Flip (16 page)

That's not mere assertion. Australia's ANZ Bank have already proven it true. ANZ Bank have made customer service a prime focus and have announced a strict policy of not outsourcing or off-shoring this function. ANZ do outsource, but nothing that is customer facing. They have about 1000 employees in Banga-lore, but they all work in back office and ICT. Customer roles stay in Oz.

The bank has also mounted an advertising campaign focused on service rather than product. I do not think it is coincidence that from 2002 to 2006, ANZ have seen a 77 per cent rise in share price, beating their nearest rival by 15 per cent and the large-bank average by 25 per cent.

Again, outsource expertise, not relationships. Or to put it differently, outsource competitive necessity, not competitive advantage. It is essential for large organisations to have efficient payroll operations. It is essential to have people who can crunch the numbers. These things are the price of entry, and from a customer point of view offer no real advantage over the competition. Handle them locally, outsource them, or off-shore them to the moon, because they have little impact on the customer experience. But don't outsource and send beyond your daily control the part of your business that connects and interacts with the customer. The cost benefits in the short term may be good, but the impact on your brand will be far more expensive in the medium to long term.

A 2005 study by Gartner found that 60 per cent of companies that outsource customer-facing operations risk losing customers. Perhaps that is why 80 per cent of companies that outsource customer service fail to reach their cost-saving targets. The lost customers cost far more than is saved in lower operational expenditures.

In light of all these factors, let me share with you the outsourcing model for, wait for it . . . an outsourcing company. Syntel, which specialises in advising companies on business process outsourcing, moved 6000 of 6500 US jobs to Pune, India. But it kept the sales staff – the employees with the deepest and closest customer relationships – in the US. I am thinking they might be onto something here.

Making the most of your relationships with customers is hard work. Fortunately, some new technologies can help.

HIGH TECH CAN BE HIGH TOUCH: MINING THE POTENTIAL OF NEW COMMUNICATIONS TECHNOLOGIES

Recently I was presenting a master class for clients of CB Richard Ellis, the commercial property giant. During a break, a very senior manager of a listed property trust pulled me aside from the dozen other executives and said to me, 'Pete, I have a problem with the whole Gen Y thing.'

'What is it?' I asked. 'I thought we were making real progress with your managers.'

'No. This time it is not a work thing. It is my daughter.'

I was not sure I wanted to continue the conversation. But I was paid to be there so I figured I had better try to be of service. 'What's the problem?'

'Last night she said she was ready for a boyfriend.'

'How old is she?' I inquired.

'Fifteen.'

'Well, if she is ready for a boyfriend at fifteen I would be pretty happy with that, because she is probably a good few years later than her friends. Nine seems to be the new age.'

He didn't think that was very funny.'No, I am serious, Peter.'

'Were you supportive or did you remind her that you had a gun collection?'

This time I got a bit of a laugh. 'Of course I was supportive. I asked if she had met someone. She said no. I asked if there was someone she liked. Again she said no. Finally, I asked if there was someone she thought she would like if she got a chance to meet them. Again she said no. I was, like, what's going on?

'Then she told me, "Dad! I don't need to meet them. I am just going to do a search." Some site called Facebook or something like that.'

Now I understood the problem. This baby boomer dad had no idea that there are such things as social networking websites, and that Facebook is one of the most popular of them, along with MySpace. Even after I explained these facts, he still had difficulty understanding that his daughter could take seriously a relationship she might form on some 'stupid website', as he called it.

This same executive used internet technology every day to connect and stay in touch with colleagues, suppliers, clients, friends and family via email, and he regularly pulled information off websites. In fact the very same sorts of technology had completely changed the way his industry, real estate, advertises too and stays in touch with its clients. Despite this, he could not fathom how his daughter could use this technology to start and develop a relationship.

To him that did not seem like a real relationship. But it did to his daughter, and he needed to recognise that not only can such relationships feel real, they can have real-world consequences. In the summer of 2006 a 16-year-old American girl tricked her parents into getting her a passport, and then flew to the Middle East to be with a 20-year-old guy she met on MySpace. The authorities at the airport where her plane landed convinced her to return home to her parents. In December 2006 MySpace announced that it was taking measures to protect MySpace's youngest users from sexual predators who troll its pages looking for victims whose trust and confidence they can gain online before luring them into a real-world meeting.

Facebook and MySpace are part of what has been dubbed web 2.0. In terms of the evolution of the internet, web 2.0 signifies the mass adoption of online collaborations and usergenerated content sharing – things that have been part of the internet from its inception but have now moved from being specialist activities to being commonplace ones, at least among Generation Y. For Generation Y, social networking sites are not a substitute for genuine personal connections. They are instead among the best current means of initiating and sustaining genuine personal connections, equally as valid and meaningful as an encounter at a school disco or other 'realworl?' social event.

Also important in the web 2.0 space are massive multiplayer online games such as EverQuest, World of Warcraft and Second Life. Owned and produced by Sony, EverQuest is a sword-and-sorcery fantasy world in which groups of gamers as large as fifty to seventy individuals join to complete various quests in nearly 400 three-dimensional zones, including all sorts of geographical terrain and cityscapes. The game is so addictive that it has been called EverCrack, as in crack cocaine, and an online support group, EverQuest Widows, exists for people whose real-world relationships have been affected because of their partner?' obsession with it. Lately World of Warcraft, a similar game with some eight million subscribers worldwide, has overtaken EverQuest in popularity, although the latter remains a hugely important product for Sony.

Although its current user population is so far only a fraction of that of EverQuest or World ofWarcraft, Second Life is an even more interesting phenomenon long term. Owned and operated by Linden Lab, Second Life offers a virtual second world in which all sorts of fantasy activity can take place, but which is designed to look much more like the real world than the EverQuest-type realm. Users of Second Life create an avatar through which they can lead their second lives online, including buying and selling property, building houses and carrying on other economic activity with Linden dollars, which can actually be exchanged for US dollars in the real world. In early 2007 US$655,000 was traded on Second Life every month, and many people earn their real-world livings by designing virtual products and selling them to users who want to spruce up their avatars or their avatars' homes and businesses. The top ten Second Life entrepreneurs have an annual average income of around US$200,000. That's real money.

Multiplayer online games and social networking sites have become arenas that stimulate creativity and offer opportunities for connection between people and organisations, including businesses and governments, in a way that is becoming an almost seamless extension of the real world.And they are doing so with no regard for geographical boundaries.

The Chicago- and later Los Angeles-based band OK Go were relatively unknown before launching a hilarious video clip on YouTube, a website where people can upload and download video for free.A single continuous shot showing the four band members dancing on eight treadmills, the
Here It Goes Again
video attracted more than fifteen million viewings on YouTube and carried the band to stardom. The video was named the most creative video of 2006 on YouTube and won the 2007 Grammy Award for best short form video.

Musicians are particularly active users of MySpace, which allows them to upload up to four songs in Mp3 format.Music companies in turn pay close attention to MySpace in deciding which new artists to sign. And both music and film companies use MySpace to spread the word about new releases. Given that MySpace has over one hundred million users and is currently the third most popular website in the US and the sixth most popular website in the world, it is clear that social networking has ceased to be a fringe activity and has become part of the mainstream of popular culture.

In recognition of this fact, politicians are putting their avatars on Second Life. The first woman Speaker of the US Congress, Nancy Pelosi, made her debut in Second Life in the same week that she first brought the gavel down to open a new session of Congress.And Second Life's news bureau filed regular reports from the 2007 meeting of the World Economic Forum in Davos, Switzerland, including interviews with the avatars of attendees such as the American political commentator and blogger Arianna Huffington.

Some of the most intriguing uses of Second Life and other online communities are in education. Peter Yellowlees, a psychologist at the University of California, has built a practice and hospital environment on Second Life where he takes his students to help them understand what it is like to be a schizophrenic. He has created a chilling experience filled with the types of hallucinations that schizophrenics suffer. People walk through a hospital and mirrors suddenly flash 'shitface' at them, or they watch a televised address by a political figure who suddenly starts screaming, 'Go kill yourself, you wretch?'

After Yellowlees opened up the virtual hospital to the public on Second Life, 73 per cent of visitors said it improved their under-standing of schizophrenia. Many other educational in-itiatives are popping up in web 2.0, seeking to harness the immersive experience of virtual worlds in order to accelerate learning.

Harcourts, the New Zealand-founded real estate agency, with offices in Aust-ralia and Southeast Asia too, have set up an office in Second Life. Initially it was to display real-world property, but in time they may find they are able to list and sell Second Life property and make a commission in Linden dollars that they can convert into real-world dollars. I also have a client in the charity sector looking at how they may be able to have avatars donate Linden dollars to their charity, in exchange for something that shows they have engaged in philanthropic activity, which again can be converted to real dollars. One of my major banking clients is looking at how they might offer money management, investment and other informational seminars using Second Life as the venue. In June 2007, five companies – Alstom, Areva, Capgemini, L'Oréal and Unilog – held a 'neojobs meeting' on Second Life, telling job seekers, 'In the fantastic Second Life universe, join us for your first 100% virtual interview and discover 100% real positions.'
⁴
The list could go on.

The key is not that you should be in Second Life, but that the internet and its related technologies are providing new and powerful ways for you to connect with your customers. Business is personal and the next generation of communication is a big part of building relationships that customers will value.

IN CASE YOU ARE STILL NOT CONVINCED

In November 2006 Toyota launched a virtual Scion City on Second Life, where all of its Scion range can be bought and customised with Linden dollars. Other companies that have a presence on Second Life include Adidas, Sears and Sun Microsystems. Dutch banking giant ABN Amro have set up a financial consultancy on Second Life. The value of this activity for the companies is twofold. On the one hand it helps stimulate some business in the real world. But more important is that it puts the companies in touch with the leading edge of consumer trends.

Likewise the cleverly crafted MySpace profiles of Wendy's and Burger King each have over 100,000 registered friends, who post suggestions for new meals and funny stories about their experiences at the fast food chains. They also sometimes post hateful vitriol, which the companies leave untouched. Toyota, Microsoft, Ernst & Young, Apple and EA Games are among the large brands to get actively involved with similar personal/business branding exercises in Facebook, the largest student community site in the world. The CIA has even begun to recruit prospects on Facebook!

Companies, organisations and governments are paying serious attention to developments in online communities because of hard demographic facts:

• According to the Pew Research Center in the US, 87 per cent of US teens are now regular internet users and more than 50 per cent are daily users.
  
• Over 81 per cent play games online and almost half make purchases.
  
• With a combined purchasing power of around US$139 billion a year (according to American market research firm Harris Interactive) and even greater influence over others' purchasing decisions, they're not just playing Pac- Man anymore!
  

This kind of technology usage is clearly not a passing fad. It is also no longer a small enough niche to ignore. In fact, it's large and powerful enough to warrant serious attention and to be utilised as an extremely powerful new forum for building relationships and brands. But it doesn't have to be massively serious relationships, nor does the usage of technology have to be bleeding edge.What I am talking about is using the lessons from how high tech can be high touch, and having the courage to apply them to your world.

A car service centre could use it (and some do) very effectively.When a customer's car is due for a service they can send a gentle reminder and enable the customer to book any available time slot via SMS, and after the service work is done they can send another SMS to let the customer know the car is ready. This is such a simple, unobtrusive and useful application of very cheap technology. It simultaneously enhances the customer experience and streamlines the company's operations, making them more profitable.