The same technology – two approaches

Isaac Mostovicz writes...

Internet technologies in general and mobile devices in particular allow us certain independence. For example, today, many people book their flights online, check in online and get an electronic ticket, and use their mobile device to show that ticket at the gate. Unfortunately, these technologies can potentially be exploited by our service providers.

A recent study illustrates how financial service companies are promoting the idea of the self-service customer. These financial institutes provide increasingly sophisticated self-service information, used especially on mobile devices, to help people find various financial offers, compare between various products and services, and manage their accounts. The author raises two interesting points. Firstly, he argues that self-management may lead to more and more customers making wrong decisions without the help of an expert. While the author proposes some suggestions for overcoming the lack of expert service, much has yet to be accomplished to put such a service on par with the current offline practice.

However, the interesting nugget in my opinion lies in companies’ reasons behind their online services. The author states: “many financial service suppliers are under pressure to improve efficiency and margin, in some cases to increase the contribution to improving their balance sheet in the wake of the problems of the last few years. This financial pressure is leading some of them to choose the perceived win-win of a self-fulfilled customer experience with minimal staff intervention.”
These financial institutes are self-concerned. They see their margins eroding and their balance sheets heading south and they look for ways to offer an efficient service while cutting overhead and excessive staff. What is wrong with their approach is not that they are striving for greater efficiency, but that their main motivation is self-concern. While they claim that they want to offer a win-win solution, all that is sure is that they are winning. Whether the customer wins is unspoken for. What is wrong here is not what these institutes are doing, but what is behind it – concern for their own issues.

An example on the other side of things –Starbucks started enabling customers to use their mobile devices to order their preferred beverage online, pay for it by waving a barcode on their mobile device in front of a scanner, and send invitations to friends to meet at a certain coffee shop, complete with a map and the option to order their favourite beverage en route to the store. The report that appeared on Bloomberg is full of financial data. It shows that Starbucks invested $25 million in the venture, that Starbucks hopes to pay fewer fees on credit card transactions, and that Starbucks hopes the system will make the company more efficient and increase its sales.
Again, the interesting nugget is not what Starbucks is doing but why it is doing it. Years ago, Starbucks discovered that people are ready to overpay for their coffee and since then sells coffee at a premium price, as luxury. However, the luxury is the cup of coffee, not the experience of purchasing it, which can actually become a drawback. Being the provider of a mass-market luxury therefore, Starbucks suffers from its success. During peak hours people waste a big part of their lunch break standing in line and waiting to be served. Starbucks’ offer started to become a burden. Starbucks found a way to peel off that burden while keeping its luxurious offer intact. With its new program Starbucks manages to offer its luxurious coffee again without taxing its customers. Was it a sound business decision? Of course, more people will buy this expensive offer more frequently, Starbucks will operate more efficiently, and ultimately increase its bottom line. However, the customer only appreciates this program because in his eyes, it is for him and not to enrich Starbucks. Ask the happy customer and he’ll tell you that Starbucks is concerned with the customer’s needs.

Over time any offer should be updated to incorporate new technologies and new social behaviours. Nevertheless, we should not lose our focus. If we focus on our own needs, we will eventually be punished by the customer. However, if we use the same technology, but focus on the customer’s needs, we will be rewarded handsomely.

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