Last week I participated in a very good discussion about the value of a service from both the agency and the client’s perspectives (see the post that originated the discussion and the follow-up post, both by @ginidietrich from Arment Dietrich PR).

It’s very interesting to see how passionate people are about the value of their work (and about the perception of value for the same service in the client’s eyes).  Despite how much this topic is discussed, I don’t think we will ever see a simple answer for it.

The problem here is that there are several different ways to understand “Value” in a service, so a “Value-based” pricing model will never be unique from agency to agency or client to client, and not even within the same agency and the same client.

To understand the value of a service, we need to consider 3 factors:

1. Expectations – No matter the case, value is a matter of expectation. Setting the right expectations from the start is, in my experience,  the only way to ensure satisfactory results and to avoid discussions on the actual value of the service provided.  (I wrote about it 2 years ago – click here to see the post)
   Now, how to set the right expectations? It is a mix of confidence in your own capabilities and knowledge of the market you work in. Each professional will deal with this in its own way, but successful professionals can set right expectations without any effort, because they know their capabilities and limits as well as the current state of their markets. This, of course, doesn’t take into account unforeseen circumstances, but remember that acknowledging the possibility of unexpected outcomes and planning for them is ALSO part of setting right expectations to your clients.
    
2. Trust – A good level of trust is essential to both sides. The agency needs to trust the client and, even more, trust the client’s products or services being advertised. No matter how much effort is put into the message, customers won’t be coming back and the campaign success will be short-lived if the service is not good enough for them.  Agencies that work with products they don’t believe are just fooling themselves (and their clients) and, in the long run, are compromising their relationship, results AND the perception of value to their services.
   On the other hand, the client need to trust the agency and its methods so they can give them enough room to do what they believe will work better.  Clients that question the agency’s strategy every step of the way don’t really trust the agency’s capabilities and intellectual authority.  They are looking not for brains to bring them solutions, but hands to implement their own ideas and strategies. There’s no real perception of value in this kind of relationship and there will never have any.  If you need to do a project like this, charge an hourly rate…
   My analysis here is that you CANNOT work based on value when there’s NO trusted relationship established with the client yet.
    
3. Risk – As with everything, a value-based pricing model is about taking risks (for both sides) and making them worthwhile taking (again, for both sides). The best approach is the one where the agency minimum costs are covered (no one will risk for long if they have to pay to keep working), the main fee is based on achieving expected results and there’s a percentage (bonus) based on overachieving milestones. Clients usually don’t have any problem in paying more for these stretch goals as long as they believe they are proportionally getting (way) more in return.
   Another approach is to agree previously upon separate cost streams based on risk:  
   -  A minimum monthyly retainer cost for allocation of resources for the whole duration of the project (no matter how long);
   -  A main fee based on specific goals and milestones ;
   -  A percentage of revenue, based on a pre-agreed KPI for results clearly above original goals.
   This way each party shares the risk of a minimum cost for believing in the engagement (or the need of the engagement), a fair price for its success and a premium for any extra ROI provided.

I know this answer is not a simple one, but I learned over the years that nothing is simple in our line of work, that client relationships can never be understood by simple numbers and practical wisdom (or just plain common sense) and real empathy are our best tools in the process of understanding the perceived value of our servies (see Barry Schwartz’s video presentation on Practical Wisdom at TED).

All in all, it is good that it isn’t easy or we would all be out of jobs…

Follow Luis on Twitter at www.twitter.com/luiserpa

I received these images in an e-mail the other day and it made me literally laugh out loud.

I have no idea who created them or if they are already posted anywhere else, but I think they are too good to pass without sharing them.

Anyway, below are some criative versions of some companies brands after being hit by the recession.

Enjoy!

 
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(If you know who made those or what site has first published them, please let me know so I can update this post with a link and/or the proper credit)

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If anyone still had any doubts of the impact of games on consumers’ choices, that doubt is quickly fading out.  Microsoft has broadened the marketing experience and branding possibilities inside Xbox games (See the article here). Aside from the standard banners and videos throughout the game, Microsoft is offering geographical targeting and the ability to serve-up ads during a specific time of day, much like traditional media like TV.   Also, gamers can engage with a brand by choosing to dress their avatars in related sunglasses, T-Shirts, jogging pants and running shoes.

Many Ads are clickable, connecting to microsites or offering downloadable content, all taking advantage of the Xbox Live community and all supported by monitoring software to analyze how the gamers use the platform and help build the next generation of advertising services based on user trends and behavior.

So… Are you ready to play?

See original post at Vox Inc – Customerspective Blog

In the midst of the economic crisis, while most banks are trying to keep attracting customers by offering higher interest savings and money market accounts, one bank (PNC) is thriving by focusing on delivering a unique online customer experience, specifically designed to target the generation Y (people aged 18 to 34, according to PNC demographics).

PNC created a product called Virtual Wallet that boldly discards all usual conventions from the banking industry, such as checking or savings accounts, and offers 3 types of accounts (dubbed “Spend,” “Reserve” and “Growth”) combined in a single solution.  They focused on two simple concepts:

• Twentysomethings consider bank sites clunky, and they typically don’t know how to manage their money (’We need help helping ourselves’)
• The Gen Y really understands how to take advantage of online resources.

The solution takes advantage of concepts borrowed from other online services, games, social networks and even e-Commerce sites with features like Wish-List, Financial Calendar, Money Bar, Danger Days and “Punch the Pig.”   That strategy is luring 130 new customers a day (20,000+ Virtual Wallet customers since July) to an account that otherwise could hardly compete with more aggressive banks in terms of paid returns. 

Defying conventions and betting on exceptional experience can cost a lot initially (PNC expects the project to cost about 15 Million overall), but the ROI is unquestionable: PNC estimates to break even 1 year faster than a similar investment on a new brick-and-mortar branch would have.

From that example (plus everything that we preach here at Vox), I can get 3 great lessons to any company in any industry:

1.  Don’t be afraid to defy conventions!  Know your customers, understand what they what and what they need and create NEW experiences that fit their expectations
2.  Test your concepts with real customers, watch how they react and behave and adjust your solutions accordingly
3. The best strategy in times of crisis is still to offer a truly great customer experience.  Marketing gimmicks and discounts can only go so far as… well, superficial wins…

 So… What strategy will your company follow to get over this crisis?

 See more about it in this article from BusinessWeek or in this blog post from Customer Experience Matters.

It is just me or the lines between media channels are becoming even blurrier these days?  Don’t mind campaigns that go cross-channel and campaign pieces that can be followed on facebook or twitter, now they can be followed as well on the CUSTOMER ITSELF.

”GirlInYourShirt” is offering exactly what the name says but with a twist:  for a whole day she becomes your company’s evangelist and will showcase your company everywhere she goes, online and offline.  All of that for just $75 bucks…

See original post at Vox Inc.

Just one day after the election, in a discussion group for UX practitioners and Information architects, I saw a post asking people’s take on the U.S. election with respect to UX & Usability.  Specifically, it was asking if either McCain or Obama would provide a better environment for UX to thrive…

Well, my first reaction was to think that the question was a little off-point and that the choice of the U.S. President couldn’t possible affect the UX environment, but then I stopped to really think about it…

It’s interesting to think how a president could positively or negatively affect the UX environment. Particularly, I’d think that the UX environment evolves by the need from users to have more friendly sites/systems and by usual rules of market behind supply and demand, driving companies to look for new and better ways to stand out from the competition.  

Now, Obama proved more than once during his campaign that when used correctly and to its full potential, the online channel can change the way your product is seen and consumed.  He showed that the internet can be a force to reckon when getting people involved and interested in what you have to say.

Obama’s approach and use of all available online resources (from SEO to Social Media to iPhone applications) reinforces that he is already more in tune with the new media and better yet, capable of leveraging new concepts and ideas to bring out-of-the-box solutions that actually work. 

Not even a week has passed since his election and he has already launched a new website that lets people track his decisions, give feedback and offer help: Change.gov .  The website is an example of “by-the-book” UX best practices.  It is simple and effective and will certainly get him one step closer to achieving his goals.

It seems to me that Obama is set to change how the government uses the Internet and he intends to do it with the best available UX standards and techniques.

That alone should give us hope on how he can bring more people to use the internet as a primary communication channel and, by that, raise the competition and the overall need for better UX.

 
 
UPDATE: Here’s some more data on Obama’s innovative use of the Internet: Read it at TechCrunch

Stop right there!

If you were looking for some “how to improve your love life” article, you came to the wrong place. Rather, I would like to explore how the emotions involved in customer relationships are strangely similar to those you have with your loved ones.
…
Well, customers may be willing to share the object of their affection with a couple million other people, but the difference ends there… Like in romances, customers will become jealous if you favor others over them. If your company sees more value in acquiring new customers than in keeping a current one, the current one will leave.

Take for example wireless companies. To get into the proverbial bed with you, they lie and say they’ll treat you right. They offer you free phones, cash back, gifts and promise to take care of you and make you happy forever after. However, as soon as the sun comes up, or you’ve signed a two-year contract, you are tossed aside and simply added to the list of their many conquests. You, as an individual customer, don’t matter anymore.

Being treated this way is bad enough but then, adding insult to injury, the company continues to flirt with others right in front of you; making the same empty promises they made to you.

If your girlfriend or boyfriend treated you this way, how would you respond? Exactly!
Now, how do you think your customers will respond?

Oh sure, you may be able to fool a few and keep them with you for a while. But, as soon as the competition starts making its move and offering better perks, your customers are as good as gone.

Long romance or one-night stand?

Does offering all these perks to attract new customers really pay off when you treat them like that and they leave you in two years? Why not reward loyal current customers by giving them special offers or at least the same advantages as new customers when they renew their contracts. Better yet, why not offer them incremental benefits throughout the years?

It costs six times more to attract a new customer than to keep an existing one.¹

So, investing in customer retention not only saves your company money, it also leads to loyal, life-long customers and a higher return on investment.

In simple language: Set the right expectations, and be ready to invest as much in retention as you do in acquisition!

After all, one of the most basic rules of relationships is that if you are happy with what you have, you will be less tempted or willing to risk your relationship for instant gratification.

Is it time to break-up?

SPRINT has taken a somewhat unique approach to the customer relationship; they’ve flipped the table and are dumping their unhappy customers, (SPRINT is starting to cancel customers’ contracts when they call customer service too often).

I wrote an article about this topic last year (Bad, Bad Customer… No Soup for You!), explaining how companies were starting to identify customers who don’t measure up or are deemed too high maintenance.

I am not taking sides on this matter², but you can bet that outraged high maintenance customer is going to tell everyone she knows about your service and your company has a lot more to lose in brand awareness and public image than she does.

Having said all this, I ask again: Is it worth losing the one you’re with?

^{1 – Stevens, M. Extreme Management: What They Teach At Harvard Business School’s Advanced Management Program. Warner Business Books, March, 2002.
2 – You can read views of both sides on Seth Godin’s Blog “Treating different customers differently” and “The first thing“, and also at the consumerist.com.}

Originally published at Vox Inc Customer Experience Articles

In my last post (“Welcome Back! Long Time, No See“), I commented on how face-to face interactions are being affected by the reliance on technology, subsequently missing real customer relationship development opportunities. After posting it, I realized that it wasn’t very fair. Technology and CRM tools can be useful for improving the Customer Experience in real world situations with creative implementation. So I decided to devote a few brain cells towards imagining some scenarios that could be implemented with today’s tools and technology.  Here is what I came up.

Grocery Stores:

After a busy day at the office, Beth (our imaginary customer) is driving home when she decides to stop by the store for some groceries.

On entering the store, she goes directly to the first available Customer Service Kiosk and, having forgotten her “Preferred Client” card, uses her index finger to log in. The system shows Beth her current shopping list with her son’s wish list, added earlier at home over the Internet. The system offers Beth some interesting new products fitted to her needs and a list of personalized coupons. She then prints out her shopping list and coupons, sorted by the store’s aisle layout so she won’t have to backtrack.

As she shops, a chip embedded in Beth’s cart stores her information and a wireless device indicates her location in the store.

Beth is speeding through her list until she notices that one item is out of stock. Of course, the list shows several recommended substitutions for the missing item, but Beth is not sure which to choose.  She decides to ask for help and presses a Customer Help button on her shopping cart. A nearby attendant, alerted by an automated text message on his two-way radio, approaches her.

“Good evening, Ms. Johnson, It is good to have you back!” says the attendant.
“Are you by any chance wondering about a substitution?”

“Oh yes, thank you!  I was looking for a dandruff shampoo for my husband, but his favorite brand is out of stock,” she tells him.

“Not a problem!” He swiftly picks up his hand computer and downloads her list and shopping history. “We have several other good brands, but I see here that your husband bought ACME shampoo the last time he was here. Was he happy with that purchase?”

“Yes, I think he said he still preferred the other one, but this brand was ok,” she says.

“If you like, I can get one for you. If not, I personally think this other brand here is very good. It’s a little more expensive, but it is more effective,” he adds.

“Oh, thanks! I will try that one,” Beth decides.

Satisfied with her choice, Beth walks towards the checkout and a small display on her cart indicates which cashier has the shortest line. At the checkout, the smiling cashier greets her with a “Hi Ms. Johnson, did you find everything you needed?” while quickly scanning her purchases. As the cashier thanks her, she adds, “Did you know that you can call us ahead of time and have your whole list ready for you by the time you arrive?”

She didn’t know that, but she is already considering doing that the next time she shops.

. . .

Forget all the Sci-Fi movies’ wildest predictions (although Minority Report has an interesting take on possible future customer experiences), the example here is imagined, but quite feasible with today’s technology. I wouldn’t be surprised if someone is already doing something like it already. 

Are you? 

If you lived your whole life in the U.S., you may be oblivious to some curious everyday situations that I, as an outsider, can’t help but to find amusing.

For example, everyday I tear money apart.

No, I am not saying that I spend more than I should on a daily basis. I am stating that I LITERALLY tear money apart.  EVERYDAY!

Before you start cursing some made up foreign habit of throwing money away, let me explain: Given that all my normal written communication with friends and family is done through the Internet, every time I check my mailbox I rest assured to find only bills and direct marketing. Additionally, I frequently find marketing pieces disguised as money.

Some are checks for pre-approved loans that I didn’t ask for, some are checks to transfer debts to one of my credit cards, and finally some are checks for refund on the first month fee of a new bank service that I don’t want to sign-up for.

So, after the revision of delivered mail, I often pick the bills to be paid and immediately tear apart all the  “checks”, before I feel an urge to credit any of them.

That said, I can’t avoid the sense of wrongness when I think how I dutifully send my money to pay others and, at the same moment, I am throwing away any money that others send to me…

Maybe I am just crazy, but it helps me to think that if the global economy usually doesn’t make sense to me, why my personal one should? In any case, now I can understand a little bit why so many Americans are always in debt.

Here are two examples in the opposite side of the Customer Experience spectrum:

The first one was pointed out today by Seth Godin in his blog and is a perfect case of holding a grudge against your customers without learning how to deal with them. At the “Four Paws Design” website, an oblivious customer may find the following FAQ:

“Unfortunately, we can no longer take phone orders. Customers forget to tell us something and after the order is placed and processed, they claim we wrote down incorrect information. By placing an order online, we have a record of exactly what you want, especially for custom-designed items, leaving no room for error.”

I think I don’t even need to go as far as reminding the “customer is always right” cliché. It’s enough to observe that no company should be arrogant to the point of believing that they are NEVER wrong.

The second example I saw commented in the Signal vs. Noise Blog and shows how far a company can go to be remarkable to their customers. HP is launching a new feature for its digital cameras: An Instant Digital Diet! (At least on your pictures.)

I will not discuss the moral or ethic implications of their ad, but one has to appreciate the lengths they seem to go to be innovative and customer-centric.

Well, if nothing else, at least is food for thought…

I usually say that I am a very practical person. I am proud of my capacity to research the best possible deal before purchasing anything. Moreover, when asked, I always say that price DOES matter to me. It matters a lot!

Well, if this is true, why do I frequently end up paying more for the products and services I buy?

To answer that, I started recalling my last purchases.

• First, my wife’s birthday present – OK, that doesn’t count… I couldn’t be concerned with price on a special date. It HAD to be the right gift!
• Second, our last vacation - Yeah, I didn’t get the cheapest package available, but it was our vacation! Why not seize the moment and get something better.
• Finally, our last grocery purchase - That should be an easy one… Hmm… I could have bought less expensive stuff, maybe used some coupons. But what can I do if the products I like most are not on promotion. After all, I can’t spend all my valuable free time saving a cent or two.

After analyzing that, I came to the conclusion that nothing really went wrong and that, despite my bravado about low prices, what really matters to me is the tingling feeling that I made the right choice and bought what I really wanted or what I really needed, for me and for my loved ones. There is no better deal than that!

Yeah, well. I think I am no different from any other consumer after all…

*This post was originally published at the Customerspective Blog