Tag: zappos

giffgaff: Doing Good! More to Do?

On 20/05/2013

All the way back near when it was founded, I wrote a post about giffgaff, an MVNO with a twist running on (and actually owned by) the UK operator O2 (which is of course now owned by Telefonica). The twist with giffgaff is that it termed itself as being “people-powered”. Nice buzzword, huh? When I wrote that post, it was pretty much on the basis of early news, PR and not much more. Now, though, I know better what it is because, you see, I just swapped the phone deals for my two children over to giffgaff (away from Vodafone where they were on a 30-day-rolling contract).

No Frills

So, here’s what it does (and, more significantly, doesn’t): giffgaff doesn’t have shops, it doesn’t have sales reps, call centres, etc. In other words: it doesn’t have much overhead. It does have a network (not its own, it piggy-backs on the mothership, i.e. O2), simple tarifs, very low prices and the quickest way I have ever ordered any phone product online.

Beating the Power Law of Distribution (?)

But how, do you ask, can they run a network with all its customer queries, moans and whining, small and big problems? And that is exactly where I originally voiced concerns: You see, they use fora instead. If you have a question, just post it to their forum and the users will answer. According to the power law of distribution, this is a tricky one as only very few users contribute a lot and most contribute nothing. However, by the looks of it, they answer a) more quickly and b) more competently than a poorly paid, poorly trained, probably somewhat frustrated (whatever happened to the glistening career) call centre worker. The MVNO has a programme for users encouraging to participate in the community. They will earn points (convertible in additional phone credits) for spreading the word (marketing) and helping out other users on the fora (customer service).

So (and here’s a theme for me): giffgaff effectively used some basic tools from the social and commercial toolbox to drive customer acquisition and customer service: incentivise people and, in doing so, make sure you align their commercial interests with your own.

And whilst there seem to have been growing pains, it seems to work more or less really rather well. And all this for £12 per month for a “bucket” of 250 minutes, unlimited texts and unlimited (!) data. Can’t beat that!

Is There More?

This then got me thinking: what if they would expand on this bucket (and, perhaps, forum) ideas and start customizing them for the more “discerning” user. Something for SME for instance, travelers, professionals, etc. Higher bucket prices but better tailored for business needs. Premium buckets for, say, dedicated concierge services (the crux is that the customer service required for that is quantifiable and directly accountable). With the basics still covered (cf. supra under “No Frills”), it should still be possible to run the basic service at similar margins (and note that I assume that they have positive margins) but start building in the fatter bits of the market in return for the higher reliability, security and no hassle that business users require. The thing is, you see, they do not require tedious and generally hopeless customer service over phone lines you have trouble even finding or reaching (20 minute waiting time is not rare as we probably all know).

Such a service would probably not for everyone but. You would have to be comfortable to transact your business online (but more and more people – and, yes, probably 100% of readers of this blog – do so anyway), you would arguably have to have at least a basic understanding of some tech issues (again, cf. supra) but, hey, you would be targeting the growing part of the economy, i.e. the one that either is purely digital or successfully leverages (terrible word, I know) digital outlets for its business. Bingo!

There Are Blueprints Galore!

Come to think of it: it is exactly how so many of the online stalwarts disrupted traditional businesses. And it seems almost ironic that this has not yet happened in an industry such as mobile telecoms! Amazon (first books, now almost everything), Zappos (first only shoes, now part of Amazon and, well almost everything), eBay, PayPal, First Direct and any other number of online banking services), Charles Schwab, eTrade and those folks (stock trading), Okado (groceries), Money Supermarket, confused.com, etc. (insurance brokerage), etc., etc., etc., etc. Virtually all e-commerce business models rely on realizing higher efficiencies through digital scale combined with lower overheads.

And virtually all of them originally were told that this was a niche for a few, that only geeky people with no money would use it. And in virtually all those cases, the doubters were wrong. So, then, O2, let your “gaffer” (that’s the title the giffgaff CEO goes by) lose and go for it. There’s money to be made (and I might just be persuaded to leave Vodafone, too).

To the others (Vodafone, are you listening?): it’s not too late. Get in whilst you can!

So social lost its sizzle, huh?

By Volker

On 02/01/2012

In Social

Happy new year, everyone! (that is, if you are inclined to follow that particular calendar…)

Have you, like me, been reading some of the predictions on what is and what is not going to happen this year? What buzzwords to remember, which ones to avoid? What to focus at, where to “pivot” to, what to ignore?

One of the predictions I read was that social media has lost its sizzle. Markets saturated with products, failed to live up to the lofty ideas of monetising it, done, begone… Now that is, of course, the prediction of either someone who looks only what seems investable by Sandhill Road this quarter (and by that notion, he is probably correct) and/or someone who forgets that one actually doesn’t create social but would need to seek to use and aid existing sociality. People are social, you know…

To be fair let it be known that the author of this prediction, Vivek Wadhwa (@wadhwa), a man with impressive job titles and scholarly assignments, did in fact mean it in the former sense (see his comment to a reply on RWW here). However, are we declaring anything dead upon hype-deflation only?

“Social” battles with the challenge at the moment that lots of me-too-business tried and failed to harness its power and make money from that at the same time. Now, I wonder whether that means it’s dead though…

On the “Facebook for rabbit breeders” side of things, I would just say that there can only ever be so many useful things for so many people. Get on with it. However, a lot of businesses think they have tried out “social” and have largely failed at it. That is a little more substantial perhaps but there are a number of reasons for this (and these are only the very few I could cook up on the last calm day before the office beckons again, so feel free to add any number you can think of!):

Reason 1: Categorizing “social media” as a marketing tool

Organizations tend to try and categorize certain “functions” or “verticals”. Social media? Ah, that’s marketing. Ooops. There are still tons of companies out there whose marketing departments conscientiously update their corporate Twitter accounts and Facebook pages twice daily, whilst blocking access to such services by their employees at the same time. If you are an engineer or product manager in such an organization, you won’t even get near anything that even smells remotely social. Now, what will your products, services, overall perception of the world take that into account?

Reason 2: Accounting for social media impact by “analysing” links, etc.

The “power” or “impact” of social media often is attempted to be measured for instance by how many leads were created (and converted into hard sales) by that link that was at the centre of last week’s social media campaign. This approach is merely mistakenly trying to press analysis of social dynamics in known measurement parameters whilst disregarding that it is an entirely different creature all together: social dynamics cannot be measured by counting the number of clicks on a link tweeted by the marketing folks (and I thought that should be pretty obvious to anyone even remotely familiar with the space by now).

Because these numbers will then be used by senior management (who are all too often not digitally native in the present-day sense of the word; doing e-mail and knowing what an IM is, is NOT where digital is at!), and, alas, social will again be relegated to the back benches of, well, marketing (because, you know, we are reading so much about this; we do have to have a report about our social media activity for our next AGM).

Reason 3: Social is a business of its own

“Social” is not offer walls, new ad-placement algorythms, check-ins, likes or otherwise. These are only fairly cruel (though effective) tools to harvest some of the fallout from social interaction: you can coerce people in using offer walls because competetiveness, peer pressure or any other familiar trait might make it desirable enough. You can put “Volker likes Brand X” bits next to your banner ads and hope you can borrow some of my (presumed) credibility with friends (although: what tells you that the fact that I like Jazz would make me buy T-shirts…) but all of these are merely utilising perfectly “normal” behavioural patterns of people: they like to socialize with those who are close to them (friends, family, colleagues, neighbours, supporters of your favourite club, you name it). It is not in itself a new business at all and, most important of all, it is not a business in its own right (I grant it to Facebook and the likes [how generous of me, huh?] that they invented a new way to make social interaction in certain contexts easier actionable (and those might indeed be difficult to replicate though if you take, say, Group On, there would seem to be tons of businesses out there that still cry out for some sophisticated new take on the models). But, again, their business is not “social”, they “only” use the combination of social behavioural patterns and unpredented scalability (and filtering abilities) of digital platforms to make what was always there easier and more accessible.

Social is witin us

The trouble then is that “social” lives with and within us. Humans cannot (normally) survive without social interaction. Outside investor presentations and elevator pitches,

social refers to the interaction of organisms with other organisms and to their collective co-existence.

(and, yes admittedly, if you have ever heard me speak, you will be familiar with this one). Does that sound like marketing? Does it sound like a check-in app? Does it sound like an online network with digital pinboards and such? No, not in itself. The real trouble is then of course that this definition misses the all-important commercial angle. You see, social interaction does, per se, not really care for gross margins, ROI and such.

Social business = aid interaction

The answer to what comprises a social business is then really is quite simple: make sure you create products or services (or indeed tweak or expand your existing products and services) to aid interaction between organisms. Period. Zappos shows it so well. Not by tweeting lots. But by interacting with their customers, by allowing the normal human to be seen, heard, recognized and appropriately responded to with whatever their question, concern, inquiry, problem at the time is. The commercial results are well-known but Tony Hsieh is still being seen as one daring bugger – I mean: how can you possibly offer people free returns without even asking? How can you possibly allow your telesales folks chat with a granny for an hour; the examples are plentiful (btw: make sure to read his book “Delivering Happiness”; it’s good!). Well, you can because it creates the social glue. It makes sure you interact with people in the way they seek to interact, and that is not normally a link-clicking way.

But they’re not a social media company, you say? They are only selling shoes by mail order after all (and tons of other stuff by now). But the way they sell them added the social fairy dust that made for this great business success. And good business it is. Just ask Amazon (who acquired them for a ton of money). But, more importantly, ask their customers! They are humans, you know…

The Internet Business is a People Business

Business on the Internet, social or not, is – as all businesses – a people business: if you do not find people to who you can add value, there is no business for you. Given how little of it has been “socialized” in the VC-speak sense, I do struggle to see why the sizzle should be gone. If you look to raise a ton of money and then flip your loss-making business on the back of a couple of buzzwords, yes, it might be over, but perhaps you should then not have been able to do it in the first place… For everyone out there seeking to create true value (and that value needs to be with your customers as they will otherwise feel horrendously ripped off the very moment they see through your tactics), then I would predict social in its current state only being the crisp morning of a bright fresh day.

To quote the legendary Buzz Lightyear: to infinity and beyond! 🙂

Image credit: http://heidicohen.com

Book Review: “Delivering Happiness”

By Volker

On 07/06/2010

In 1, Thoughts

This is (slightly) off-topic as it looks at a new book written by a guy who has come to fame not in the mobile but “only” in the online world (or click-and-mortar as would be more accurate). But it is a book that will give everyone who has to deal with value chains, investors and people (vendors, customers, employees) a couple of interesting insights on how it can (also) be done.

The book, of which I received an advance free copy (which I was told I needed to disclose here), is by Tony Hsieh, the iconic CEO of Zappos, and it is called – unsurprising to anyone who has ever heard im talk – “Delivering Happiness”. It is available for sale from today.

The book has two very distinct parts. The first one gives you an interesting and humorous account of the journeys of an entrepreneur – all the way from a worm farm when ickle Tony was 8, via LinkExchange, which he managed to sell to Microsoft for $265m, through the start, near-death and eventual exit with Zappos, which sold to Amazon when it was valued at some $1.2bn on the day of closing.

Part 2 could be termed the introduction to the Church of Hsieh. Tony is famous for preaching the importance of happy employees in order to run a good business, and there is many an example from the world of Zappos that raises eyebrows elsewhere in the corporate world (to pay new employees $2,000 should they leave within X weeks being one of them). Most of it comes from one of the 10 core values Zappos set itself, namely the “be fun and a little weird”, and I find it almost insulting to judge a company or its policies by random examples alone.

At the very least, the book shows you that there is much more to it than the wacky ideas of a driven entrepreneur (and I’ll get to more in a moment). If you take, for instance, the story of the $2,000 leaving-bonus and look into it a little deeper, some very sound thinking reveals itself:

The idea is that people should only stay if they really feel aligned to Zappos’ vision and principles and the idea is that only people whose mindset is a real fit will not be tempted enough not to take it; it also shows a lot of respect to the nature and common sense of their employees: if the job [and the company] is really that good, $2,000 is very little! According to the book, less than 1% take the cheque.

So what do you get from that? 1) employees that should be a better fit than average, and 2) reduced recruitment cost. The first part is invaluable whenever you run a business that has customers (so, always) because employees that fit with your culture and vision should be better enabled to communicate this – internally and externally, which helps the business. The second part is self-explanatory.

The relentless focus on company culture is as awe-inspiring as it must be spooky to some. And it is, arguably, amongst the reasons for their sale to Amazon (or so VentureBeat interprets this part from the book). Sequoia pocketed $248m on $48m investment and were keen to liquidate (and, according to Hsieh, his board was not entirely convinced of “Tony’s social experiments”).

One should however not forget over this that Zappos operating principles are based on hard-nosed facts (from vendor relations, logistics, finance, employees to customer relations), and the “secret sauce” might then indeed be the company culture (Tony Hsieh is of course not the first one to propagate this). If he tried to take things too far is beyond me to say but I would say that a company that strives to make its customers, vendors and employees happy is not following a necessarily wrong path – even under cold-nosed corporate standards:

Happy customers will help you by coming back to you (low retention costs and follow-on revenue) and by recommending you to their friends (low acquisition costs and incremental revenue);
Happy vendors will be more likely to accommodate your requirements as to your stock (lower cost of supply), delivery schedules, etc, etc.;
Happy employees reduce your employee churn and will – arguably – provide for higher productivity of the company as such (lower operating cost).

It is, in short, a very worthwhile book to read. And if you read it with the right glasses on, you will be able to look through what might sound like the preachings of Hsieh to find some real benefits for your own company (whether it exists already or is in the formation stages in your mind only and whether it is mobile, online or good old brick and mortar). If you are then still a believer, check over here for more…

And if you want to buy it?

Buy “Delivering Happiness” here

O2 Can’t Do: Why it is going to lose me (#fail)

By Volker

On 01/12/2009

In 1, Carriers, Events, Slides

Quick facts: I am an iPhone user. I wanted one, I am based in the UK. What to do? Switch to O2, which had the exclusivity for this. This post is not about bandwidth, 3G availability or anything like that – I have not (much) to complain about this actually. It is not about the iPhone either.

This post is about the simple mistakes network operators (plural; O2 is not alone here) make by not living up to their own messages. Listening to customers and identifying (and answering!) user needs.

Back story: I have an iPhone 3G on a £45/month plan, which gives you countless voice minutes and lots of SMS and unlimited data – in the UK that is. In short, I do not normally have to pay anything for (UK) calls and texts, hence the tariff. Now, if you dare travel with your iPhone, you’re in for nasty surprises. The only thing O2 UK has to offer is slices of 10 or 50MB of data for some hefty sum.

One of the most insulting things about this is this: I used to have a Blackberry on O2 and, you see, you can purchase an international roaming plan that gives you blanket data coverage on your device when abroad for – if I remember correctly – £25/month extra. Would I take this? Any day. Does this exist for iPhone tariffs? No.

O2 UK would be able to easily deduce that I am traveling regularly. Great opportunity to hook me into an even dearer deal, you might think (ad slogans include “We’re better, Connected” and “O2 can do”). But wrong you are. Whenever I travel with O2 abroad (and this is on an O2 network), this is what I get:

They actually send me at least 3-4 SMS with various warnings and alerts about how expensive and truly nasty it is to use my (O2-purchased) phone to its full potential and capacity whenever I dare leaving British soil. Connected? Can do? Not at all! Very inspiring. NOT!

Does it offer ANY solution to my apparent need? No. Does it try? No. What does this say about how important I am to them as a customer? A lot. And nothing good either.

It reveals a very “last century” way of looking at life: users are basically being perceived as revenue-generating units rather than someone the brand even attempts to communicate with. This is a very short-term view of the world, and one that is bound to fail quickly. Why? Because I am very likely to switch carriers (I have already unlocked my iPhone, which you can – incidentally – do here).

Now, O2, listen up: will I switch because there are so many other so much better offers out there? No. Will I do it because I fear the charges? No. I might end up paying the same as before. But that’s OK. I will do it because you, my dear carrier, showed me that you do not give a toss about me as your customer and you failed to deliver on your promise (“connected”, “can do”). I beg this will change about 2 weeks before my contract with you runs out: you will promise me everything under the sun to keep me but this is cheap, and I will not have it (as, I suspect, will apply to countless others).

Here’s the solution: Try and build some trust in your brand and your actions (Zappos anyone?). The reference to Zappos is not only a fashionable one (and, yes, I know it turns up in every man and his dog’s presentation these days; I used it myself a couple of weeks ago… But Zappos business is, get this, O2, to deliver happiness. You think that this is over the top? Think again: Tony Hsieh just sold his company for a very real-worldly price of $800 million to Amazon. His company is America’s biggest shoe retailer. Did I say shoes? Happiness!

Do you have to go that far? I would wish you would. But, dear O2, a little respect and care would already do it. Any of this? None I can see or hear, and your hotline will know I have tried! In modern “Tweetish”: #fail.

Listen and deliver. Then the rest will come. Until then, it’ll be Vodafone for me (who at least abolished roaming charges) or Orange (if they manage to learn from the above in time before my contract runs out).

Good bye!