WebPeel - Customer Loyalty and Online User Experience

Netflix and Substitute Goods

One of my favorite classes in college was macro economics even though I barely passed a single exam. It was a perfect example of thinking you know what you’re doing, but you really don’t. One concept that I did correctly understand was the idea of Substitute Goods. As I look at how the Netflix story plays out, I can’t help but think about my economics class.

First, Netflix announced they would raise their subscription rates starting in September, which alienated a lot of customers including myself. Today in the news we hear that negotiations to continue licensing Starz content broke down, which resulted in their stock taking a hit. No matter what happens in the short-term, Netflix is going to have a tough road ahead as more companies want more money for their content. Whether you’re pushing sitcoms, movies, or articles in a magazine, content always has and always will be king.

In anticipation of the September rate increase I put my subscription on hold and took Blockbuster up on their offer to woo Netflix customers. Now, I am not a Blockbuster fan since they went bankrupt and wouldn’t accept my gift card at their store, but given the cheaper price I thought I would give them a second chance with their Total Access offering. Today, I got my first 2 discs and the verdict… so far so good, which is bad for Netflix. To be fair, while price was a factor, Blockbuster also offers video game rentals and my son is an Xbox addict. These video games can be $50 to buy and get played for a few weeks before they just sit on the shelf. So on my first order, I got (1) movie and (1) Xbox game. While Blockbuster may not have as many movies and their web interface is not as easy to use as Netflix, the video game rental service and the ability to drop off movies in the store (if you can still find one) almost makes this a perfect case of substitute goods.

At the end of the day, I get to see more movies than I would see otherwise with no subscription. I get to save money. I get the same level of convenience. And, I get a son who thinks his dad is the best. In all honesty, I still struggle with cases like Blockbuster and Borders who couldn’t get an online strategy in place quick enough to decimate the competition. But it goes to show you that don’t always assume the strongest will win, and don’t always assume that a fallen hero won’t ever rise again.

So what’s the lesson?

Lesson 1 – When changing price or service, make sure you really understand your customers’ alternatives. Is there something compelling that your competitor might offer that makes up for the product you compete head-to-head on? In my case it was video games. Netflix has a lot of smart people who I’m sure ran the numbers to account for a certain percentage of lost subscriptions. So, like Netflix, always do the math and understand what the impact to the bottom line could be.

Lesson 2 – Blockbuster will need to keep fighting tooth and nail to get new movies and streaming deals as well. If they don’t then I will switch. Beware of switching costs. The switching costs are so low for customers in this model it is scary. I signed up online for Blockbuster Total Access over the weekend and had my first discs in 3 days. The only finger I lifted was to get my wallet.

Lesson 3 – MOST IMPORTANT to readers of this blog. A great web experience doesn’t mean anything without the right price and the right products and services. Before investing more in your web site, make sure you’re polling your customers to ensure you’re not missing the basics. In Netflix and Blockbuster’s case they need to keep feeding the insatiable appetite of consumers wanting every movie available at anytime through any format (DVD or streaming). Oh, and don’t charge a lot.

It’s tough running a business!

Blockbuster Misses Opportunity to Re-Recruit Old Customer

Yesterday I learned another lesson that translates well into the digital world. I won a gift basket this week that contained a $15 gift card to Blockbuster. If you read this blog, you know that I am a long time fan of Netflix, but I used to be a regular at Blockbuster over 8 years ago well before they started to get into real trouble. I remembered they used to have these great deals on previewed movies like 5 DVDs for $20. So I was rather excited to add some good ol' fashioned disks to the collection. As great as the cloud is there is something about holding something in your hand that the cloud can’t replace. Second, no matter how fast the Internet becomes, it still requires that your connection be good for the whole 2 hours you’re watching a movie. I have never had a movie stop working halfway through unless my disk was scratched.

I happily went to a Blockbuster that I found near my house. It had been over 2 years since I had stepped in one. They had a few great classics that I debated over for more than an hour. I wanted to take advantage of the 5 for 20 deal and the 3 for 20 deal on some of the newer films. With 10 great movies in my hand I had to decide which 2 wouldn’t make the cut. After 60 minutes of looking and deciding I went to checkout my movies for the grand total of $43 dollars. I handed over my $15 dollar gift card to be greeted with an awkward look from the cashier as if I had given him a wooden nickel.

I later found out that as part of the Blockbuster bankruptcy filing the judge had ordered that Blockbuster stop accepting gift cards over 2 months ago. In all honesty the 8 classic movies were well worth the $43 price, but on principle and sheer shock I just walked out the door empty-handed.

So what's the lesson? While, I can blame the person who gave me the gift, I put some of the blame on Blockbuster as well. I wasn't mad I lost $15 dollars, I was mad that I passed my house in Friday July 4th traffic to waste an hour in their store. Now if I ran Blockbuster, here is what I would have done.

I would have notified customers via mail or email on the policy change. While it's been over 2 years since I engaged with their company I should still be in their database. Lesson here is you should determine what the shelf life is for your customers. Maybe 2 years is the right timeframe to say a customer won't come back and never send them an email or postcard again. Whatever the period is, it’s good for your employees to know and even better if your customers know. I get reminders all the time from companies I haven't dealt with in years just to let me know that they  would still like my business. Magazines are really good about re-recruiting past customers and on more than one occasion I have re-subscribed.

As for the store itself, I would have put signs on the door so that customers knew that gift cards would not be accepted before they started shopping. I wasn't the only person that “didn't get the memo” as an elderly lady was asking the same question on my way out. Unlike me, she was smart; she asked before shopping, but I assume she must have heard about it on the news or from someone else.

Because of the experience I will not be going back to Blockbuster again, which is too bad because my interest had been renewed in the business when I was able to experience the joy of looking through rows and rows of movies once again.

When customers come to your website make sure you cover the following:

• Be clear about gift cards and/or using multiple coupons in one transaction.
• Be clear about your return policy.
• Be clear about your mailing lists and privacy information, do you plan on sending them emails forever or just for 12 months after their last purchase?
• Be clear about how to unsubscribe from your mailing list.
• Be clear on how to contact customer support if something fails during the checkout process or if they are unhappy with their product when they receive it.

A lost customer may not be lost forever, but if you get a second chance you have to make the most of it, since it will usually be your last.

Soap.com Backs a Good Web Site with Great People

So if you have been following my posts about my ordering experience on Soap.com, I am happy to say that my issue is finally resolved. My order was never received because it was damaged during shipping and then I only received a partial refund even though nothing was ever delivered.

With one email to their customer service address I received a wonderful reply from a “Marla” who apologized for the mix up and not only refunded the rest of my money but said they would resend my order free of charge. I received everything a few days ago and my wife and I are very happy.

We will be ordering from Soap.com again.

Lesson Learned

Even the best web sites using the best technology can have breakdowns in the system, especially when it comes to things like ordering and shipping logistics. It is a great reminder that no matter how good your front-end is, at the end of the day, we still need real people behind every web site. It’s people, not computers that make the decisions to do what is right for the customer.

And if you’re a business owner, it is critical that you empower your people to make the right decisions at the right time. This does not mean giving everyone the keys to the castle, but setting limits for when someone should be able to resolve an issue quickly. If I had ordered $1,000 worth of Tide and Palmolive, I don’t know if Soap.com would have sent me the order “on them” but there is a price point where it pays for the company to do what is right. Past experiences with McDonald’s have been like this. If your $4 Big Mac is a little cold or the bun not really fresh they would just give you a new one, no questions asked – I don’t know if they’re still this liberal.

In short, make sure someone is keeping tabs on the technology and the system; don’t assume that just because the support system doesn’t show a lot of complaints people are happy. I hate having to contact customer support, but this time I am glad I did. There are many cases where people are not happy, but they just forget or don’t want to bother following up.

Listen proactively to your customers (that means asking when they don’t).

Does Soap.com's Front Office Know What Their Back Office is Doing?

This is a follow-up to my earlier post regarding my recent order at Soap.com. Unfortunately the story does not have a happy ending; but at least I have more material for this blog. After a few more days had passed, I received an email from Soap.com saying that my order was being refunded. I was not expecting or wanting a refund. I actually wanted my product. I found this approach a little disappointing considering I was not ordering some very unique hard to find item. It was literally, some dishwashing liquid and razor blades.

 
 

Now here is the kicker - I was charged $35.78 on by debit card and the refund was only for $22.78. I never received any shipment from Soap.com so now I have to go figure out where the rest of my money went. And the icing on the cake is this - I was sent a second email to write a review about the products I ordered.

 

I am very surprised how bad Soap.com's fulfillment process has been. There is obvious a total disconnect at various points in the system.

How On Track is Soap.com and OnTrac?

So I recently jumped on the Soap.com bandwagon solely because I was enticed by their 20% off coupon for new customers and I am tired of lugging gallon jugs of Tide from the supermarket. The first time I ordered the process was perfect - Good user interface, easy checkout process and delivery showed up in exactly 2 days as promised. The second time around I wasn't so lucky. The ordering experience was again very good, but 2 days came and went and no package. If you're like me you always second guess when you ordered the package especially if you do a lot of midnight shopping like myself - do I count today as one day or the next day since it is already past midnight, etc... Nonetheless I went back to the email to verify the actual delivery date and sure enough it should have come yesterday. Soap.com uses a service called OnTrac which I am not familiar with - every ecommerce site that I have ever used has delivered through FedEx or UPS in the past, unless it is some special delivery. Logging onto the OnTrac site was simple as Soap.com provides a link to track your packages - there in plain site was the reason my order was not here. Apparently the delivery reached the distribution center damaged so it's on it's way back to the sender. I love the ability to track packages, but it begs the question if Soap.com and other ecommerce sites can be more proactive when a problem does arise. This would require tighter logistics with the shipper, but something I would think is quite possible. The shipper would have to have access to my email address or some mechanism that when the note was made to send back to sender, I would also get the notice saying my shipment was delayed rather than guessing what happened.  I am satisfied knowing what happened, but it is a good example of how companies can still do a little more to be proactive with their customers.

 

I am still a fan of Soap.com only after two tries simply because of the convenience. If you're interested in experiencing the service for yourself, use the code below to get a discount:

use code WEBPEEL

shop for all your home essentials: Gillette Razors, Dove Soap, Moroccan Oil

Not valid for existing Diapers.com, Soap.com or BeautyBar.com customers. Some restrictions apply.

Eddie Bauer Bows to the Cyber Monday Pressure

I used to be a big fan of Cyber Monday, because I hate crowds. There is nothing fun about standing in line at 4am (in the cold) to fight some old lady over a television set. I have actually never got anything I really wanted doing this simply because most stores only stock 4-5 of the most desired products and since I am lucky if I am number 20 in line, I am not willing to run over someone for merchandise. So the start of Cyber Monday seemed like a great way to even the playing field - no crowds, everyone has an equal chance. Well, this year I didn't get any great deals online either - I got good deals, but not great deals - free shipping galore, but you can get that during the rest of the year now for most stores. 

The fact is that nowadays many people have a fast internet connection, and crowds do exist online!! At least with doing the shopping spree in person, if you manage to wrestle that digital camera out of some teenager's hands, you get to keep it - all you have to do is waste (sorry, wait) in line for the next cashier. It may take 20, 30 or even 40 minutes to checkout, but it's yours. Online, not only does the crowd problem surface with slow response times to web pages, but then once you have added something to your basket, you have to pray that you can get through the registration and/or checkout process before the site goes into a cyber coma. This was my experience with Eddie Bauer a few hours ago. 

Eddie Bauer was offering 30% off on almost everything plus free shipping, so I bit.  I was only buying 2 small gifts, but it took 2 times for me to add the gifts to my cart, the site was just spinning until I finally backed out and went into the cart to see that it had added the correct items and correct number of items. I then added the discount code. As soon as I did that, it gave me the lovely message below.

 

Since I knew the tax in my area, it was not enough for me to want to stop the purchase. On the final submit, the site hung again, so I never knew if my purchase went through. 30 minutes later I received an email, so I am assuming my order took, even though I never got the confirmation page on the site. While I am going to give EB some slack, it does bring up some important lessons to remember: 

• Always keep your checkout process as short as possible. Many steps on separate screens means many steps that can break or lockup during high volume times. 
• Always, always, always follow-up with an email confirmation - 2 at least; one to say we got your order, and one to say when the order has shipped. And if you read my Gap blog entry you would send a third about requesting them to write a review. 
• Always ensure your coders have built in safeguards so if things like sales tax don't show up, you give the customer an opportunity to help themselves. Include a phone number for direct support. If this was a 40 inch flat screen for $199, I would have been on the phone in a panic. 
• If you have the means - load test, load test, load test. How many simultaneous users can your site handle? Do you even know - 10, 100, 1000? Most small businesses would be surprised how few transactions can occur simultaneously before end users start to see a slow down on their shared hosting site. The big boys like Amazon.com invest millions to handle thousands of transactions in minutes. While most of us would kill for that type of volume, keep in mind how big you want to get when building your business online, especially if you are only online.  If your traffic were to spike tomorrow would you instantly lose 90% of the people who tried to make a purchase?

Christmas - The Season for Writing Online Reviews

If you read this blog a lot, I am big about advising companies to manage their online reputation. If someone is going to write a bad review, I would rather have that review on my own site than find it on some other random site on the Internet? Why, because I can control the outcome a lot better. If someone who has made a purchase from my store is unhappy and leaves an online review, it is a lot easier to engage with that person to correct the situation. If they cared enough to login and leave a message, they might just care enough to allow you to fix the problem instead of just bad mouthing you across the web. 

What amazes me is that while many sites offer online reviews of their products, many companies are not proactive about sending emails to customers to actually write a review. Gap Inc. is obviously getting it right. I received the following email the other day after I made an online purchase. The email contained a picture of the items asking me to leave a review for each. This should be the standard in the industry.

 

Now, if I were Gap I would even go a step further. If I purchased these two items in the store, they should print out a code on my receipt that would allow me to go online and leave a review as part of my online account?  Please comment if you know whether Gap does this or not - it seems like it would not be too hard to do?

 

Old Navy and Time Zone Discrimination

Old Navy uses a good tactic to call you to action - they send out coupon codes via email that have a decreasing savings percentage with each passing day. On Monday it may be 30% off your total online order, but if you wait until Wednesday it may only be 20%. Last week was the first time I ever took them up on this offer. 

 

While I did save some money, I was a little peeved that I lost 5% because the day for me apparently ends at 8:59pm not midnight. I was shopping on their site for a good 45 minutes before checking out. When I entered the coupon code, it gave me a discount of 5% less than I thought I should be getting. I quickly went back to the original email only to "read the fine print." 

 

To get the savings for that  day, you had to make the purchase by 11:59 ET. Since I live on the west coast, this translated to 8:59pm for me. I quickly looked at my computer screen and the bottom right clock said 9:40 - Ugghhh!! Old Navy was perfectly in the right, but it just irked me that I had been rushing around all day knowing I was going to make the purchase later that evening. By the time dinner was fixed, kid was in bed, etc. I had missed my window. In the grand scheme of things 5% may not seem like a lot, but when you factor in taxes and the fact that I didn't get free shipping, this would have paid at least for the shipping. 

I have programmed a couple of web apps that send reminders to people at various times in the day. So I know first hand that dealing with time zones can be a pain in the butt. However, as companies do more and more business online, it will be important to make these disclaimers a little more prominent. In a sense, Old Navy is cheating me by 3 hours. If the average person starts their day in New York at 7am, it doesn't mean the average person in L.A. starts their day at 4am (unless you’re a stock broker). If my day ends at 5pm like most people, I have 4 hours to make the cutoff where someone in New York has a whole 7 hours. 

Now, Old Navy has customers all across America, so maybe this is not a big deal, but it would be interesting to know what percentage of their customers lose the 3 hours. If 50% of your customers were negatively impacted would you change the expiration to 3am or solve it with technology and use the person's zip to determine the local time? Or would you do nothing?

 

A Clearinghouse for Product Reviews

I have written about the power of online reviews before. It is critical for businesses to actively manage their online reputation even if their products and services are delivered primarily offline.  One thing that I would like to see is even more standardization across the industry in terms of how feedback on products is collected and shared across web sites. I recently purchased a string of items online over the course of 2 weeks and having read so much customer feedback before making those purchases I wanted to return the favor to others who were researching similar items. One thing that frustrated me was having to sign-up for an account at each web site in order to submit feedback. That's when I thought it would be great if there was some company(s) that became the standard for collecting and distributing feedback. In order to make this work they would need to enable APIs that could be used by web sites to integrate feedback about their specific products offered on their web sites. Just like most networks, it wouldn't be useful for only 1-2 companies to use the feedback system. But if this product review clearinghouse was able to get say the Top 20 ecommerce sites you would see a trend where all businesses selling something would want to leverage this network to display customer reviews rather than every single web site building their own product review mechanism. 

If I had the money and time I would do this myself just like every other crazy idea that pops in my head, but I think companies like Amazon.com or even eBay could probably get this to market way quicker (laugh). Better yet, who already plays in this space? Why haven't sites like Epinions done this. This company has been around for ages, but uses a model to centralize  customer reviews on their web site. As the web moves more to a data driven layer, people want access to that data in a way most consumable for them whether it be another web site, a Windows Phone app, or via email. Epinions should work on a taxonomy that can abstract those reviews and place them on any site or phone app. This would allow any web site to integrate reviews right into their product pages with little effort. The data requirements for this is massive, but as alluded to earlier it is possible when you look at what Amazon has already done with their API.  What's needed is a web portal that allows businesses to use the review system to find or add their own products and an embedded interface for consumers that allows them to seemlessly comment on Amazon products or Best Buy or any other commerce site all with one login. 

If anyone knows of a company trying to do exactly this, I would love to hear.

 

Can Your Online Reputation Stand Up to Your Offline One?

Last weekend I had to return a Black & Decker mini fridge to Walmart. I am one that hates returning things so I typically make it a point to do extensive research before making a purchase and then live with the consequences of my choice for better or worse. What made this return easier was the fact that it was not my first pick to begin with. Prior to going to Walmart we had decided to go with another brand that we saw on Walmart.com. Unfortunately, the brand we wanted was not in store and could only be ordered online - I learned that after we made the 45 minute drive to the store. When we arrived the only mini fridge they had in our price range was this Black & Decker version. My wife convinced me that since we made the drive that we might as well get it. But as I stood on the checkout line I told her there was some reason I didn't want this one. I remember the reviews were bad online, but couldn't remember why. Instead of just relying on the fact that the reviews were bad, I made the purchase simply because I couldn't remember the specifics and was trying to make my wife happy. After all, Black & Decker's reputation offline is very well regarded especially when it comes to power tools - How bad could the fridge be? I see their products all the time when I am in Home Depot - they must be doing something right. Sure enough by the time we got home and I read the label closer, I remembered that it was one of these new thermoelectric environmentally friendly refrigerators (no compressor). It keeps things cold, but has two major drawbacks. It doesn't get cold enough to store frozen foods, and it gives off a lot of heat into the room. Considering we needed to store milk for my son, we needed something that would store dairy close to freezing temperatures. To be honest, after 2 days the fridge seemed to keep things cool enough for dairy, but the amount of heat it generated in my child's small room was enough to take it back. 

After going back online, the comments about this fridge on the Internet were all confirmed first hand. Even the part about a lot of these cube fridges getting damaged during shipping. Ours had a dent in the left back corner of the fridge similar to when you try to crush the edge of a box by stacking too much weight at the corner. This one experience has now made me a strong believer in online customer reviews for products. While some companies are victims of unwarranted attacks and some companies falsely post positive comments about their products, overall I think the system is working. More and more "real" customers are going online to post real experiences about their perceptions of a product or service. In my case, I ruled out a product only to forget why. In the end, I wasted a week, but the comments online only helped me further justify the hassle of going back to return the product. If all the comments had been positive I probably would have just overlooked the excessive heat and dent in the back - I would have just assumed I was crazy. But seeing my perceptions in writing by other people who had no relation to me, was a huge factor. 

Businesses must start to address all feedback good and bad on the Internet as more people come online. In fact as more people get mobile devices the problem becomes magnified. If I had my smartphone with me, I could have looked up the reviews while I was still in the store and eliminated the fridge right there on the spot. If you're not tracking your online reputation, you could be losing valuable business and not knowing why. Startups like Yelp and others are building entire business models on giving customers a forum to voice their pleasure or displeasure. Make sure you are taking an active role in managing your reputation in the digital world.

 

The Proper Way to Shop Online

This blog entry could really be titled, “How to Save Money Shopping Online,” but shopping is all about finding the best deal; let’s face it, it’s all out war between you and the retailer - there is absolutely a right way and a wrong way to go about shopping, especially online. Shopping over the web is all about saving money, avoiding the crowds and long lines, quickly comparing features, reading reviews and making the quick buy without having to visit multiple stores. Oh, and did I mention, saving money! If you are a member of hoWIWeb.com, most of this text will look familiar if you use the Coupon Module, but it bears repeating on this blog.

If you want to save the most money shopping online there are three basic things that you must leverage: 1) rebates; 2) discount codes; and 3) free shipping, preferably combining all three tactics in that order, in the same purchase.

REBATES - Since discount codes and shipping are done at the time of checkout, you should first start with launching your shopping excursion from a rebate site. Doing so locks in your rebate for that session on the site. If you want cold-hard cash, we recommend Bing Cashback. Note, it requires a Windows Live ID, but once signed-up you can shop at a number of cashback stores that offer as much as 25% back during different times of the year. If you want to save money for your child's college education then try a site like Upromise. With both of these sites, the lag time for receiving actual payment or credit to your account can range from a few weeks to a few months, so be prepared to be patient. The really good thing about both these sites is that they pretty much have partnerships with every flower company, clothing store, electronics boutique you can think of.

DISCOUNT CODES - During checkout, you will sometimes be presented a textbox that allows you to enter a discount code. These codes vary by retailer but are usually for additional money off or free shipping. HoWIWeb.com aggregates discount codes from a number of coupon sites, but you can also visit coupon sites directly or even the retailer to find discount codes. Note, using discount codes is probably the hardest thing to leverage regularly since many codes are often reserved for first time shoppers or require that you click thru a link embedded in an email to get the discount. This negates the first step in going through a rebate site. Nonetheless, it pays to do a quick search to see if you can find a few codes that work. Some sites use cookies to show different offers or stop you from using a certain discounts once you have made a visit. For that reason, I often like to browse for what I need in one browser like Firefox. I do all my research, find all my possible discount codes, and then once I am ready to make a purchase, I will switch to a completely different browser like Microsoft Internet Explorer to make the purchase.

FREE SHIPPING - I'll admit it, if shipping was free on everything, I would never step foot in another store again. Shipping charges can kill a great deal; especially on sites like eBay where you may have to pay twice as much to get a hard to find item shipped to your home. There is usually no way to know if you will get free shipping without visiting the actual site, but sites like Bing Cashback will also list which retailers in their rebate program offer free shipping (usually with certain conditions).

If you have others tips and tricks, share them with us. Happy Shopping!