Archives / July 2004

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A couple of years back, a potential client contacted me about improving her company's website. It seemed like a good fit: the company was (and is) an established, profitable company; and improving the customer experience would, without a doubt, create significant gains in metrics like revenue and customer acquisition. The site needed help, customers were frustrated, but with a bit of work the business could enjoy enormous returns.

The problem came when we talked about fee. Creative Good was too expensive, she said, because her boss (the CEO) only wanted to spend a few tens of thousands of dollars per *year* on anything dealing with the customer experience.

I told her that seemed a tad low for an annual budget to be spent improving the site for customers, especially given that the annual revenue of the company was around $50 million.

"Well," she responded, "we already spend $30 million a year just on advertising, so there's not much left over."

Needless to say, the project never happened. The CEO decided to continue to "run a few surveys" with his $20,000-or-so budget; his $30 million in ads continued to drive customers to a website that frustrated them.

Let's review the numbers.

Amount           Annual budget for...
$30,000,000...Advertising (driving people to the website)
$20,000.......Customer experience (what happens when they get there)

So... a good chunk of every dollar the company earned went to sending potential customers to have a bad experience. A tiny percentage of those frustrated people would muddle through and become paying customers; the vast majority would click away, never to return.

Is this any way to run a business?

Believe it or not, it's the normal, accepted way business is run today in *many* companies. I know because I've encountered it again and again throughout Creative Good's eight-year history. $70 million for an ad campaign; $10 million to redesign the logo; a few thousand to "run a focus group" to assure the executives they're doing the right thing. Business as usual.

The good news is that more and more companies are "getting it" and beginning to invest in improving what happens when customers actually arrive on the site. They're not abandoning advertising; they're just investing in a more balanced fashion.

Imagine what would happen if the potential client above had had these numbers:

$15,000,000...Ad budget
$15,000,000...Customer experience

Can you imagine a company investing in the customer experience as if it was as important as advertising? Imagine a site turning from a frustrating, stupid, slow experience into a smooth, quick, easy, informative, delightful experience that you wanted to return to - and might even tell your friends about. Shouldn't *that* be a way (THE way) to run a business?

Let me take it a bit further.

What if a company stopped advertising altogether and focused exclusively, with undivided laser-focus attention, on the customer experience? Would the CEO be insane? If it was a public company, would Wall Street riot, and would the board ask for the CEO's resignation?

In a word, no. I know this because there is a major, established company that is pursuing a strategy very close to that. Its TV advertising budget is zero.

BusinessWeek recently interviewed Amazon.com's Jeff Bezos (Aug. 2, 2004). The interview included this exchange:

    BusinessWeek: How important is advertising to building the brand?

    Jeff Bezos: We don't do any television advertising, and we take
    all of the money that we would put into television advertising,
    and instead put it into things like free SuperSaver shipping
    [free shipping on most orders over $25], lower product prices,
    category expansion, and invention of new features. We take those
    funds that might otherwise be used to shout about our service,
    and put those funds instead into improving the service. That's
    the philosophy we've taken from the beginning. If you do build a
    great experience, customers tell each other about that. Word of
    mouth is very powerful.

    BW: It's fascinating that the increase in the value of your brand
    has happened at the same time when you're not advertising in mass
    media at all. Do you anticipate ever needing to use broad-scale
    advertising again?

    Bezos: No. Never say never, but I don't anticipate that. I like
    the strategy we're on.

I like the strategy Amazon is on, too. Not to suggest it's even close to a perfect customer experience - there are many challenges on Amazon.com, not the least of which is the increased clutter on its product pages recently. But Amazon is much, much better than most, any way you measure it - revenues, profitability, stock price, brand equity. And their stated strategy - straight from the mouth of the CEO - is close to the ideal corporate focus on the customer experience.

Amazon's example offers a challenge for other companies: focus first on the customer experience. It's not even necessary to pull the entire ad budget. Just create a strategy, and a budget, to focus on the customer at *least* as much as you invest in ads.

The most effective companies realize that they can't succeed on advertising alone; the customer matters. For those companies operating online, customer experience isn't a list of "website usability guidelines." Instead, customer experience requires a transformation of the company's strategy, backed up by the organization, investing with a reasonable budget.

Those with ad budgets, remember: Bring customers in, but be sure to treat them well when they get there.

I have an almost allergic reaction to most advertising. It's usually irrelevant, gratuitously manipulative, or obviously ineffective in its design, contributing unnecessary noise to the surroundings (whether the TV, the magazine, the Web page, or the street).

There are exceptions - online text ads, for example, tend to be relevant to me and occasionally even welcome, depending on the context. But text ads are (sadly) dwarfed by the mountain of advertising and marketing messages that seem to appear nearly everywhere these days.

So I was happy to read in The Economist that I'm not alone in my reactions, and that the ad industry is beginning to take notice.

"Consumers are getting harder to influence as commercial clutter invades their lives." (This from The Economist on June 24th.) More: "People are tiring of ads in all their forms... [a recent] study found 65% of people now feel 'constantly bombarded' by ad messages."

Here's an example of what people are reacting to. Yahoo News reported recently that the Spanish Steps - "Rome's premier gathering spot for tourists" - has "been draped in a giant advertisement for L'Oreal beauty products, the latest in a series of controversial advertisements that obscure the ancient city's monuments." As I might say elsewhere, this is BROKEN.

Then on July 12, Seth Godin wrote online that it's becoming harder to distinguish between legitimate companies and bad or ineffective ones; the traditional trappings don't mean much, while smaller or unknown companies without those trappings could very well be a better choice.

    ...So, how do we tell the good from the bad? In a connected world
    where people don't have letterhead, don't wear suits (don't even
    own suits), work out of tiny rented office suites (or their
    living room), have a simple website and buy only [online text
    ads], ... in that world, how do we tell?

His conclusion will be familiar to regular Good Experience readers:

    [T]he winners are those that treated their customers and their
    constituents with respect and did it with honesty. Trust and
    respect are the two things we haven't figured out a shortcut for.

I think the reason for these changes is that customers have gotten smarter. People see beyond the ads' empty promises and are interested in substance, effectiveness, and results. The Internet, combined with customers' irritation with increased advertising, have motivated customers to care (and research) what lies behind the promise.

It's clear how companies must react. At a time when traditional advertising is failing along with other expensive and conventional "signaling mechanisms" - promotions, direct mail, product placement - there's one mechanism that companies can rely on to build their business. This is, of course, the customer experience. By consistently creating a good experience - showing trust and respect to the customer - the company can thrive, long-term, no matter what its size or traditional media reach is.

I feel compelled at this point to clarify the relationship between customer experience and advertising. It's a simple relationship that I'm afraid is lost on many companies, given the relative size of the budgets for the two activities. (More on budgets another time.) Here we go:

    Advertising is a promise of something.
    Customer experience is the something.

Note that you can substitute "a brand" for "advertising", and it still holds true:

    A brand is a promise of something.
    Customer experience is the something.

There are some people who have to be good at making promises. Politicians come to mind: "Vote for me and I'll deliver XYZ." Vote him or her into office, and then you see if the promise holds. Advertisers, branding experts, marketers - they're in the same game: "Buy this product and it will deliver XYZ."

But who are the people who actually have to deliver on that promise? Product designers. Project managers. Customer service reps. Customer-facing executives. Practically everyone in the organization. That's because the customer experience makes or breaks the company - not the advertising. It's better to deliver well on the promise than to promise well and not deliver. Though there's a place for both, it's better to have substance than surface.

So here we are in "the age of delivery": promise what you like, but you'd better be sure you deliver on that promise. Companies with a good customer experience excel above traditional companies that put all their resources into the promise.

Seth asked how we make sense of it all, in these changing times: "How do we tell the good from the bad?" I would simply answer: Is it a good experience?

Walking down 9th Avenue in Manhattan a few days ago, I spotted this advertisement for Nescafe Taster's Choice, a popular brand of coffee.

    INTRODUCING
    THE GREAT NEW LOOK
    OF TASTER'S CHOICE.

Displayed below this bold statement was a photo of the new packaging of Taster's Choice: a plastic container with what appeared to be a label with a slightly new graphic design.

The clincher came below the product photo, a call to action that I could only admire for its chutzpah:

    Pssst...tell a friend.

Now, don't get me wrong: I'm no stranger to telling friends about products and customer experiences that I like. (I wrote a free guide to recommend products at www.unclemark.org - download the guide, if you're interested.) But telling your friends that a coffee brand changed its graphic design is absurd.

That absurdity is matched only, I think, by the marketer who spent untold thousands of dollars spreading this message all over New York City, perhaps the country. "Pssst...tell a friend that I wasted my ad budget!" would perhaps be more accurate - and get more people to participate.

Think about it from the customer's perspective. Heck, you've drunk coffee before - think about it from *your* perspective. What's the essence of the product - the customer experience - that would determine whether you say "pssst" and tell a friend? I'd guess that the list of criteria would look something like this:

1. Price
2. Taste

I doubt if "label" or "packaging" would be a top concern. After all, if a coffee brand was expensive and tasted bad but had a great logo, would you buy it? Would you recommend it to your friends?

To be fair, it is possible that better packaging could improve the customer experience of Taster's Choice. For example, if there was a "portable package" - i.e. a package where customers can open the top, pour in the hot water and go - then there might be a real customer experience improvement (as opposed to just a new color, material, or size). The key here is to base it on a real customer benefit or unmet need. Companies that are merely trumpeting their latest graphic look really are wasting their budgets.

This isn't meant to single out Taster's Choice, because I've seen scores of companies make this same mistake in the past: marketers often confuse the packaging with the customer experience.

I recently spoke at a conference on "customer experience and the brand", hosted by a group of branding experts and attended by brand managers of some of the most recognizable brands in business today. I was struck by how often the other speakers would talk about "customer experience" as though it was found mostly in the brand's packaging, color scheme, logo, or positioning in the marketplace - as opposed to the substantive part of what the customer actually consumed, tried, wore, or otherwise used.

And then I remembered: these were brand managers who have spent their careers creating the best possible *packaging* - advertising, marketing, and physical labeling - in order to convince the customer to buy. And marketers, historically, have been different from product designers.

My talk was supposed to focus on the online customer experience. So when I took the stage, I reminded the audience that there is no packaging on websites (much to the dismay of clueless marketers and designers a few years ago, who began every website with a "splash page" as though it was a glossy shrinkwrap label wrapped around the pages inside). The website is just the experience itself, which the customer could leave, at any moment, at no cost, if it's not good.

Remember this if you work online: there is no packaging on a website. Online branding should involve less emphasis on logos and color schemes, and more work on what actually improves things for the customer.

There's a lesson here for offline products, too. Marketers should know by now that customers won't be telling friends about new product labels. The customer experience isn't the promise on the label - instead, it's what the product or service actually delivers to the customer. Make *that* good, and your customer might actually tell a friend.

- - -

Update July 15: Robert Moss points us to this article from India, which provides a good counterpoint to my column above.