BrandWatch by Michel Gutsatz

When Angry Customers Strike Back at Brands

For several years, on BrandWatch, I have defended the idea that the arrogance shown by luxury brands is no longer acceptable in the 21st century. These brands, in their race for development, have constantly expanded their customer base - for the last 20 years we have entered the era of what I call "Luxe Populi". This democratization of luxury has come at the expense of customer relationships and quality of service. These new customers have, for a long time, accepted the poor service, disdain or even lack of consideration of certain brands. However, the context is changing under the pressure of two factors: the consumers' / clients' consciousness of their own power ("consumer empowerment") and the use of the Internet as a tool to air their grievances.
Let me illustrate this, using two very different examples - both involving automobile brands:
In 2006, an American client of Mercedes, a marketing specialist, wrote a series of posts on the Internet telling of his troubles: "Mercedes - a case study on how to squander a great brand".  They are part of a series entitled "Worst Practices" where we find, for example, "Being in "HP Hell"", "Alaska Airlines Sucks! (WARNING: DO NOT FLY!)", "Why are companies thinking that it's OK to trick their customers?", "Bruegger's Wins Award for Worst Customer Service", "Why Is customer service at Starbucks consistently great - while The service at most other take-out joints sucks ?"... Just run-of-the-mill complaints that would have remained confidential - if they had not found a relay.

A few weeks ago, the Chinese owner of a Lamborghini Gallardo, furious about the problems he had with this car, decided to destroy it in public:

"In one instance, the Lamborghini wouldn't start, so the owner had it towed to the local dealer. Upon arrival at the service bay, the owner found that the car had been damaged in transit. No one would claim responsibility and the original non-starting issue still wasn't fixed.  The Gallardo owner attempted to escalate the issue within the Lamborghini family, ultimately trying to reach out to Lamborghini CEO Stephan Winkelmann. No response or solution has been offered so the owner has become decidedly frustrated. So frustrated, in fact, that he decided destroying his Lamborghini in public would be the best way to garner attention." (Source: Autoblog)

Two points are worth noting here:

• The car owner had it destroyed on "World Consumer Rights Day", saying, "luxury brands are exploiting China and not delivering the same quality and service as they do elsewhere in the world".
• The story gave rise to 180,000 citations on the Internet, and a video shot on the occasion and posted on YouTube was viewed 700,000 times...

These two stories have nothing trivial about them: they show how, in the space of 5 years, the Web has helped the development of consumer power - and that China may prove to be an expert on the subject. Luxury brands should make certain that they do not underestimate Chinese consumers.

 

Three Lessons on the Power of the Internet

The beginning of 2011 has been exciting for the observer/actor that I am!  The Internet is proving how powerful it is, and I would like to draw three useful lessons that brands could draw from this as well.

• The resignation of a German Minister: Karl Theodor von und zu Guttenberg, the Defence Minister, was accused of plagiarizing a large amount of material when writing his Law thesis. Using the help of the search facilities of the Net, users discovered that it related to 324 of a total of 393 pages. An interactive website "GuttenPlag Wiki" conducted the investigation. Dubbed "Baron zu Googleberg," the resigning Minister saw dozens of lawsuits for "breach of copyright" filed against him.
• The dismissal of a star designer: "Today, because of the particularly odious nature of the behaviour and comments made by John Galliano in a video released Monday, Christian Dior has decided to suspend him and a dismissal procedure has been initiated against him". John Galliano was therefore fired by Dior following the publication of a video shot on a cell-phone by The Sun ... and posted on its website by the British tabloid.
• A Tweet from a customer:  Normand Boulanger, Canadian journalist (read the story on Rue89), waited interminably to be served at a Nespresso boutique in Montreal. After waiting for 30 minutes, he sent a Tweet to Nespresso in the U.S.:
  

"The store manager came down about twenty minutes later and asked me what happened. So I told him my story. The server then came up to me and said, "you tweeted that you were badly served".  I replied, "Yes".  He said that Nespresso Switzerland had called and that he risked losing his job because they are very strict about the service".  He had sent his Tweet to Nespresso in the U.S. - and Nespresso Switzerland had telephoned the boutique!
Lesson N°1:  Important people (and brands belong to this category) are constantly under the public eye.  Whenever a question arises and whenever an "out-of-the-ordinary" event occurs, the Internet mobilizes itself: each small compromise, omission, error, is relayed around the world.  Of course, plagiarism is universal - and for years it was very difficult to prove. Today the Internet has become an instrument at the service of accountability: we are responsible for our actions, and our shortcomings are immediately identifiable.
Lesson N°2:  We are entering the Age of Responsibility. Individuals as well as brands need to have ethical attitudes, to return to their values, to make them meaningful ...
Lesson N°3:  Ground reality - in this case the boutique, because of its irreducible human dimension, falls far short of the ideal the brand strives for.  The contrast between the rapid flow of information via social media and slow communication on the terrain results in a potentially explosive situation:  Brands will soon have to address the question of bringing the two into line.

Do Brands know how to use Social Media?

A spate of recent studies ("Social Media in Marketing Mix: Budgeting for 2011, Debra Aho Williamson, e-marketer / "How Engaged is Your Brand?" Alterian 8th Annual Survey / "Why Social Media Projects Fail: a European Perspective ", BSI) tend to prove that brands, whether in Europe or in the USA, do not know how to make use of social media. I propose to take another look at the salient points of these surveys:

1. Brands do not incorporate social media into their overall strategy: all too often they are just used as "one-offs" or driven by a fad ("this is something important so I'm going to do it even if I don't know why", so says another study).  Poor integration into distribution channels, CRM, or customer service, reduces social media to merely a tool for marketing and/or communication.  This shows a basic misconception of the influence that social media can have in building customer relationships.
   
2. Brands continue to consider social media as just another "top down" communication channel: they overlook their very spirit, which is to maintain a conversation. Besides the fact that some of them (including luxury brands) are reluctant to build a relationship as "equals" with their consumers, they do not equip themselves with the tools to track online discussions in which their name is mentioned – although these exist and have proven to be very useful (a member of The Scriptorium Company network is an expert in the matter).
3. The marketing strategy is too often stereotyped, and lacks real personalization of the relationship: this contrasts with one of the mega-trends that The Sscriptorium Company points out in its reports - the need for personalization. They need to go beyond traditional CRM - and build real "personalized consumer journeys".
4. Brands find it very difficult to determine the ROI of their Web initiatives: unlike Internet pure-players where all data is computed, all the brands hailing from the offline sector do not know how to equip themselves with ad hoc measuring tools.
   

The White Paper published last week by The Scriptorium Company ("Case Study: Customer Experience Design for Luxury Brands / Re-engaging with consumers to design integrated customer journeys in the luxury industry") shows how customer relationships have to be placed at the core of brand strategy today. Once it has been defined, "social media", CRM, and communication then become so many tools at the service of customer relationships.

Customer Experience Design: A White Paper from The Scriptorium Company

In 2010, the Scriptorium Company conducted a mission for a luxury beauty brand. The brand in question wished to develop "customer journeys" that straddled multiple distribution channels, enabling it:

• To connect directly with its client(s) and win their loyalty;
• To offer them "contact points" that were consistent with the values of the brand.

We invite you to download the "White Paper" that describes this mission.

"Case Study: Customer Experience Design for Luxury Brands
Re-engaging with consumers to design integrated customer journeys in the luxury industry".

 

 

P&G innovates with its business models

Procter & Gamble does not stop at just developing its brands.  Over the last four years, the company has launched into a reflection on its future poles of development which show three main characteristics:

1. Building upon key consumer trends;
2. Implementing an innovative business model;
3. Reinforcing the value of its brands.

P&G has thus set up a division - P&G FutureWorks - which is driven by two work ideals:

• Working in partnership – with "business contributors";
• Developing business models focused on service.

By connecting with external partners, our scope has expanded beyond P&G's strategic core businesses into new channels and domains. P&G FutureWorks seeks to create adjacencies and new business models for P&G brands in high-growth categories that are on-equity, strategic and service-based.

As a result, three initiatives have emerged over the past two years:

• Mr Clean Car Wash: 16 car-wash centres (including 13 in Atlanta) that capitalize on the Mr. Clean detergent brand - and strengthens it by adding a "service" aspect as well. Developed by franchisees, this brand places the accent on cleanliness, comfort, recycling of wastewater, price ... and sells Mr. Clean products.
• Tide Dry Cleaners: 4 franchised laundries (Kansas and Ohio) offer a unique range of services (drive-in / 24-24 secure deposit / same-day service / alterations...) in clean and odour-free spaces…
• The acquisition of MDVIP: a network of several hundred doctors who have established a one-to-one relationship with their patients. For an annual fee of $ 1,800, each person is entitled to health monitoring, 24/24 - 7/7 availability, a personal website and immediate access to a doctor. Each of the doctors handles 600 patients (as against an average of 2,000 in the U.S.).

Three elements seem essential here – those that The Scriptorium Company also systematically encourages with its clients:

1. The partnership aspect: 50% of P&G's innovations originate from outside the company - including its consumers;
2. The quest for new business models - an approach to innovation that is too often overlooked but which truly creates value;
3. The creation of new services in areas in which the group's brands excel – corresponding to a mega-trend that we now see among consumers.

Customer Experience: United Airlines vs. JetBlue

Two recent examples highlight - in the same industry, airlines – the adverse consequences, in terms of image, of poor management of customer relationships and the role that the Internet and social media can play:
In 2009, Dave Carroll, a Canadian singer, who flew United Airlines, realized that his guitar - although well protected - had been irreparably damaged. He asked the airline to reimburse him ($1200) - which it refused, arguing that his claim was not filed within the 24-hour regulation limit. After 9 months of negotiations and realizing that the company would not acknowledge its error, he composed a song, "United Breaks Guitars", and posted it on YouTube in July. In just a few months more than 6 million visitors had viewed it (today they number almost 10 million).  This song was followed by two others, including one describing the problems he had had with United Airlines' customer service.  In fact, the most remarkable reaction was that of the brand that made his guitar: they presented him with two guitars!

My second example may at first seem very different but I find many similarities between them.

The New York Times tells us that on 9 August, on a JetBlue flight (the low-cost American airline whose unusual media campaigns I have described on BrandWatch), a passenger rose from her seat well before the plane came to a halt, and started to retrieve her baggage from the overhead bins. Refusing to obey the steward's orders to sit down, she insulted him and threw her bag in his face. The steward, Steve Slater, activated the emergency slide and quit the plane, saying that this incident was the one incident too many in his 20-year career. He was arrested later in the day at his home and went on trial for endangering the lives of others by operating the slide.
The Internet unleashed its wrath - coming to the aid of Steven Slater.  The surfers, almost in unison, asked JetBlue to reinstate him and appoint him as … head of customer relations.  Laying the blame on the growing number of incidences of rudeness while flying, they took sides with the steward. Others found posts that Slater had written on forums analyzing the deterioration of relations with passengers after certain airlines started charging for luggage. In the end, employees of the company hailed him as a "hero" – saying they themselves were at the end of their tether.  A "Ballad of Steven Slater" has even been viewed over 100,000 times on YouTube.

After a long silence (in Internet time) and after being pressed for answers several times, JetBlue finally responded on their blog on August 11 by creating a space for discussion called "Sometimes The Weird Things Is About us", where anyone could express their opinion on the Slater case.
In both cases the Internet (and YouTube in particular) played a decisive role in implicating the company.  JetBlue - more reactive than United Airlines – was able to establish a dialogue with its customers and allow them to communicate among themselves. In both cases we see that building a customer relationship is not achieved through training alone, but by a real reflection upstream on the reasons for lack of interest or even conflict … and accepting that this could also be one of the repercussions of the business model of the company.

Customer Experience: after-sales service at A. G. Spalding

Less than two years ago I bought a bag from A. G. Spalding & Bros.  Recently, its two zippers came off, so this week I went to their shop located in the Marais in Paris.
Sales assistant: "To benefit from the 2-year guarantee, I would need a proof of purchase"

Me: "I do not have it.  But I purchased it recently - you will be able to find the collection in which this model is shown..."

Sales assistant: "I do not know this model. But then, I have been here only for a very short time...."
Me: "How long will it take to repair?"

Sales assistant: "From 3 to 4 months ... We will send it to our workshops in Italy. There is a despatch every month ... it's too bad that the one for December has already been despatched.  So we will send it in January..."

Me: "How much will it cost me?"

Sales assistant: "Around 30 Euros per zipper..."
While I was leaving, to reassure me he added, "You know we have pleasant surprises sometimes... It may take less than 3 months..."
This was my encounter with the zero degree customer experience - with a salesman who was really very courteous:

• An after-sales service deadline that is stupefying;
• An organization (monthly shipments to Italy) that deters rather than encourages the client from having recourse to it;
• The impression that even if I had obtained service under the guarantee - the time taken would have been exactly the same...

One could dream of a situation where the salesman was able to determine that my bag was part of the 2009 collection and it was therefore certainly still under warranty ... but that would be expecting too much. The only thing I wanted was to retrieve my working tool – the manufacturing quality of which really proved to be very mediocre.  Alas!  Sergiolin, the Italian leather goods manufacturer (they recently bought Lamarthe) which owns the American brand, A.G. Spalding, probably never considered the question of customer service, content to be just a seller of products...

Get Satisfaction: An innovative customer-relationship platform

Too often brands do not know how to build a community – in terms of a space for communication between their consumers and themselves. They often approach, haphazardly, CRM, social media, iApps, consumer service, etc. without really integrating them into a long-term client strategy. The client/consumer has therefore a host of contact points with the brand, consistent in terms of image, but which in no way help it to capitalize on, and turn those contacts into, a profitable long-term relationship with the client.
A platform has been created which offers brands a space for communicating with their clients: it is called Get Satisfaction.  To me, this concept seems perfectly adapted to the consumer expectations of today: a place where you can chat and also find answers to questions you ask ... the new customer service is here!

 

 

Amazon: Be Obsessed with Customers

July 2009: Amazon announces the acquisition of Zappos - through a swap of shares. Choosing this opportunity, Jeff Bezos, founder and CEO of Amazon, posted a video in which he explained the 3 essential things he has learnt in his professional life at Amazon:

• Being obsessed with customers
• Invent
• Think Long Term

He also explains why the strong customer-focus developped by Zappos explains their common move. As Tony Hsieh, Zappos CEO, says: "People may not remember exactly what you did or what you said, but they will always remember how you made them feel".

Here is this video - which reinforces me in the idea we develop at The Scriptorium Company: tomorrow's "success stories" will be brands that will have developped innovative customer experiences!

The Apple Ecosystem

We just learned that Apple intends to become a virtual mobile operator (MVNO).  The brand has worked for several years with Gemalto to develop a revolutionary "chip":  this SIM card is wholly virtual.  According to Les Echos (29-30 October), it is "an electronic component loading flash memory to activate the telephone on the operator's network".  We are therefore going to see a fundamental change within the telecommunications market:  operators will potentially be "responsible for maintaining a network of channels, and double as bankers who might subsidize telephones".  Mobile telephony will see a revolution - just like music did after the launch of iTunes.
I think this is additional proof of the existence of a genuine Apple ecosystem - enabling the brand to develop with a completely new business model: instead of selling products (a manufacturer Business Model), instead of selling a brand (a brand Business Model), Apple sells solutions.
Each of these solutions – corresponding to consumer issues / expectations - being extremely "pertinent" with regard to these expectations, the consumer - following a "contact" rationale - will be drawn towards an interest in other Apple solutions, and so buy a new trinomial - wish / product / solution. A perfect method of "percolation" towards the heart of the brand ...
Let's take some examples:

• The iPad buyers choose the product / solution for its functionality (access to books, magazines, videos, etc.), and discover the potential of the iOS.  A recent Nielsen study shows that "25% of likely smartphone up-graders who have not yet owned an iPhone or iPad, indicate that they would purchase an Apple iPhone as their next smartphone. But when we asked iPad owners who do not have an iPhone this same question, this number more than doubled to 51%".  They therefore "move on" to an iPhone.
• The iPad brings Apple new sections of the population - often still excluded from computing, such as the elderly, very young children ... or even baby boomers.
• iTunes users (there are currently 160 million) will use Ping – Apple's "entertainment" social network - to share their expectations, their pleasures and grievances: music in our society is the most structuring social factor (more than one million users became members within 48 hours of its release).
• Apple Stores offer computer users a unique space, organized around the 'expectations / solutions' combination: non-commercial consultancy spaces (Genius Bar, Studio, Amphitheatre...), "living" products to use and to transfer data from an older computer to a new Mac ("One to One").  Result: 45% of its buyers hail from the PC world.

The arrival of Apple as a virtual operator fits into this logic. Faced with operators whose business model relies on proposals made by engineers – with no concept of service and no reflection on the expectations of consumers - Steve Jobs could only repeat one of his own phrases (when he opened Apple Stores) and transpose it: "Buying a car is no longer the worst purchasing experience; buying a computer is now number one".  Apple, after the success of the iPhone, offers to reinvent the relationship we have with our telephone operators – it's about time.