The Jan-Feb HBR features the article “Rethinking Marketing,” by Roland Rust, Christine Moorman and Gaurav Bhalla. In it, the authors argue that B2C companies need to adopt strategies that put the customer in the center, and tailor products and services to small segments, rather than pushing products and services onto the mass market.

VRM advocates will encounter in the piece lots to disagree with around “managing” customers and pushing offers on them, Including a rather gruesome example of “one insurance & financial services company (that has) proved adept at tailoring products to customers’ life events.”

Customers who lose a spouse, for example, are flagged for special attention from a team that offers them customized products.

Nevertheless, there are many undeniably beneficial things that come out of the customer orientation the authors advocate. Most significant to me is their proposed shift in customer service from a cost to be contained to a strategic asset:

This function should be handled in house…to help cultivate long-term relationships. Delta Airlines, for example, recently pulled out of its call centers overseas because cultural differences damaged the airline’s ability to interact with its North American customers.

I spent time on the phone with Delta today, for the first time in more than a year, & I was pleasantly surprised with how adeptly the rep handled my call.

I’ve been preaching this for some time (here, here, here). Customer service is a vital customer touchpoint that should not only be done in house, it should be carefully monitored & scrutinized for valuable customer insights.

VRM conflicts aside, “Rethinking Marketing” is valuable for reiterating the assertion that customer service is a vital, core function of any organization that sells to people.

Related posts:
Good customer service is an investment
A method for gathering customer intelligence from your front-line staff
Customer service is such an important job, perhaps we should spread it around

I feel a bit like those folks who complained about the new Tropicana orange juice carton.

The editors of my favorite magazine, Harvard Business Review, have completely redesigned the look of the magazine. Editor-in-chief Adi Ignatius writes in his editor’s note, “we are excited to bring you a more modern, accessible magazine.”

He may want to hold off on the “accessible” comment. For me, the magazine has gotten busier – much busier. Bolder text, more graphics, more color. Everywhere from letters to the editor (now called “Interaction”) up front to the recommended reading list in back. I actually put the magazine down the first two times I started to read it. My eyes were boggling from all the colors and graphics.

In particular, the upfront IdeaWatch section (formerly Forethought) is a mess. Longer articles weave among sidebars – some relevant to the article at hand, others completely separate. And I had trouble differentiating. Is “Faith In Firms – as Low as You’d Expect,” on p. 22, part of the article “Can Technology Really Save Us”? No, it’s not. But the sidebar on p. 23, “Gauging the Impact of New Energy Technologies,” is.

This picture with its brilliant coloration and large, cartoonish numbers seems like what Edward Tufte calls “chart junk.” With four pie graphs, two outsized percentage numbers, the picture was utterly confusing to me. It took me a minute or more just trying to figure out what the graphs are trying to say.

And what of this?

(Full-size version here.)

If you can make heads or tails of this without referring to “How to Read this Chart” two or three times, I admire you.

Unfortunately, these examples are emblematic of the whole redesign. It’s far too busy for my taste. The great content is still there, it just takes more time and energy to wade through the clutter to reach it.

Perhaps I will grow used to the redesign. For certain my comfort level with the old design hasn’t helped me adapt to the changes. But I won’t ever love it, and I would be surprised if too much time passed before a “re-redesign” to improve readability and reduce the noise level.

Related post:
Customers are talking: Tropicana brings back old juice carton

B2B salespeople are familiar with the concept of the “buying center” – a group of people responsible for reviewing, analyzing and recommending purchases. The best salespeople cultivate relationships with lots of important folks at the client. They know that focusing on a single decisionmaker is a prescription for a lost sale. (Yet the “decisionmaker” myth persists. Salesperson: “Did a product demo with XYZ corp today.” Boss: “Great. Did you talk to the decisionmaker?”)

Consumer purchases don’t have a buying center, do they? Well, I did a project last year that involved trying to understand why people calling into a telesales center didn’t end up buying anything. The most frequent reason for them saying no? “I need to talk about it with my spouse/mother/sister.” They couldn’t make a decision without the concurrence of someone else.

This has implications for consumer sales of any significant size. Consumer sales channels – especially virtual channels like call centers and websites – are focused on individuals, not groups. They don’t have any easy way of involving that other person who needs to say yes. This was the puzzle my client faced.

Perhaps it’s too complex for consumer marketers to worry about. But by ignoring the buying center, they run the risk that their “buyer” loses his/her energy and commitment between the time they are ready to say yes and the time they get the go-ahead from that other person. That equals lost sales, and lost sales are expensive.

A bit of year-end horn tooting. Check in tomorrow for a list of the 5 best blog posts that I read this year. Happy New Year!

5. “Design-Driven Innovation”: The Powerful Advantage That Comes From Changing The Meaning of a Product – the review of my favorite business book of 2009.

4. P&G, Moving Into Services, Can Learn Lessons From Disney – Procter & Gamble is the world’s preeminent packaged goods company. But can they pull off a chain of car-washes? They might want to look to Disney, which successfully balances a content business (movies, television, etc.) with a service-intensive theme park business.

3. Kindle Illuminates the Skim-Pricing Strategy in Tech – Kindle’s fairly high initial price ($359) didn’t deter voracious readers, who were the product’s early adopters. I hope those who read that post also read this reconsideration: Re-Examining Kindle Pricing.

2. Another Kind of Value Proposition – a discussion of the importance of deep values customer unconsciously reference when buying/recommending products and services. These values can be identified by asking customers for stories about their experiences with a product.

1. The 5 Archetypal Business Twitter Strategies – 2009 will go down as the year when any post with “Twitter” in the title was read by lots of folks. I’d be surprised if that continued.

This week Doc Searls posted on an idea called “Personal RFP.” In this model, people wishing to buy a product would be able to put together an open “request for proposal” – essentially, a specification for what they want to buy, including budget, and solicit bids from suppliers wanting to sell it to them. [Nothing even approximately like this exists today, except perhaps Priceline, the reverse-auction travel broker, which is full of compromises to the Personal RFP model.]

Scott Adams of “Dilbert” fame made a similar proposal, and he created a catchy name for this type of service. He called it “Broadcast Shopping,” and described it like this:

The standard shopping model needs to be reversed. Instead of the shopper acting as hunter, and the product hiding as prey, you should be able to describe in your own words what sort of thing you are looking for, and the vendors should use those footprints to hunt you down and make their pitch.

For example, let’s say you’re looking for new patio furniture. The words you might use to describe your needs would be useless for Google. You might say, for example, “I want something that goes with a Mediterranean home. It will be sitting on stained concrete that is sort of amber colored. It needs to be easy to clean because the birds will be all over it. And I’m on a budget.”

Your description would be broadcast to all patio furniture makers, and those who believe they have good solutions could contact you, preferably by leaving comments on the web page where you posted your needs. You could easily ignore any robotic spam responses and consider only the personalized responses that include pictures.

This is something kind of revolutionary. “Customers are talking” has meant, by and large, customers responding and reacting to what companies do to them. Companies release a product, change a service, or make a promise, and customers, through their stories, say what they think about that. Those stories influence other buyers, competitors, regulators, and (hopefully) the company itself.

“Broadcast Shopping” is talking, too, but it’s active, not reactive. The customer sets the agenda, and companies respond.

In Searls’ terms, it’s a type of “Vendor Relationship Management” system, as opposed to the Customer Relationship Management systems that many companies utilize today to help them sell and service customers.

There are many profound implications of broadcast shopping. One that comes to mind immediately is this: it will greatly reduce the benefit companies get from distribution scale. If I am asking people to supply me, anyone can respond. Today, I have to seek out suppliers, and the bigger they are, the easier (by and large) they are to find.

Using Adams’ example, a small provider of patio furniture, who could provide a set meeting his specifications, would be on par with Wal-Mart from a distribution standpoint – they each could respond to the Personal RFP.

Broadcast Shopping also undermines traditional branding. Because any company could respond to a customer request, many choices are available, along with information that allows customers to evaluate the proposals independent of the brand identity of the product.

Broadcast Shopping doesn’t exist yet. But Searls is convinced it will, and soon. He writes:

All this is not only do-able, but inevitable….

Google should be interested because Advertising in Reverse, or Broadcast Shopping (a term I love, by the way), will either undermine or replace the company’s standing business model (which pays for all those freebies we enjoy).

Microsoft should be interested because this could give them something Google doesn’t have yet.

Yahoo should be interested because they need something new that’s a winning idea. Amazon and eBay should be interested because they’re already in that business, though in a silo’d way.

Oracle should be interested because it will sell more databases and Sun gear.

Apple should be interested because it’s one more area where they can push for new standards on which the range of innovation goes through the roof.

Every retailer and intermediary should be interested because the promise of the Net for buyers is not an infinite variety of closed silos, but a truly open marketplace where any buyer can do business with any seller — and on the buyer’s terms and not just the seller’s.

Behind many great customer-service stories is a front-line person who went outside standard operating procedure to solve a customer problem. Now this practice has its own name: Customer-Oriented Defiance.

In “Customer-Oriented Defiance [COD]: Exploring Righteous, Sacrficing and Sneaky Behaviours,” co-authors Cheryl Leo and Rebekah Bennett of the Queensland (Australia) University of Technology comb existing sources and do first-hand research of their own to flesh out the phenomenon. Leo and Bennett show that it is not a completely altruistic practice, nor always (or even primarily) beneficial to the companies involved.

Yet it’s clear from reading this paper, and backed up by my experience, that exceptional customer service doesn’t happen without front-liners (the most vulnerable staff in the company, the least paid, often the least respected) stepping out and taking some personal risk by addressing a customer problem in a non-standard way.

In the past, management has been able to avert its eyes and allow this to happen without explicitly sanctioning it (a pretty shameful practice when you get right down to it). But, with auditing/control technology on the rise, it will be harder for COD to occur without a paper trail, increasing the risk that stepping outside the lines, even “righteously,” will be caught and punished. (See this post on the benefits of lighter access-control policies.)

Which means that exceptional customer service will become even rarer than it now is – unless leaders recognize that some processes are art rather than science, including customer-service processes, and provide lighter constraints that reflect the values of the business, the worth of the customer and a respect for the judgment of the front-line employee.

After all, just because you can audit and control something, doesn’t mean you should.

Related posts:
Processes as art & science
Carnival of Trust (the benefits of lighter access-control policies)

(Thanks to Arie Goldshlager for pointing out this research.)

Two blog posts struck a chord with me this week. First, Bob Sutton posted on Wal-Mart’s decision to stock Girl-Scout-cookie knockoffs (the delightfully-named “Thin Mint-y Gate“). Then David Pogue provided an update on “Take Back the Beep,” his campaign to get wireless companies to stop playing lengthy introductory messages to callers trying to leave voice mail. Verizon’s ham-handed response fascinated me–especially considering the more mature and enlightened reponses of VZ’s competitors, and the high profile of Pogue’s campaign. Here’s how AT&T handled it, then Verizon:

Mark Siegel, AT&T’s executive director of media relations, wrote with some very encouraging news:

David: All the messages we got from customers really made us look again at how we handle voice mail, and we are going to make some changes. I commend you for raising the issue.

– First, we really appreciate hearing from the thousands of customers who have contacted us.

– As I know you know, any customer with our Visual Voicemail service does not listen to an upfront voicemail message. Today, our iPhone customers enjoy Visual Voicemail. In the near future, we will make Visual Voice Mail available on other devices.

– In the meantime, we are actively exploring how to shorten the voicemail message on our other handsets.

Verizon’s PR contact, Tom Pica, hasn’t responded to my request for a progress report.

He’s probably still irritated at me. When ABC News interviewed him about this campaign, he told them that customers can already turn off the instructions. Which isn’t true. So that night on Twitter, I said that he was lying.

He called me to let me know that he wasn’t lying—he was misquoted. What he said was that you can turn off *voicemail altogether* if you don’t like the 15-second instructions.

Besides the Schadenfreude factor, these stories are notable because they show how isolated large companies are from the outside world. In other words, they are able to take carefully-considered actions that, once revealed in public, are immediately ridiculed and seem perverse and self-defeating. “What were they thinking?” is the only sane response.

But there’s an explanation. Most large companies are hermetically sealed off from the outside world. Within the walls, these decisions don’t seem perverse. They seem sensible and logical. Verizon responded to Pogue’s campaign as an attack, not as a dialogue. They defended, counterattacked, and discredited. Pogue (who of course has the easier job here) retained his considerable sense of humor and used Verizon’s words against them. One can almost feel the VZ spokesperson’s frustration when he claimed he was misquoted–all his tactics conceived inside the company walls had backfired.

This bunker mentality infects companies when they deal with outside criticism. Wal-Mart has learned volumes of lessons on its responses to the environmental movement, union organizing, community protests, etc., and now much more sensitively deals with these outside critics (even learning from them!). However, Thin Mint-y Gate shows how inside-the-walls corporate strategy, obsessively pursued, can create “what were they thinking?” moments.

Sutton writes in his post:

The brilliance –and the Achilles heel — of Wal-Mart is that they talk and act as if the answer to every problem is to use their scale, bargaining power, and speedy implementation to tackle any problem by driving down the price they pay and pass it along to consumers.

Wal-Mart’s strategy has made them the largest retailer on Earth. So they apply it “to every problem” without enough reflection, questioning or dissent. Inside the walls, mint cookies are just another product, not a national symbol of the Girl Scouts.

Companies have increasingly realized that the outside world matters–whether in questions of sustainability, regulation, trade and economic policies, etc. They have groups that do face outward and deal with these issues. But the Wal-Mart case in particular shows that departmental approaches are insufficient.

It’s not enough to open the curtains in one part of the building to let the world (and all its messy opinions, obstacles and arguments) in, while leaving them closed in other parts. The light, too, must penetrate to the very center of the organizations, where people far from the customer, the press and the government continue to drive decisions that, when presented publicly, make their companies look stupid.

It’s time to bring the outside in, indeed.

Related post:
Why are companies so inwardly focused?

The dustup over Apple’s disabling of the Google Voice app on the iPhone is getting interesting. According to David Pogue, Google is rewriting the Google Voice application so that it will run as an ordinary web page–but be accessed just like the iPhone’s approved apps.

Why does AT&T care? Because Google Voice (like many other, much smaller applications) attacks the carriers’ most vulnerable pockets of profit. Text messaging costs virtually nothing to provide but yields the carriers 25 cents per message or $5 and up for a bundle of texts. International calling is infrequently used but, at 25 cents/minute and up, commands direct margins of somewhere around 92% (by comparison, Skype international calls to landlines average around 2 to 4 cents per minute).

So, at one level this is a technical or commercial dispute between corporate giants. At another, though, it’s a front-line battle for customer transparency. If AT&T, Verizon, etc., by dint of competitive threats, are required to reprice these fat-margined services, they’ll have to forgo profits, or redistribute the costs to other services–ones which are more central to their offering and which can be more easily shopped by customers.

Perhaps then we’ll get a bit closer to wireless service packaging that’s friendly, or at least less forbidding, to the customers paying the bill.

Related post:
David Pogue’s “Take Back the Beep”

There have been expressions of customer outrage in the past, but this one feels different. David Pogue, the widely read tech columnist of The New York Times, wrote a couple of weeks ago about the instructions wireless companies force you to listen to when you leave a voice mail for a cell customer, or retrieve them from your wireless phone.

Pogue asserted that the lengthy instructions were intended to boost usage and thereby carrier ARPU. He followed the initial column with a series of posts (begin here) on a campaign he titled “Take Back the Beep,” in which he asked readers to contact their cellphone carriers to complain about this practice.

The campaign was referenced by bloggers Doc Searls and Umair Haque (creator of the Edge Economy blog and possessing a, say, radical view of the vices and virtues of corporate America).

What’s different this time? Pogue, Haque and Searls enjoy a large, influential audience via the blogosphere and Twitter. This gives them real-time weapons they can deploy without going through editors’ approval. And their voices support each other, and inspire other writers (um, like this one) to further spread the word.

How different this is to one enraged customer browbeating a poor customer service rep! Perhaps this is the first strike in the battle against companies customers hate.

Related posts:
Companies profiting from customers’ mistakes, watch out
Doc Searls runs up against Simply Everything’s limits

I posted earlier today on Sprint’s progress in customer satisfaction. It’s not all good news, though. Internet sage Doc Searls often posts on his experiences with suppliers (perhaps part of his work on Vendor Relationship Management), such as Apple and Cox Cable. Today, he wrote about Sprint and a $500 bill he got from them when he unwittingly exceeded his usage limit on his EVDO wireless card. (You didn’t think there were usage limits on “unlimited” plans? Think again.)

The problem was “resolved,” kind of:

The Sprint person on the “courtesy call” knocked $350 off the bill. That was because she was ready to “work” with me on the matter. I asked her how she arrived at that number. She said she couldn’t say.

Searls is a great observer of the absurdity of large company bureaucracies and the battle between consumer and supplier. He’s also an artful complainer. I’ll be staying tuned to see if there’s any further fallout from his latest experience.