Chief Friction Officer

Speaking of the Friction Model, I came across an article based heavily on work done by Bruce Temkin of Forrester Research reviewing the state of the Chief Customer Officer position.  You know how I feel about this idea; this CCO function should be performed by Marketing.

Why?  Because Marketing has the ability to measure, predict, and act on the Friction in the system which causes dis-Engagement.  Heck, lots of the time Marketing (examples) causes this Friction.

Here’s an interesting quote from the article:

“This job is about helping the rest of the company improve, not taking responsibility for the improvement,” Temkin said.  “At the end of the day, you still have to have an executive team responsible for running the business.  The only way to proceed is to get customer experience embedded into what they’re doing.”

Sound advice on the analytical culture there.  Most really problematic sources of Friction are cross-silo in nature, and you have to press on multiple silos simultaneously to resolve them.

At the same time, these Friction reduction activities should not be altruistic; they need to be grounded in the reality of a profit-seeking enterprise.  In an article titled Corporations’ Duty Is Transparency, not Charity, author Jonathan Salem Baskin makes this point about the role of Marketing:

Maybe the opportunity isn’t to gloss over or distract but rather to communicate and make transparent the real activities and trade-offs within our businesses.  Let customers know what they’re buying and why.  Make the cases for what we do and figure out how to tell them what’s involved.  It might be lots harder than hiring an agency to avoid it, but they’re going to find out via the Internet anyway.

He’s right about that, and this is the position every Chief Friction Officer should operate from.  A huge part of removing Friction, and in turn (examples) Marketing through Operations is simply understanding why the business operates as it does.  Then, taking a customer perspective, ask yourself these two questions:

1.  Is there any way to fix this problem so it doesn’t cause customer Friction?  Can we change process, policy, copy, presentation?

2.  If the answer to #1 is No – and that’s acceptable, as long as you have very concrete, unmovable reasons – then how do we explain it to customers in a way that is transparent and logical to them?

I don’t think most customers are unreasonable.  They just want their relationship with a business to make sense, they want to understand the nature of it, and then make logical choices.  When you remove Friction, you make these choices less frustrating / easier for customers, which increases the likelihood they will remain a customer.

And that, in the end, is the payback – increased Potential Value.

A very simple example of Friction reduction from the Lab Store is the repackaging of our core food product.  By simply adding a slip of paper to every unit shipped (Contextual Marketing, or for web analysts, Usability), repeat purchase rate on the staple food increased by 32%.  If you’re looking for “big company” examples of reducing Friction, try Nice to New Customers and the Check Shredding Example.

Here’s a more complex example from the Lab Store, one that more directly addresses the Transparency issue.  Many online retailers choose to compete on Price.  This is a strategically flawed choice in most cases, especially in a small business.  We compete on personality, service, and uniqueness, in that order.

Once in a while, customers will take an “eBay attitude” towards the price of a product we carry.  But interestingly, they will e-mail us and say something like, “I have always been so very pleased with your service and would really like to buy this product from you, but found this product on another site for $XX below your price.  Can you match that price?  If so I will buy from you.”

Now, I think many online retail folks would look at this situation and say, “She’s a customer, we should match the price and get the sale, even if it crushes our margins.”  I beg to differ. 

Think about it from the customer perspective. 

The second you take this price action, you create emotional Friction relative to all your pricing.  All of your prices immediately become suspect.  The next time this customer wants to buy something, she may try to negotiate. 

Then she will tell other people “you can negotiate their prices”.  And then all of a sudden we would be faced with a severe drop in margins, or explaining why we “cut prices for one person but not for all”, resulting in a potential Social brouhaha and customer defection.

So, how do we respond to her question?  Typically, something like this:

Wow, that’s a great price.  Are you sure it’s not on sale or a liquidation item?  The price is pretty close to what we pay for the product!  We certainly appreciate your past business and preference to give us your future business, but we simply can’t afford to sell the item for that price.  Congrats on finding such a great deal!

Let’s review what happened in this exchange:

1. Customer is experiencing emotional Friction.

2.  We acknowledge this Friction and provide a logical (to the customer!) and transparent explanation for it, including a potential reason for the price difference (is it on sale?)

3.  More importantly, we don’t create additonal Friction by making her “feel bad” about bringing this issue to our attention; in fact, we support and encourage her success.  This is the Potential Value component; the psychology behind maintaining Customer Momentum.

Every time we have had an exchange like this, we flag the customer and track their behavior at 3 months and 6 months.  And so far, 94% of these “inquiring minds” have been an active customer at the 6 month Tripwire. 

A 6-month retention rate that’s higher than for similar customers.

This is the nature of Relationship Marketing, it’s an honest dialogue.  And for the most part, that’s all customers really want.

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2 thoughts on “Chief Friction Officer

  1. Jim, re your point #2 in the exchange. A possible reason.

    That reason (on sale or a liquidation item) may be perfectly true, but it sounds like pure FUD. It may depend on what and where you’re selling, but any such response back to me like that would leave a *really* sour taste in my mouth.
    It may simply be that the alternate retailer is a more efficient and streamlined operation and can hence shave their margins even thinner.

    eg The company I deal with most who tends to be more $$ than others, focus on other aspects. Quality of the end product – they “stand behind it” vs selling any old functionally equivalent junk that has the lifespan of 2-3 months.
    The other trick they play is that postage is included in their pricing. Some online stores charge around 2-3 times the shipping of others – make their margins there I guess. So you “save” on the item, but get more $$ on the total package.

    So how would I choose to deal with this situation? (So as not to be negative entire :-) )
    I’d do similar to your start: Great price. And then choose to focus on the Value Add that I offer to the customer. Some/Much/All of that value add may not be valuable to them. Which I’d regard as a useful learning experience in it’s own right.

    Dissing the competition subtly or not just doesn’t come off well IMHO. Better to demonstrate the intangible (or tangible!) values you do add.

    Thoughts?
    Cheers!
    – Steve

  2. Really, FUD? In pet supplies?

    As you said, “depends on what and where you’re selling” and I’d add it also depends on the general tone of your communications and relationship building methods with customers. We guarantee all our products and use a flat rate shipping model, so no games there.

    We’re talking about a very low tech product here, it just is what it is, and there isn’t really any kind of “FUD lever” available. In this particular case, the product was indeed priced for liquidation so we felt pretty sure that was what was going on (we know the product / supplier very well).

    Don’t you find it interesting that the relationship we have developed with customers is such that they would even take the time to engage in this kind of “I would really rather buy it from you” query?

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