The Empty Whitecoat

Blogging again soon

After spending 200% of the last year taking Strategyn UK close to a £1m turnover business (working across Europe and in UK), I have now just kick-started my PhD (How firms develop capabilities to act upon Voice of the Customer?) and intend to start blogging again very shortly. I am delighted to be back and really look forward to contributing some new thoughts to my blog as well as participating in the conversation very soon....

"The greatest danger in times of turbulence...

...is not the turbulence: it is to act with yesterday's logic. "

I love that quote from Peter Drucker as it describes perfectly how marketing is struggling to adapt to create and deliver value in today's experience-centred, co-creative markets.  Here is a quick contrast between the "old" and the "new" marketing logics:

Old Marketing Logic

• Emphasises value-creation at point of delivery
• Communicates mostly tangible value through attributes of the product
• Focuses on transaction and exchange value
• Can't help but provide asymmetric Information (selective communication of product value attributes to stimulate desired customer response)
• Customers are viewed as passive objects or resources to be acted upon and owned for lifetime value
• Aims to merely satisfy the customer through mixing the firms marketing resources (4P's)
• Manipulates the language and systems of relationship marketing to suit own ends
• Places primacy of firm over customer value

New Marketing Logic

• Emphasises engagement and exchange of intangibles such as skills, knowledge and processes
• Provides "offerings" which generate experiences which create personalised value
• Generates a two-way flow of value between firm and customer, therefore values these interactions as learning investments
• Moves into the customer sphere of "value-in-use" by assisting the customer to derive value from multiple, ongoing interactions with the firm and its products and services
• Focuses on assisting customer to achieve multiple experience desired outcomes, which vary according to unique customer events and contexts
• Develops customer capabilities and makes knowledge the primary source of competitive advantage
• Aligns business partners with the customer's view of value
• Creates mutual alignment and a blurring of roles between firm and customer and the co-creation of value
• Marketing shifts to centre stage as an holistic organising process of value-creation

What is preventing Marketing from making this shift to a new logic? There are several factors, each of which is deserving of a blog entry in their own right. They include:

• The lack of a "new marketing logic" representation in many marketing education and MBA syllabuses
• Separation of strategy, innovation and marketing functions and specialisations
• Marketing's love of strategic planning, SWOT and PEST and the fallacy of strategy-plan-act approaches
• The thrill of the customer chase ("hunter and the hunted") embodied by the militaristic marketing language and mindset of "campaigns", "targets" and "frontline" staff
• The challenge of identifying desired customer experience outcomes, i.e. knowing what customers want and how these vary across events and contexts
• The complexity of creating experience environments and multiple partner management

If you want to read more about the new logic, check out this great series of resources on the service-dominant logic at www.sdlogic.net

Overseas call centres damage the brand: Update

Back in 2004, I wrote a blog entry on the back of some research published then in BrandRepublic magazine. It revealed that UK companies setting up overseas call centres are losing customers at a rate that actually negates the cost-saving of outsourcing abroad. The following extract described:

The current use of offshore call centres is damaging the brands of UK companies and hitting profits, according to a new survey.

Industry analysts ContactBabel says one in seven customers who used an offshore centre responded by changing supplier.

The report, "Finding the balance: the effect of offshore customer contact on profit and brand", claims that UK businesses are using the offshore call centre industry in a cost-obsessed and unimaginative way that is severely hurting their brands.

The report, which analysed a survey of 1,008 UK adults in February 2004, found that 14.2% of the UK public changed their supplier as a result of using an offshore contact centre.

Out of those who personally experienced offshore customer contact, 74% said they felt more negatively towards the company than before. UK telecoms and insurance companies experienced the greatest levels of offshore-related customer resentment, with Scottish consumers the most likely Britons to change supplier because of an offshore service.

The survey also found that those who experienced offshore contact were also four-and-a-half times more likely to change their supplier than customers who had no direct experience of offshoring.

ContactBabel said that a typical high street bank would save £9.26m a year in operating costs by replacing 1,000 UK agents with the same number in India. However, if only an extra 0.343% of customers defected in protest, the bank's revenues would be reduced by the same amount. Last year, 1.09% of UK banking customers changed banks as a direct result of customer service offshoring.

I wrote then that it seems that generally many businesses view their customer interactions as a COST TO BE REDUCED rather than as a potential investment in experience, dialogue and learning. By automating customer interactions or outsourcing them overseas for example, many companies are at risk of commoditising one of their most precious future innovation assets: the opportunity to learn from and create value with their customers. In most cases such cost-focused initiatives will fail to deliver lasting value. Why? Because organisations use them as quick-fixes instead of addressing their more deep-seated underlying problems - i.e. a lack of customer knowledge, a poor experience and a limited market orientation...

Well, it now seems that the trend to switching operations back from overseas operations could be accelerating. A couple of weeks ago, Powergen - a UK energy business - announced it was to close its Indian customer service operations. Their MD claimed that the cost savings in India were not compensation for loss of quality.  In 2005, Abbey Group did the same following customer complaints. Whats' more, some analysts are now arguing that Indian outfits are beginning to reach the limits of their competent capacity for customer service and that a growing crisis in quality and emerging security issues may entail a reconsideration by many firms of their overseas customer interface.

My view remains the same. All too often, the primary goal of investments in overseas contact centres and the customer interaction more broadly is to reduce cost , increase efficiencies and boost margins.  A more enlightened approach would be to earmark cost-savings made when switching overseas to invest in improving poorly performing elements of the customer experience together with the creation of new added-value services, such as those by First Direct - which have the added benefit of hardly costing anything! 

Back in 2004, I wrote a blog entry on the back of some research published then in BrandRepublic magazine. It revealed that UK companies setting up overseas call centres are losing customers at a rate that actually negates the cost-saving of outsourcing abroad. The following extract described:

The current use of offshore call centres is damaging the brands of UK companies and hitting profits, according to a new survey.

Industry analysts ContactBabel says one in seven customers who used an offshore centre responded by changing supplier.

The report, "Finding the balance: the effect of offshore customer contact on profit and brand", claims that UK businesses are using the offshore call centre industry in a cost-obsessed and unimaginative way that is severely hurting their brands.

The report, which analysed a survey of 1,008 UK adults in February 2004, found that 14.2% of the UK public changed their supplier as a result of using an offshore contact centre.

Out of those who personally experienced offshore customer contact, 74% said they felt more negatively towards the company than before. UK telecoms and insurance companies experienced the greatest levels of offshore-related customer resentment, with Scottish consumers the most likely Britons to change supplier because of an offshore service.

The survey also found that those who experienced offshore contact were also four-and-a-half times more likely to change their supplier than customers who had no direct experience of offshoring.

ContactBabel said that a typical high street bank would save £9.26m a year in operating costs by replacing 1,000 UK agents with the same number in India. However, if only an extra 0.343% of customers defected in protest, the bank's revenues would be reduced by the same amount. Last year, 1.09% of UK banking customers changed banks as a direct result of customer service offshoring.

I wrote then that it seems that generally many businesses view their customer interactions as a COST TO BE REDUCED rather than as a potential investment in experience, dialogue and learning. By automating customer interactions or outsourcing them overseas for example, many companies are at risk of commoditising one of their most precious future innovation assets: the opportunity to learn from and create value with their customers. In most cases such cost-focused initiatives will fail to deliver lasting value. Why? Because organisations use them as quick-fixes instead of addressing their more deep-seated underlying problems - i.e. a lack of customer knowledge, a poor experience and a limited market orientation...

Well, it now seems that the trend to switching operations back from overseas operations could be accelerating. A couple of weeks ago, Powergen - a UK energy business - announced it was to close its Indian customer service operations. Their MD claimed that the cost savings in India were not compensation for loss of quality.  In 2005, Abbey Group did the same following customer complaints. Whats' more, some analysts are now arguing that Indian outfits are beginning to reach the limits of their competent capacity for customer service and that a growing crisis in quality and emerging security issues may entail a reconsideration by many firms of their overseas customer interface.

My view remains the same. All too often, the primary goal of investments in overseas contact centres and the customer interaction more broadly is to reduce cost , increase efficiencies and boost margins.  A more enlightened approach would be to earmark cost-savings made when switching overseas to invest in improving poorly performing elements of the customer experience together with the creation of new added-value services, such as those by First Direct - which have the added benefit of hardly costing anything! 

Off to Aspen, Colorado

Sat here in Newark Liberty waiting for connecting flight to Denver then drive up to Aspen for a week with the guys at Strategyn. Shall be blogging quite a bit over the next week about Voice of the Customer stuff as well as getting in some biking around Vail, CO. Should get some good pics of Rocky Mountains in all their glory.. . Well, you gotta have fun some time...!

The Empty Whitecoat

I got bored with Creating Positive Context, so with a hat tip to Charles Handy, and after about ten minutes thinking about it (heck the age of planning is now well and truly dead) I have switched the name of this blog to The Empty Whitecoat - for reasons I think I needn't explain. Well, maybe later.

Could you feel sorry for an ad man?

There is a terriffic article on the BBC website about the growth of product placement in films and on TV. Especially interesting is the huge volume of comments the story has elicited from readers, reflecting both sides of the argument, against or indifferent to placement, although the majority are resoundly against. Some of these comments are very anti-marketing and worth a read to get an idea of how people are thinking about the spread of media intrusion.

Offroad charity bike ride pictures

This weekend (July 29th - 31st), I completed a 165 mile solo offroad bike ride from my home in Buckingham to the famous Clifton Suspension Bridge in Bristol. The ride was in aid of Practical Action, a charity that develops sustainable innovation projects to combat third world poverty.

Their website provides a good description of their work and objectives:

Practical answers to poverty

Using our expertise in simple and appropriate technology, we make technology work for people living in poverty through innovative thinking.

Sustainable solutions

Sustainable development is crucial if poor people are to improve the ongoing quality of their lives. Our technologies are easily replicable, affordable and sustainable.

People focused

We help people to create their own solutions, apply and share ideas and skills that make their lives better and their communities stronger.

The ride
Despite getting lost a couple of times and suffering from blisters on my hands, I managed to complete the ride on schedule on Sunday, finishing to a terrific welcome from my wife and children, complete with homemade "Well Done Daddy" banner! It took me a good 45 minutes to do the last couple of miles - all those hours spent with the laptop taking their toll!

Below I have added some pictures I took whilst on the ride (evidence!). Nothing spectacular and a few embarrassing self-portraits but hey, what are digital cameras for?

Thank you
Of course, thank you very much to all of you who sponsored me to do the ride. If you haven't done so and would like to add a donation to help Practical Action, you can still do so using the excellent Just Giving service. The donation page for my event can be found at:

www.justgiving.com/chrislawer

Thanks! Now, what was I doing last Thursday?

Pictures

Before setting off, Buckingham, Friday 11am
Reaching the outskirts of Oxford, Friday 2pm
Somewhere on the Thames Path near Wallingford, Friday 4pm
Saturday on the Ridgeway, Didcot Power Station in the distance
Half-way down the Ridgeway, Sat lunchtime
Trail stretching ahead, Ridgeway
Rainclouds looming, The Ridgeway
Calne Locks, outskirts of Devises, Sunday 9am
Reaching Bath, Sunday 1pm
The Finish, Ashton Court Estate Bristol, Sunday 3.30

Volume Logic and iTunes

If like me you are working off a laptop and are an iTunes nut - and are frustrated by the quality of the sound coming through the speakers or via earphones, then I cant recommend highly enough Volume Logic from Octiv - a digital sound enhancer that you can download, trial for 14 days and then purchase for about $20. This adds noticeably superior sound quality- even when through the tinny little speakers that most laptops come supplied with these days.

Anyway, Its added a whole new experience to my listening which today is mainly consisting of Elliott Smith, Ed Harcourt , Ben Folds and Rilo Kiley - in case anyone is interested in an old man's musical interests.

Voice Marketing: Peppers and Rogers? Oh Dear

Other than a Door-step salesman, can anything be more intrusive and well, annoying than so-called "voice marketing"? Yes, its another label for a marketing fad likely to end up as innovation scree at the foot of the slowly-crumbling marketing mountain. What is it? Well it’s the practice of leaving answer machine advertising messages when people are out of the home of course...

Imagine the disappointment - you get home from work, notice that there are 3 messages on the answer-machine, put your feet up, press play and then listen to your three new "friends" –

BEEP – Hi its Bob from Bob's Double Glazing… you know we got a terrific offer for you if you just try us again,,,,,

BEEP Hey, Al and Jake's Funeral Cover Plan here – if you increase your premiums you can get a mahogany casket……

BEEP Afternoon, its Mary from Mary's Home Baby Proofing Service here (yep, I’ve seen The Simpsons) –

Exasperation!!! No real friends just a bunch of delusioned marketers - each wanting to build or extend that special relationship with YOU..

But what is most surprising is that I found out about this latest “panacea to cure marketing's ills” from an unlikely source - that one-time pillar of marketing respect and bastion of one-to-one customer learning relationships, Peppers and Rogers. Since their sale to Carlson Marketing Group a couple of years ago, they seemed to have lost some of their values (or the plot perhaps) as this extract from a white paper, co-authored with the US's "leading Voice Marketing specialist" would appear to suggest:

Retail marketers have a range of interaction tools to choose from to get the job done. An emerging option is voice marketing. Voice marketing helps retailers strengthen brand and communicate with customers more effectively by combining pre-recorded, telephone messages with professional voice talent. Designed to connect with existing customers, voice marketing allows retailers to accelerate their relationships with individual customers and capture higher value. By incorporating voice marketing into their initiatives, retail CMOs can reduce costs by eliminating ineffective campaigns and reallocating marketing resources. At the same time, they can make relevant and timely offers that increase revenue via improved response rates and a higher average transaction level. (whilst really annoying the other 99 % of customers - CL)

And then this:

The Mechanics of Voice Marketing

A voice message is typically a 35-second pre-recorded audio message that sounds like a live call.The messages are left on answering machines or voice mail systems. The retailer can determine the content, style, length and even gender of the voice for each campaign.To make connections, voice marketing relies on a combination of hardware components, including routers, dialers and servers.A typical campaign is launched between 10am and 4pm (when everyone is out- CL) and can be targeted at a focused customer group or expanded to reach millions of customers. Two differentiators are the realism of each call and the ability to differentiate between an answering machine and a live person.Through the use of voice talent, each message is “professionally unprofessional” (come again? CL) and sounds like a live person-to-person phone call. If the customer “picks up,” the technology recognizes the algorithm of a human voice and switches from a 35-second message to a shorter message that sounds like a simple alert.Typically, 20% of calls placed are picked up by a live customer, and results among customers receiving a live message versus an answering machine message are similar. On average, two in one thousand call recipients opt-out of future messages, in which case an inbound, automated calling system immediately processes the request.

Quite frankly this is so wide of the mark from Peppers and Rogers, it is almost funny - if it wasn’t so corny. Voice Marketing represents the worst excesses of ROI Marketing gone extreme. OK it is meant to be used for existing customers only and is trying to stick to FCC regulations. But even so, I cant help but squirm at the thought of answermachines being clogged up with ad messages as well as doormats etc..

But strangest of all is the title of this paper itself : "At the Eye of The Storm: How Retail Chief Marketing Officers can Deliver the Optimal Customer Experience". Where did that come from? What is obvious is that the Voice marketers have taken some Peppers and Rogers thinking on customer experience management and then tagged their rather desperate and tactical marketing method alongside it. The juxtaposition is odd to say the least - how can VM even hope to deliver an "optimal customer experience"? (By the way, I am loathe to give this a link - if you really want it, you can search for it on the P&R web site)

OK, Voice Marketing has been around a while but surely, endorsed by Peppers and Rogers?!! I dont believe it.

The supply of marketers

I have just come across this incredible statistic. According to the Marketing and Sales Standards Setting Body, established by the Department for Education and Skills (tough job they must have!), the number of marketers in the UK has grown by about 80 per cent in the past decade to no less than 545,000!! This is actually more than the number of teachers, engineers, doctors or accountants.

Marketing is becoming one of the fastest growth professions in the world. In the UK, I calculate for every 100 members of the British public, one marketer is somewhere amongst them. How do you know which one? Just mention the 4P's.....