Wednesday, January 6, 2010

"Think and Grow Rich" - the Customer Service Edition

Napoleon Hill's classic, "Think and Grow Rich" has been in the library of every success-minded person, and spawned an entire industry of self help and personal development.  Mr. Hill started from the perspective of trying to understand why certain individuals achieve great success, while others equally talented can't seem to get it.  His basic conclusion is that you become what you think about most of the time.

For modern corporations, they have sought to understand what their customers think most of the time, and use that information to increase market share, wallet share, and loyalty among new and existing customers.  Michael Dell made a powerful observation at the age of 16 regarding the power of market segmentation while selling newspaper subscriptions (see http://www.answers.com/topic/michael-dell).  By tightening the segmentation criteria, Dell was able to sell thousands of newspaper subscriptions - far outperforming his peers at the time.

Segmentation in general allows companies to devise particular strategies for interacting with sub-groups of customers in a standardized way.  The segmentation that Dell did allowed him to target his limited selling resources to a group that was more likely to buy than the first order segmentation that was done by the newspaper.  Thus his efforts, in contrast to his peers, were much more productive.

In a sense, customer segmentation is a backward-looking activity - important, but it is driven by the contours of the market that were created by a particular product or service.  Of course, companies that have been most successful in creating strong loyalty still perform customer segmentation and put a great emphasis on well-executed customer support activities, but it is more of an effectiveness play in reaching customers, but not necessarily the cornerstone for creating customer loyalty.

Apple and Harley Davidson are two companies that have high customer loyalty.  Apple has an iconoclastic culture that represents the best of Silicon Valley.  Harley Davidson is associated with the freedom of the open road.  In a sense, their first order segmentation really is a self-selected group of customers that develop affinity for the perceived value represented by their products.  It is unexpected and welcome by customers.

As much as anything, Napoleon Hill tapped into the human emotion that people have control over their own destiny.  For companies, it doesn't necessarily mean that there needs to be an entirely new product, as in the iPod or the new Harley Davidsons.  What it means is that companies need to help their customers think differently about their products - tell the story in a simple but compelling way.  Companies can then create segmentation strategies that will support the product or services value proposition.  Finally, companies need to structure their support in a way to support the desired company and product perception.

Many other things become part of the support equation, especially as means and channels change in concert with changing demographics and customer service needs.  While bad customer service will always drive away customers, good service will not necessarily keep them.   Building customer loyalty represents a cross-enterprise commitment to customers that a company's products and services will meet and exceed several customer needs and wants, do so in a compelling way, and make it easy to work with the company when things don't go perfectly.  How to do it is a  subject for future posts.