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A couple of years back, a potential client contacted me about improving her company's website. It seemed like a good fit: the company was (and is) an established, profitable company; and improving the customer experience would, without a doubt, create significant gains in metrics like revenue and customer acquisition. The site needed help, customers were frustrated, but with a bit of work the business could enjoy enormous returns.
The problem came when we talked about fee. Creative Good was too expensive, she said, because her boss (the CEO) only wanted to spend a few tens of thousands of dollars per *year* on anything dealing with the customer experience.
I told her that seemed a tad low for an annual budget to be spent improving the site for customers, especially given that the annual revenue of the company was around $50 million.
"Well," she responded, "we already spend $30 million a year just on advertising, so there's not much left over."
Needless to say, the project never happened. The CEO decided to continue to "run a few surveys" with his $20,000-or-so budget; his $30 million in ads continued to drive customers to a website that frustrated them.
Let's review the numbers.
Amount Annual budget for...
$30,000,000...Advertising (driving people to the website)
$20,000.......Customer experience (what happens when they get there)
So... a good chunk of every dollar the company earned went to sending potential customers to have a bad experience. A tiny percentage of those frustrated people would muddle through and become paying customers; the vast majority would click away, never to return.
Is this any way to run a business?
Believe it or not, it's the normal, accepted way business is run today in *many* companies. I know because I've encountered it again and again throughout Creative Good's eight-year history. $70 million for an ad campaign; $10 million to redesign the logo; a few thousand to "run a focus group" to assure the executives they're doing the right thing. Business as usual.
The good news is that more and more companies are "getting it" and beginning to invest in improving what happens when customers actually arrive on the site. They're not abandoning advertising; they're just investing in a more balanced fashion.
Imagine what would happen if the potential client above had had these numbers:
$15,000,000...Ad budget
$15,000,000...Customer experience
Can you imagine a company investing in the customer experience as if it was as important as advertising? Imagine a site turning from a frustrating, stupid, slow experience into a smooth, quick, easy, informative, delightful experience that you wanted to return to - and might even tell your friends about. Shouldn't *that* be a way (THE way) to run a business?
Let me take it a bit further.
What if a company stopped advertising altogether and focused exclusively, with undivided laser-focus attention, on the customer experience? Would the CEO be insane? If it was a public company, would Wall Street riot, and would the board ask for the CEO's resignation?
In a word, no. I know this because there is a major, established company that is pursuing a strategy very close to that. Its TV advertising budget is zero.
BusinessWeek recently interviewed Amazon.com's Jeff Bezos (Aug. 2, 2004). The interview included this exchange:
BusinessWeek: How important is advertising to building the brand?
Jeff Bezos: We don't do any television advertising, and we take
all of the money that we would put into television advertising,
and instead put it into things like free SuperSaver shipping
[free shipping on most orders over $25], lower product prices,
category expansion, and invention of new features. We take those
funds that might otherwise be used to shout about our service,
and put those funds instead into improving the service. That's
the philosophy we've taken from the beginning. If you do build a
great experience, customers tell each other about that. Word of
mouth is very powerful.
BW: It's fascinating that the increase in the value of your brand
has happened at the same time when you're not advertising in mass
media at all. Do you anticipate ever needing to use broad-scale
advertising again?
Bezos: No. Never say never, but I don't anticipate that. I like
the strategy we're on.
I like the strategy Amazon is on, too. Not to suggest it's even close to a perfect customer experience - there are many challenges on Amazon.com, not the least of which is the increased clutter on its product pages recently. But Amazon is much, much better than most, any way you measure it - revenues, profitability, stock price, brand equity. And their stated strategy - straight from the mouth of the CEO - is close to the ideal corporate focus on the customer experience.
Amazon's example offers a challenge for other companies: focus first on the customer experience. It's not even necessary to pull the entire ad budget. Just create a strategy, and a budget, to focus on the customer at *least* as much as you invest in ads.
The most effective companies realize that they can't succeed on advertising alone; the customer matters. For those companies operating online, customer experience isn't a list of "website usability guidelines." Instead, customer experience requires a transformation of the company's strategy, backed up by the organization, investing with a reasonable budget.
Those with ad budgets, remember: Bring customers in, but be sure to treat them well when they get there. |
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