Ocado - great experiences come with high investment

Given that my wife and I work full time and the thought of traipsing around the supermarket at the weekends with the kids who have the potential to lose the plot at any moment, we frequently use Ocado. The online supermarket, set up through venture capital and until recently, the exclusive online shopping facility for Waitrose, has worked very hard to put the customer at the heart of what they do and it has a proven success formula.

A recent experience reminded me of this. We ordered some goods via the iPad app on Wednesday night for delivery on Sunday night 9pm. A few things to note about ordering:

• lists are easy to use, remembering similar purchases from before and categorising them
• delivery slots are hourly; very convenient.
• certain slots are highlighted as "green", since that particular van is already going to be in your neighbourhood. 

Sunday approached and a call arrived at 7.30pm with the driver stating that she was in the neighbourhood and asking whether it would be convenient to deliver now. However, hearing the screaming kids in the background she quickly said "Shall we just leave it until 9pm?".

At 9pm she called "I see you have a side gate. Is that nearer your kitchen and easier for you? Would you like me to enter into the kitchen or leave the goods at the door?" Finally, a smiley driver greets me at 9pm and leaves the goods, which are already divided into colour-coded frozen and non-frozen bags and with no products missing.

I share the whole story because it's a great example of how to deliver a great experience the customer has to be at the heart of the operating model. Analysing my experience means that they thought of me when they:

• recruited by hiring on attitude ("we can teach you to drive a truck, but not smile")
• created a proposition that has colour categorised bags ("what happens after we leave the shopping?)
• created great delivery interfaces ("this has to remain simple and convenient")
• invested in one major distribution centre ("we don't want dissatisfaction over substitute orders").

Recently, Ocado posted a loss of £2.4m for 2011. Now in its 10th year of existence, some argue that they have over-invested in order to gain the customer experience they desire and cannot return on the investment. They are indeed investing more, constructing a second major distribution centre. I personally would like to see Ocado flourish. They have all the right ingredients for success. Potential expansion to other parts of the UK might be the key they need to return on such a large fixed asset, since I am sure that others experiencing what I have will be sure to return frequently.

Random Acts of Kindness

The website Trendwatching recently posted a great article called "Random Acts of Kindness (RAK’s) - how kind, human brands will thrive in a connected economy". The basic tenet is as you would expect from the title, namely:

• customers want to see the human side of brands after so many disappointing experiences
• the connected economy makes this increasingly easy to do so in a relevant manner
• surprising and delighting consumers will have an exponential effect, as they easily share these experiences with many others.

The article cites examples such as:

• Interflora, a flower delivery service in the UK, monitored Twitter users to look for people who needed cheering up. Once found, they were sent a bouquet of flowers as a surprise.
• Sweetgreen, a Washington restaurant chain, employs a street team to perform random acts such as covering people’s bicycle seats when it rains, or leaving gift certificates for drivers who’ve received parking tickets.
• Topicana took a huge helium balloon “sun” to Inuvik, an Arctic town where residents have 31 days of pure darkness in the winter

One I’ve also heard of recently is from Apple. A man returned his iPad to Apple with a return note where under the section “Reason for return” he had put “Wife says “no””. A customer service agent receiving the returned item read this and found it interesting and passed it onto Apple executives. A week later the said customer received the iPad back in the post with a note from the company saying “Apple says “yes””.

This is so much about what my blog is dedicated to. Companies who do this understand that these activities help build brand equity and that there is a genuine desire by consumers to see a human face to brands they purchase. It may be difficult to measure in the short term but KPI’s exist that would show a trend of brand preference, strength, etc over time. Indeed, monitoring the online viral impact of these events helps to calculate more instant feedback. Getting investment for this kind of activity on a sustainable basis, rather than a one-off, is notoriously difficult, as P&L owners clearly like to see the link between marketing activity and sales. Yet, this is always the challenge that faces any marketing activity that is not direct response based. My feeling is that we will see more and more of the cleverer companies delivering RAK’s.

If you have any other stories of RAK’s by companies I’d love to hear them. Download this article - you’ll love it.

Smart and Stupid Companies

When it comes to consumer experiences, there is much stupidity but sometimes smartness within the corporate world. I have personally sat in meetings during my career where, for all the right desire to do the right thing by the consumer, the solution is designed to do the right thing to the bottom line (interestingly, only short term clearly, since doing the right thing to the consumer will drive bottom line improvement).

David Williams, a colleague of mine, talks about what makes smart and stupid companies within the world of Consumer Services. He writes about why they do what they do, and comes to a similar conclusion. David argues that having empowered employees to do the right thing, or even the unexpectedly delightful thing, is a pre-requisite. I would agree, but build on that to say that the right attitude must be present in the individual to want to go that extra mile for the consumer, empowered or not. The attitude comes from that individual and is reinforced by the organisational culture.

Have a look at David's article. Appreciate your thoughts.

Using Web Chat in Commerce: Be prepared to change your model

As companies strive towards lower operating costs and as technology progresses, web chats have become a great way of improving customer experiences. However, as always, the simple introduction of the technology without the appropriate operating model changes can lead to disappointment and ineffective customer service.

I’ve recently had two experiences of using web chat with two large organisations. The first was with Adobe, to help out in a technical query about functionality in a certain version. The second was with Ikea, as I had encountered problems with their online planning software and was looking for help.

The experience with Adobe was a good one. It was purely text based, not cam. The level of English was fine, and the Customer Services Advisor (CSA)  answered my question very quickly. It was an enhanced experience over other channels, since she sent me a link to various Adobe sites, which were clearly easy to then access. At the end of the chat, she then moved to a subtle sales approach for me to upgrade to other software. Clearly, this channel is not easy to “push” sales down, as a customer can politely but firmly decline and halt the conversation abruptly. Nonetheless, a thought was planted about the newer software, on which I may enact another time. So not a wasted question. Overall, it was a great experience, that was seamlessly integrated into other channels. Well done.

The experience with Ikea was different. I had looked to use their online planning tools to think about changes to our kitchen. However, I was blocked from downloading the software, despite turning off my firewall. So I tried to look for help on their website. Nothing. I then found their web chat for customer services. Over the next two hours, I kept receiving the message that no-one was available to take the “call”. So, I’m none the wiser as to what’s wrong.

It got me thinking. Clearly, Ikea has put in a service that is linked to UK office hours (not even their store hours, as the store would have been open), and failed to update their operating model that would allow for 24/7 service levels. Nowadays, consumer expectations have been set, rightly or wrongly, that companies set their back office functions around the world to reduce cost and always be available. Yet, when you create a channel such as web chat you instantly create an expectation with the end consumer that the channel will be available when that individual needs it, having taken away the shackles of manning a physical building. Following the sun operations are de rigueur.

I’d suggest that Ikea, who have committed to driving high customer service, have another think as to why they introduced web chat, and how they can use it to drive improved service levels. They are currently running an online survey asking how they could improve. I’ve passed the comment on.

Relative Pricing: are we in control?

I watched a great speech given by Dan Ariely at a TED conference back in 2008. He talked about a topic that’s close to my heart: relative pricing. Dan has written a couple of books on behavioural economics. In this particular conference, he talks about pricing strategies and consumer behaviour and draws a couple of great points:

First, that we, as humans, cannot cope with multiple pieces of information when making a decision, and the more we get the worse our decision making.

Second, when making decisions around purchasing, we tend to create views on a item’s value relative to what else is on offer, rather than the inherent value against the money charged. When you look around the commercial world, you would agree that certainly this is not a new tactic. Super-size me portions, mobile bundles, positions of certain wines within the wine list etc. all play to consumer behaviour around how we make relative purchasing decisions and the somewhat irrationality around how we get there.

Dan highlights this superbly in a test he did on The Economist subscription pricing. I won’t give the whole thing away but watch the speech. He’s a great speaker and the topic is fascinating. Would be interested on other examples you find on behavioural pricing.

Apologies

Apologies all. I let the latter half of last year run away with me, and the blog suffered as a consequence. I'll be to sure to be better at updates and insights this year.

Which brands burnt in the volcano?

What an interesting couple of weeks for brands. I've spoken a few times on this blog about service recovery and its ability to galvanise consumers' views of a brand, good or bad. In the worst ever grounding of flights in Britain's history, directly affecting travellers and indirectly affecting those companies reliant on air freight to ship their products, companies had the opportunity to shine in consumers' eyes. Some indeed have, others are still covered in ash.

Those who found their demand for their service shoot up as a result took very different approaches.

The rental car organisations appeared to all let dynamic pricing take its course and charge limitless amounts to rent a car as supply decreased.

Eurostar, on the other hand, announced that it would only charge the £89 for a one-way trip from Paris to London. As tempting as maximising revenues may have been, I think this was the right move in the longer term. Consumers will not be travelling with a sour taste in their mouth over the extortionate fare and could alight with a positive "thank you for saving me" feeling after a horrendous journey.

Those who were caught directly in the chaos came out mixed.

British Airways came away a bit mixed. Customers reported some very good experiences, where passengers were continually briefed on a daily basis through fax and text and staff looked to do what they could to ease discomfort. However, Willie Walsh spent his entire time in the media trying to land the fact that the laws required changing and that it was unfair for airlines to pick up the tab for compensating passengers. Perhaps justified, but pick your moment Willie. Talk about what you're doing to help passengers, then come back after the chaos to discuss changes to the law. It didn't come across well.

First Choice/Thomson ran adverts afterwards to make the point that they had booked over 100,000 and arranged hundreds of flights to bring guests home. Sounds good.

Easyjet offered £10 off the next flight as a sorry for the disruption, pushing an acquisition message for the next time you fly with them. A bit naff. I had flights cancelled with them, and their website was helpfully always updated 24 hours a day, but when I had a query that could not be answered by FAQs, I looked to speak to someone. Customer Services numbers were hidden from the site. When I eventually found one, offices were shut outside "working hours". Not great.

Once planes were running again, the trains from airports ran 24 hours to get people home. A small thing, but you can imagine how inconvenient finally getting back home only to find the next train was at 5am tomorrow morning.

Lonely Planet had a great idea. For a couple of days only, the Lonely Planet City Guide apps were free to download onto your iPod/iPhone, helping out those stranded in cities in which they hadn't planned to be (I'd imagine the Madrid app did well). They could have increased their charge by 50p and remained within consumers' price sensitivity with short term gain but chose to help out and invest in loyalty.

My view on the matter: those who invested to re-coup the rewards later, through fixed prices or accommodating travellers out of their pocket, will reap the rewards in the long term.