Scott Jeffrey » netflix

Every Customer Touch Point Matters

Scott Jeffrey — Thu, 01 Oct 2009 11:00:59 +0000

Every interaction your brand has with your customer is important. Each point of contact (or touch point) provides your brand with the opportunity to strength your customer’s tie with you. Conversely, if you’re not careful, any touch point can damage your customer relationship.

A blaring example is the growing call center industry. Why invest in full-salary employees with benefit packages for in-house customer service reps when you can outsource to India at a fraction of the cost?

Here’s why: Not only are you going to frustrate your customers and weaken your relationship with them, you are going to lose a precious opportunity to strengthen your customer’s commitment to your brand.

Plus, you make it easy for your competition to steal your market share:

Online retailer Zappos has grown by a staggering annualized growth rate of 7,800% over the past 8 years, growing sales to over $1 billion. Its stellar in-house customer service team provides a powerful competitive advantage.
L.L. Bean has always been known for world-class customer service. I’ve been a loyal customer for over a decade and can attest to the fact that I’ve never waited on hold for more than a few seconds. You automatically get a knowledgeable customer service reps who is also an L.L. Bean Brand Lover.
DVD-by-mail provider Netflix has dominated the industry they invented and their online customer service, rated #1 by Nielsen Online, has helped them grow to almost 10 million subscribers. Realizing that their savvy customers prefer addressing customer service issues online, Netflix has anticipated virtually every potential issue and set up easy and quick ways to solve customer problems.

Every touch point matters. Your call center is just one touch point, but it’s a big one. Your website, advertising and packaging—everything you do either reflects your brand and strengthens your customer’s bond, or weakens it.

The Value of Innovation

Scott Jeffrey — Tue, 01 Sep 2009 11:30:59 +0000

How much does your business value innovation? Is innovation a once-in-a-while occurrence or a continual business objective?

Peter Drucker noted that innovation is one of the only two drivers of business (the other is marketing), yet innovation-driven efforts often get swept into obscurity in an effort to meet the demands of the moment.

To better understand the value of innovation, take a look at one of Wall Street’s most coveted metrics: the Price-to-Earnings Ratio (or P/E Ratio or just “the multiple”).

A publicly-traded company’s P/E ratio is calculated by dividing the stock price (market value per share) by earning per share (EPS). For example, Apple’s current stock price is $168 and its EPS is $5.72 yielding a P/E ratio of 29.41.

The P/E ratio shows how much investors are willing to pay per dollar of earnings. With a multiple of 29.41 investors are willing to pay $29.41 for every $1 of Apple’s earnings.

Higher multiples imply a higher expectation of future growth. While Apple’s multiple is 29.41, multiples for Dell, Microsoft, and Hewlett-Packard all hover around 15. This means that the market expects Apple to grow twice as fast as its competitors.

Apple, Amazon.com, Google and Netflix all have staggeringly high P/E ratios as a consequence of their customer-centric, innovation-driven businesses. Their higher multiples increase the perceived value of their business today, providing them with a larger pool of capital to continue to fuel innovation efforts tomorrow.

Notice also how these innovation-driven businesses dominate within their respective markets.

It pays to be innovative.

The Right People for the Right Culture

Scott Jeffrey — Thu, 21 May 2009 13:18:40 +0000

How important is hiring the right people? If you’re trying to cultivate a culture around a clearly defined set of core values, the right people mean everything.

Zappos offers new hires a $2,000 bonus to quit after week one of four weeks of paid training. CEO Tony Hsieh explains, “It’s best to know early on if an employee doesn’t buy into the vision or the culture.”

You also won’t last very long in companies like Southwest Airlines, Netflix, Apple, Umpqua Bank, or Google if your attitude isn’t aligned with the company’s core values.

It isn’t easy to find the right people, but it’s impossible if you don’t define what your culture stands for.

With a distinctive, clearly-defined culture your job gets much easier. By being the best expression of what your culture represents you’ll naturally attract employees aligned with your culture and repel those who are not.

The Purpose of Business

Scott Jeffrey — Fri, 01 May 2009 12:31:13 +0000

Peter Drucker noted that the organization is an abstraction—a concept we use to denote a group of knowledge workers operating towards a single purpose: To produce customers in the outside world.

True organizational results are achieved on the “outside” because everything “inside” is related to effort and cost, not profit. These outside results positively impact your customers.

From this perspective we can better understand the need for clear direction—to an ultimate vision—within any enterprise. Without a clear end picture, effort and cost will spiral upward as the company’s employees lack focus and direction.

As a leader, your job is to provide a clear vision for how your business will serve your customers better than anyone else. Companies with this obsessive focus win. They build extraordinary internal cultures that attract people who want to join in their mission.

A few examples:

Netflix effectively dismantled Blockbuster (and fought off Wal-Mart) with laser focus on serving their customers with high integrity and dependable service.
The Motley Fools has become an oasis of honest financial commentary in a sea of Wall Street spinsters and celebrity commentators.
Zappos built a legion of loyal shoppers by delivering world-class customer service 24/7, 365 days a year with free shipping both ways.

The single purpose of a business is to create a customer. Cultivate a culture that respects and lives this reality and you’ll join the ranks of strong brands that build sustainable, profitable enterprises.

Is Your Business Killing Creativity?

Scott Jeffrey — Tue, 21 Apr 2009 11:00:39 +0000

In today’s hyper-connected, ludicrously-fast-moving global marketplace, businesses are racing to grow big—and fast. Wall Street and private investors alike demand double-digit growth year after year and track it month after month.

Many business owners and executives fail to realize growth results when they set up the right conditions. Profitability and customer loyalty are consequences of a business’s commitment to evolve, innovate and exceed their customers’ expectations.

Ironically, a focus on obsessive growth can often stifle innovation, the lifeblood of a business’s growth and expansion. Just ask companies like Apple, Google, Netflix or any company that thrives in a competitive landscape. Or talk to Microsoft, Yahoo! and Blockbuster to learn how the aforementioned competitors have trampled their market share.

Consider Proctor & Gamble: In 2000, the company issued several profit warnings, sending the stock tumbling to half its value. A.G. Lafley arrives as the new chairman and CEO and shifts their focus to customer-centered innovations. Profits tripled and P&G is now one of the most valued companies in America.

Conducting “business as usual” is a surefire way to make your business obsolete. Innovation and growth requires unbridled creativity to ask questions, solve problems and create an extraordinary customer experience, which in turn requires the proper inner and outer conditions to manifest.

Learn to eliminate the barriers to rapid creative innovation, but first learn to appreciate the Capital of Creativity as the source of your business success.