Posts Tagged ‘Best Buy’

When Things Go Wrong, There’s No Substitute For The Human Touch

by on Wednesday, October 20th, 2010

Social shopping sites (like Zavee), as well as many merchants’ own web sites, provide tools that let shoppers “self serve” information they want to make an informed purchase decision. Some large merchants are also asking customers to self-serve customer service issues, too. Is this a good idea?

For product-related issues, it’s a great idea. Many manufacturers, such as Apple, now host libraries of information to help consumers use and, when necessary, troubleshoot their product. This system filters out customers with easy to solve (or at least common) problems and frees the customer service representative (CSR) to deal with more difficult (or less common) issues.

Not another customer service complaint! (via Star5112 - Creative Commons)

Some companies have an intermediate stage between self-service and a conversation with a CSR: live chat. Live chat uses an IM-like interface for online interaction with a CSR in real time. Why would a merchant use live chat rather than a live conversation? Most live chat software lets CSRs conduct several live chat interactions at once, while they can handle only one phone call at a time. This can result in shorter wait times compared to phone queues, which may make the more impersonal quality of live chat a fair exchange.

Are consumers equally wiling to self-serve when the issue relates to the company’s service? Recent research supports the unsurprising conclusion that when things go wrong consumers want to interact with a human, either in person or on the phone. But not just any human will do. Consumers want someone who listens, responds appropriately (rather than from a script) and is empowered to address the problem.

Speaking of Apple, I recently had a wonderful customer service experience at the local Apple Store. They made an avoidable mistake that delayed the servicing of my laptop. When I called and pointed out the mistake, the service manager immediately took steps to make it right. He didn’t even consult the store manager; he just made the decision on the spot. I’ve always been a “Mac guy” but now I’m more likely not only to buy Apple products but to recommend them as well. Great customer service will do that.

Best Buy explicitly treats customer service as a sales channel. Its twelpforce program puts sales associates on Twitter where they respond to customer inquiries, which range from questions about what to buy to troubleshooting assistance to service complaints. Why Twitter and not either live chat or a phone call? First, from a look at the Best Buy feed the interactions clearly are unscripted and one-on-one. Live chat isn’t as spontaneous or personal. Second, Best Buy doesn’t offer twelpforce as an alternative to telephone interaction with a CSR – it’s positioned as tech advice for the consumer (even though they handle service issues). Twitter also scales better than the telephone. Associates can switch between helping customers in the store and on Twitter; a voice solution would would take associates off the floor. Finally (and I’m speculating here), I think it matters that twelpforce consists of sales associates rather than CSRs. Associates’ only mission is to grow the business, which includes providing a customer experience that makes buying – and returning – more likely. CSRs also are (or should be) tasked with providing a quality experience, but they encounter customers when they want to complain, not buy. So it’s easy to understand why CSRs might be less customer-centric than associates.

Smaller companies can’t (and probably wouldn’t want to) duplicate an enterprise level customer service structure, but there are lessons that small companies can learn from big ones. First, asking customers to self-serve on product issues can make sense and save money. It’s one of the smartest things you can do with your web site. Second, make sure that every customer-facing employee is trained to listen to customer concerns, respond appropriately and take prompt action (even if that action is to pass the customer to a more senior employee). Third, use customer service as a sales channel. Any action you take that goes beyond customer expectations – especially if you venture into “surprise and delight” territory – can increase that customer’s loyalty and create an advocate whose recommendations bring you new customers and more sales.

The Zavee takeaway:

  • Understand the differences between customer service issues that relate to the products you sell and the service you provide. Customers are more willing to self-serve product issues than service issues.
  • When things go wrong there is no substitute for personal interaction, the more personal the better. Especially (but not only) in smaller companies, everyone is a CSR.
  • Customers share their experiences, both good and bad, so every interaction can be amplified. Great customer service creates brand advocates who recommend you to others. Poor customer service has the opposite effect.

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I’ve Been Annualized!

by on Tuesday, February 23rd, 2010

Last Spring I attended a Loyalty Marketing Conference at which the head of Best Buy’s Reward Zone program described how her company planned to handle a problem that seems to affect many large loyalty programs: inactive members. She explained that while the company was not about to throw inactive Reward Zone members out of the program, they would eventually forfeit their points if they failed to meet an activity threshold. I didn’t meet the threshold, and I just lost my points.

Best Buy Logo

Best Buy

Why did Best Buy take this step? Is it something all loyalty programs ought to consider? And what does it mean for Zavee? At first glance it might appear that companies can safely ignore inactive members. They don’t do anything to tarnish the brand; many do make purchases, at least occasionally; and they don’t require much care and feeding.

In fact, all three of these assumptions are wrong. And companies that segment out inactive members from their loyalty programs are doing the right thing – provided they handle it the right way.

Although inactive members of a loyalty program may not be actively harming the brand, they are not evangelizing for it either. They may be willing and able to recount positive experiences and describe brand attributes, but they are hardly the brand ambassadors that the merchant thought it was getting in exchange for points or other loyalty currency.

This leads to the next assumption: that inactive loyalty program members remain valuable because they may not be completely dormant as customers. Here the risk isn’t that inactive members won’t shop, it’s that they will only buy on sale. Shopping only during promotions may be the behavior of a rational consumer, but not of a loyal one. Program members who shop only when the company has already reduced its margin arguably are the last customers who should be earning loyalty rewards. This is something merchants should bear in mind quite apart from the loyalty context: Customers who are purely (or predominantly) price-driven are a business’ least profitable customers because they return the lowest margin with their purchases. The return on investment of marketing to such customers is therefore lower than for other customers. Adding loyalty exposure only adds to that cost.

Finally, maintaining an inactive program member incurs hard costs. Programs that use physical cards have to print, issue and occasionally replace them. In the aggregate, data processing and storage needs are higher than if the program were limited to active members. Reducing the size of the program by setting inactive members to the side may reduce these costs.

How should a company handle the pruning of inactive members? Best Buy’s approach seems pretty good.

  • First, the company communicated its intentions clearly and repeatedly by email – not that I paid a lot of attention.
  • Second, Best Buy didn’t pretend to create an aspirational environment in which I could keep my points if only I shopped just a little more. I was so far from the activity cutoff (which was clearly disclosed in the email) that it would have taken the purchase of a high-end home theater for me even to get close.
  • Third, the company increased its engagement with members who met the activity threshold by issuing reward certificates.
  • Finally, they didn’t drop me from the program altogether. This was something the Best Buy exec emphasized at the conference. Taking away unused loyalty points from an inactive member sends the message that loyalty is a two-way street. But dropping a customer from the program sends the message that the customer should shop elsewhere. That isn’t a message any retailer wants to send. Instead, I was “annualized” – my point balance will be reviewed annually and I can keep my points if I shop enough.

Some of these principles apply to Zavee more than others. As a registered card program we don’t have the hard costs associated with loyalty cards, and unlike single-merchant programs we hope that shoppers can always find merchants they want to do business with. Instead of an annual cutoff based on activity we will forfeit a shopper’s unpaid reward balances only after 24 consecutive months of no activity.

However, the main difference between Zavee and a typical loyalty program is that Zavee is also a social shopping platform. Because active users of the program receive more and better information from fellow shoppers we believe that activity will largely be self-reinforcing. Shoppers who frequently write reviews and communicate with other shoppers will gain influence in the Zavee community as well as the opportunity to earn rewards and direct charitable contributions.

The Zavee takeaway:

  • Dormant loyalty program members are bad for the brand. So are dormant customers. Increase your engagement or reduce your exposure, but don’t ignore them.
  • Calibrate offers to avoid providing price incentives to customers who are already driven predominantly by price. Those are your most expensive customers and least profitable sales.
  • Find ways to earn and reward customer loyalty that aren’t limited to price.

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