Disney's Berms and Contradictions

by Paul Williams

The Imagineers at The Disney Company, the folks who dream-up theme parks and make them a reality, have created their own terms that allow quick understanding.

The Imagineer Terms

Berm - A raised earthen barrier, typically heavily landscaped, which serves to prevent visual intrusions into the Park from the outside world and block the outside world from intruding inside.

When you're in the fantasy world of a Disney theme park - Disney didn't want the outside world to break that spell.

Contradictions - Elements that could break the spell and ruin the experience. Walt Disney taught his team to be attentive to details and to think things through to the very end. They don't leave the experience to chance, it is all calculated.

The Disney Imagineers go to great lengths to eliminate contradictions. They have taken care to ensure you can't see the future of Tomorrowland while standing in ye olde Frontierland. Cowboys and Astronauts don't mix. They built 'utilidors' - a basement beneath the Magic Kingdom in Florida - that allows cast members (employees) to travel directly to their attraction from beneath the scenes in their themed costume. The guy wearing his silver Space Mountain costume would look quite alien strolling to his shift along Victorian Main Street, USA.


Broader Marketing Interpretation

While we may not worry whether customers can see the outside world, we do have to be attentive to visual intrusions and contradictions within our locations.

Typical examples may include:

Smoking employees - especially if your business has anything to do with food. Yeah, maybe your wait staff or chef needs a break to chill with a smoke... But don't let your customers see it. And for Pete's sake as a courtesy - please make sure they wash their hands before returning to work.

Incentive posters - Customers don't care or want to see employee-targeted posters for your 'extended warranty incentive'. How genuine do you think it's going to sound to the customer - who spots the partly shaded "Warranty Sell to Sail" bar graph - that the warranty is really in their best interest?

Sales awards - Don't let the manager post their 90% secret shopper score award in customer view. Doing your job right is not something to boast to your customers. It's an expectation. That's meant for backstage. Note to self... do a post about 'backstage'.

Drive-Thru Dumpster/Grease Buckets - Garbage, trash and used frying oil are realities of most fast food restaurants. But, when is someone going to invent a drive-thru design that doesn't parade drive-thru customers past a kid dragging an oozing bag of restaurant waste to the dumpster? A dream I had, while working at Starbucks, was to be part of the Drive-Thru Development team and make the drive-thru experience like no other. A challenge I proposed was: How would Disney do a drive-thru? (My dream was to make it operate like a car wash where you put your car in neutral, and you were guided by the drive thru like a Disney attraction)

Decompression Zone - Paco Underhill the cultural anthropologist and author in his book "Why We Buy wrote" about 'decompression zones'.

This is offering an area at the entrance of a store/business where the shopper can make a transition from one environment to the next. For example, from the main mall to the entrance to your retail store. Think about the first time you entered a new store; the lighting is different, the decor, the music, the smells, and sometimes the temperature. You're not taking time to read a sale banner or want someone asking, "May I help you?" As a customer you're simply trying to get acclimated to the new space - get your bearings.

Back to Disney for a great example of a 'decompression zone'. And for this one, I've even provided an annotated illustration diagram below.

Disney knows the reality of the world doesn't wear off easily. So, when entering the Magic Kingdom theme park at Walt Disney World in Florida, after you pass the ticket entrance you have to enter the park through two short, slightly dark tunnels. These run underneath the railroad station. When you emerge you are on Main Street USA. However, you still don't see Cinderella's Castle yet - the icon of the park - until you've started to head down Main Street.

These tunnels serve as a final buffer between the outside (reality) and the fantasy of the park.

[Fig. 1 Magic Kingdom Entrance - Walt Disney World Resort, Florida]

Are you giving your customers the experience they deserve?


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Paul Williams is a professional problem solver at Idea Sandbox. He can help you create remarkable ideas to grow your business. You may read more at his website and find him Twittering as @IdeaSandbox.

The 'Captive Upsell' Business Model

by Rocco Tarasi

I was reading Free: The Future of a Radical Price by Chris Anderson the other day, and it got me thinking about other innovative business models. One of the best that I have encountered recently was at the Bridgestone tire store when I got new tires for my car.

What was so impressive was how they convince you to purchase an alignment while they are mounting your new tires. While your car is being worked on, they come out with a computer generated report that shows the misalignment of each of your tires, and offer to do the alignment for an additional fee. It is a very compelling sales pitch:

1. The computer generated report provides reliable evidence that your tires are misaligned, instead of just looking at the wear on your tires (a computer can't lie, right?).


2. To some extent, you have already experienced the problem that they are selling you a solution for - the reason you are there in the first place is for new tires, and misalignment wears tires out faster. The alignment is offering you a chance to extend the life of your tires, and you are most receptive to that sale when you are about to pay for your new tires.


3. Since your car is already up on the jacks, you believe - rightly or wrongly - that doing the alignment will be cheaper now than if you want to do it later. You've already paid, via your new tires, for the labor to get the car on and off the jacks.


4. You expect (and they verify) that it will only take a few additional minutes to do the alignment, since again it is already on the jacks. Deciding to get an alignment later will most certainly take more time.


5. You are already spending many hundreds of dollars on new tires, so the alignment seems inexpensive in comparison.

This honestly is an impressive sales technique. The manager that I worked with was personable and not at all pushy - he didn't have to be, he had all of the above factors in his favor. I bought the alignment - I wouldn't say I "happily" bought it, but I didn't leave there with a negative experience even though I spent more on the trip than I intended to.

It is interesting to compare this to a somewhat similar sales technique - an electronics store trying to sell you the extended warranty on your new technology purchase. How does that situation compare to the five factors above?

1. Reliable evidence? Not really. TVs, stereos, cameras, DVD players – they aren't known for their poor quality.
   
2. Already experienced the problem? Probably not. Odds are you are buying a new toy not to replace a broken one, but because you are upgrading (DVD to Blu-ray) or because you have a new need (like a bigger house).
   
3. Cheaper now? Yes. You can only buy the extended warranty at or soon after your purchase.
   
4. Only take a few minutes? Yes.
   
5. Inexpensive in comparison? Yes (usually).

So three "Yes" and two "No" answers. But those two "No's" are important - without reliable evidence you don't believe your new purchase is going to break, especially if you haven't had one break before.

The lack of evidence is also supported by countless stories you've read of how extended warranties are a rip-off. Perhaps if they lowered the warranty price then it wouldn't be considered a rip-off anymore - but then again, they have likely maximized the price that consumers would consider "acceptable" to maximize their revenues. If they lowered the price it probably wouldn't gain any new consumers, so they would be just giving away revenues.

There is one other problem with the extended warranty purchase - there is no "immediate gratification". The warranty payment is for something that might happen in the future. It doesn't make me enjoy my new TV or DVD player any more now. This reminds me of one more experience - buying my first big screen TV at Best Buy, and the salesperson talking me into an overpriced Monster surge protector. I bought it - partly for its insurance policy, and partly for the supposed immediate improvement in having a "cleaner electrical signal to the TV". I know, I know... but how did that experience stack up against our five factors above (plus our new sixth "immediate gratification" factor)?

1. Reliable evidence? Not for the "cleaner signal"
   
2. Already experienced the problem? Not for the cleaner signal either, but I did have a relative lose their electronics from a lightning strike.
   
3. Cheaper now? Not really, I could buy it at any time.
   
4. Only take a few minutes? Yes.
   
5. Inexpensive in comparison? Yes.
   
6. Immediate gratification? Yes.

When I think back to why I chose the surge protector and not the extended warranty, I think it was a combination of (1) from every news story I heard I knew the warranty was overpriced; and (2) since the surge protector served a dual role - part product improvement, part insurance policy, I was able to more easily justify the high price since it was still much less expensive relative to the TV itself.

I know that I didn't need a Monster surge protector, but I wonder how many other people have gone through the same thought process, and what other similar sales cases we could apply these factors?


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Rocco Tarasi was an accountant, investment banker, and CFO before becoming a technology entrepreneur. He writes about innovation at www.InnovationMinute.com with a focus on "everyday" innovations in business models, sales strategies, products and services.

Creating Preference in a Commodity Business

by Matt Heinz

I was asked recently how to successfully sell value in a commodity business. When your product or service is virtually identical to what is available elsewhere, how do you create differentiation, preference, value and market share acceleration?

It's not easy, but there are ways. Here are five to start:

Service: How well you treat your customers can make a big difference, especially if you want to be a premium-priced commodity seller. Customers who don't value service will always buy on price, and if you want to be the low-cost leader, that's fine too. But if you want to sell value with a commodity, provide excellent, remarkable service at every level and every interaction with your customers and prospects.

Trust: What's your reputation? What are you known for? Do customers trust you, and why? Know what your customers value, and establish a tight bond between those values and the trust you create and strengthen in the way you do business, every day.

The Little Things: There are countless ways to do little, remarkable things for your customers. Unexpected things that make you stand out, thoughtful gestures that show you're different, and that you care. Real estate agents who bring new buyers a pizza or sandwiches on moving day, that's special. Auto dealerships that offer free car wash service for life. Things like that can be huge for differentiation and preference, not to mention word-of-mouth for your business to new prospective customers.

A Consultative Approach to Selling: Are you just selling the commodity, or are you providing additional value in the sale? Are you teaching customers more about the industry they work in, the environment in which they need that commodity. Are you helping them be more successful in the process of buying? Provide that kind of value-added service as part of the sale, and you're creating immediate value & differentiation.

Results: A commodity market doesn't necessarily mean that every option is the same, and will deliver the same results. How are you able to transcend what you're selling, and deliver differentiation and value in how that commodity impacts your customers? Is the end-result better through you? How? And how effectively can you communicate that results-based differentiation? Let your happy customers tell that story for you. Use their enthusiasm and success in the market to drive preference and value.


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Matt Heinz is principal at Heinz Marketing, a sales & marketing consulting firm helping businesses increase customers and revenue. Contact Matt at matt@heinzmarketing.com or visit www.heinzmarketing.com.

Solid Service Principles are Crucial

by Damian Kernahan

Below is the latest blog I just received from Seth Godin. He (as he does most days) makes an important point especially for Service based companies and provides additional reasons why Service Design can be such a potent weapon for progressive companies.

It's not JUST the steak or the phone call or the insurance cover that your customers are buying when they look to buy something from you. It's not JUST the all the elements that make up the customer journey and everything within it. The touch-points that deliver it, the spaces where engagement with customers occurs through channels such as in-store, call centre, postal mail, or online. The 'moment' within each touch-point where there is an interaction and your staff or systems engage with your customers.

These are all crucially important and without it, your business will not thrive and grow new and recurring revenue streams. But how do you handle situations when the unexpected happens. When there is no script, no exact procedure?

We have been working with a large Australian based firm recently who is acknowledged as a great Service Innovator and relative to their peers, they are head and shoulders above in terms of customer experience and growth. However they also know that their competitors are quickly imitating them in marketing, minimising the perceived gap. It's time to leap ahead again with a sustainable differentiator.

Having developed deep insight through design research methods we have developed innovative human centered Customer Journey Maps, an Experience Strategy and undertaken Intention Engineering.

However you cant stop there. On top of that we have developed the mortar that holds all those bricks together. It's a set of Service Principles that allow their team to take the right decisions each and every day when there is no touchpoint, no planned interaction. It provides an important guide, a set or principles on how to act to remain customer focused even when no-one is looking and no one is listening. It fills in all those 'in between moments' that all add up to the delivery of an exceptional customer experience and transformed loyalty and profitability for companies.

As is quite often the case, the ideas are the relatively easy part, the real expertise comes in how you hang it all together and make it work in a repeatable, sustainable manner making it work within your clients organisational systems and infrastructure. That is our singular goal here at Proto Partners and should also be for each and every Service Design firm.


Seth's blog entry is below

Scott McCloud's classic book on comics explains a lot more than comics.

A key part of his thesis is that comic books work because the action takes place between the frames. Our imagination fills in the gaps between what happened in that frame and this frame, which means that we're as much involved as the illustrator and author are in telling the story.

Marketing, it turns out, works precisely the same way.

Marketing is what happens in between the overt acts of the marketer. Yes you made a package and yes you designed a uniform and yes you ran an ad... but the consumer's take on what you did is driven by what happened out of the corner of her eye, in the dead spaces, in the moments when you let your guard down.

Marketing is what happens when you're not trying, when you're being transparent and when there's no script in place.

It's not marketing when everything goes right on the flight to Chicago. It's marketing when your people don't respond after losing the guitar that got checked.

It's not marketing when I use your product as intended. It's marketing when my friend and I are talking about how the thing we bought from you changed us.

It's not marketing when the smiling waitress appears with the soup. It's marketing when we hear two waiters muttering to each other behind the serving station.

Consumers are too smart for the frames. It's the in-between frame stuff that matters. And yet marketers spend 103% of our time on the frames.


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Damian Kernahan is the managing partner of corporate growth consultants, Proto Partners, www.protopartners.com.au.

Who Should Be Driving Social Media?

by Mike Brown

The title topic came up recently on Twitter, as it had at a B2B social media roundtable late last year: Who should be doing social media strategy and implementation for a brand - organizationally and individually?

My take is a strategic perspective is the foundation for a social media effort to build a sustaining impact. When it comes to questions of social media strategy "ownership," it's clear sole responsibility for it doesn't fit nicely into a box on today's org charts.

Stepping back from the discussions, I forced myself into three criteria which seem necessary for taking on social media responsibilities in corporations:

1. Ability to always be on message for the brand, which implies effectively linking brand strategy to messaging


2. Appropriate sensibilities for social media channels


3. Diverse communication skills that work across various social media channels

Sometimes those people are in marketing communications, but you may find them in other parts of a company as well. They may also exist outside a company's employee base; that's fine too.

Most importantly, given the rapid pace of social media, you want the best strategic writers crafting the communication. Where are these people located in and around your company? Find them wherever they may be!

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Mike Brown is an award-winning marketer and strategist with extensive experience in research, strategy, branding, and sponsorship marketing. He's a frequent keynote presenter on innovation and authors Brainzooming!

Competing Outside the Box

by John Karlson

While their competitors advertise holiday clearance bargains, Best Buy is running full-page newspaper ads to inform customers that they "...promise to be there for you and whatever you bought for as long as you need us." Wow, Best Buy's got your back (if you're a customer).

These are not simply platitudes. The campaign goes into tangible detail about an extended no-hassle return and exchange program, help with set-up and even recycling when it's time for new stuff.

Why all this altruism? It's easy. The low price purchase factor big box retail relied on as a reason for being and eventual domination is going away. Retail pricing is quickly becoming transparent. Online shoppers regularly use sites like PriceGrabber.com and CNET.com to scour the web for the best deal. More dramatically, it's not unusual to see shoppers in a Best Buy scanning UPC codes using smart phones equipped with apps like RedLaser or ShopSavvy for instant price transparency at the shelf.

When you use these digital shopping tools, you'll note that Best Buy rarely wins the low price race against no-frills online outlets like Abe's of Maine or NewEgg.com. It used to be just the geeks or hyper analyticals who used these tools. I've noticed that bar code scanning is a popular smart phone bragging point this holiday cocktail party season.

So if you can't win on price, you had better change the game. Best Buy is doing just that with its Buyer Be Happy campaign. The tone speaks to a bigger end game than simply changing the rational context of a purchase decision. Best Buy's language signals a fundamentally different social contract with the consumer. They are not just there to deliver a low price or even a better usage experience. They are promising to act with what I term, "social integrity" - essentially "pledging" to treat their customers, employees, communities and even their supply chain with an eye toward a long-term, mutually beneficial relationship. Is all that worth an extra $150 on a flat screen? Time will tell.

When what you buy is pretty much the same from store to store and the pricing is instantly transparent then how you behave as an organization becomes a more important point of differentiation. Maybe the "best buy" is not necessarily the "best price." Let's see if Best Buy can turn the super tanker that is our current shopping paradigm.

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John Karlson is the owner and principal at Karlson Consulting, Inc. A recovering advertising executive/start-up veteran, John helps businesses grow in the post mass-media world.

Innovating Without Ignoring Today's Revenue

by Matt Heinz

Scott Cook, legendary founder of Intuit, discussed in a recent issue of Inc Magazine how today's entrepreneurs can continue to incubate new ideas while successfully focusing on today's day-to-day revenue generation. His answer can be broken down into four keys to achieving both innovation and execution today:

1. Make sure employees know which output metric they are responsible for and how it is measured. Focus on the metrics that matter most to growing the business (new customers, margin, top-line growth). These measures will ensure proper focus on today's business, and will also give employees a foundation from which to brainstorm and incubate new ideas focused on the same end-goal.


2. Enable all of your employees - not just a small group - to invest business ideas or product features. Don't predetermine which employees - based on rank or tenure or paycheck - will have your business's next great innovation. Oftentimes, it's the frontline employees who speak with your customers all day, every day who are first to see trends and identify new opportunities.


3. Run cheap, quick tests to make sure you are on the right track. The first step could be running the idea back by a few customers to gauge their feedback. But don't overthink these tests. Get enough feedback to hone the idea and mitigate risk/exposure of taking it to the next step.


4. Think big! For innovations to succeed, they must solve a large enough problem for the customer. This doesn't mean that every innovation is a new product, or new division, or fundamental shift in your business. It just means, to succeed, innovations need to make a profound impact on the customer. That impact can still be created by relatively small changes in policy, features, supply chain and more.

How does your company focus on innovation without ignoring today's revenue?

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Matt Heinz is principal at Heinz Marketing, a sales & marketing consulting firm helping businesses increase customers and revenue. Contact Matt at matt@heinzmarketing.com or visit www.heinzmarketing.com.

Innovating Healthcare

by Rowan Gibson

The first modern hospitals were founded in Europe and America in the 18th century. About a hundred years later, both the pharmaceutical industry and the health insurance industry began to emerge. So it's safe to say that, in much of the developed world, the healthcare business has been around for about two or three centuries. And, over time, like most other businesses, it has become bigger, better and faster. But has it actually become different in any essential ways? Not really. Yet that's about to change. In a world of hyper-accelerating change, global competition, rapidly commoditized products and services, and unprecedented patient primacy, the industry is waking up to the need to reinvent itself from top to bottom for a whole new era.

Over the last few years, I've been spending a disproportionate amount of time with healthcare people. Not because I'm sick (thankfully!). But because there's a growing recognition right across the industry that the strategies and business models of the last couple of centuries may no longer be fit for purpose. The world is simply changing so much, and so quickly, that the old ways of doing things (and they are very old) are looking increasingly archaic, perhaps even obsolete.

As regular readers of this column will know, my approach to radical rethinking and renewal is centered on a set of strategy tools called the "Four Lenses of Innovation". Briefly, they are: challenging orthodoxies, harnessing trends, leveraging resources in new ways, and addressing unmet customer needs. And if we look at what is happening in the healthcare industry around the globe, we can see numerous and very exciting examples of these four "lenses" in action. Here are just a few.

One of the stubbornly enduring orthodoxies in hospital management is the age-old notion that we all make mistakes - "to err is human". Everyone has heard horror stories of people having the wrong leg amputated, or getting an operation that was meant for the patient next door. Every year in the U.S., for example, millions of hospital patients suffer injuries - about 100,000 of them fatal! - from things like false medication, incorrect dosage, inefficient diagnostics, duplicated procedures, and so forth. Yet in healthcare, people have long accepted these medical errors as "part of the system". This is clearly an orthodoxy that must be challenged. When IBM took a good look at what was going wrong - and all too often it was stupid things like illegible handwriting, misplaced decimal points, missed drug interactions and allergies - they realized they could alleviate the problem. They offered to use IT to help hospitals manage their patient data a lot more effectively, in much the same way that companies manage their supply chains. This was the birth of IBM Life Sciences, which has grown from a 2-person unit in 2000 to a multi-billion dollar, 1500-employee business today.

Consider another orthodoxy - this time in the pharmaceutical industry. The traditional pharma model is based on drug discovery - testing thousands of compounds to see if any of them makes a measurable difference. It's a model that has essentially remained unchanged since the industry got started in the 19th century - the only difference being the scale and efficiency with which today's pharma companies can manage the compound-testing process. Today, however, a new set of players has emerged - companies like Amgen, Genentech, and Genzyme - where the business model is focused on understanding disease mechanisms (i.e., genetic diseases, immune system disorders, heart disease, cancer) and creating targeted products that address those mechanisms. Their promise is 'personalized medicine', in which the therapy can be matched to an individual's own unique genetic makeup, as opposed to big pharma's "mass medicine" model. By innovating around gene-based therapy, which is based on completely different skills and assets from conventional drug-making, this new breed of pharma companies is fundamentally changing the game. Which explains why Swiss pharma giant Roche was recently so focused on swallowing up biotech pioneer Genentech.

Now think about trends. Look at what's happening in the technology field alone - from e-health to handheld scanners, mobile information devices, telemedicine, surgical robots, remote diagnostics, "integrated digital hospitals", 24/7 access to full medical records, and the list goes on. Or consider the parallel trend "from high tech to high-touch", where design elements such as nature, color, lighting, noise reduction, and so forth, are being used by a few cutting-edge hospitals to promote what is known as a "healing environment" that treats both body and soul.

Then there are healthcare providers that leverage their resources in novel ways to create new value for customers. India's Apollo Hospital Group, for example, which is the largest healthcare provider in Asia, and the third largest in the world, uses its expertise to offer medical business process outsourcing - i.e. writing of diagnosis reports, medical coding, billing etc. - to hospitals right across America. And for many of these hospitals, Apollo take cares of radiology, X-rays, ultrasound, CTs and MRIs when it's nighttime in the U.S., taking advantage of the time difference. The company's IT-enabled services already generate tens of billions of dollars.

And what about unmet customer needs? Again, there are great examples. Like Florida Hospital, where staff did "day in the life" profiling of patients so they could better understand and address their problems and frustrations. Or California's Fresno Surgical Hospital, which has modeled itself on the Ritz Carlton hotel to offer a '5-star patient experience' - including luxury rooms, mini-bars, art on the walls, and food prepared by a Ritz-Carlton chef.

True, many of these examples are still about improving what has always been done. But as all this exciting innovation activity continues, I believe we'll soon see the healthcare industry doing things it has never done before.

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Rowan Gibson is widely recognized as one of the world's leading experts on enterprise innovation. He is co-author of the bestseller "Innovation to the Core" and a much in-demand public speaker around the globe. On Twitter he is @RowanGibson.

Double the Fun - If You Follow the Rules!

Out and About Marketing

by Mike Brown

The Baskin Robbins Double Header Cone screams, "I came out of an innovation session!"

That's okay though because it appears from the outside-looking-in to have a solid customer experience-based strategic foundation.

An ice cream cone allowing multiple flavors and formats side by side lets customers preferring cones experience them in a new, fun way. Who can beat two different ice cream flavors and formats (soft serve and scoop) the way YOU want to combine them, instead of randomly (mashed scoops), sequentially (scoops on top of each other), or in a forced swirl (for soft serve)?

It's fun for kids (who seemed to be the primary audience the day we were in Baskin Robbins) and probably makes a parent's life a little saner (since it helps more easily please a kid wanting multiple flavors). For Baskin Robbins, it creates some near term buzz and introduces a new, slightly higher price point to upsell customers who'd typically only buy a single cone.

Unfortunately, the poster's fine print clearly states "no substitutions." You can't have two scoops or two soft serve flavors. The Double Header cone "fun" doesn't extend to customer-driven innovation at the point of sale.

Have a wonderful Thanksgiving (US-based readers), and be on the look-out for more "out and about marketing" examples to share here! Brainzooming is taking a few days off and will be back next week.

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Mike Brown is an award-winning marketer and strategist with extensive experience in research, strategy, branding, and sponsorship marketing. He's a frequent keynote presenter on innovation and authors Brainzooming!

Amazon Gets an 'A' for Innovation

by Steve McKee

Retail sales are projected to decline this holiday season for the second year in a row, an occurrence unprecedented in the entire history of the federal government keeping statistics on such things. Online retailers will continue to face stiff pricing pressure, as they have for more than a year. Free shipping has become almost the ante in such a competitive environment.

That's why Amazon's shipping program, Amazon Prime, is so impressive. For a company that ships 100 percent of its products, finding a way to neutralize pressure on shipping costs is no small thing--especially when it's competing with Walmart, which offers its online customers 97 cent shipping on many products, or the option to pick up their orders at a nearby store for free.

Two million people have become members of Amazon Prime, paying $79 for automatic two-day shipping on all of their purchases. Not surprisingly, they tend to be Amazon's most frequent customers, which means they're still getting a pretty good deal. But the program helps ensure they'll turn to Amazon first when they have a new purchase occasion, and the numbers indicate they increase their spending with the company some 20 percent after signing up.

Just goes to show you that innovation isn't the exclusive purview of the R&D department. While many online retailers have thrown in the towel on shipping charges, Amazon found a way offset them while increasing order flow. The company took one of its biggest lemons and turned it into a refreshing beverage.

Makes me wonder about the bitter aspects of my industry and how how my company might do something to sweeten them up. What about yours?

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Steve McKee is a BusinessWeek.com columnist, marketing consultant, and author of "When Growth Stalls: How it Happens, Why You're Stuck, and What To Do About It." Learn more about him at www.WhenGrowthStalls.com and at http://twitter.com/whengrowthstall.

Planning and Designing Excellent Service

by Damian Kernahan

It's the Me-conomy stupid.

And so sums up in just four words the feeling a lot of us have as consumers as yet again we encounter another average service experience with a company we have provided our custom, our dollars and our time, often over many years.

In this article we will look at trying to understand why we so often have these average customer experiences, why services are still most often developed using an industrial product mindset and how that might be improved. We will also provide a new approach to ensure that services are more regularly designed with the end user in mind rather than as an organic process, which has little connection to the importance of the crucial revenue stream that it has been set up to deliver.

It has been proven there is a huge gap between companies' and consumers' perceived customer experience. Bain and Co conducted a study several years ago across 362 firms. Of those firms, which were a representative sample across businesses, 95 per cent said they were customer-focused. Of those companies, 85 per cent believed that they delivered a superior experience for their customers. And the corresponding amount of customers that agreed with them. Eight percent! Yes, that's right, only eight percent of customers believed that they were being delivered a great experience. By my count, that is a rather large discrepancy between what the company intended and what they actually delivered upon. It's an even scarier number for any company that operates as a service business given their product is 'customer experience'.

According to the ABS, nearly 75 percent of the business conducted in Australia is produced by organisations that provide services as their means of generating revenue and growth. Importantly, that figure is growing annually, not only in Australia but across nearly every developed western country as manufacturing moves offshore to cheaper more cost-effective countries.

With the service sector growing in terms of both numbers employed and its importance to the economy, the requirement of having a process to maximise the value of the service exchange to both company and customers becomes even more crucial, especially in a world that is becoming increasingly complex.

In the '80s there was only one way to access the funds in my meagre bank account and that was by fronting up with my passbook and talking with the teller. Now, in addition to the traditional teller, you can transact with a bank via phone using the keypad, Internet, Paypal, and even more recently via smartphones. The world has changed and with that has come added complexity. With more channels and avenues to connect with customers and for customers to connect to service providers, logically that should result in a better service experience. Paradoxically with this increased complexity and choice has come greater difficulty in providing the customer with a better experience.

Accenture published a global report in January of this year with specific focus on major western countries, one of which was Australia. It showed that over 52 percent of customer expectations were never or rarely met and 64 percent of customers left at least one provider last year due to poor service.

So, why is that? Why, given the size of the service economy, the number of jobs and the importance in delivering business growth, is the service experience so average? It can't be that business leaders don't believe in delivering a great customer experience, because apparently 95 percent of business leaders do.

Our hypothesis is that service organisations in determining how they will reach their business goals have a firm belief that they face a choice. They can deliver increased margin and profitability at the expense of the customer experience. Alternatively, they can choose to focus on delivering the superior customer experience that nearly all managers are aspiring to and forgo potential margin and revenue because of the investment needed to do so.

And using traditional approaches they are absolutely right. Using the skills and frameworks that thousands of postgraduates - including myself - learned in the leading MBA programs in this country, we very quickly determine that we need to make a trade-off between the two choices at hand. As the saying goes, 'money talks', and nine times out of ten, forgoing the customer experience in exchange for the most efficient process will always almost win out.


DESIGNING SERVICES

Businesses have used design as part of their new product development process for decades. But unlike products, services are produced only at the point of consumption. So how do you design something that is ostensibly intangible?

The good news is that using proven approaches developed over the past 15 years by leading US and European Business consultancies-cum-'Big D' design companies such as IDEO, organisations now have a legitimate and robust process they can successfully call on to prevent the need to trade-off between profitability and customer experience.

Working alongside small and not-so-small organisations, some firms have successfully demonstrated that when you spend the time to design and determine what the ideal service scenarios look and feel like, it significantly increases the chances of the customer experience actually being delivered as it was intended. When that occurs consistently as part of the customer journey, it significantly enhances the value of the service for both the service provider and customer.

The discipline that is resolving this trade-off is known as 'service design'. Service design is the thinking and design that goes into every interaction that a service organisation has with its customers, in such a way that the organisation delivers both a dramatically improved customer experience and increased profitability. It helps organisations identify where, when and how their services can be improved and made more valuable for both themselves and their customers.

As a discipline, service design occupies a new space combining the skills of management consultancies, research agencies, and marketing and design firms. The firms occupying this space formed as a result of the inability of traditional approaches and disciplines to solve the myriad of non-traditional problems and complex business issues.

The positive impact of design on practically every measure of business performance, especially service businesses, including market share, growth, productivity, share price and competitiveness, has been shown repeatedly by data from the UK Design Council National Survey of Firms. It shows that:

• More than 80 percent of design-led companies have introduced a new product or service in the last three years, compared with just 40 percent of UK companies overall.


• 83 percent of companies in which design is integral have seen their market share increase, compared with the UK average of 46 percent.


• 66 percent of companies which ignore design have to compete mainly on price. In companies where design is integral, just one-third do so.


• 80 percent of design-led businesses have opened up new markets in the past three years. Only 42 percent of UK businesses overall have done so.

So how does it work? Well it begins with understanding what a company is trying to achieve. Most business challenges for service-based organisations boil down to successfully answering one, or more likely, both of the following questions:

• Retention - how do we improve the customer experience so we grow our loyal customers?


• Acquisition - how do we create ways for new customers to engage with us?

Upon closer inspection, service design firms often help answer questions that need solutions. They typically look something like the following:

• We currently just make products - how do we go about becoming a service-focused business?


• How do we build a strategy around a coherent suite of services that supports our product range?


• How do we come up with compelling service propositions that meet customer needs and deliver against our strategic objectives?


• How can we deliver new and improved services around a particular brand?


• How can we add far greater depth to our service concepts to ensure long-term competitive advantage?

If you find yourself asking these or similar questions in your business and want to take a positive step in creating better services and happier customers, then there are five areas that you can immediately focus on to start the journey.

A good starting point is to look at the following service design principles as a way of determining where, when and how your company can approach the creation of better services.

Using these principles alongside a methodology, tool set and skillset that have been purpose-built to drive service innovation, will provide the significant boost required to drive new and improved growth for any service-based organisation.


PEOPLE

Services, unlike products, are only created at the point that users and service providers come together. Providing a great customer experience relies very heavily on the delivery by staff of that experience. Without scripts, training and a deep understanding of the outcome they are ultimately trying to create, staff will never be able to deliver a sustainable and consistent experience for their customers. The other key point is that people leave, get promoted, forget and are fallible. Knowing this ensures that companies take these aspects into account when designing the system.


SERVICE PROPOSITIONS

Services are often referred to in service design literature as 'propositions'. It makes sense, as a service is often a collection of different elements and touchpoints that combine to hopefully deliver a compelling service proposition. The reason this takes on such great importance is that unlike manufactured products, services are quite often developed organically, and they lack the pro-active design and development required to ensure that service providers take all the available opportunities to maximise the desired experience. Companies generally focus on the 'during' phase of the service and spend far less time on what occurs 'before' or 'after' the service exchange. And the economic tragedy of that is that these areas are quite often the sweet spot where significant value can be created for a very small investment.


TOUCHPOINTS

One of the key differentiators of service design is that it looks in great detail at the entire customer journey of any service. As indicated earlier, a service takes place over time and a well-designed service also enables customers to access information, help or customer service the way that they wish to, not just the way that a service provider thinks it should be provided. By starting with the end-user in mind when designing the various touchpoints, it significantly increases the ability of the service provider to determine where and when they wish to inform, engage or influence the behaviour of current or new customers.


SYSTEMS

How many meetings have you attended where multiple ideas are generated to improve the experience for your customers? You know these meetings because they are filled with statements like 'wouldn't it be great if we ...'. And you know what is always missing at these meetings? It's the backend systems or processes to link these 'wouldn't it be great if we' statements to the operational aspects of service delivery. Focus on the development of user-centred (useful, usable and desirable) customer opportunities and understand and appreciate how the operational limitations of the back end systems will impact the successful execution of the idea. This ensures that as an organisation you always keep your promises to your customers.


SHARED VALUE

Finally, service design focuses on creating mutual value for both company and customer and is one of the crucial aspects of delivering the required performance. Innovation, it is often said, is created when someone solves the previous requirement to trade-off between two options. And in using the same logic, service design resolves the need to trade-off between value created for the company or the customer. The process is about maximising the total mutual value for both parties - a much smarter and far more 21st century approach to growth.

Which brings us back to the opening line of this article, "It's the me-conomy stupid", borrowed from a David Armano presentation.

If last century was about organisation control or organisation-led service, then this century will be about customer control or customer-led service.

The internet has given us the ability to access information and knowledge easily. We no longer need to accept things at face value, we can check to see if there is a better and/or cheaper option. We can look around with a few clicks and see if what brands and companies are promising, they are actually delivering. No longer do customers have to wait to determine if they will be in the 92 per cent of customers who are likely to receive average service; they can look online and choose which companies have proven repeatedly that they will deliver the service and the experience they promise.

With so much at stake for service-based companies, the opportunity exists even in the face of greater complexity to deliver against the constantly changing and increasing expectations of their customers to their great benefit. And if those companies listen hard enough they will have thousands of their customers saying to them, "But enough about me, let's talk about you ... what do you think of me?"


Giving Service Design Wings

Nestled in a nondescript brown industrial park near Mascot, an inner city suburb of Sydney, something very interesting is taking place. It involves a $10 million capital investment, a 5000 square metre facility and 18,000 staff per year in an effort to deliver better service for the company's customers. And the company involved? Qantas.

Qantas has embraced service design as a key driver of reaching its vision. As part of its journey as possibly the first Australian company to embrace service design, it is now focused more than ever before on its quest to deliver what it describes as "the combination of world class product and flawless service at every customer touchpoint".

With $1.7 billion invested in product, Qantas decided that service design was key to leveraging that hard investment in order to deliver the service standards needed to compete in a fiercely contested market.

For Qantas, the move to focus on delivering better customer service involves three key elements:


USING SERVICE CHAMPIONS AS ADVOCATES

Understanding the scope of its challenge, last year Qantas endorsed over 200 sales, cabin crew, customer care, pilots, engineers and corporate staff to act as service champions across the business. Their role is to continue to reinforce service levels and encourage other staff they come into contact with to deliver against the standards that Qantas has set for itself.


THE 'CENTRE OF SERVICE EXCELLENCE'

An old engineering apprentice workshop was rebuilt as a purpose-built facility to help employees experience and understand the Qantas brand and desired customer experience. The end-to-end customer experience has been recreated in the facility so that employees can feel, see and touch what the brand represents and more importantly how it is presented to customers (THE 'EXCEPTIONAL PROGRAM').

As the kick off to a wider company change program, this year Qantas is planning to take 18,000 of its staff through a one-day learning experience at the Centre. Initially, they will learn and experience how they can play their part in delivering the right level of service for their customers. In a good example of practising what they preach, from the time attendees are picked up by a dedicated bus at Sydney airport to the time they leave the facility at the end of the day, every interaction they have has been carefully designed to ensure all staff are clear on what is expected. To reinforce the initial day, ongoing initiatives have been developed to reinforce the key messages and maintain staff commitment levels.

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Damian Kernahan is the managing partner of corporate growth consultants, Proto Partners, www.protopartners.com.au.

Stop Selling and Add Value

by Mike Myatt

What I'm about to espouse will cause many an eyebrow to furrow and jaw to drop. I truly believe that the practice of sales as a business discipline has become at best ineffective, and in many cases flat out obsolete. You see, good business practices are not static. Stale methodologies and disciplines simply die a slow and very painful death, and it is my contention that the overwhelming majority of sales processes I see in today's marketplace are just that...stale. If you want to create revenue, increase customer satisfaction, and drive brand equity, stop selling and start adding value. In the text that follows I'll share my thoughts on how the practice of sales must change in order to survive.

Lest you think I've lost my mind, I want to be clear that I'm not advocating taking your eye off the revenue creation ball. Rather what I'm recommending will help you generate more revenue, with greater velocity by simply doing the right thing in putting your customer's needs first. I hear a lot of noise about the tough economy, and revenue being down for many companies. I hear complaint upon complaint that companies just don't have money to spend, and that nobody is buying. If you're experiencing this type of reaction from your customer, it's not because they don't have money to spend, it's because you're selling and not adding value. It's because you're talking and not listening. It's because you don't get it. It's not about you, your company, your products or your services. It's about meeting customer needs and adding value.

The problem with many sales organizations is that they still operate with the same principles and techniques they were using in the 60's, 70's and 80's. While the technology supporting sales process have clearly evolved, the traditional sales strategies proffered by sales gurus 20 or 30 years ago have not kept pace with market needs. They are not nearly as effective as they once were, and as I've eluded to, in most cases they are obsolete. Trust me when I tell you that your prospects and customers have heard it all before. They can see the worn-out, old school closes coming a mile away. They can sniff antiquated selling strategies, and will immediately tune out on presentations not deemed relevant. If your sales force is still FAB-selling, spin-selling, soft-selling or using any number of outdated, one size fits all selling methodologies, your sales are suffering whether you realize it or not.

So, my first suggestion is that you change nomenclature. Think about this example - in most corporations there exists a hierarchy of sales that comes with a very established and entrenched pecking order. The enterprise sales folks and key accounts reps sit atop the food chain, followed by inside sales reps, and at the bottom of the latter you'll find the customer service reps. The hunters are revered and the farmers are tolerated. Regardless of the titles being used, this entire concept of sales is so antiquated it's laughable. Frankly, most people I know would rather talk to a knowledgeable customer service person over a sales rep any day of the week. The reason for this should be obvious. The perception is that a customer service professional is providing information and helping them meet their needs. A sales person is trying to sell them something.

Call me crazy, but I don't want to talk to someone who wants to manage my account, develop my business, or engineer my sale. I want to communicate with someone who wants to service my needs or solve my problems. Any organization that still has "sales" titles on their org charts and business cards is living in another time and place while attempting to do business in a world that's already passed them by. It's time for companies to realize that consumers have become very savvy and very demanding. Today's consumer (B2B or B2C) does their homework, is well informed, and buys - they are not sold.

Engage me, communicate with me, add value to my business, solve my problems, create opportunity for me, educate me, inform me, but don't try and sell me...it won't work. An attempt to sell me insults my intelligence and wastes my time. Think about it. Do you like to be sold? News flash...nobody does. Now ask yourself this question, do you like to be helped? Most reasonable people do. The difference between the two positions while subtle, are very meaningful and powerful. If customer centricity is a buzzword as opposed to the foundation of your corporate culture then you have some work to do. The reality is that until I know that you care more about meeting my needs than yours, you'll remain on the outside looking in. By the way, in order to understand my needs you have to actually know something about me.

The first thing to do when assessing your sales model is to take a giant step back, and critically examine the current landscape. You can't fix a problem that you don't understand, and implementing change for the sake of change will likely only make matters worse. If what you've read thus far even remotely resonates with you, then I would suggest reading "Don't Negotiate...Facilitate." Teach your sales force to become true professionals focused on helping their customers for all the right reasons vs. closing the big deal for personal benefit. Otherwise you will likely miss substantial opportunities without even being aware of it.

The bottom line is that the most important factor in creating revenue and building brand equity is the client/customer/end-user. If you don't engineer everything around the client, your client relationships will vanish before your very eyes. I would strongly recommend reading "Understanding Your Customers," and "Leveraging the Customer Experience."

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Mike Myatt, is a Top CEO Coach, author of "Leadership Matters...The CEO Survival Manual", and Managing Director of N2Growth.

Innovating Up and Down

by Drew Boyd

What is the first thing you do when you step into an elevator? For most people: push the button of the floor you are going to. Not so with a new breed of elevators manufactured by Schindler North America. These elevators have the buttons on the outside, not inside. The buttons for selecting your floor are on each floor. Instead of just pushing a single up or down button to hail an elevator, you push the button for the floor you want as though you were inside.

The Division Template is the culprit here. In this innovation sighting, the elevator floor button panel was divided out and placed back into the system...outside the elevator cab. Very novel, useful, and surprising. To use Division, make a list of the components, then divide out a component. Divide functionally or physically and place it back somewhere in the system. Use Function Follows Form to identify potential benefits, feasibility, challenges, and adaptations.

The benefit is better elevator customer service. Elevator cars operate more efficiently which means you get to the right floor faster. How? By selecting your floor sooner (while waiting for the elevator to arrive) the elevator's computer has more timely input about peoples' destinations. It can calculate the optimal pattern of pickups and dropoffs, then execute it faster than traditional elevators. Here is how this new elevator, called the Miconic 10, operates:


"Miconic 10 advanced software drives a powerful logic program that systematically rationalizes elevator traffic flow in a building. It employs a sophisticated algorithm to manage the complexities of traffic patterns as they change throughout the day and to group passengers together with the same departure and/or destination floors.

With any conventional control, passengers can only tell the elevator system that they want to travel either 'Up' or 'Down'. Likewise, everyone tries to get into the first car that arrives, often causing overcrowding, then scrambling to push the buttons once inside the car. As a result, the car will probably stop at every floor on the way up.

With Miconic 10, you can register you destination even before you reach the elevator lobby. The system tells you immediately which car to go to. It groups passengers together by destination to minimize the number of stops. It makes sure that cars can't become overcrowded. Once inside the elevator, your destination floor is confirmed to you. You don't need to press any more buttons (special service buttons are, of course, provided). You receive confirmation of your destination floor upon arrival."


The first elevator was built by Archimedes probably in 236 B.C. It has come a long way since then.

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Drew Boyd is Director of Marketing Mastery for Johnson & Johnson (Ethicon Endo-Surgery division). He is also Visiting Assistant Professor of Marketing and Innovation at the University of Cincinnati and Executive Director of the MS-Marketing program. Follow him at www.innovationinpractice.com and at http://twitter.com/drewboyd

Creating High Performance Customers

by Mike Brown

The past few weeks, I've been schlepping around fabric stores since Cyndi wants to recover several pieces of furniture. This is unfamiliar territory for me, which usually means an opportunity to hunt for different takes on Brainzooming-related ideas.

One can imagine the most asked question in a fabric store is, "How much material is it going to take to reupholster __________?" With many ways to fill in the blank, store staff must spend a lot of time answering the question, especially since customers could likely struggle to accurately describe (from memory) items they're looking to recover.

That's where this photo shows such an innovative services marketing idea: a poster depicting 60 pieces of furniture with the approximate square yardage needed to recover them.

With the poster in place, the exchange on "How much material is it going to take to reupholster __________?" becomes a smile and a finger point to the nearest poster where a customer can find the item and the answer with much greater speed and certainty.

The poster creates higher performing customers which turns into time savings for customers and staff, which leads to better service and lower staffing costs. That's a strategic idea put into practice.

So what stumbling blocks to efficient customer-employee interaction exist in your business? What simple ideas might be lurking to address these issues as effectively as this poster does?

Spend a few minutes thinking about it and see what you can do to improve how you cover the situations you face.

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Mike Brown is an award-winning marketer and strategist with extensive experience in research, strategy, branding, and sponsorship marketing. He's a frequent keynote presenter on innovation and authors Brainzooming!