How Viable are Tips?

Exciting title, eh? Well, this is a shorter post, so there’s today’s improvement. One aspect at a time! (After better titles comes the removal of words like “aspect.”)

Anyway, on to what I really want to talk about: tips. Yesterday, I had lunch with my friend Miles. We went to one of Tulsa’s best-yes, I said best hamburger joints: Ron’s. [PS-to Ron's: contact me about your (new) website.] While perusing the menu, I clicked a quick picture, which you see here, to introduce the concept of tipping front-line service employees (or, for those who read my blog with any degree of regularity, FLSEs).

Notice at the bottom of the menu, the line, “PLEASE REMEMBER…SERVERS WORK ON TIPS.” As one who spent many years as a server, I have an immediate appreciation for such an admonition. Especially at a restaurant like Ron’s, which, making a completely closed-minded, stereotypical assumption, probably sometimes attracts clientèle that is not familiar with niceties like leaving a 15% (minimum) tip for services rendered. I mentally commended the management for going to bat for their FLSEs as they did.

Then I started wondering, what would a full-service restaurant in which tipping was abolished look like? Maybe I should say “unnecessary,” not “abolished.” I think I know what the latter would look like: empty.

So my question is, is this possible? What would the pay have to be in order to attract and retain servers? How would this affect the dynamic between servers and guests? (Words like “sincerity” and “loyalty” come to mind.) What about between servers and management? (words like “Communism” might come to mind.) How empowered would/could servers be? What other rewards would be available to servers to compensate for the loss of those nights when “everyone was tipping at least 30% and my tables were turning like crazy”? (Keep in mind, I’m talking normal restaurants here-$15-$35/plate.) I honestly don’t know if it’s possible or if it would work. I just want to know your thoughts on the issue.

Friday Favorites: April 21-25

Wow, just two faves last week and eight this week! What a great week! (Or more accurately, what a less-busy week.)

Crisis Communications and Social Media- Great thoughts and practical suggestions for “writ[ing] social media into your crisis plans,” by Leigh Householder at Advergirl.

Learning Viral: The Basic Viral Model- From Noah Kagan of OkDork, a clear breakdown and analysis of an oft over/misused marketing buzzword. I love formulas! Noah wraps it up with a concise explanation of what to do with your formula results.

10 Combinations to Create Engagement- I also love lists, and this list by Anna Farmery at The Engaging Brand Blog epitomizes her blog’s title well. Clip it in your Classics folder.

Right-Selling Customers- Becky Carroll at Customers Rock! articulates a wise balance between under- and over-selling: right-selling.

How Well Do You Know Your Customers?- Laura Spencer at Business and Blogging reminds us of the simple things we can be doing to meet the needs of our customers through real relationships.

#174. Forcing little kids to sing at the end of your song- An odd title until you realize that the post is from a list that is the very substance of the blog itself: Stuff Christians Like. Jon Acuff (assuming that is his name), a copywriter in Atlanta, has the uncanny ability to isolate some of the most amusing idiosyncrasies of the Church. I mention this post, not so much because of the marketing implications (although there are many in every piece he posts), but because the guy is just hilarious and one of the best writers I have read in a long time. (And the fact that one of his favorite books is The Great Gatsby speaks volumes.) Make sure you read his apology at the bottom and the comments that prompted it. It’s just the icing on the cake!

The Physics of Marketing - Newton’s Law of Gravitation- I just began subscribing to davidebowman this week because of this very post from the site’s namesake. Very logical and effective marketing analogy. Nice writing style too. Hat tip to John Moore at Brand Autopsy for mentioning it.

Why The Open Rate Must Die- As the “e-newsletter guy” for my company’s magazine, Open Rate is typically a metric my boss and I discuss frequently. I took the opportunity to pass this post by Loren McDonald at Media Post’s e-mail Insider along to him. Be sure to read the comments section too!

Tools + Stuff in This Post = Relationships? Maybe.

Loyalty programs, CRM, CEM, social media. These and so many other strategies are designed to improve relationships with customers. And while these tools are powerful, they are simply that: tools. They are not the final step. They are a means to an end.

Sometimes, we lull ourselves to sleep in the peace of knowing that the mailer we just sent went directly to the very focused demographic we intended it to go to. Or that we addressed a hot issue on our blog. Or that our e-newsletter was one of the most robust we’ve created.

The thing is, while these things may be true, our relationships with customers may not have improved one iota. Implementation and execution do not necessaarily result in improved relationships.

I read a lot of marketing blog posts that intend to scare readers with some obscure insight that supposedly undermines convention. That’s not my intention here. I’m writing this more as consumer than a marketer.

You see, I am loyal to very few companies on a personal, consumeristic level.

Why? Well honestly, I just really don’t care too much about the grocery stores I shop at or the fast food restaurants I eat lunch at. These places are faceless commodities to me, and I’d turn my back on any of them if a better deal came along and not think twice about it. The same thing goes with department stores, book stores, online music services, airlines, toy stores, home improvement centers (although there is definitely one I will refuse to go to—Home Depot), and I could go on and on.

Despite my fickleness, I have been absolutely loyal to one establishment moreso than any other I can think of in my life, and that establishment is a small car stereo operation here in Tulsa called Car Toys. I’ve mentioned my guilty pleasure of car audio in past posts. Much of this love is attributable to Andy at Car Toys.

Let me list a few reasons I have been so loyal to this shop:

1. I absolutely knew that Andy would not try to rip me off. Let’s go beyond using the fuzzy, nebulous word “trust.” That word is merely symbolic. Here’s what it means: on multiple occasions, Andy told me that the equipment I was eying was unnecessary, or that I could get just as good equipment from a cheaper brand. At times, he even told me that the equipment I was really looking for could be found elsewhere. And do you know what I did in response? I spent thousands of dollars at Car Toys, because I knew that the things Andy was selling me on were the right things for me, my car, and my car audio goals.
2. Andy listened to me, even when it was obvious that I was not immediately in the market for equipment. I know that sometimes, he had to be contemplating turning the other way when he saw me coming in the door. I took a great deal of his time as I was considering a purchase, but even when I wasn’t and it was clear that I wasn’t, he made himself available to me, and he listened to everything I told him. And somehow, amazingly, he saved all of that information up so that when I was ready to buy, equipment selection was often a no-brainer.
3. I knew that the equipment I purchased was high quality.
4. I always knew what I was in for. No surprises. When car audio legend Gary Biggs built my front speaker pods, I knew exactly what it was going to run me per hour for his hands to touch my car. When I moved toward a competition system which required a massive wiring upgrade, I knew before the purchase that this often overlooked aspect of car audio would add hundreds to the price tag. I think that the most I paid over and above an estimate was maybe $20 for clay that had to be added to my pods for reinforcement.

While I am an avid supporter of all of the marketing initiatives I mentioned at the beginning of this post, I can also say that the thing that kept me going back to Car Toys was not merely a battery of tools. It was the fact that Andy had connected these tools to me on a personal level. That’s the key. That’s what’s missing so often.

When you implement CEM and CRM programs, you’re not finished! In order for a loyalty program to promote true loyalty, it’s got to be more than just a discount card. Blogging and other social media cannot be arbitrary acts. As Laura Spencer notes, in order to get potential customers reading your company blog, you’ve got to blog about topics that interest your readers. And in order to know that, you’ve got to know your audience. When I use the word “know,” I don’t mean, “have a good understanding of analytics available to you about a representative demographic” (although you should anyway). I mean, “listen to individual customers (even when they aren’t buying), prove that you’re never going to rip them off for a commission, provide a high quality product, and do all of these things with no surprises. Every time, without exception.

Honestly, I think it’s just plain silly to think that a business can have a relationship with clients without having a conversation with them. And no, an e-mail blast is not a conversation. Here lies the challenge: how does this conversation take place? Maybe a blog, sometimes, for a small audience who is privy to and comfortable with such a medium. I really don’t know.

If you’ve endured this tireless post, I want to know what’s happening out there to build real relationships successfully-ones that, were I to ask your clients and customers, they would agree with you that indeed, a true relationship does exist. Is it that cashiers are spending time finding out about customers’ families and interests? Is it that executives work “on the floor”? I really don’t know, but I think that however it is accomplished effectively, it’s not cheap, it’s not simple, and it’s not without timely, repeated, personal engagement.

Empowered Employees, In Spite of Company Policy

One significant aspect of Services Marketing is that of empowered employees.

Verizon Communications Inc. (Florida) saw what happens with little or no serious, formal employee empowering structure in place, a little earlier this month.

In a nutshell, Verizon employees felt that the company’s customers were not being treated fairly—so they picketed. (See the entire story here.)

In defense of the managers and executives at Verizon, I am sure that they meant no harm to their customers or their employees-they were simply trying to conduct business and make money. It seems however (based on what the reports would suggest) that the company was putting sales over common sense, even going so far as to mandate that employees attempt to sell new services to angry customers who were calling to disconnect. (”Mrs. Jones, we’re sorry to hear that you hate our service and that you never intend to work with us again. Would you be interested in an international long distance plan?”) What a slap in the face of the customer! And honestly, what employee is going to do this with conviction? (By the way, Verizon is not the only telecom guilty of this.)

Any logical employee recognizes that this is not a great strategy for customer retention. Empowered employees go beyond merely recognizing this to act as a true liaison between the customer and the company’s decision-makers. Granted, picketing is a little on the extreme side of empowerment, but it certainly makes a statement.

To avoid this unpleasantness altogether, Verizon’s (or any other company’s) decision-makers could have:

• created an internal corporate blog where FLSE’s could comment and then taken FLSE’s comments seriously
• followed FLSE comments on Twitter and then taken their comments seriously,
• created an internal feedback mechanism in which FLSE’s could have an e-audience with the company decision-makers, who would then take the FLSE’s seriously
• included FLSE reps in planning meetings and then taken their input seriously
• petitioned FLSE’s for input and then taken it seriously
• visited with FLSE’s face-to-face and then taken their comments seriously

See a theme here? The first step in employee empowerment is to recognize FLSE sentiment as legitimate.

I’m committed to keeping this short, so for more on employee empowerment, check out Why is Everyone Smiling, by Paul Spiegelman.

Customer Touchpoints: The “Back-End” of Services Marketing

That title should show up on some interesting searches.

I jump through hoops all day. We all do. It’s annoying, but we have reconciled ourselves to them: the mindless processes that were implemented, who knows how long ago, because of an isolated incident that caused someone high in the food chain to get burned.

Typically, when we think of Services Marketing, we think of customer service, value-added service, branded service, relational service, etc. Interactions resulting from these are what would be considered “front-end” initiatives in services marketing.

On the “back-end” are the logistical concerns. In Services Marketing, the back-end includes the processes that promote interaction between service providers and their clients; for example, mailing and call list creation, location planning, and provider education. They also include the creation of a sequence of events that most effectively, efficiently connect a service provider, be it a cashier, a front-desk clerk, a financial services counselor, an educator, a minister, or civil service employee with the right client.

Unfortunately over the years, humans have been removed from this aspect of service provision. In light of this, it is absolutely essential that these logistical considerations, which I’ll just refer to as “connection processes,” be absolutely targeted, focused, effective, and free from superfluous activity (previously referred to as “hoops”). I mean, if you’re going to remove the human aspect, it had better be good, right?

A key to auditing connection processes is that of a services blueprint that necessarily consists of a customer-touchpoint flowchart. This blueprint comes from conscientious evaluation of all customer contacts available and their efficacy in accomplishing the mission of the company. This goes beyond financial nuts and bolts to address attitudes and positioning, points of failure, adaptivity, customer loyalty, and employee empowerment, among other aspects. And in its most elemental form, a customer-touchpoint flowchart addresses the very steps performed by the customer in accomplishing his goal, as well as front-line service employee (FLSE) action that is visible to the customer, FLSE action that is not visible to the customer, and support processes that are not visible to the customer (Pires and Stanton; also, thanks to Zeithaml, Bittner and Gremler).

I realize the idea of sitting down and creating a flowchart seems arbitrary, but it is my guess that many marketers are unable to list all of their company’s customer touchpoints-especially those implemented long ago by people who no longer work at the company in question-which means that some touchpoints, such as this one described on The Consumerist, are at best inconvenient and at worst, catalysts for discontinued service.

Ineffective customer touchpoints arise for a variety of reasons. I’ve already mentioned one (higher-ups got burned). They also arise to help fend off litigation. These are not always bad, but perhaps less effective than they could be. Some show up around employee review time as a token of one’s work. Some exist simply because they “always have.”

Some traditionally shoddy touchpoint culprits include service calls, ticketing, waiting rooms, checkout lines, parking and orientation, guest services, transaction processes, and one that should be of grave concern for marketers: new accounts.

There are obviously many more, and to simplify and wrap up this already lengthy post, the payoff for evaluating these touchpoints is that of differentiation that leads to loyalty. Of course, when drawing up a touchpoint blueprint, it’s important to be painfully honest and critical of the connection processes your company already has in place. Try to anonymously go through these processes yourself multiple times to assess their effectiveness. Doing so may lead you to a combination of otherwise unassuming changes that ultimately transforms your front-line service.

What experiences have you endured and what hoops have you had to jump through to initiate and/or complete an FLSE transaction? How have you seen companies creatively transform an otherwise meaningless or mundane point of contact into a creative connection process that will keep you loyal?

References: “The Role of Customer Experiences in the Development of Service Blueprints,” Guilherme Pires and Patricia Stanton; Services Marketing, Valarie Zeithaml, Mary Jo Bitner and Dwayne D. Gremler

Friday Favorites: April 14-18

Just a couple this week, but I’ve had a lot of blog-catching-up to do, so I probably just skimmed some other gems. I found these two are as valuable as a dozen any other week.

Businesses Should Be Alert for Bloggers- I receive Google alerts every day, all day long at my job. (How could one find nuggets of power industry journalism otherwise?) I thought this use of Google alerts from Liz Fuller at Business and Blogging was a great idea. Clip it in your “Classics” folder.

Suicide Money- One of the best posts I’ve read, not just about marketing, but about business in general. I think Andy from Damn, I Wish I’d Thought of That! needs to take this idea and run with it. (The book referenced in the post does not present the concept in quite as concrete and practical a manner-there’s definitely room for an “upgrade.”) Andy’s comment about Google Docs and Microsoft-absolutely correct!

McDonald’s Erroneous Battle of the Wallet

McDonald’s again took a stab at Starbucks by offering free lattes in Seattle last Friday. Mickey-D’s has also launched a website that offers coffee drinking average “Joes” an alternative to Starbucks’ “snobby” coffee.

I still contend that price point is not the appropriate battleground in this war. With price-positioning as its primary thrust, McDonald’s cannot compete with Starbucks any more than it can compete with General Electric or the Gap. Starbucks and McDonald’s are not merely different brands-they are, in a broad (read: “marketing”) sense, different industries. This is not to say that McDonald’s should discontinue the practice of serving high quality coffee-of course they should provide a good product, just as most other companies attempt to do (why weren’t they serving the good stuff before??) . But to draw a line in the sand with a coffee stirrer is not McDonald’s most damaging offensive.

Initiating a price-war is to say that Starbucks’ success is merely a function of the coffee it serves, which is a gross oversimplification. Sure, the coffee is usually great (despite recent criticism from a guy at Consumer Reports), but the “products” Starbucks provides that contribute to its incredible success will never be found at a McDonald’s-and that’s OK, because McDonald’s has found enormous success in the milieu it has created for itself.

Without going into detail about the lights, noises, sounds, and smells unique to Starbucks, it is the Starbucks experience that positions it into a different industry than that of McDonald’s. This experience necessarily includes Starbucks’ “tall,” “grande,” and “venti” designations, which a few find to be quite vexing, and it includes exclusive pricing.

My only concern is that Starbucks looks to be cow-towing to those deterred by their exclusive pricing by offering $1 shorts. Strolling down Price War Road will only lead to commoditization, and that never benefits anyone-business or consumer. David Kiley from Businessweek’s Brand New Day accurately blogs, “If Starbucks is going to hold on to its place in the brandscape, it needs to remain unmistakably Starbucks.” This includes the higher price and the tricky cup size names that separate it from The Low-Priced, Fast-Food Industry.

What do you think about this battle? Is McDonald’s right and they’re simply the only company with enough cash to challenge Starbucks? Or is their reasoning fundamentally flawed?

Passing It On: “Five Reasons Why PCs Are Better Than Macs”

Not to be an instigator, but I just had to pass along this article by Scott Stein of Esquire magazine. It is a very level-headed analysis and is mild in its criticisms (I think I could have added at least another 5 reasons, but like I said, I’m not trying to be an instigator—today).

Five Reasons Why PCs Are Better Than Macs

While you’re at the site, read this essay from F. Scott Fitzgerald’s The Crack Up. Gotta read some Fitzgerald every so often, just to remind ourselves of what good writing truly is.