Month: May 2011

The ways some companies these days strive to keep their customers always amaze me as well as make me happy as a consumer. One place where you can easily find close company-customer relationships is car dealerships. In my own car buying experiences, most salespeople are willing to negotiate a special deal for each customer with the permissions from their managers even if by making the deal, they will not earn  as much profit as they normally will for that car type. This kind of behaviors is also starting to become more popular among other industries such as the phone companies.

These actions would seem unreasonable a couple years ago, so how companies nowadays justify doing them? One of the main reasons I believe is the shrinking rooms for innovation and hence the increasing cost to truly differentiate your products from the others. For instance, Mercedes revolutionized the way people perceived coupe by releasing the CLS-class, a four-door coupe. However, Mercedes’s advantage earned by the CLS-class has almost disappeared now that other car companies also have their own four-door coupe available, such as Audi’s A7 and BMW’s 5-series. Moreover, companies nowadays have to invest much more recourses into their R&D departments in order to get the same results in the good old days. As a result, they shift their focus to building customer relationships, which in comparison is becoming more profitable. Also another reason, which has something to do with game theory, is companies trying to match competitors’ efforts to perfect customer service. As companies observe this level of efforts spent by their rivals on their customers, they also spend more resources in the same area in order to match the new standard of service quality.

Many companies these days have recognized the deep potential of using their employees to communicate company values to the customers as well as promoting the company and its products in general; in fact, a company’s image among consumers has a lot to do with its employees. For instance, when we think of Apple, one of first few things that pop up in our minds are their employees and some of their unique attributes such as friendliness, cool uniforms  and extroversion. And thus, we also associate these positive qualities with their company, Apple, which demonstrates how important employees are in connecting customers to their company.

There are many ways to get the most out o f your employees’ ability to promote the company, but in my opinion, the one critical element in effectively utilizing this potential is employee training program The training programs are to educate your employees about company values, product knowledge and  how to behave in front of customers, but more importantly, their purpose is to achieve consistency in customer experience. In my own experience, I have mixed feelings about Rogers customer service. When I am on the phone with them, sometimes I will encounter a representative who is really impatient and rude while sometimes I will be talking to a nice and helpful service person. However, my overall experience is flawed because of the inconsistency of Rogers employees’ attitudes. Moreover, this inconsistency can damage the company’s reputation even further as some individuals like me may write our occasionally terrible experience online, causing more customers to stay away from Rogers. As a result, a company needs to make sure this does not happen by implementing systemic and effective employee training programs that reduce unsatisfactory customer experience to a minimal as well as make sure company values are clearly demonstrated through employees.

Before I start, I want you to watch these two videos and think about what they have in common.

Barney Stinson’s video resume

Volkswagen Commercial: The Force

There are several things they have in common. For starters, technically, they are both advertisements, one for promoting a person and one for selling a car. Also, they are both awesome, funny and cool. But there is one key thing they lack in terms of their nature: they both do not tell us anything about the products they are promoting. For example, in Barney’s resume, there is literally no information about his work experience, education or personalities, while in Volkswagen’s commercial, there is not a single word spoken, and the whole commercial is about a kid in Darth Vader’s suite.  Yet both advertisements are very successful at getting people’s attention, and in fact The Force won the best commercial during the super bowl this year. The message they send is that advertisements are about getting maximum attention instead of trying to get people to know the products.

As the time-poor society becomes more diverse and overwhelmed in terms of entertainments and information,  this trend in advertisements appears more obvious and growing stronger. Instead of selling the key concept or the major function of a product, a successful commercial is creative and interesting; it also often shows something very personal and related to our lives as well as connects it with the product. My own experience also reflects this whole idea. During a commercial period, I often have my Ipad or laptop at hands, and the only commercials that grab my attention are the ones that are cool and funny. Advertisements that throw technical terms, such as a new technology for television or functions of a new computer tablet, at me often do not leave a single mark in my memory at all. This also illustrates that people’s opportunity cost for commercial is increasing as there are many other forms of entertainments that steal the spotlights of advertisements. As a result, in order to compete for our attentions, I believe the element of creativity will take an even greater part in future commercials, and the effectiveness of information-oriented advertisement will diminish eventually to the point where it is barely worth the money.

More and more I am noticing that many companies focus their attention and recourses on building their company and product image; companies’  budgets for promotion and campaign can easily match or even overwhelm the money spent on developing a product. For instance, during the fourth quarter of last year, Microsoft released two huge products, Kinect for Xbox 360 and Window phone 7, and they spent half a billion dollars on advertisements for each product. Another obvious and popular example is Apple. Many people, mostly experts on computers and phones, argue that Apple does not have the best smartphones and laptops on the market, and many other devices have better specs and functions. However, despite the high prices, these two products are arguably the most popular of their kinds as of now.

Given these examples, one will ask why companies nowadays will be willing to spend so much money on promoting their brand and how these actions result in a success? Here is my take and observation. For products such as video games, computers and cars, I believe it is safe to say that the majority are not experts. For example, when my mother goes to stores to look for computers, the only knowledge she has about this kind of products are brand names.  As this fact becomes more obvious, companies realize the key to success is to implant the belief that their products are the best in people’s minds rather than keep on expanding their products with streams of money. Once a company build a strong and unique image in a society, it is very hard for other companies to copy, and it becomes a free advertising machine as it becomes the topic of people’s conversations.

With this said, I am not claiming that a product’s quality is not important to a company’s success. But perfecting a product is very costly and time-consuming. With today’s technologies and competitiveness, finding an blatant edge in your product is almost impossible unless you has a lengthy head start before everyone else, like Microsoft. To conclude, I believe the main solution to success is to combine these two elements: first identify the special quality a company will stick with and then magnify it to the public. Plus, once this strategy succeeds and gives you the attention and sales you need, you will have more budgets to spend on improving the products and thus make a few more steps ahead of your rivals.