One of the best panel sessions I attended at this year’s SXSW Interactive was Customer Service is the New Marketing. This panel featured speakers from shoe retailer Zappos, photo site Flickr, online calendar service 30 Boxes and Satisfaction.

The moderator, Thor Muller, has posted a recap of his presentation on his blog.

Zappos is Customer Service

The power house of customer service on this panel was Zappos. I was blown away at how dedicated they are in caring for the customer.

They made a conscious decision to spend money on the customer experience instead of marketing. The resulting word of mouth marketing has significantly grown their business. Zappos’ Tony Hsieh went through several things they do to provide a superb customer experience:

• Toll free number available 24/7
• Free overnight shipping both ways: for your order and returns
• 365 day return policy
• Fast, accurate fulfillment
• Friendly, helpful “above and beyond” service
• Will occasionally direct customers to competitor if Zappos can’t help them.
• Call center employees don’t have set scripts, they are instructed to customize the interaction with the customer and think for themselves. Call reps should talk on the phone like they would with their neighbor.
• Call center doesn’t have “call times” or sales-based performance goals. This allows the call reps to focus on the customer and not some impersonal number goal.
• Zappos started by only selling drop-shipped products. As they ramped up internal inventory, they saw they could only give the best customer service on products they directly sent the customer. It reached the point where they chose to focus on the customer and gave up 25% of their revenue (all from drop ship) to focus on only products they inventoried.
• Every employee, irregardless of position, goes through a four-week training, including phone time, to help them best fit the culture and know how to serve customers.

It is OK to apologize

You can admit mistakes. The very act of doing so will help generate trust with your customers.

Several panelists reminded us that it is OK to admit fault, and say “I’m sorry.” By making that statement, you’ll often lessen tension with the customer.

Handing Support Issues

You don’t have to fix everything. Some things are outside your control. If you explain the situation to the customer, odds are they will understand and may even help you fix the issue.

Flickr’s Heather Champ has a sticker on her keyboard that reads: “soft, pleasing tone of voice.” This reminder helps her stay calm when customers get irate. You need to have guidelines that you can’t let people cross. When they do, “don’t fall for the bait” and feed their anger by responding in kind. Remember: “soft, pleasing tone of voice.”

If you fix bugs in your software or process quickly, they won’t build up and affect more people.

Lessons Learned

Zappos’ Hsieh said that retail companies can compete at three main things: selection, price, or service. At most, you’ll get two of the three. You have to decide which ones you want to focus on. Zappos has chosen selection and service. By so doing they knowingly lose many price-centric customers (and that is OK!).

When your company decides how it will focus your efforts, remember, you can’t be everything to everyone. In order to provide a memorable and loyalty building customer experience, you can’t neglect the “service” part of the equation.

I was booting up my computer the other day when my Norton firewall prompted me that it was time for a renewal. This message came in the form of the concise little window you see here:

Norton could have just asked if I wanted to renew my subscription. However, they didn’t stop there. They threw in this little gem:

You have been protected against 72986 viruses over the last 707 days.

That sentence alone made me think: “Wow, that is a lot of viruses. What would happen if I didn’t renew?”

No Freebies

You can’t assume you’ll retain current customers when it comes time to renew their service or buy from you again. You need to be prepared to re-earn their business.

Reminders

Help the customer remember all the beautiful benefits they enjoyed because they used your product. Norton reminded me of the security I may have taken for granted. Help the customer recall the pain they felt before they found you and the joy they’ve had since their initial purchase.

The Future

Customers will renew or buy from you again when they don’t like the vision of the future without you in it. I don’t really want 70,000 new viruses getting through to my computer next year. So what do I do? I renew my subscription.

Persuasion

Paint two pictures: one with your product and its related benefits and one without it accompanied by the negative consequences.

You don’t have to spell everything out for customers. Spark their imagination or help them doubt your competition and you may just re-win their business.

Every week we get a handful of retail advertising fliers in the mail. Every week it seems the sames stores are offering the “lowest prices of the season.”

How can you keep offering the lowest prices of the season every week? Either your prices will rapidly approach zero dollars or you’ve got a crazy scheme for identifying seasons.

So what is wrong with this approach?

You’re setting the expectation with customers that prices will always be a little better next week. So why should they go buy from you today?

You start to lose credibility when “sales” don’t really match the hype you’ve placed around them. Can I believe your claim this week if you said the same thing last week and told me I’d never hear it again?

Aside from undermining trust in your advertising and marketing claims, gimmicks like “lowest prices of the season” turn the focus away from the true value of your product and hinge everything on the lowest-price-wins-all mentality.

Newlin’s Shopportunity talked about focusing on value instead of price. You’ll never be able to win on price alone since someone can always undercut you. The true value, in terms of benefits, of your product should be your unique advantage.

Kate Newlin’s Shopportunity! dedicates a chapter to infomercials. These common late night television staples are amazingly effective in grabbing people’s attention and money.

Newlin quotes successful marketer Greg Renker:

“Part of the power is in the myth,” says Greg. “We want the story, the narration, we want to know the creation story of the product. Customers want to know its genesis: Who created this product and why. Who uses it? … The best product is the one that delivers the best story. Our way of looking at it is to say ‘Feel, Felt, Found.’ In other words, I know how you feel, I felt that way too, until I found…

Feel and Felt

Empathize with prospective customers. Instead of simply broadcasting your message to the masses, focus on the individual and on the particular situation. This will resonate with prospects and drive them towards the purchase.

Found

Your company is the solution. Your product is the answer. Once the customer realizes the problem and that you understand her needs, you need to provide the answer.

Perfect Match

When you sync up with potential customers using these three powerful hooks, you’re using the power of emotions to make the sale. People buy based on emotion but justify it with logic. So take those first steps and reel in the customer with a great story.

In Crossing the Chasm, Geoffrey Moore references Theodore Levitt’s concept of a “whole product.”

Moore summarizes this concept:

The concept is very straightforward: There is a gap between the marketing promise made to the customer — the compelling value proposition — and the ability of the shipped product to fulfill that promise. For the gap to be overcome, the product must be augmented by a variety of services and ancillary products to become the whole product.

What is your whole product?

Aside from just your core product, your customer may be expecting a number of different items to be “included” in the sale. These could be:

• warranties
• technical support
• return policy
• installation
• user manual or instructions
• how-to guides
• starter kits
• necessary accessories

Customer Expectations

Your customers have high expectations when they purchase your product. They’ve believed your marketing and now visualize themselves in the dream world you’ve promised. When they get your product home, you better hope it lives up to the hype.

Your customer’s expectations are built from various different sources, including:

• past experience with your business
• advertising
• consumer reviews
• product packaging
• word of mouth from friends and family
• price
• product’s copy writing
• rebates

All of these inputs get mixed together in the consumer’s brain and form their idea of the “whole product.” Will your product or service match that expectation? Understanding your customer will greatly improve your chances of delivering on their expectations.

How do you go above and beyond the simple product or service in completing the customer’s “whole product?”

Previously, I talked about Silk yogurt’s cost-saving measure of reduced packaging. While this is a great initiative, the wording on their packaging left me a little confused.

Environmental Benefits

As you may remember, Silk’s label touts:

Losing our lid saves over 100,000 pounds of plastic annually which is equivalent to planting 68 acres of trees every year!

Every loving spoonful of Silk Cultured Soy is powered by the wind!

I’m all for reducing the number of plastic people will throw away. But how does plastic directly correlate to trees? Silk’s claim seems impressive but both sides of the equation don’t seem to match.

Due to this confusion, I contacted Silk via their website. After quoting their package label, I wrote:

How does saving plastic correlate to trees if plastic comes from petroleum and not trees?

I like your impressive numbers but both sides of the sentence don’t seem to match the other.

Can you clarify this for me?
Thanks.

I’m yet to receive a response to my email.

Keep it Revelant

And while we’re on the topic, what does wind power have to do with saving plastic lids? Nothing except they are both Earth friendly. Did that last sentence really belong on the prominent foil wrapper along with claims about plastic lids? Probably not.

When crafting copy on packaging, keep it relevant. Pick your main point and stick to it with supporting facts. This will keep your customer focused on the big principle you’re hoping to drive home while avoiding tangents or other distractions.

On my way home from work this week I found myself behind a Southeastern Freight Lines truck. As you can see from their website, the name accurately reflects their business across the southeastern parts of the United States.

Do all companies with regionally specific names do business in their representative geographic area? Let’s take a look.

Compass Points

Should you use the points of the compass in naming your company? Take a look at Southwest or Northwest Airlines. These airlines do have routes that cover their namesakes. However, they have definitely outgrown their original geography.

Compass points are relative. South of what? West of what? It really depends on where you are standing.

City Names

Here in town there is a store called “Austin Affordable Furniture.” They have one location, aptly found in Austin.

What happens if they start to expand to neighboring cities like Round Rock or Cedar Park? The city name may still hold up because you’re close enough to Austin. However, what happens if you grow and spread across the state of Texas? Or if you go national?

Some regional names may shoehorn you into a market that you outgrow down the road.

These types of names may give you growing pains later:

• city names (e.g. Austin Affordable Furniture)
• county names (e.g. Bexar County Towing)
• state name (e.g. California Pizza Kitchen, Texas Instruments)
• national names (e.g. American Airlines)
• regional names (e.g. Tri-County Plumbers)

Consider your growth potential and your market before picking a regionally specific name. Do you only provide services in that area? What about tomorrow, is that still true? Once you’ve established yourself and your brand, it will be extremely difficult (and expensive) to change names.

Go Generic

You can avoid the locale-specific problems by using generic geographic names like:

• national
• global
• worldwide
• countrywide

These have their own issues since you’ll still have to scope your company to some geographic restriction.

Combination Names

Here in Austin I see lots of companies named “AusTex”, “CenTex” or the like. These obvious contractions of, for example, Austin and Texas, give local flavor to a company name.

Will this type of name scale nationally or globally? Maybe it would lose its regional specific meaning and take on another as the company grew.

Local Name = Local Appeal

One advantage of a local name is that it appeals directly to local customers. Many people like locally owned businesses and will frequent them over larger franchises.

How Would You Name Your Company?

Naming your company is a big decision that will affect your business for years to come. In addition to regional names, there are several other points to consider. Make sure you look at all your options and the ramifications of each.

What do you think? Do you know of companies that have overcome their regional namesake to achieve greater things? Would you name your company something regionally specific?

We got a card in the mail this week from our favorite home improvement store Lowe’s. The cover of the card stated: “Get your next project started.” Inside was a ten dollar gift card labeled “FREE $10 Project Starter.”

Normally when I get a gift card, I think about what can buy for that exact amount. This time was different. My first thought was about the fence I need to replace and the bathroom we’d like to paint.

Why was that?

Lowe’s had carefully crafted the wording of their card to make me think about my home improvement projects. They had helped me think big.

Think Big

If you frame your customer’s expectations on something small, they’ll buy exactly that. If the Lowe’s card had shown me pictures of ten dollar items, I would have gone with my typical thought and bought something for the exact price of the gift card. However, they set my sights on the big picture. Your business should do the same.

If your company can meet a customer’s big needs, surely you can handle the little things as well. Focusing on the big picture will essentially up-sell some customers and still give you the safety net of those that fall back to smaller purchases.

Think Possibilities

You want your customers to think about all the wonderful things they can do with your product. This gift card example helped me remember all my projects and how I could buy supplies at Lowe’s.

Get your customers thinking about possibilities by addressing their current situations, pain points, or responsibilities in your marketing.

Start Sparking

To successfully spark your customers’ imagination, you have to know what they dream about. This knowledge only comes when you find out exactly what kind of customers you have. Take that familiarity with customers and use it to your advantage!

I recently saw international shipper DHL’s commercial on TV. The piece ended with the announcer stating:

Bringing customer service back to shipping.

Those last words stuck in my mind and left me thinking: “what did they mean by that?”

I immediately remembered all the bad experiences I’ve had with DHL’s competition. Foremost of these has been the United States Postal Service.

This is exactly what DHL wanted me to think. Brilliant! The natural next course of action would be for me to say: “Oh yeah, I did have a bad experience with UPS/Fedex/USPS. Maybe I’ll try DHL next time.”

Overt Jabs

You can indirectly attack your competition by making them look bad. You don’t even have to mention names. By alluding to problems of customer service, DHL let the customer draw the natural conclusions. Can you do the same in your industry?

Customer Realization

Customers are more likely to act upon conclusions that they make than ones you force feed them. Lead your potential customer down the path but let them take the final step. Make it so easy and natural that they have no choice but to choose the conclusion you want.

With the Winter Olympics a few weeks behind us, I must ask: did you buy anything you saw advertised on TV during the Olympics solely because you saw it during the Olympics?

I vaguely remember car commercials: were they for Chevrolet? I don’t know because I didn’t buy a car due to its appearance on TV.

How about beer? There were lots of those commercials. Which brand? I don’t remember because I don’t drink beer.

Doesn’t Home Depot have lots of Olympic employees? I don’t care because Home Depot has failed me in the past. I love competitor Lowe’s.

Then there was that one movie preview I kept seeing. I think it was The Da Vinci Code. This one did look promising. I’ll have to add it to my list of movies to see.

Of the four commercials I can remember, I will most likely take action on one of them (the movie). Why is that? Because TV commercials are too broadly targeted.

Mass Media

As Seth Godin communicates in his book Purple Cow, mass marketing is useless. Companies spent millions of dollars on Olympic advertising and sponsorship to questionable financial benefit.

Brand Reinforcement

Commercials during the Olympics, while ineffective in swaying you to purchase new products, did hammer the companies’ brand into your head. This may just leave customers thinking: “oh, I already do business with company XYZ. That’s nice that they sponsored our Olympic team.”

Doing Good

You may say that sponsoring the Olympic team is a noble and charitable endeavor. Absolutely. Guy Kawasaki in his Art of the Start reminds us that we should give back to the community by being a Mensch. Give charitably because it is the right thing to do, not because you think you’ll gain business because of it!