these stories. They're familiar narratives, even if we don't know what they mean.
But they're not the only problems companies are experiencing. Behind the scenes, off-camera, quiet catastrophes are also playing out in real time, imperiling the very existence of very good companies that are struggling to maintain themselves in one of the toughest economic climates we've ever seen. The fact that these problems aren't as visible, aren't as in-your-face, and aren't as immediately terrifying to management and shareholders doesn't negate their impact.
In fact, when the media do pick up on these problems— something that is increasingly likely, and is happening much faster now that social media are integrated into almost everyone's life—they have just as much potential to break a business.
They're secret trapdoors, embedded in the familiar trail of, "This is how we've always done it." You'll be walking along, with everything appearing to be fine, when suddenly a problem emerges, and you discover that there's empty space directly beneath your feet, where you once took solidity and security completely for granted. Falling puts you and your organization into reactive mode, cleaning up messes and managing spin. This isn't a position any company wants to be in, especially when resources are scarce and crisis management forces them away from revenue producers, such as innovation and production.
Taking On the Trapdoors
GM was once the nation's leading auto manufacturer. It was so successful that it was one of the largest corporations in the nation. It was said that "what's good for the country is good for General Motors, and vice versa." Yet today, it doesn't enjoy quite the same level of prestige, in terms of both productivity and popular acclaim.
GM's slide from dominance was marked by repeated examples of flawed decision making: a focus on automating production that let quality slide substantially, a controversial decision to abandon division branding in favor of an overarching umbrella brand that the public did not either respect or trust, and a never- ending cycle of acquisitions and subsequent divestments of foreign car companies, including Fiat, Suzuki, and Isuzu, brands that its target market did not favor. At the same time, GM discontinued or sold lines that had tremendous customer loyalty, including Oldsmobile, Pontiac, and Saturn.
GM accepted massive amounts of government bailout money as part of the "too big to fail" debacle. It then aired an ad claiming that it had repaid all of the bailout money; this brought a tremendous amount of scorn and governmental censure down upon the company when it was revealed that the money that GM had used to repay the bailout money had actually been borrowed from another government program.
What's missing from this picture?
United Breaks Guitars
To say that the airline industry has had a rough decade is a little like saying that water is wet or that the sun is expected to rise in the east tomorrow. It's a given at this point, with the industry's largest carriers struggling to remain viable, much less competitive.
One might think that given an environment in which costs are escalating, opportunities for profitability are limited, and regulation severely restricts organizational flexibility, a company would perhaps focus on those elements of its business that it has more control over. These areas, such as customer service, provide the best opportunity for an airline to positively differentiate itself without incurring tremendous expense.
Southwest Airlines has done a superb job of this over the years, a fact that Continental, American, and Delta are well aware of. More than a few articles in industry journals have been devoted to analyzing and deconstructing Southwest's success, in the hopes that it is duplicable.
United, however, clearly seemed to have missed the memo. In 2008, musician Dave Carroll witnessed United baggage handlers handling his guitar with less than tender loving care, throwing the expensive instrument onto the tarmac. When Carroll discovered that his $3,500 Taylor guitar was broken, he filed a claim.
Nine months later, still without any compensation from United, Carroll did what musicians do. He wrote a song, performed it with his band, and posted the video on YouTube. It was viewed half a million times in three days, with more than 11 million views to date. This has been a public relations nightmare for United.
Could this have been avoided?
When the Left Hand Doesn't Know Whom the Right Hand Is Selling To
Many organizations suffer from a lack of clarity about the company's customer base, what the people in it value, and why they're loyal. This disconnect can have disastrous consequences, especially when it manifests in ways that make it admirably clear that the company doesn't value its customer base.
Mark Zuckerberg, the founder of Facebook, has been quoted as referring to the social network's first users as "stupid f*cks," which has done little to endear him in the eyes of those who are beginning to view the company less enthusiastically with each new security concern.
In 2009, SCI FI announced that it was changing its name to Syfy, in part to distance the channel from the stereotypical image of the science fiction fan as a nerdy adult, living in his parents' basement and spending his time on World of Warcraft raids. Not only did it turn out that SCI FI's fans were invested in and attached to the stereotypical image and resented the overt goal of changing the association, but the new name was also slang for syphilis in several languages. Fans who felt scorned and disrespected by the rebranding effort wasted no time in sharing that bit of information online.
What can keep a company from self-destruction?
Your First Customers: Attracting and Retaining Good Employees
There is an inverse relationship between economic circumstances and employee retention. The worse the job market is, the easier it becomes to hold onto qualified people. The conviction that there are no other jobs to be found is a powerful incentive to tolerate unpleasant circumstances, substandard pay, and other negative working circumstances. That being said, organizations that thrive based upon the expertise, initiative, and enthusiasm of their employees chronically experience challenges in identifying and retaining great people.
At the same time, socially conscious customers are placing increasing emphasis on how organizations treat their employees. Exxon Mobil, Laclede Group, and Cracker Barrel Old Country Store were all recently listed on the Human Rights Campaign Index as among the worst companies to work for based upon their HR policies. Walmart, undoubtedly the world's largest retailer and one of the most successful businesses ever seen, is regularly savaged by critics who cite its low pay, gender inequalities, and substandard benefits as reasons to stay away. A company can lose considerable amounts of business because of issues that it had previously considered to be wholly internal matters.
How do we conduct business under such scrutiny?
Does It Have to Be like This?
Reading through these examples, one theme keeps coming to the fore: companies get into trouble when they get too far from what their customers want them to be. Not knowing or deviating too far from that set of customer expectations causes organizations to make mistakes at every level in the organization. The wrong choice from the wrong person—whether it's the CEO assessing new locations and brand extension opportunities or the frontline worker faced with an angry customer—can do irreparable damage to a brand. Social networking now gives anyone and everyone a platform upon which to vent her outrage, with the result that brand damage moves faster and is more painful than ever before.
What Are We Missing?
We are suffering from a crucial lack of certainty. Faced with the dynamic and omnipresent challenges that business presents, how do we make good decisions? The only way to avoid the consequences of making bad choices is to make good choices.
How do we do that? We begin with the need for good information, but that's only the starting point. Good information in and of itself is wonderful, but success lies in the interpretation and application of the lessons that are hiding in the data, lessons that often aren't immediately apparent to the casual observer.
We must be able to act with precision and speed, continually positioning our organizations to be receptive and reactive, listening and leading at the same time. Not only do we have to be ahead of the curve, but we have to be able to see the hairpin turn three miles on!
Excerpted from CUSTOMERS FIRST by BOLIVAR J. BUENO. Copyright © 2012 by Bolivar J. Bueno. Excerpted by permission of The McGraw-Hill Companies, Inc..
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.