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What does social networking really mean for your company and your brand? If themessages your customers hear about you come mostly from you, then advertisingrules. But now that customers communicate with each other, more and more, it'sthe customer experience that counts. As transparency has become inevitable andcomplete, and all our customers can know essentially everything about all productofferings and pricing, how do we compete?
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COPYRIGHT © 2012ALL RIGHTS PROTECTED AND RESERVED. 1
Standing Up and Standing Out
Trustability: Marketing Imperative
Martha Rogers, Ph.D.SMICS
July 11, 2012
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2
Toyama no Kusuri-uri
House-to-house medical supplies
Consumers only charged for usage
Detailed records kept in a database, called the “Daifuku cho”
Circa 1750
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In 1996, Barnes & Noble offered to buy amazon.com,
--to protect them from B&N’s online launch
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In 1996, Barnes & Noble offered to buy amazon.com,
--to protect them from B&N’s online launch
Today:•Barnes & Noble has a market cap of $719 million
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In 1996, Barnes & Noble offered to buy amazon.com,
--to protect them from B&N’s online launch
Today:•Barnes & Noble has a market cap of $719 million•Amazon.com has a market cap of $102 billion
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We all recognize this, right?
6
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And everyone knows what this is?
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Well, how about this?
Philip Stewart's 'Chemical Galaxy II' periodic table
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Taking a different point of view
Orica’s business involves collecting detailed blast parameters from customers all over the world
Now the company sells service contracts for crushed rock, taking on the risk of managing each blast itself
What business are you in?
Customers just want their rock crushed to ideal granularity
Strategy. Execution. Results.
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The company that does not use the information it has about customers has no
advantage over the company that does not have information
about customers
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Can this work for smaller businesses?
Zane’s Cycles faces both Wal-Mart and a sports superstore
Chris Zane applies 1to1 marketing at the retail-detail level
Lifetime bicycle warranties
CRM-based customer profiles
Doubled his business in two years to $3.5 million
Now has 65% of the bike market in his area
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Twin benefits of relationships…
More satisfied customer
More convenient product
More appropriate offer
Personalized service
Lower costs
Less “wasted effort”
Lower inventory costs
Better asset utilization
Relationships and good experiences require trust
Strategy. Execution. Results.
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Customer centricity’s objective
Product CentricityProduct CentricityMarket share
Customer Needs
Satisfied
Customers Reached
Share of customer
Cus
tom
er C
entr
icity
Maximizing the value created by each product
Maximizing the value created by each customer
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Customer centricity is building the value of the company by building the value of the customer base
Customer centricity is building the value of the company by building the value of the customer base
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Welcome to the Age of Transparency83% of consumers trust the recommendations of
their friends
More than half trust the online opinions of complete strangers
But just 14% of consumers trust advertising!
Forrester Research
“Transparency is a disinfectant for business. It will purify things and help start the healing, but it’s going to sting like
hell.”
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Moore’s Law
Every 20 years, computers get a thousand times faster and cheaper
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Zuckerberg’s Law
Every 20 years, we share a thousand times as much information with others
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Now suppose you were a food source for bees…
But a bee will only do his dance to tell the other bees about you if he was satisfied with the nectar
Moral: In the absence of communication among your customers, advertising rules
Once your customers communicate with each other, it’s the customer experience that counts
Bright colors and a sweet fragrance can get any exploring bee to take a look
Strategy. Execution. Results.
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It’s basic:Customers create the most
value for you when you create the most value for them.
Strategy. Execution. Results.
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Going forward: 3 Requirements
For Extreme Trust
Intention Do the right thing
Competence Do things right
Proactively
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Customers assert their new social power easily
• HSBC forced to reverse course• Over the summer it had dropped its policy
of free overdrafts for university students• By using Facebook, students connected
with others to organize a protest of this new policy
• Soon HSBC reinstated the free overdraft policy
Strategy. Execution. Results.
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The components of 20th century “trust”
Competence – doing things right
Good intentions – doing the right thing
Now
Doing things right, and
Doing the right thing,
Proactively
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Honeybees dance about everything!
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Screw up, and the “news” will be immediate, ubiquitous, and permanent
You can’t un-Google yourself.- Linda Kaplan Thaler, CEO, Kaplan Thaler Group
“You can't take something bad off the Internet. That's like trying to take pee out of a swimming pool.”
- Grant Robertson, blog post, May 1, 2007
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Trust Is Becoming More Important Because…
1. Trust makes interactions efficient
2. We screen information for its
trustworthiness
3. Interaction generates transparency
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Extreme Trust
•No longer sufficient simply to refrain from cheating or deceiving customers
Proactive trustworthiness
Strategy. Execution. Results.
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Earning trust sometimes requires a deliberate balance of
short-term gain and long-term
equity
Strategy. Execution. Results.
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Earning trust sometimes requires a deliberate balance of
short-term gain and long-term
equity
Acting in the customer’s interest
Strategy. Execution. Results.
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Earning trust sometimes requires a deliberate balance of
short-term gain and long-term
equity
If that seems impossible, ask what
happens when customers choose between you and a
company that can be trusted in the long
run
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Lots of people are asking:
How can I use new social media to sell more to my customers?
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Lots of people are asking:
How can I use new social media to sell more to my customers?
Wrong question!
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Lots of people are asking:
How can I use new social media to sell more to my customers?
Wrong question!
The question to ask now is:
How can I use any tool to understand my customer better
and build a more trustable relationship?
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One bank routed calls from its most valuable customers to product and sales specialists, to try to sell something, before letting them do the routine transactions they wanted
Ordinary customers were able to get right to the IVR and handle their transactions
Why did those valuable customers leave?
Very special (mis)handling?
Source: The Best Service is No Service, Price and Jaffe, 2008
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A B
Things aren’t always what they
seem
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How good is your customer experience?
80% of corporate executives say their company delivers a superior customer experience
Just 8% of consumers report they received one
Source: Bain and Company,
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makean
impact!Trustworthy is not good enough. Your company must be trustable
Take this test…
Strategy. Execution. Results.
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Carefully follows the rule of law, and trains people on its ethics policy to ensure
compliance
A trustworthy company:
Follows the Golden Rule toward customers, and builds a corporate culture around that principle
A trustable company:
Strategy. Execution. Results.
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Does what’s best for the customer whenever possible, balanced against the company’s
needs
Designs its business to ensure what’s best for the customer is financially better for the firm, overall
A trustable company:
A trustworthy company:
Strategy. Execution. Results.
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Fulfills all its promises to customers, and does what it says it will do, efficiently
Follows through on the spirit of what it promises, by proactively looking out for customer interests
A trustable company:
A trustworthy company:
Strategy. Execution. Results.
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Manages and coordinates all brand messaging, to ensure a compelling and consistent story
Recognizes that what people say about the brand is far more important than what the company says
A trustable company:
A trustworthy company:
Strategy. Execution. Results.
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Uses a loyalty program, churn reduction, and/or win-back initiative to retain customers longer
Seeks to ensure that customers want to remain loyal because they trust the firm to act in their interest
A trustable company:
A trustworthy company:
Strategy. Execution. Results.
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Focuses on quarterly profits as the most important, comprehensive and measurable KPI
Uses customer analytics to balance current profits against changes in actual shareholder value
A trustable company:
A trustworthy company:
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Doing Business in the Age of TransparencySocial networks evolve in a path-dependent way, and social sentiment cascades in an inherently unpredictable manner
As a result, dealing effectively with rising levels of unpredictability is a vital skill-set for today’s managers
Six strategies for dealing with unpredictability
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Doing Business in the Age of Transparency
The social domain and the commercial domain operate on entirely different customs and mores
Four ways to influence the influencers without using cash or commercial incentives
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Doing Business in the Age of TransparencyThe e-social world facilitates convenient, cost-free sharing and collaboration among strangers: “social production”
“Free revealing…is at the very heart of social production—the free and unencumbered sharing of innovative ideas to generate some
collective good.”
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Doing Business in the Age of Transparency
The world is not perfect, so brands that maintain they are perfect are simply not trustable
“Admitting one’s own vulnerability is the first step in earning someone else’s trust.”
“…the numbers show that a negative customer review actually converts to a sale more effectively than a positive customer review.”
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Doing Business in the Age of Transparency
Dealing with a supernova of data will require skill with numbers, but human biases often triumph over objective analysis
In the 1970s a man won the Spanish lottery with a ticket he’d specifically chosen for its ending number of 48. Very proud of his
“strategy” for winning, he explained: “I dreamed of the number 7 for seven straight nights, and 7 times 7 is 48.”
“…90 percent of CMOs believe that customers trust their own company’s brand as much as or more than they trust competitors’
brands!”
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Customer’s view of trustability
Based on experience with other trustable firms
Your view of trustability
Based on changes you made to your own prior policies
Things aren’t always what they seem
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Rising Customer Expectations
•Previously acceptable business practices are now “untrustable”
X Profiting from consumer error
X Failing to notify
X All “caveat emptor” policies!
Strategy. Execution. Results.
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Earning trust all the time helps on a bad
day
Remember what happened to
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Imagining the Future…
•How would a trustable gift card work?
•What about a trustable mobile phone company?
•…a trustable health insurer?
•…a trustable automotive manufacturer?
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What social networks require of you:
Build and maintain a reputation for trustability
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Trust is everything
Prediction: Trustability will become the
single most enduring measurement of a
company’s ability to create and sustain value.
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Trust sells
84% of marketers agree that building customer trust will become marketing's primary objective
Source: 1to1 Media survey
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The three things they respond to: Figure out what’s best for each of
them, and do it – well. And proactively.
Customers can be tough:
Strategy. Execution. Results.
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If customers trust you…
…they believe you will understand their point of viewWhat’s it like to be your customer?What should it be like?
Three elements of trustability: Goodwill CompetenceProactivity
56
Strategy. Execution. Results.
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Customer trust is based on reciprocity…
“Treat the customer the way you would want to be treated if you
were the customer.”
“Customer advocacy is…the best indicator of…cross-sell success”
“Firms that score highest…are considered the most for future
purchases”
Strategy. Execution. Results.
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…and there’s no such thing as “one-way reciprocity”
First Persian Gulf War (1991) USAA sent unsolicited refunds for time spent abroad by members
Empathy works both ways
2500+ members mailed their
refunds back!
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How would you compete against a company that
customers trust so much they send back the refunds and stay
for three generations and counting?
Strategy. Execution. Results.
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…can “trustproof” a business, protecting it from random swings of social sentiment
Trustability
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A culture of customer trust drives many leading firms
Strategy. Execution. Results.
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Creating a culture of customer trust
These companies are not just selling something.
They are building the value of the customer base.
Strategy. Execution. Results.
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Rising levels of transparency will raise the standard for trustworthiness:
No longer sufficient simply to refrain from cheating or deceiving customers• What happened to the wealth client
Proactive trustworthiness:
Trustability
Instead, a trustable company will work to protect customers’ interests proactively
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Simple truth
Do things right
Do the right
thing
Do things right
Proactively
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A little inspiration from Harley Davidson?
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Peppers & Rogers Group
Management consultants in customer strategy issues
Magazines, newsletters,research white papers
Offices and clients around the world
www.extremetrustbook.comTwitter @martha_rogers
Strategy. Execution. Results.
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