The Oh-No! Moment
Platform extensions may hurt successful platforms: 4 check points learnt from Apple and Uber mistakes required for growing without loosing loyal customers.
The need for growth poses the opportunity of entering new markets or giving new services. Just see Uber delivering food, Google driving cars or Amazon flying drones. But this expansion strategy may also increase the risk of loosing competitiveness in your initial core business, due to lower focus on your core assets: your loyal customers and your main competitive advantage.
Loosing a passionate customer is much worse now than some years ago, due to the exponential visibility of consumer complaints and higher availability of alternatives.
So these are my recommendations of what to check based in my own bad experiences as a platform user:
1. Know your customers, and value their business (not like Apple that ignored my loyalty)
After 4 weeks trying to get help from the Apple Customer service I gave up. I was only trying to solve an issue arising from 2 defective Apple Gift cards with illegible PIN codes.
They told me I should kept the receipts of these purchases (but that was not stated in the gift card). Nobody cared I was an Apple customer for more than 10 years (I even offered to show the invoices for more than U$S20,000 in hardware of more than 10 Macs, 10 Iphones and 5 iPads I has bought). They weren’t able to get me the U$S 65 of credit in my iTunes account…
2. Understand and Map the potential Oh-No! moments that your customers may face (like the ones that broke my Apple passion…)
As you enter in new businesses offering for your core customers, you should be aware that you may not be able to maintain the same level of quality that enchanted your customers in your initial business. As you are playing out of your normal ecosystem you may get new potential frustration situations for your customers. And that may impact the whole business…
The horrific Oh no! feeling is full of frustration and disenchantment, opposite to the “ A-ha moment” that generates delighted customers with a product or service. The A-ha moment creates value, the Oh-no destroys value.
3. Verify that the commercial policies, practices and service levels of the new business are in line to the original (and main) business, specially if you have to deal with new suppliers, in order not act as Uber Eats that left us starving…
The rules defined for the new business should be an extension of the customer experience in the main business. Verify that your maintain your competitive advantages and quality of service in the new businesses you enter. But in order to get into new business you are using new suppliers, or distribution channels, and if you don’t apply the same passion and quality controls to them too, a disaster may come.
Sales and Customer Service Quality levels are so difficult to manage and maintain (that’s why they became my passion area) that may end be totally unaligned between several business lines, or worse suppliers, putting at risk a much bigger business.
In one of our working lunch at office in our startup, we decided to give a try to Uber eats asking for some argentinean “empanadas”. Being heavy users of Uber, without any kind of problems at all, it seemed natural to get the same level of service. But not, the food never arrived, Uber didn’t notified nothing. We had to call back and ask for a refund (we got the refund and a compensation for the problem, but we evaluated other food platforms, and gave Cabify a try too).
4. If your customers in the new line of business come from your original business, treat them as kings. If you fail, you can put in risk the whole relationship (aka business), like when a frustrated Apple user starts to see the options he didn’t wanted to see before…
Apple knew that my gift cards where not used, nor declared as stolen, but in order to get the credit I need to send the proof of purchase. Or, “sorry we can do nothing”. It made me think that Apple Customer service systems where not top line as their products. As a Customer, for the first time Apple doesn’t trust me, . So I don’t trust in Apple anymore… I decided to stop purchasing Apple services by cancelling subscriptions. That was the case with Apple Music, I realized that I can get the same service from Spotify, for 30% less cost in the family plan I had. With a great Customer Service, focused in one business.
I imagine I’m not the first, and this is a very specific situation, non standard, with off line to on line issues. But this is just the whole point. New business bring new intersections in On and Off Line Customer service, that may generate frictions with your customers.
For example, some years ago, owning and using Apple was a differential experience due to the technology, the design and the customer centered focus. So price was not the first issue, and even perhaps a product differential. Loosing the customer first focus (and obsession) is the initial step to commoditization, price war and lower profit.
The Apple, Uber and many other companies ecosystems are becoming so big that it’s quite difficult to maintain the original service level. An ecosystem of hardware, software, stores, streaming and web services together. But if you don’t take care of your customer base, and only speak about growing without going in detail about same customer growth, you may going to a fast commoditization that will hurt the bottom line.
Apple Services is the fastest growing product line agains LY (+18%, http://images.apple.com/newsroom/pdfs/Q1FY17DataSummary.pdf ), but it’s not the most relevant and original business (hardware & software).
Welcome Samsung, Motorola, Spotify, Netflix and B2C startups, you may grow by breaking the ecosystems by the weakest point of the value generation process. A platform is as strong as it’s weakest offering.
Loosing a customer is bad. Loosing a passionate customer is disastrous for the business, they post and share their broken feelings…
Customer Service Evangelist