Mar 31, 2009

The Shelf Life of Revolutions: Part 3

So having looked at the post-war Price Era and the turn-of-the-millenium Selection Era, we now turn our attention to the current, social media-enabled Service Era.

The birth of the Service Era can now be seen to be more or less inevitable, as both service and retail businesses rushed to bring their wares online once the Selection Era was underway, creating the Long Tail effect (or not) along with a fairly level playing field. By the mid-2000s, a vast selection had become the price of entry for any new business, and so the time was right for a new way for companies to set themselves apart.

Service, which had long been neglected in favor of price and/or selection, was the obvious answer. It was made all the more obvious by the increased attention paid to the pronounced lack of service consumers received in industries ranging from airlines to health care to department stores.

Service, in this era, is defined as much by the overall customer experience, as it is by gracious and accommodating salespeople. So a chain like Starbucks, with its rich aroma of coffee, stylish furniture, soothing music and knowledgeable employees (at least in the early days) was providing a level of service that customers couldn’t get from their local coffee shop. Ditto Whole Foods, where theater-set food displays with seven different varieties of organic salt and full-on gourmet cheese bars introduced consumers to a new level of food buying. Customers felt pampered. They felt valued. They felt like spending way more than they were used to for parity products like apples because they so enjoyed the experience.

It’s important to note here that the dominant new media vehicle of this era, social media, is an adjunct to the Service Era, not the cause of it. Social media fit in nicely with the ethos of the Service Era because, like the pretty music in Starbucks, it makes people feel special. When they can comment on a blog and see their name up there in lights, it makes them feel heard. When a brand representative responds to them on Twitter, they feel even more special. And I’m not saying this to mock people: it’s human nature. If someone in a position of power responds to you in a one to one fashion, you feel important. And in the Service Era, feeling important is important.

Look at Zappos, certainly one of the great success stories of the era (and, full disclosure, an occasional client.) Zappos has a corporate culture based on the ethos that the customer is king. Their ten core values revolve around that simple notion and it’s paid off for them in spades. Like Starbucks and Apple and Whole Foods, Zappos is far from the cheapest option. But in the Service Era, price is no longer the driving factor for purchase decisions and people add a “psychic discount” if you will, to the value of quality service.

Traditional advertising messages (as opposed to traditional advertising mediums) are at their lowest ebb in a Service Era, as their role here is less about delivering news (e.g. Just $49.95!!!) and more about reinforcing what people know from word-of-mouth (both digital and actual) and confirming the value of a superior brand experience.

In plain English that means that when Whole Foods runs a TV commercial, Whole Foods fans are reminded of why they love the store so much and what a special place it is, while those who have yet to experience the legend that is Whole Foods see validation that the misty-eyed ramblings of their friends and family members might actually be on the money. And while I’ve used a TV commercial in this example, a similar scenario plays out when Facebook friends read that “Chris has become a fan of Whole Foods” on their feeds. Marketing in the Service Era is about selling the experience; details are not what's important.

So how does this brand nirvana finally play out? Well, in time, a majority of brands will figure out that offering a superior customer service experience will increase their profit margins. Which means that their superior customer experience won’t be all that superior any more. Because it's only superior if it's better than what their competitors are offering. If everyone's customer service is the same, then that becomes the new floor and no one is special.

That means brands will once again have to figure out a way to set themselves apart. And since higher prices are a by-product of the Service Era, lower prices will be the key to differentiation. Customers, having become inured to the value of good service, will see low price as a an attractive alternative and start flocking to businesses that offer lower prices. This ushering in yet another Price Era and starting the cycle all over again.

The Shelf Life of Revolutions, Part 1
The Shelf Life of Revolutions, Part 2

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