Barnes & Noble Amazon Market Cap Comparison

Toyama no Kusuri-uri

House-to-house medical supplies

Consumers only charged for usage

Detailed records kept in a database,
called the “Daifuku cho”

Circa 1750

2
COPYRIGHT © 2012 ALL RIGHTS PROTECTED AND RESERVED. 2

In 1996, Barnes & Noble offered to
buy amazon.com,
--to protect them from B&N’s online launch


buy amazon.com,

Today:
•Barnes & Noble has a market cap
of $719 million


buy amazon.com,

Today:
•Barnes & Noble has a market cap
of $719 million
•Amazon.com has a market cap
of $102 billion


We all recognize this, right?

6

And everyone knows what this is?


Well, how about this?
Philip Stewart's
'Chemical Galaxy II'
periodic table


Taking a different point of view

Customers just want their rock
crushed to ideal granularity

Orica’s business involves collecting detailed blast
parameters from customers all over the world

Now the company sells service contracts for crushed
rock, taking on the risk of managing each blast itself

What business are you in?


Strategy. Execution. Results.

COPYRIGHT © 2012. ALL RIGHTS PROTECTED AND RESERVED. 10

Can this work for
smaller businesses?
Zane’s Cycles faces both Wal-
Mart and a sports superstore

Chris Zane applies 1to1 marketing
at the retail-detail level
Lifetime bicycle warranties

CRM-based customer profiles

Doubled his business in two years
to $3.5 million
Now has 65% of the bike market in
his area


Twin benefits of relationships…

More satisfied customer
More convenient product
More appropriate offer
Personalized service
Lower costs
Less ―wasted effort‖
Relationships and
good experiences Lower inventory costs
require trust
Better asset utilization

12

Customer centricity’s objective Strategy. Execution. Results.

Maximizing the value
Customer created by each customer
Needs
Satisfied

Customer Centricity
Share of
customer

Maximizing the value
created by each product

Product Centricity
Market share

Customers Reached


Customer centricity is
building the value of the company by
building the value of the customer base

1

Welcome to the Age of Transparency
83% of consumers trust the recommendations of their
friends

More than half trust the online opinions of complete
strangers

But just 14% of consumers trust advertising!

―Transparency is a disinfectant for business. It will purify
things and help start the healing, but it’s going to sting like
hell.‖

Forrester Research


Moore’s Law

Every 20 years, computers get a thousand times faster
and cheaper


Zuckerberg’s Law

Every 20 years, we share a thousand times as much
information with others


Now suppose you were a
food source for bees…

Bright colors and a sweet fragrance can
get any exploring bee to take a look

But a bee will only do his dance to tell the other
bees about you if he was satisfied with the nectar
Moral: In the absence of communication among
your customers, advertising rules
Once your customers communicate with each
other, it’s the customer experience that counts


Going forward:

3 Requirements
For
Extreme Trust

Intention
Do the right thing

Competence
Do things right

Proactively

Customers assert their new social power easily

• HSBC forced to reverse course
• Over the summer it had dropped its policy
of free overdrafts for university students
• By using Facebook, students connected
with others to organize a protest of this
new policy
• Soon HSBC reinstated the free overdraft
policy

2

The components of 20th century “trust”

Competence – doing things right
Good intentions – doing the right thing

Now
Doing things
right, and
Doing the right thing,
Proactively


Honeybees dance about everything!

2

Screw up, and the “news” will be
immediate, ubiquitous, and
permanent
You can’t un-Google yourself.
- Linda Kaplan Thaler, CEO, Kaplan Thaler Group

―You can't take something bad off the Internet. That's like
trying to take pee out of a swimming pool.‖
- Grant Robertson, blog post, May 1, 2007


Trust Is Becoming More Important Because…

1. Trust makes interactions efficient

2. We screen information for its
trustworthiness

3. Interaction generates transparency


Extreme Trust

Proactive trustworthiness

•No longer sufficient simply to
refrain from cheating or
deceiving customers


Earning trust Strategy. Execution. Results.

sometimes
requires a
deliberate
balance of short-
term gain and
long-term equity



sometimes
requires a
deliberate
balance of short-
term gain and
long-term equity

Acting in the
customer’s interest



sometimes
requires a
deliberate
balance of short-
term gain and
long-term equity

If that seems
impossible, ask what
happens when customers
choose between you and
a company that can be
trusted in the long run


Lots of people are asking:
How can I use new social media to sell
more to my customers?



Wrong question!



Wrong question!

The question to ask now is:
How can I use any tool to understand
my customer better and build a more
trustable relationship?


Very special (mis)handling?
One bank routed calls from its most valuable
customers to product and sales specialists, to
try to sell something, before letting them do
the routine transactions they wanted

Ordinary customers were able to get right to
the IVR and handle their transactions

Why did those valuable customers leave?
Source: The Best Service is No Service, Price and Jaffe, 2008

33

Things aren’t always
what they seem

A B


How good is your customer experience?

80% of corporate executives say their company
delivers a superior customer experience

Just 8% of consumers report they received one

Source: Bain and Company,


make
Trustworthy is not good enough. an
Your company must be trustable impact!

Take this test…

COPYRIGHT © 2012. ALL RIGHTS PRTECTED AND RESERVED. 36


A trustworthy company:
Carefully follows the rule of law, and trains
people on its ethics policy to ensure compliance

A trustable company:
Follows the Golden Rule toward customers, and
builds a corporate culture around that principle

37


Does what’s best for the customer whenever
possible, balanced against the company’s
needs

Designs its business to ensure what’s best for the
customer is financially better for the firm, overall

38


Fulfills all its promises to customers, and does
what it says it will do, efficiently

Follows through on the spirit of what it promises, by
proactively looking out for customer interests

39


Manages and coordinates all brand messaging,
to ensure a compelling and consistent story

Recognizes that what people say about the brand is
far more important than what the company says

40


Uses a loyalty program, churn reduction, and/or
win-back initiative to retain customers longer

Seeks to ensure that customers want to remain loyal
because they trust the firm to act in their interest

41


Focuses on quarterly profits as the most
important, comprehensive and measurable KPI

Uses customer analytics to balance current profits
against changes in actual shareholder value

42

Doing Business in the Age of Transparency
Social networks evolve in a path-dependent way,
and social sentiment cascades in an inherently
unpredictable manner
As a result, dealing effectively with rising levels of
unpredictability is a vital skill-set for today’s managers

Six strategies for dealing with unpredictability



The social domain and the commercial domain
operate on entirely different customs and mores

Four ways to influence the influencers without using cash
or commercial incentives


The e-social world facilitates convenient, cost-free
sharing and collaboration among strangers: “social
production”

―Free revealing…is at the very heart of social production—the free
and unencumbered sharing of innovative ideas to generate some
collective good.‖



The world is not perfect, so brands that maintain they
are perfect are simply not trustable

―Admitting one’s own vulnerability is the first step in earning someone
else’s trust.‖

―…the numbers show that a negative customer review actually
converts to a sale more effectively than a positive customer review.‖



Dealing with a supernova of data will require skill with
numbers, but human biases often triumph over objective
analysis

In the 1970s a man won the Spanish lottery with a ticket he’d
specifically chosen for its ending number of 48. Very proud of his
―strategy‖ for winning, he explained: ―I dreamed of the number 7 for
seven straight nights, and 7 times 7 is 48.‖

―…90 percent of CMOs believe that customers trust their own
company’s brand as much as or more than they trust competitors’
brands!‖


Things aren’t always
what they seem

Customer’s view of trustability Your view of trustability
Based on experience with other Based on changes you made
trustable firms to your own prior policies


Rising Customer Expectations
•Previously acceptable business practices are now
“untrustable”

X Profiting from consumer error
X Failing to notify
X All “caveat emptor” policies!



Earning trust all the time
helps on a bad day

Remember what
happened to

5

Imagining the Future…

•How would a trustable gift card work?
•What about a trustable mobile phone
company?
•…a trustable health insurer?
•…a trustable automotive manufacturer?


What social networks require of you:

Build and maintain a
reputation for
trustability

5

Trust is everything

Prediction:
Trustability will become the
single most enduring
measurement of a company’s
ability to create and sustain
value.


Trust sells

84% of marketers agree that
building customer trust
will become marketing's
primary objective
Source: 1to1 Media survey


Customers can be tough:

The three things they respond to:
Figure out what’s best for each of
them, and do it – well. And proactively.


If customers trust you… Strategy. Execution. Results.

 …they believe you will understand
their point of view
What’s it like to be your customer?
What should it be like?
 Three elements of trustability:
Goodwill
Competence
Proactivity

5
COPYRIGHT © 2012. ALL RIGHTS PROTECTED AND RESERVED.
2012ALL RIGHTS PROTECTED AND RESERVED. 56

Customer trust is based on reciprocity… Strategy. Execution. Results.

“Treat the customer the way you
would want to be treated if you
were the customer.”

“Customer advocacy is…the best
indicator of…cross-sell success”

“Firms that score highest…are
considered the most for future
purchases”


…and there’s no such thing as

“one-way reciprocity”
Empathy works both ways

First Persian Gulf War (1991) USAA sent unsolicited
refunds for time spent
abroad by members
2500+ members
mailed their
refunds back!


How would you compete
against a company that
customers trust so much they
send back the refunds and stay
for three generations and
counting?



Trustability
…can ―trustproof‖ a
business, protecting it from
random swings of social
sentiment


A culture of customer trust
drives many leading firms



Creating a culture of customer trust

These companies are not just
selling something.

They are building the value of
the customer base.

COPYRIGHT © 2012. ALL RIGHTS PROTECTED AND RESERVED.
2012ALL RIGHTS PROTECTED AND RESERVED. 62

Rising levels of transparency will raise the

standard for trustworthiness:
No longer sufficient simply to refrain from
cheating or deceiving customers
• What happened to the wealth client
Instead, a trustable company will work to
protect customers’ interests proactively
Proactive trustworthiness:

Trustability

Simple truth

Do the
Do things
right
right
thing

Proactively

A little inspiration from Harley Davidson?


Peppers & Rogers Group
Management consultants in
customer strategy issues
Magazines, newsletters,
research white papers

Offices and clients around the world

www.extremetrustbook.com
Twitter @martha_rogers



&

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