For my friends that are not aware of the incident with United Airlines breaking guitars, I am posting the video link below.

It goes without saying that we need to be careful how we treat our customers.  Three million views in less than a week is a lot of negative press!

I’m sure during the development of this issue, the United representative(s) felt the customer should have received consideration outside the policy, but did not feel appropriately empowered.

Although generalized policies are necessary in any large company, these should always be backed up by employee empowerment.

Individual customers never like to be shown they are being treated impersonally by “broad brush” policies that leave them without identity or options.  ”I’m sorry Mr. Jones, there is nothing I can do, this is our policy”, is a good way out for the representative, but could be the worst thing to say to customer.

(Before you upset a customer, ask them if they own a video camera)

here is the link: United Breaks Guitars

Rudy Vidal
Creating Profitable Loyalty

I was listening to a talk by Iqbal Quadir an inspiring entrepreneur who is changing the world through human empowerment. He said two phrases that made an impact.

“Connectivity is Productivity” and “Specialization is Productivity”.

Both of these make sense, but bringing them together is powerful.

Although I’m not a math major, I could not resist doing the logic.

If Connectivity = Productivity
and
If Specialization = Productivity

Then it follows that:
Connectivity = Specialization

As I thought about it, it didn’t take long for some of the challenges and opportunities in our markets to start making more sense.
One of these changes is the shifting marketing paradigm that is largely ignored.

For the last couple of hundred years, business has relied on raw POWER as the deciding factor of success. Although brilliant ideas and management are still necessary, the power to reach more people, to build more products, to move them faster, is the engine for success. We only need observe mass mailing, television, or the number of SKUs in Nike’s shoe lineup, to see that it’s about POWER more so than efficiency.

In the end, we are forced to homogenize our segments, compromise the essential value in our products and dilute our brands in order to widen our mass appeal. In essence, we destroy, destroy and destroy in order to deal with the inefficiency of the paradigm.

But maybe the equation: Connectivity = Specialization, presents new possibilities.

The drastic increase in Connectivity accelerates the normal rate at which we create “specialized” communities of like-minded people. These communities form faster and become larger and more powerful than would normally be possible. In essence, they become large networks of beacons searching for more resonant experiences, people, products and brands.
Suddenly, we find we may not need to look for them, they may be inadvertently looking for us.

The problem is that in order to be noticed we need to resonate, we need to have a point of view, a stand or clarity of purpose, what Simon Sinek might call a clarity of WHY?

This new paradigm has potentially meaningful characteristics:

1. It is personally meaningful
2. It is deliberate (not passive, like mass media)
3. It provides an opportunity for deeper connections.
4. But, it requires TRUST.

The old paradigm of PUSHING our value to the masses is giving way to the need for CLARITY and TRUTH that allows smaller more aligned groups to hear us. A clarity and truth about who we are, and what we stand for as companies. ?This clarity of purpose, turns the brand into a resonator that draws all that are tuned.

Only one problem . . .

Companies today are not good at CLARITY or TRUTH.

We find it difficult to be clear on what we stand for. (read your mission statement lately?).
And we find it difficult to be truthful because we want to maximize potential customers as we aim at the masses.

Are we sure of our WHY? Can we be true to it? Can we resonate?

I vote for investing some resources here, so we can stop sending junk mail.

Rudy Vidal
Committed to Profitable Loyalty – XCS

Sometimes I talk about the idea of Profitable Loyalty and often I’m asked what I mean. So, here it is:

Not All Loyalty is Profitable, therefore, Not All Loyalty is Good.

Profitable loyalty is the result of a successful alignment of our corporate goals and capabilities with the values of our strategic customers.

When we are aligned with these customers’ values, we have a greater likelihood of setting the right expectations, of delivering on those expectations, and of creating partnerships based on mutual trust and benefit.

When we are not aligned, we find ourselves with large numbers of unprofitable customers who never seem to understand our capabilities and often demand that, which we find difficult to deliver.

Profitable Loyalty comes from clearly defining who we are, who we want to become and with whom we want to do business – Segmentation.

Once this is clear we can develop and maintain policies, processes and delivery mechanisms that add value to strategic customers who are aligned with our direction and understand and value what we do. It is here we want to invest in creating positively emotional touch-points.

There is nothing worse than having customers push us to be something we are not, and don’t want to become. It adds instability and costs to our business. It creates frustration in our employees and stresses our processes.

Let me be clear. I‘m not saying we should not listen to our customers when they are asking for new capabilities or innovation. Great customer communications and flexibility to meet market needs is a basic tenet of Loyalty. However, trying to be everything to every customer is a sure formula for failure. There are things we do well, there are thing we need to improve and there are things to which we need to say NO.

If your company is NOT concentrating on Profitable Loyalty, you may be experiencing some or all of the following:

• Your most important customers are the least profitable.
  
• Price is the prime negotiating variable
  
• Process exceptions seem to be the rule
  
• You are becoming increasingly reactionary
  
• Customer attrition is increasingly an issue.

At times these symptoms seem endemic to an industry and therefore, par of the course. Accepting this as our reality, puts us in danger of racing our competition to the bottom. On the other hand, we can thrive in the face of adversity if we are able to re-align ourselves with the values of our strategic segments.

All customers are not created equal.

Rudy Vidal
Committed to XCS

During a seminar last week, someone asked the following question:

“More industries than ever are experiencing runaway price and margin erosion. Why is that? More importantly, what can we do about it?”

I believe value is being lost as a result of our lack of understanding of shifting paradigms.

Economies naturally progress through value shifts. For example,

from Raw Material Economies (pre-industrial)
to
Product Economies (Industrial)
to
Service Economies (post industrial)
to
Experience Economies. (information)

Although we can still find economies at all four levels throughout the world, most of the higher systems are now Experience Economies. In experience economies, by and large, consumers place lesser value on Raw Materials, Products, or Services. Instead, they place more value and are willing to pay more for the Experience. Products and Services, although required and expected, are no longer the prime field of differentiation. Their expected high quality is simply a minimum business requirement.

Sadly, within our experience economy there are companies and entire verticals that may not have yet noticed the shifted paradigm and still offer products and/or services as their key value proposition. A perfect example is the consumer electronics sector, which continues to assert product features as their key value. Features, however, are easily copied, creating short-lived differentiation. In the absence of other differentiating value, they turn to price. And so, the cycle begins: Lower prices causes reduced margins which causes diminishing profits which creates pressure to reduce costs which causes layoffs which brings reduced purchasing power which prompts the need for lower prices. You get the idea.

A surprisingly large portion of top management I meet believe customers demand and cause lower prices, without considering the possibility we may simply be misaligned with customer values, which ultimately forces us to turn to price. After all, although lowering price is not usually the best course of action, we cannot deny it is an easy and generally effective way of getting attention; if only for a brief moment.

Maybe we should learn from others:

• American auto manufacturer’s have refused to see the new paradigm. They are still selling cars as if it were 1950.
• Nordstrom, on the other hand, sells the same exact merchandise as other department stores, but charges a premium based on the experience.

(I’ll leave more, and perhaps better examples to you – please share through a comment.)

Perhaps it’s time we listen to the voice of the customer and align ourselves accordingly.
If we don’t, our only recourse will be lower prices, outsourcing and ultimately layoffs.

Rudy Vidal
Committed to XCS