For retailers and brands “the moment of truth” has already passed

In the 1980s, former Scandinavian Airlines System (SAS) CEO Jan Carlzon transformed the struggling carrier into a leader by turning customer service into an obsession. In doing so, he coined the phrase TheMoment of Truth to describe the exact point in time a customer made contact with a SAS employee — when SAS had to prove its value in order to keep the customer.

For SAS, Carlzon preached, the collective outcome of these Moments of Truth — 50 million of them per year, he tallied — ultimately determined the success or failure of his company.

Walmart founder Sam Walton put the same phrase into action by instituting the retailer’s famous Ten Foot Rule. Employees who came within 10 feet of customers were expected to greet them to influence The Moment of Truth at the shelf when they decided whether to buy a product.

In 2005, Proctor & Gamble declared The Moment of Truth to be about the customer’s experience with a product:

  • seeing it in a store or online,
  • buying and
  • using it, and
  • offering feedback about it.

In 2011, Google (perhaps not surprisingly) proclaimed The Moment of Truth to be when a customer researched a product online before making a purchase.

Fast forward to today. Given the massive disruption in retail over the past decade, if you asked a hundred consumers or retailers to define The Moment of Truth, you’d get just as many answers. That’s because for retailers and brands, The Moment of Truth has passed. It’s been replaced by the sum of the consumer’s connected experiences.

Here’s why: As consumers, the value we once associated with the act of buying a product has diminished. Sure, there are lots of ways to buy products today — online, in stores, using mobile payments and even digital currencies. But in an omnichannel world, every successful transaction is still just a transaction. A non-event, not a memorable experience that creates lasting value. Ironically, it’s often memorable only if something goes wrong.

Today, brands at the vanguard don’t push products. They curate connected customer experiences by leveraging partners to create ecosystems of value for consumers.

Take Airbnb. They’re not just selling rooms, they’re delivering a broader, more satisfying travel experience involving such diverse experiences as violin making in Paris, truffle hunting in Tuscany or driving classic cars in Malibu.

Or consider Ikea’s acquisition of Task Rabbit. It improves the home furnishing experience by taking the frustration of assembling furniture off the table.

For consumers, it’s no longer just about buying a product or service. It’s about anticipating memorable experiences from their favorite brands, regardless of industry. In today’s connected economy, customers are placing more value on their experiences than the products or services they’re consuming. They want experiences that make their lives easier and precisely reflect their preferences, needs and aspirations.

Think about it. Decades ago, a Moment of Truth with a retailer or brand was when a customer in a store interacted with a salesperson or spoke with a customer service rep by phone. With the dawn of the Web and e-commerce, the number of these touch points exploded. Today, the Internet of Things has brought the digital insights of the online world to the physical world. Using machine learning and augmented intelligence, retailers and brands design highly personalized customer journeys spanning the real world and the digital world, which to consumers are one.

For today’s connected consumer, the most recent great experience with a retailer or brand automatically raises the bar for all other competitors going forward. It’s become a virtuous cycle that’s made them feel empowered, always expecting more.

For retailers and brands, this has made connected customer experiences the new competitive battlefield. Instead of pushing products, they must now sell great customer experiences that play out seamlessly across their integrated physical and digital worlds.

Leading born-on-the-Web retailers such as Amazon understand the importance of connected consumer experiences for creating greater value. That’s why industry pundits are so intrigued by the company’s foray into brick-and-mortar stores and its acquisition of the Whole Foods supermarket chain. They’re eager to see what it holds for the connected customer experience.

For retailers and brands, the implications of Connected Consumer Experiences are daunting. How do data-driven marketers reconcile the new Moment of Truth — the sum total of the consumer’s connected experiences?

They have to go well beyond selling products to address broader consumer needs and aspirations like beauty, adventure, health or wellness. They must orchestrate customer experiences that span multiple brands, service providers and commercial ecosystems.

Instead of static product offers, carefully designed connected experiences need to continuously raise the bar, feeding the virtuous cycle of consumer expectations. Imagine if a fitness equipment store went beyond its traditional boundaries to serve its customers — as an example, when a consumer buys a rowing machine, the store offers not just assembly services but also

  • fitness apparel,
  • nutritional supplements and a
  • trial membership at a local rowing club.

Doing this at scale is a tall order. It requires capitalizing on the gold mine of customer data retailers are sitting on and IoT insights from the physical world, including stores. Connecting, analyzing and sharing it in real-time across company silos and with their new partners in value to

  • understand,
  • anticipate and
  • satisfy customer needs.

And most important — continuously detecting and learning new consumer consumption patterns so customer experiences get better and better.

The new marching orders for retailers and brands are clear: they must deliver connected consumer experiences that add up to The Moment of Truth.

 

On Hold for 45 Minutes? It Might Be Your Secret Customer Score

Retailers, wireless carriers and others crunch data to determine what shoppers are worth for the long term—and how well to treat them

Two people call customer service at the same time to complain about the same thing. One waits a few seconds before a representative gets on the line. The other stays on hold. Why the difference?

There’s a good chance it has something to do with a rating known as a customer lifetime value, or CLV. That secret number is used by all manner of companies to measure the potential financial value of their customers.

Your score can determine the prices you pay, the products and ads you see and the perks you receive.

.. “There’s no free lunch,” says Sunil Gupta, a marketing professor at Harvard Business School who has researched models for calculating lifetime value. “The more profitable you are, the better service you will get.”

.. Everyone with a bank account, cellphone or online shopping habit has at least one CLV score, more likely several. And most people have no inkling they even exist, let alone how they are used, what goes into them or how accurate they are. Unlike credit scores, CLVs aren’t available to consumers and aren’t monitored by any government agency.

.. “Not all customers deserve a company’s best efforts,” says Peter Fader, a marketing professor at the University of Pennsylvania’s Wharton School who helped popularize lifetime value scores. His scoring method is based on transaction history, which he says is all companies need to determine how customers will behave in the future.
.. Some companies deduct points from shoppers who exhibit costly behaviors. Banks sometimes take into account the calls people make to customer-service agents or the number of times they visit branches. Online retailers track shoppers who buy things only when they are deeply discounted. People expected to cost more than they spend can have a negative score.
.. At some carriers, high-value customers who are at risk of switching to another carrier are prioritized and get routed to a top-rated call center.
.. his e-commerce clients use scores, including CLV, to respond to email inquiries. “If you’ve got an angry shopper with a high lifetime value, you might want to bump up the priority,” he says.
.. Shoppers with higher scores, however, won’t necessarily get the best deals all the time, says Jerry Jao, chief executive of Retention Science, which has worked for companies such as Target Corp. and Procter & Gamble Co. Retailers sometimes withhold discounts to high-value customers until they are at risk of losing them. “Why waste a 25% offer when the person is going to buy anyway?”
.. The scoring helps dealerships weed out costly customers. “This is what you call grinders—people who visit 16 stores to get the absolute lowest price,” he explains.
.. his firm develops scores by crunching data on things such as previous car purchases, whether a household has a teenager, where else a person has shopped and ZIP Codes, which can be used as a proxy for income. Someone who has a Neiman Marcus credit card is going to be more valuable for a car dealership than someone with a credit card from a discount chain
.. The company tracks, for example, the number of times a person calls to complain over the prior 90 days, which can affect the CLV.An airline can compare how often a shopper complains with his or her lifetime value and customer experience score, which measures inconveniences such as number of times in the middle seat, flight delays and lost bags.

“A high-value customer who had a real service disruption and never calls to complain should be compensated more quickly than someone who is complaining and costing time and money,” Mr. Srinivasan says.

Ask HN: What happened when Amazon moved into your business?

aspir 21 hours ago [-]

I work for an competitor to an AWS product. We’ve grown rapidly over the past ~7 years in a generally competitive (lots of startups, some really old tough incumbent companies). Without revealing too much on our end, here’s some lessons learned:

* AWS is bad at customer service, even for their large or premium customers. If you position yourself, and _seriously_ invest in making your company’s culture rooted in exceptional customer service, that’s a foothold.

* Don’t compete on price. This is hard for most tech startups, as pricing is a very difficult thing to do properly, but resist the urge to drop price to compete. You’ll never have the scale, the supply chain masterminds, or the financial modeling to compete with AWS on price, so position yourself as a premium or luxury offering and don’t be afraid to price accordingly. If you do the first step properly (a deeply rooted culture of service) you’ll be able to justify the price.

* AWS has great uptime, but often the actual operating performance of their service isn’t that great, especially when you push the products beyond the 80% use case. They know that for the majority of their customer base, best-in-class performance isn’t actually business critical (despite how flashy it sounds). However, there is absolutely a market for people who truly need best in class performance, or product flexibility, or some other best-in-class trait (latency, interaction design, etc.). Find who these people are, and optimize for that ruthlessly. This focus, in combination with the culture of exceptional service and positioning your brand as a premium provider, puts you into a completely different market space than AWS.

.. their API is far more consistent than Azure. Azure has the worst API of all. But their services are much faster than AWS.

.. A good host has a phone number, you ring it, somebody answers and then they fix your problem, without pinging you around a call centre. You’re in and out within 20 minutes.
For AWS (and their class) you submit a ticket and in 4-48 hours, you twiddle your thumbs while the cheapest labour available to Amazon wakes up on the other side of the planet to investigate your problem (also known as walking you through a script).
AWS-sized hosts have advantages but I put a lot of weight in scaling things back to the RackSpace, Linode and Hetzner size operations. They put so much more effort into their human interaction.

United Airlines Says Corporate Clients Seek Customer-Policy Fixes

Recent passenger incident prompts call for airline “to do the right thing”

He also said crew members traveling as passengers much check in an hour before a flight’s departure time.

.. “It’s clear we have further to go to elevate our customer experience,” Mr. Munoz said, and declined to comment more specifically on those changes until the review is complete.

.. Backlash against United had been particularly intense in China, a key market for the carrier, after media there identified Dr. Dao as Chinese. He is Vietnamese-American. Mr. Munoz said he met with officials at the Chinese Consulate in Chicago and will visit China in a few weeks on a previously scheduled trip.

Behind United Airlines’ Fateful Decision to Call Police

Airline’s rules-based culture in spotlight after man was dragged off flight by law enforcement

 .. Deviating from the rules is frowned upon; employees can face termination for a foul-up, according to people familiar with the matter.
.. At United, this has helped create a rules-based culture where its 85,000 employees are reluctant to make choices not in the “book,”
.. At least some decisions that led to the crisis were fueled by employees following rules
.. Last Sunday evening, Republic Airways Holdings Inc., the regional airline operating the flight for United, asked an hour before departure for four of its crew members to take the place of passengers, according to a person familiar with the matter. The crew was needed the next day at the flight’s destination in Louisville, Ky., the person said
.. But the two pilots and two flight attendants didn’t arrive at the gate until a few minutes before departure, according to United’s pilots union. All the passengers were already seated.

.. In hindsight, the gate agent should have said, “Folks, we’re not leaving until someone gets off. If someone doesn’t take the $800, we’re going to cancel the flight,” said the United pilot, who wasn’t involved in the incident.

.. People close to United said the rules-based calculus is to inconvenience the fewest number of fliers.
.. United hasn’t provided its front-line managers and supervisors with “the proper tools, policies, procedures that allow them to use their common sense.”“That’s on me,“ he said. ”I have to fix that.

.. Decades-old union conventions that enshrine seniority over performance are part of the problem, one former executive said, because employees are rewarded for their tenure rather than their talent.

.. Mr. Munoz also said United will change its former policy of asking law enforcement officers to remove passengers from its flights—unless it is a matter of safety and security.
.. But Mr. Milton added that Dr. Dao’s mistreatment and United’s flat-footed reaction must become “a defining moment in the history of United Airlines pivoting to customer service and customer delivery.”