As many businesses begin to spend serious money to develop a social networking strategy, the approach some French companies are taking is refreshingly counterintuitive: They drive revenue by engaging deeply with fewer people, not more. Whether they’re relying on forms of communication as old as humanity—such as talking over a meal—or making seemingly quaint investments in call centers, they stand in sharp contrast to companies that obsess over how many Twitter “followers” or Facebook “friends” they’ve amassed.
Corporate Friends Need Not Apply
These French companies are, for the most part, ignoring technology-driven solutions as they strive to engage customers and understand the changing marketplace. They have figured out that while technology is changing consumer behavior, it’s the relationships that matter—and sometimes, the best interactions still take place offline.
Deeper, Not Broader
Five years ago the French jewelry and fragrance company Boucheron joined the stampede of luxury retailers into China by building shiny new stores in Beijing and Shanghai. As the company prepared to open the Shanghai location, Boucheron president Jean-Christophe Bedos flew in to talk with local customers and managers about building the customer relationships the brand relies on. The plan was not to send out Twitter or Facebook blasts or try to get an online viral campaign to take off. Rather, Boucheron would host a tasteful cocktail party with champagne and hors d’oeuvres for a couple of hundred select guests, learn more about customer care and customer experience on this page.
When he told an important Boucheron customer in Shanghai about the plans for the in-store reception, the gentleman responded by asking if he could be candid. Bedos said yes, and the man asked: “Why are luxury brands from the West so insulting?”
Because he was on “the list,” the customer explained, he usually attended two or three store openings each week. At every event, he saw the same crowd of guests being offered the same cocktails and canapés, and listening politely to short speeches or watching promotional videos. Guests see through these events, the customer said, and many feel insulted by the implication that a few drinks is all it takes to get a Chinese customer to spend a small fortune in the store.
Instead of throwing a cocktail party for hordes of guests, he suggested, organize a truly lavish dinner for a smaller group. Serve multiple courses and get to know the guests. Don’t just make speeches to them about the company and its products; listen to would-be customers’ reactions and suggestions.
Bedos thought the idea was brilliant: Invite 20, not 200—and engage them. Tell the guests what the company’s plans are, but more important, ask how best to serve them. So Boucheron did just that in Shanghai, holding an intimate dinner for 20. “It was a great success,” says Bedos, who has since revamped Boucheron’s marketing strategy to hold small dinner parties with its top customers. “You have to believe in the power of word of mouth,” he adds.
The desire to engage with customers on a personal level is particularly prevalent in France. Although internet use by the French has increased markedly over the years, it still lags behind use in other Western countries. Just 63% of households in France now have internet access, compared with 74% in the United States, 77% in the UK, and 79% in Germany. The French lag in their use of social networking sites, too. In 2008, only 20% of them visited such sites. In 2009, their number jumped to 36%, but that tally still left France behind the UK (43%), Spain (52%), and Italy (59%).
The fact that the French have been slow to embrace the internet and online social networking may partly account for why French companies have aggressively sought other ways to enrich relationships with their customers. But their retro strategy offers lessons for every consumer-focused company. Even companies that heavily invest in social media technologies should consider them a complement to—not a substitute for—traditional ways of connecting with customers.
Listen, Don’t Broadcast
As social networking has grown, organizations and individuals alike have felt pressed to set up “broadcast operations” to share their news and information. For many companies, however, the broadcast nature of these media is a problem, because the dominant form of communication is one-way—think tweets or Status Updates. A number of companies, including Comcast and Dell, have service reps who scan social media platforms for negative comments and try to intervene to address customer complaints. But very few companies are able to use existing social media as a way to listen to customers.
For smart French companies, however, using low-tech means to engage in conversation with customers allows for real two-way communication. At the French subsidiary of Nespresso, part of Switzerland-based Nestlé, the technology most important to the company’s performance has been the telephone.
Public Relations Sparks a Conversation
“In France,” says Arnaud Deschamps, president of Nespresso France, “when people have problems, they prefer human contact…they prefer to go to a boutique or call.”
Nespresso sells individual-serving coffee capsules for use in coffeemakers sold by brands such as Krups and DeLonghi, as well as in its own machines. The capsules are sold exclusively via Nespresso’s catalog, on its website, by phone, or through 200 retail boutiques. The company was founded in 1986, and its business model was created before the internet. Back then, call centers were the primary channel for customers’ orders. For many years, 90% of their orders were placed over the phone and only 10% at the few boutiques Nespresso had opened. After the company launched its website, it took only a few years for more than half the orders to shift to the web; meanwhile, the retail network was growing, with 30% of sales made in person in the past year. Today just 20% of sales are made by telephone.
Nevertheless, instead of cutting the company’s investment in call centers or customer support staff, Deschamps invested more heavily in them. The reason is simple: Customers are still calling, even if they don’t actually place orders over the phone. Nespresso’s customers love the product and love learning more about it, Deschamps says. It makes them feel smart, in much the same way wine drinkers do when they are knowledgeable about what they are drinking.
Today Nespresso has 20 global customer relationship centers that employ 1,100 “coffee specialists.” The centers handle an average of 12 calls a minute, 24 hours a day. When Nespresso realized how much customers wanted to talk about its products, the company trained its call center staff to engage with customers longer, offering more information about, for instance, the characteristics of a particular type of coffee. Intentionally extending call times violates accepted practice for running an efficient call center, but to Deschamps, it’s an obvious strategy: More than half of Nespresso’s sales occur because of word of mouth from existing customers. Through those phone conversations, Nespresso was “training” its best sales force.
Training call-center staff to spend more time talking to customers runs counter to accepted practice, but to Deschamps, it’s an obvious strategy.
Nespresso would save money if it directed customers to search for information on its website or relied on a steady stream of tweets to inform followers of new flavors. But Deschamps believes it’s better to give them a variety of ways to interact with the company.
“People change,” he says. “It’s hard for any company to anticipate how consumer behavior might change. The same customer who usually orders by phone might decide to use the internet one day because he or she is in a hurry. And a week later, that person might go back on the phone to ask advice about mixing coffee and desserts.”
The phone reps also pick up on how consumer interests and concerns are evolving. Five years ago, for example, few Nespresso customers cared about carbon emissions and what impact their use of disposable coffee capsules might have on the environment. “Now, everyone wants to know the carbon footprint of our coffee capsules,” Deschamps says. So the phone reps spend time explaining Nespresso’s commitment to reduce its CO2 footprint per cup by 20% and to triple its recycling of coffee capsules to 75% by 2013.
Plenty of companies continue to see call centers as a vital form of customer interaction. Writing in the July–August issue of HBR, Zappos chief executive Tony Hsieh described how he relocated the entire company from San Francisco to Las Vegas in order to access a better pool of affordable, customer-minded phone reps. Indeed, as low-tech as call centers may seem, Deschamps considers them an uber–social network. “This is better than communicating with our customers on Facebook or Twitter,” he says. “People actually want to talk to us.”
Deschamps recognizes the danger in relying on new-media solutions like Twitter and Facebook as the primary way to engage with customers. In fact, marketers are recognizing more and more that it’s dangerous to outsource conversations to other organizations’ platforms. Jed Alpert, cofounder of Mobile Commons, says: “When you rely on social networking sites, you are handing your relationships off to those services and broadcasting to a group instead of developing one-to-one intimacy. The conversation is endlessly interrupted, and the resulting data about your customers isn’t available for your marketing department.”
“When you rely on social networking sites…data about your customers isn’t available for your marketing department.”
In the same way that traditional retailers came to realize the multiplying power of having both brick-and-mortar stores and a robust e-commerce website, smart companies realize that the best way to listen to customers is to use a combination of high-tech and low-tech methods. Advertising guru Jon Bond, founder and former cochairman of KBS+P, organized a test in which Wendy’s inserted cards into customers’ bags. The cards directed people to the fast-food giant’s website to sign up for promotional e-mails—and promised a substantial coupon for doing so. On the basis of a two-week test of the program at 20 stores, Wendy’s projected that the simple program would increase its fan list by millions of people. And for each dollar spent on the test, the company saw an increase in sales of $1.22—an “astonishing” result, according to Bond. Together the stores, the customers, and the web create a virtuous cycle—the store drives traffic to the web, which drives revenue in stores.
Suppliers Are Customers, Too
At web-based luxury-goods discounter Vente-Privee, one of the first lessons CEO Jacques-Antoine Granjon learned was that he needed to treat his suppliers as consumers and understand their needs in order to succeed. Before starting Vente-Privee a decade ago, Granjon had worked for years in the discount clothing business, and he understood some critical things about French consumers. In France, people spend less, but image is still very important, and image includes where you buy your clothes. Europeans, especially the French, rarely go into stores that sell designer clothes at a discount. They don’t like to be seen bargain-shopping.
Granjon saw that as an opportunity for a new business. Vente-Privee offers huge discounts on designer clothing on the internet, so customers can buy in the privacy of their own homes. He further separated his selling process from the traditional one by putting sale items up on his site very early in the morning, just as people wake up. That creates urgency: The sales end quickly because the items sell out fast. His customers feel that they are getting an extraordinary deal because they have to move so rapidly. Vente-Privee has become the inspiration for American discount-sales websites such as Gilt, Rue La La, Ideeli, and others.
To make his model work, Granjon needed to treat his suppliers like customers. He listened to their problems and responded with proposals that made their lives easier. “My job is to sell the collections of the people who worked hard to make them,” he says. “I go to Abercrombie or Ralph Lauren, and I say: What can I do for you? I’ll give you the best service. I’ll take all you’ve got and sell a high volume at cost price, so you don’t lose money.” Granjon has succeeded because his attitude toward his suppliers is the same as his attitude toward his customers: They need something, and he can provide it. For luxury-goods makers, Vente-Privee became an arm of their businesses, not just another outlet. Granjon became part of their strategy by convincing suppliers that he was an important route to their customers.
By building strong relationships with suppliers, Granjon was able to help them solve a vexing problem. As Boucheron’s Bedos, whose company sells excess luxury-goods merchandise on Vente-Privee, says: “Discounting and getting rid of overstock is like an STD—everybody has it, but no one talks about it.” The web is one way to hide it, but that’s the wrong way to look at it, he adds. Companies should value discount customers as much as any others, because it’s quite possible they are full-price customers at other times. “If people wear your product, they are your ambassadors,” he says. “No one will ask them if they paid full price for that new watch. So we must make the choice to be as proud of all our customers and treat them the same way.”
Whether they deal with physical goods or with digital products, more companies are becoming aware that suppliers are customers. “We have three customers,” CEO Jason Kilar of Hulu, the online video service created through an unprecedented partnership among television networks, told Charlie Rose. “We have users, we have advertisers, and we have content partners…. We constantly live that delicate balance between our three customers. That’s a huge part of our culture.”
Communication in the internet era has become chronically unpredictable—AOL chat rooms gave way to Friendster, which was replaced by texting and iPhone apps. Smart companies continue to rely on low-tech ways of connecting with customers. They recognize that while today’s social media can help many companies establish a new kind of relationship with their customers, it’s the relationship that matters, not the technologies that might help drive it.
For most companies, salvation isn’t just the web or mobile solutions. The best way to navigate the landscape is to realize that people’s habits are ever-changing and to pay close attention to customers’ ongoing discussions and behavior. Companies can try to guide customers to the forum or platform they believe has the best chance of helping drive their bottom line. But ultimately, customers will choose.
