Voices: the CMB Blog

Recently, the US Supreme Court heard an argument from frequent flyer Binyomin Ginsberg, whose membership in Northwest’s WorldPerks program was revoked, after he complained too often. While the practical and legal questions of enforcing contracts under the specialized application of airline deregulation are interesting, the question for us today is: does loyalty run both ways?  Any customer-facing employee of a loyalty program can probably name a handful of customers who regularly call to complain—about the service, the rewards, the benefits. They, like the people at Northwest/Delta, may feel that some of these customers contact them for the sole purpose of obtaining compensation. Should their frustration with these members lead them to take their points away, or cut them off entirely? 

Let’s look at the case of Binyomin Ginsberg:   

• He was a very frequent flier – 75+ times/year with top Platinum Elite status.  At $350/flight his annual value to NWA is nearly $30k.

• In 8 months, he complained 24 times about late and lost luggage and long delays. He didn’t complain to the flight attendants, gate personnel or pilots but instead to top managers in the corporate office of the frequent flier program. "I did exactly what they asked you to do," Ginsberg said in an interview with NPR. "If you have a negative experience, they want you to give them feedback."  And so he did — a lot.

• Ginsberg says he never asked for anything when logging his complaints; the airline reports he repeatedly asked for compensation, and that they tried to soothe the unhappy flier.  In 2007, Ginsberg was awarded nearly $2k in travel vouchers, 78k bonus miles and $491 for a lost bag. 

• And then he got the call telling him he was no longer a member of the program, that his miles had been confiscated and he’d been black-listed and would never be able to join the program again. 

• He was told he complained too much about the service and the airline has ‘total discretion’ in such matters. 

The case will be decided in the spring. In the meantime, here are some questions for you to ponder as you consider how loyal you are to your loyal customers: 

Do you solicit feedback from your members on their experience with your product/service? 

If you do, are you:

• Making improvements based on the feedback

• Communicating the improvement you’ve made

• Responding in a timely fashion to individuals who ask to be contacted

• Sharing results and verbatim customers comments with senior managers 

Take the case of AeroMexico, whose customer feedback surveys revealed the two biggest pain points impacting loyalty were on-time performance and delay management—hardly atypical for an airline, but the survey also revealed customers felt the airline’s staff lacked empathy in communicating delays. To fix this problem, the airline’s customer experience team recruited key executives to personally call customers who have experienced delays—the executives are coached to resolve issues and listen to the customer. And according to AeroMexico’s VP of Customer Experience, Eduardo Piquant, the innovative program has been a success: “We always start with an apology for the delay and then ask for feedback about what we can do better. In the beginning, people don’t believe it is the CEO or CFO or other senior executive calling. But when they realize this is a true company-wide project, the results are remarkable. And what we’ve found is simple: Customers just want to be heard.”  The airline estimates this approach has resulted in a win back of more than 3000 customers. 

Do you have a clear policy in place for compensating members for a bad experience?

For many companies, continuously improving quality standards and keeping customers satisfied are the key goals to maintaining a competitive position in the marketplace. But these intangible goals often can be difficult to achieve in practice and occasionally – for reasons within and outside your control – customers will have a bad experience.  And in the world of Trip Advisor and Facebook, these bad experiences and your corporate reactions to those experiences will be widely shared and will influence the decisions of other prospective guests. 

Assuming the corporate decision on compensation has been made and is appropriate, the actions associated with dealing with disappointed members (whether you compensate them or not) are the same:  

• Express gratefulness for their business

• Listen to complaints with empathy

• Clearly and consistently present the information on compensation policy

• Track the behavior of guests “post-interaction”– do they continue to spend (as they did prior to the problem)?  Or has the problem (and your recovery efforts) caused them to take their business elsewhere?

A compensation policy doesn’t get much clearer than Hampton Inn hotel’s 100% Satisfaction Guarantee. While the idea of a “No questions asked 100% guarantee” might sound outlandish, the policy has been a success since it was implemented nearly 25 years ago.  Years ago, Phil Cordell, the senior VP of Brand Management at the hotel chain described the success of the program: “...Compared to the more than $6 million in free rooms we’ve given away over the past decade due to invoking the Guarantee, we have been able to track more than $41 million in repeat business, a nearly seven-fold return. But more than just dollars and cents, we’ve converted unhappy guests into satisfied customers across the country, loyal to the Hampton Inn brand.”

Are you doing all you can to take care of your highest value customers?

One of the primary benefits of a loyalty program is the ability to track each customer’s spend so you can identify your most valuable customers. Calculating the percent of corporate revenue obtained from each membership tier puts their value in perspective. While every customer is important, from a revenue perspective, some customers are clearly more important.

If your loyalty program has tiers:

• Ensure your compensation policy recognizes and reflects the unique value associated with your top tier guests. Create an elite group of customer service reps to deal with your top tier guests and their challenges. 

• Conduct research to determine the share of wallet you get from members, and how much they spend with competitors. Ask questions to examine which competitors they use–for which occasions and why–to set strategies to concentrate their spend, and further build their value with your firm. 

• Closely examine the behavior of your top tier members to see if it’s time to develop a super-elite level. You may find a sizable group of customers who max out on your program, and then move their business to your competitor. 

Caesars Entertainments’ Total Rewards program, the largest casino rewards program in the world, has 4 distinct tiers. The value of a member at each tier is carefully calculated, and rewards and service aligned with value, this insight leads to smoother operations, better front-line service, and differentiated pricing. Joshua Kanter, Senior Vice President, Revenue Acceleration and Total Rewards, reports: “We have a ‘differentiated service model’ that’s keyed off of Total Rewards tiers. We strive to provide a great experience to every guest, including our entry-level Gold members but we also have special hotel check-in areas, shorter lines and exclusive lounges for our Diamond and Seven Stars members. And our VIP-focused organization engages with our most high-value customers individually. When a guest presents their card, every member of our front-line staff responds immediately with the level of service appropriate to the tier.”

So, can I imagine a customer who was so much trouble that he or she needed to be kicked out of their loyalty program? Sure, but the crimes committed would have to be much more egregious than too many complaints. Your loyal customers have made a commitment to you, they’ve shared their information with you, they’ve chosen you when it might have been easier to go with a competitor, and many have advocated for you with their colleagues, friends and family: doesn’t that deserve some loyalty in return?

Judy is VP of CMB's Travel & Entertainment practice and loves collaborating with her clients. She's the mom of two college students and the wife of an oyster farmer. Follow Judy on Twitter at @Judy_LC

Last year, when Gizmodo released a copy of Apple’s Genius Bar training manual, there was much talk that the company was educating Geniuses to engage in a type of psychological manipulation. Why were so many people distressed by these sales and marketing techniques? Using these techniques to “frame” the customer experience is hardly a new concept. Maybe it was because Apple’s product and service offerings are so strong and so beloved, some people forgot that the Apple Store is just that, a store, where things are bought and sold. 

This led me to wonder about how such training approaches have changed over the years –after all we’re so much more highly evolved nowadays, right? Ha! Enter the 1950 Packard Service Management Training Manual. Obvious cultural tags of the times aside (“That’s a swell idea.”), there’s almost nothing Apple purportedly tells Geniuses to do that Packard didn’t tell its employees 60+ years ago!

Take this line: “Although the merchandise and services we have to offer consists of: parts, accessories, lubrication and service labor, they are not the items the owner is buying. The owner wants to buy results. So, let’s sell him results such as: economy, safety, performance, comfort, convenience, and pride of ownership.”

Translated to a modern day perspective with a swap of only a few words:  “Although the merchandise and services we have to offer consist of: [smartphones, MP3 players], accessories, and service, they are not the items the owner is buying. The owner wants to buy results. So, let’s sell [her] results such as: performance, convenience, and pride of ownership.” This could be Apple, or many other consumer-oriented service companies.

A hilarious 1950-style exchange…

This brings me full circle to 2013 and Amazon’s Vine reviewer program—a program which provides an elite group of customers products to review, and often to keep.  The program has drawn a bit of attention lately, including a recent NPR piece. Some commenters are ambivalent, and a good number take a strong position that this is manipulative or biased (even if they sometimes sound envious), and a few defend it. In 1950, Packard reps were told to focus on their town doctors, and the logic holds up—doctors needed their cars to make house calls, they were highly respected community members and, guess what, they were the ones with money to buy new Packards! Was this strategic or manipulative? Or did it just feed off of basic human nature, for better or worse?

Speaking of worse, one thing that has changed across the decades is that individual sales and marketers aren’t allowed to take responsibility for, or acknowledge mistakes directly. As a Packard rep in 1950 you were encouraged to take responsibility for errors, omissions, or other flaws by directly addressing them with the customer. Nowadays legal compliance departments appear to have outlawed use of any terms that imply responsibility. 

So what’s a marketer to do? How to be honest while simultaneously “framing” your product/service strategically? Well, it helps to start with a solid offering (yes, I am a fan of Apple). If your product doesn’t meet the basic promises, don’t expect to build success on that with brilliant service—it won’t ring true. Measure the connection of what you promise and what customers perceive so that you can focus on what matters.

We help clients do this every day with customer studies—call them voice of the customer, customer experience, customer satisfaction, even call them customer journey mapping or NPS. Our focus is on providing the insights from customers that will answer business questions like:  What motivates customers to advocate our brand/product and how can we drive more of it? Or, Where are customers getting “stuck” in their “journey” with us and how do we remove barriers to repeat purchase?

But sadly, none of this work is of much use other than for a self-satisfied pat on the back if employees are telling customers to give a high score, instead of just earning it and allowing the process to work to get the real feedback for change. I cringe when staff say things like, “You will be getting a survey and we must get all 10s or I will (fill in the blank: be fired, lose a bonus, etc.).” They are seriously undermining the premise that this research is being done to learn what to improve and make better customer experiences. And even if I loved the service, I will then often not want to complete the survey.

To that end, kudos to Jiffy Lube, for whom I recently took a post-service satisfaction study where they explicitly asked if their rep had told me to give a good score. Probably as a research geek I noticed this in a way that the average person would not. Nevertheless, it was refreshing! It allowed me to give true customer feedback and feel confident the company really wanted to know what I thought, not just check a box, so they could make it better for the next person.  Satisfying as a customer and as a researcher.

It was a recent Saturday afternoon, and I had a laundry list of errands to complete. My last stop was the liquor store where I immediately found myself stalled in the vodka aisle. My list simply read “vodka,” but the vodka market is saturated with diverse options, so which one should I choose? Just a few of the attributes where options vary widely include: reputation (“Hello, Grey Goose”), quality (“Hello again, Grey Goose”), name (“Good evening, Little Black Dress”), packaging (“Hey, Crystal Head”), flavor (“Hi, Van Gogh PB&J”), and price (“Sup, Aristocrat?”). Pinnacle Vodka alone boasts 30 different flavors in their Cocktail Catalog.

Having all these choices is great, right?  I thought so too at first, but then I spent five minutes pacing that same 20 foot stretch, and then ten minutes (my palms sweaty), and, oh please don’t let me have just spent 15 minutes in the vodka aisle. The diagnosis was clear; I was exhibiting all the symptoms of the choice overload blues.

Choice overload occurs when the addition of more choices becomes overwhelming and actually starts to have adverse effects (authors Scheibehenne, Greifeneder, and Todd provide a robust description in their 2010 meta-analysis “Can There Ever Be Too Many Options? A Meta-Analytic Review of Choice Overload”).In my case, I was having trouble committing to a choice, which resulted in a longer-than-expected errand. Scheibehenne et al. also describe other effects like a decrease in satisfaction with the final choice and an increased likelihood in not making any choice at all.

Is there a cure?

Recent research by Townsend and Khan suggests that a verbal depiction of information—text— can decrease choice overload when there are a large number of choices because verbal information requires more deliberate processing. Perhaps, with an inventory list of vodka SKUs, I would have more quickly eliminated Naked Jay Vodka’s Big Dill Pickle flavor.

Of course, the impact of choice overload goes well beyond the vodka aisle; think about choosing investments, a tablet for your child, or a loyalty program. It’s especially relevant for those of us who design questionnaires to be rigorous and yield insights, without drowning our respondents. One of the best known researchers of choice overload, Dr. Sheena Iyengar, offers these 4Cs  to consider when you’re charged with designing and presenting options:

1. Cut: very simply, if possible, consider reducing the number of options

2. Concretize:  help people understand the consequences between the choices they make in a vivid way—make the benefits real to your prospective customer

3. Categorize: categories help people tell choices apart, and the categories need to make sense to the customer, not just to you, the provider

4. Condition for complexity: Ask the questions with the fewest choices first and the questions with most choices last

So what happened next on my liquor store errand? Lucky for the vodka market, I don’t like to leave anything unchecked on my errand list. I ended up with a bottle of Van Gogh Vodka Dutch Caramel.

Kyle is a recent transplant to Boston and to CMB. He enjoys long runs along the Charles, the freedom of choice, and vodka cocktails.

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Originally posted on the South Street Strategy Group Blog

Kristin Vincent, VP, Product at Marvel Entertainment, has been helping the 70-year old company re-define itself in the digital age. Not knowing much about comics when she joined the company in 2011, she quickly gained credibility and influence with her fresh perspective, insights and actions related to the company’s “Re-Evolution” digital strategy, which officially launched in March 2012.At a recent conference, she shared the principles Marvel has used to evolve its comics business so that fans continue to love their experience with comics, while traditional print and new digital formats and channels co-exist and thrive at the same time:

1. Proclaim your intentions – Declare what you want to do and communicate this publicly. This not only creates anticipation and excitement, but it builds internal commitment and accountability.

2. Develop new products with connections to existing products – This approach helps to minimize cannibalization, reassures existing customers and channel partners, and adds excitement to established products. Marvel gave everyone who bought a print comic a free digital version, and created an augmented reality application to be used with the print version to get additional behind-the-scenes information.

3. Challenge the most basic assumptions you have about your products – For Marvel, this meant re-thinking what a comic is, beyond traditional attributes such as paper booklets, panels, and pages, to seeing it as serialized graphic storytelling with excellent graphics, opening up new “Infinite” comic possibilities that rethink what a comic page means

4. Partner with users – Marvel used listening labs and usability testing to understand how fans experience comics. It brought fans in and used flip video cameras to record them in real world scenarios using comics and computers to understand pain points. Marvel also got fans to register to become Marvel Advisors to test products and provide input to their development pre-launch. Kristin says that as soon as the executive team watched a one-hour video highlighting all of the user issues and opportunities, it made a huge difference in helping to change the culture and continuing the effort to innovate

5. Develop a roadmap that starts small and builds – Marvel started with one comic in a plastic polybag with a code inside for the digital download. Now users get a free digital download with all $3.99 comics in print

6. Balance user requests with bold new ideas – Marvel re-launched Marvel Unlimited (a subscription program that gives users unlimited access to over 13,000 digital comics) but also sourced and introduced “Project Gamma,” an innovative new adaptive audio technology. It will be a cool new way to experience digital comics where the sound will change as you move through the story.

7. Fail fast and pivot – Marvel had to take a promotion down on the first day when demand for free downloads was so great that the third-party servers it was using crashed and fans couldn’t buy digital versions for two days. They corrected course and used this failure as an opportunity to show customers they cared by being honest and transparent.

8. Re-evolve –Marvel enhanced its print products with digital, and is using new formats.

In 2012, the innovations helped Marvel achieve triple digit growth in its digital business while keeping its core B2B brick-and-mortar store channel partners happy. The digital and print products complement each other, satisfying existing fans while opening up a whole new fan and user base.

Jennifer is a Director at  South Street Strategy Group. She recently received the 2013 “Member of the Year” award by the Association for Strategic Planning (ASP), the preeminent professional association for those engaged in strategic thinking, planning and action.

South Street Strategy Group, an independent sister company of Chadwick Martin Bailey, integrates the best of strategy consulting and marketing science to develop better growth and value delivery strategies. Read South Street's Strategy Group's blog here.

More and more companies are focusing on trying to better understand and improve their customers’ experiences. Some want to become more customer-centric. Some see this as an effective path to competitive differentiation. While others, challenging traditional assumptions (e.g., Experience Co-creation, originated by my former boss, Francis Gouillart, and his colleagues Prof. Venkat Ramaswamy and the late C.K. Prahalad), are applying new strategic thinking about value creation. Decision-makers in these firms are starting to recognize that every single interaction and experience a customer has with the company (and its ecosystem partners) may either build or destroy customer value and loyalty over time.

While companies traditionally measure customer value based on revenues, share of wallet, cost to serve, retention, NPS, profitability, lifetime value etc., we now have more and better tools for deconstructing the customer experience and understanding the components driving customer and company interaction value at the activity/experience level. To really understand the value drivers in the customer experience, firms need to simultaneously look holistically, go deep in a few key focus areas, and use a multi-method approach.

Here’s an arsenal of tools and methods that are great to have in your toolkit for building customer experience insight:

Qualitative tools

• Journey mapping methods and tools

• In-the-moment, customer activity-based tools

  • Voice capture exercises (either using mobile phones or landlines) where customers can call in and answer a set of questions related to whatever they are doing in the moment.

  • Use mobile devices and online platforms to upload visuals, audio and/or video to answer questions, (e.g., as you are filling out your enrollment paperwork, take a moment to take a quick—less than 10 second video, to share your thoughts on what you are experiencing).

• Customer diaries

  • E.g., use mobile devices as a visual diary or to complete a number of activities

• Observation tools

  • Live or virtual tools (e.g., watch/videotape in-person or online experiences, either live or after the fact)

  • On-site customer visits: companies I’ve worked with often like to join customers doing activities in their own environments and situational contexts. Beyond basic observation, company employees can dialogue with customers during the activities/experiences to gain immediate feedback and richer understanding.

• Interviews and qualitative surveys

• Online discussion boards

• Online or in-person focus groups

Quantitative tools

• Quantitative surveys/research tools (too many to list in a blog post)

• Internal tracking tools

  • Online tools for tracking behavior metrics (e.g., landing pages/clicks/page views/time on pages, etc.) for key interactions/experience stages. This enables ongoing data-mining, research and analysis.

  • Service/support data analysis (e.g., analyze call center data on inbound calls and online support queries for interaction types, stages, periods, etc. to look for FAQs, problems, etc.).

What tools are you using to better understand and improve the customer experience? What tools are in your toolkit?  Are you taking advantage of all the new tools available?

Jennifer is a Director at  South Street Strategy Group. She recently received the 2013 “Member of the Year” award by the Association for Strategic Planning (ASP), the preeminent professional association for those engaged in strategic thinking, planning and action.