Daniel Burstein

The Radical Idea: Outsourcing that touches the customer is penny wise, but pound foolish

October 14th, 2016
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Think about how hard you work, how much time and resources you put in to get a customer’s attention.

It may be that you have methodically built up a content marketing powerhouse that pulls in new and returning customers. Or you invest a big part of your budget in social media advertising or print advertising. Maybe you’ve spent hours and hours scrubbing your list squeaky clean and creating valuable newsletters and a finely tuned, marketing-automation fueled drip campaign.

Whatever your marketing focus, you realize that getting customer attention for your marketing efforts is costly…and valuable (not to mention a privilege).

Now what if I told you that companies are throwing this valuable asset away every…single…day?

No, it’s likely not you and your peers in marketing. It’s probably the team in the Logistics Department. Maybe in your company they call it Fulfillment. Or perhaps it’s someone in some other department that is involved in product delivery.

These product delivery decisions are about so much more than cost and speed. They also affect customer perception because they touch the customer. Customer touches and those valuable moments of customer attention are just as valuable after a purchase as they are before a purchase.

When I brought up this idea to Shane Cragun, Founding Principal and CEO, SweetmanCragun, and co-author, “Reinvention: Accelerating Results in the Age of Disruption,” he told me that “customer touchpoints can also be called ‘moments of truth.’ They are connecting points between the company and customer where the customer leaves with a renewed perception of the company.”

Cragun said that these moments of truth touchpoints can only do one of three things:

1) increase customer loyalty
2) decrease customer loyalty
3) maintain the status quo in the buyer’s mind.

First, a personal anecdote to understand the challenge, and then a few reasons why you’re missing an organic opportunity to connect with current and future customers and ensure that you increase customer loyalty (or at least maintain the status quo).

That can’t be for me

I recently bought a clothes dryer from The Home Depot. The driver calls me and says he’s 15 or 20 minutes away. A little while later, I hear what sounds like a big truck driving down my street. I look out the window, but no, it’s just a pickup truck towing a plain, white trailer. Not a truck from The Home Depot. Must be a roofing contractor working on another house in the neighborhood.

But then I hear the truck noise again. Apparently, the truck had turned around in the cul-de-sac at the end of my block, and was in front of my house. So I walked out of the house and talked to the driver and, sure enough, they were delivering my dryer. The driver happened to be wearing a GE shirt, and I had ordered an LG dryer.

Now you may be thinking — Daniel, who really cares? What’s the difference which truck they were driving or what shirt he was wearing? Value perception, my friends. Value perception.

Marketing’s job is to turn actual value into perceived value

When you think of the marketing function today, there are likely many processes and tasks that come to mind. Managing a database. Making sense of analytics. Setting a drip campaign in a marketing automation platform.

But all of those activities are secondary. Marketing’s primary job is to influence perceived value. And you do that by clearly understanding and leveraging the actual value delivered to the customer.

In my case, the actual value delivered was spot on. The delivery people were helpful and nice, and they delivered and installed the appliance quickly and correctly. Really, everything a customer would expect in a home appliance delivery.

So it wasn’t the service itself. It was the perceived value of the service. And that is marketing’s job to influence.

But if you’re a marketer, here are four reasons you should own or influence as many customer touchpoints as you can:

Reason #1: Branding

In fairness to whoever makes the decision to outsource appliance delivery and installation for The Home Depot, there is probably a very logical reason for it. After all, many other stores outsource as well. I’m guessing that reason is cost savings. It is probably more expensive to have trained delivery personnel and a fleet of delivery trucks.

However, how much does The Home Depot spend every year on branding? For example, the home improvement supplies superstore spent $70 million over 10 years for the naming rights to Home Depot National Training Center in Carson, California, according to SportsVenues.com.

Ironically enough, The Home Depot even spent money on mobile billboards — in essence, paying another company to drive trucks around within five miles of its stores to advertise its brand message.

If this money was instead invested in a branded delivery experience for the customer, would outsourcing still be cheaper? And would the overall result be a better ROI for the company?

The challenge is likely that branding and mobile billboards come out of a different budget than delivery and installation. As a marketer, your challenge is to break out of those artificial silos to create the best experience for the customer. That is, ultimately, the best experience for the brand.

“If you research the most popular companies in the world with customers, it is apparent that they proactively design customer touchpoints, or moments of truth, in a way that increases customer loyalty. They never leave touchpoints to chance. They are way too important for future viability and revenue,” Shane said.

Reason #2: Social proof

Social proof is a psychological phenomenon in which people essentially look to the behaviors of others to determine how they should act. “Oh, everyone else is suddenly running into the cave. I should as well. A saber-toothed tiger must be chasing someone.”

If I see Mr. Jones down the street getting a refrigerator (or furniture or anything else) delivered, I subconsciously think — maybe I should get one, too. After all, we’re roughly from the same socioeconomic grouping, if they can afford it, so can I. And our houses were all built within a few years of each other. If they think their fridge is old enough to replace, maybe mine is, too.

And where would be a good place to get it? The name of the store on the truck.

While big box appliance stores apparently prefer to save money on logistics instead of leverage social proof, some of their competitors are making this investment. For example, Cathy’s Appliances in Warren, Michigan which is “Stacken Em Deep & Sellin Em Cheap” (according to an image I randomly found on Twitter).

radical-idea-outsourcing

Reason #3: Purchase satisfaction

Us humans, we’re a handful. A complicated tangle of sub-conscious thoughts, emotions and hang-ups. This comes out in the way we make choices, including product purchase decisions.

A great example is cognitive dissonance, which Wikipedia defines as, “the mental stress or discomfort experienced by an individual who holds two or more contradictory beliefs, ideas, or values at the same time; performs an action that is contradictory to one or more beliefs, ideas, or values; or is confronted by new information that conflicts with existing beliefs, ideas, or values.” (emphasis is mine)

In other words, if you buy an expensive appliance (or any product) and the product delivery experience is subpar, you are getting confronted with new information that conflicts with your existing belief that you made a good purchase decision.

This increases the likelihood of a product return and decreases the likelihood or repeat purchase or positive word of mouth.

To avoid this cognitive dissonance, brands must look at the marketing after the sale as an important step in the buying journey.

Researchers Geoffrey N. Soutar and Jillian C. Sweeney provided the following advice in their academic paper titled, “Are There Cognitive Dissonance Segments?”:

“As dissonance, when it occurs, does not seem to fall in the few days after purchase (as seen in the insignificant relationship between the time after purchase and the dissonance groupings shown in table 4), there is an opportunity for the retailer to contact customers in this period to reassure them of the wisdom of their purchase and to allay any risk perceptions they may have…This may be achieved through advertising that is deliberately aimed at recent purchasers. Early researchers such as Engel (1963) recognised the interest in this post-purchase role of advertising, although studies have had mixed results. Nonetheless, such information strategies can be used to reduce dissonance through reassurance, rather than by complaining to others.”

As I’m sure you can tell by now from this blog post, I believe one way to advertise to consumers after they purchase to reduce dissonance through reassurance is to use actions (and not just messaging) by having a superior customer delivery experience.

Reason #4: Every customer touchpoint is an opportunity to add value

The first three reasons are pretty heavy on company-centric thinking, I’ll admit. Get your brand in front of more customers. Get more customers to think about your store when making a purchase. Get better word of mouth.

But let’s take a customer-first marketing approach to delivery and installation. What do you think the customer expects? If I buy a used dryer off Craigslist, then, yeah, maybe a random pickup truck with a blank white trailer. But ordering from the largest home improvement retailer in the U.S., I expect (as it says on its delivery webpage) — “The Home Depot Advantage.”

radical-idea-home depot

In fairness, I did actually experience the value listed on the website. I just didn’t attribute that value to The Home Depot. Because it was an unbranded, random, obviously outsourced customer experience.

Perhaps I’m the only one who noticed this because I work in marketing. Again, I had a positive customer experience, but I did find a couple of examples online of people who had a negative experience and blamed the outsourcing as the reason why. They did not seem to absolve The Home Depot of responsibility, however. In fact, the outsourcing just seemed to make them madder. Here’s an example from ConsumerAffairs.com

“THD [The Home Depot] contracts out their delivery service to cut corners on labor costs and wash themselves of accountability of confirmed time frames. I WILL NEVER purchase another major appliance from a retailer who has elected to put cheap outsourced labor ahead of customer experience…THD, wake up. It’s your brand I deal with when making a purchase, not GE’s lackluster delivery network.”

This is a problem. According to a study of 24,489 customers by Accenture, 52% of consumers have switched providers in the past year due to poor customer service. You don’t want to spend all that time, money, and effort on your marketing winning customers only to fumble on the five-yard line and lose them by not delivering on the value you promised.

On the upside, the study also discovered that 45 percent are willing to pay more for better customer service. For a retailer like The Home Depot, that number is crucial. After all, I could have bought that LG dryer at many retailers. And several retailers had very similar prices. So a main element of differentiation, a main piece of any value proposition is the service and customer experience, of which delivery is a major part.

Study authors Kevin Quiring, Fabio De Angelis, and Esther Gasull advised “… they [brands] need to focus less on luring customers with digital marketing and sales and more on dazzling them with superior service across all channels of interaction.”

A holistic view of marketing

You invest a lot of money just trying to get in front of customers and get their attention. That is, after all, what you are doing with PPC, TV advertising, print ads, and all of your other customer acquisition spends. When you’re delivering your product, you’ve been entrusted with an invitation into your customers’ lives. That is valuable. How will you react? Myopically look at these interventions as a logistics challenge? Or look at them as a value delivery opportunity?

Perhaps this is one reason (beyond saving on shipping costs) that Amazon is building more delivery capabilities. The world’s largest online retailer has leased 40 Boeing cargo planes (“Prime Air”), but also according to a recent article in The Wall Street Journal — is experimenting with last-mile delivery.

While Greg Bensinger and Laura Stevens focus on cost and reliability (after UPS’ holiday season 2013 fail) in the article, I think one of the readers made a spot-on observation in the comments section, so I’ll give the last word in this blog post to Chris Lee:

“For Amazon, timely and speedy delivery is a critical part of customer experience, and I think they made the right call in making this strategic decision. And yes, in the short term, they will be sacrificing profits – but all for the sake of continued growth of their customer base, which will likely reward them later with future profits once Amazon raises prices on their products.”

You can follow Daniel Burstein, Senior Director of Editorial Content, MarketingSherpa, on Twitter @DanielBurstein.

You might also like

The Radical Idea: Why investing in the physical world should be part of your social media marketing budget

Customer-first Marketing: Do you put your customers’ interests first?

Brand Marketing: 5 tactics to understanding customer experience

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Daniel Burstein

About Daniel Burstein

Daniel Burstein, Senior Director of Editorial Content, MECLABS, Daniel oversees all editorial content coming from the MarketingExperiments and MarketingSherpa brands while helping to shape the editorial direction for MECLABS – working with our team of reporters to dig for actionable information while serving as an advocate for the audience. Daniel is also a frequent speaker and moderator at live events and on webinars. Previously, he was the main writer powering MarketingExperiments publishing engine. Prior to joining the team, Daniel was Vice President of MindPulse Communications, specializing in IT clients such as IBM, VMware and BEA Systems. Daniel has more than 15 years of experience in copywriting, editing, internal communications, sales enablement, and field marketing communications.

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