Profitable relationships

Customers are a nuisance. Customers who want to talk to you doubly so because they cost you money. A couple of recent bits of news have made me think of a conversation that I had a few years ago about how to turn that "wisdom" on its head.

O2 have launched giffgaff which is allegedly a Scottish word meaning mutual giving. There are lots of innovative elements to this MVNO-like proposition but one that all the mobile operators will be watching closely is: no call centres. Giffgaff is based on the premise that people on the web already help each other for nothing through blogs, forums, etc. so why not outsource support of your base to them and pay them a (tiny) fee for doing it. Its an interesting idea that could save a good deal of cost, but I can understand why O2 didn't do it with the parent brand!

The second is an application that used to be called SnapIn and is now called Nuance. This clever bit of code is installed by the handset manufacturers on behalf of the operator and intercepts calls to customer services and forces the customer into self help on the (mobile) web. This is currently being rolled out by Vodafone across many of its new handsets.

Calls in to customer care cost the operators money; an awful lot of money. Its also very difficult for the operator to put a value on the interaction with the customer unless they can sell them additional services or a contract extension while they are talking to them.

But customers value being able to talk to another person. Customers value being able to talk to a person to the extent that some brave organisations lead with a promise of real people in UK call centres.

So, a couple of years ago we were discussing the depth of relationships that operators have with their customers (especially business customers) and how that could be monetised.

I painted the picture of a business traveller sat in an airport lounge accessing his or her corporate email via mobile broadband. Something goes wrong so who do they call? Dell? Microsoft? Google? BAA? No. Unless they work for a big corporate organisation with an IT help desk they call their network provider.

The problem, of course, could be anywhere in the stack of hardware, applications, services and access but we seem to be genetically programmed to call the operator. The same goes for when things go wrong on the handset, a scenario that Apple have been delighted to make the most of, owning the relationship and the route to market but foisting the costs onto O2 (and now Orange and Vodafone).

So the operators are fighting back by working out ways of not talking to their customers.

On a spreadsheet I'm sure this looks great. The operator takes a load of costs out. Customers can "self care" on brilliantly intuitive care portals (sic!). Everyone is happy.

But that already weakening relationship finally gets severed. Customers have even less loyalty to their operator because the network now really is only a bit-pipe with nothing to differentiate one from the other except for the ever dwindling differences in coverage.

Is there "another way" as Nat West famously suggested? One that the operators can make pay?

I believe that there is, but its not straight forward. First Direct have made a brilliant success out of their (fabulous) customer service delivered through UK call centres. They have an online alternative and they gently point customers in that direction but always seem happy to talk. However they do limit themselves to high-value customers and don't go squandering the love on the hoi poloi! In addition, its all very well supporting everything from hardware to software but if everyone else in the eco-system is trousering the cost savings at the operator's expense then its not a scenario that can last forever (just like handset subsidies).

Maybe giffgaff will be a success and the market will naturally polarise into those who are willing to pay for a more personal service and those who aren't. Or maybe it will be along the lines of those who are technically savvy enough to be able to do without it and those who aren't. Either way I'm still firmly of the belief that there is value to be had out of looking after the technology stack if you can avoid others pushing their support costs on to you and you can find a customer who is willing to pay for it.

Why is the iPhone so important?

Don't get me wrong, the iPhone is a wonderful gadget in and of itself.

It is beautiful.

The design of the device, operating system and overall functionality are fantastic demonstrations of Apple's mastery of user experience.  However there is something much bigger going on...

For years Microsoft and Apple have fought a battle on desktops and laptops, Apple consistently produced the "better" product while Microsoft produces the one that's "good enough" and pulls off the sleight of hand that makes people believe that it’s too difficult/ too expensive/ too geeky to change. Obviously the enterprise platform is a bigger discussion about “good enough” and cost to change but let’s leave that for now.

I should probably point out at this point that we have five computers in our house: four Windows and one Linux. The Linux one rarely gets switched on and we bitch and moan about the Windows ones all the time but have been too lazy/ cheap/ unadventurous to change.

But Apple has pulled off a stroke of genius...

I have an iPod that I was given as a (corporate) Christmas present a few years ago. It sat in my desk drawer for a few months until, having a bit of very rare spare time, I fired it up. Apple and iPod users alike will be unsurprised to find that it all worked so smoothly and painlessly that I was an instant convert and would never consider another MP3 player.

And that is where Apple has been very, very clever (or just good at its job if you like). When I come to replace my mobile phone, it will almost certainly be with an iPhone. Sure, there are drawbacks and limitations.  I’m equally sure that other phones, smart phones and even my work  BlackBerry do individual jobs far better but the iPod has shown me/ persuaded me/ brainwashed me that everything “just working”, really well,  in a really well designed package will make my life “better”. After eighteen months I still get a warm glow of satisfaction when I pull my iPod out of my pocket.

But that’s not the clever bit (borrowing from Douglas Adams), this is the clever bit.

As the all conquering AppStore starts to get some applications for the iPhone and iTouch that do more than merely amuse – say Open Office – Apple is rapidly working its way into the fabric of people’s lives in a very personal way. My work laptop is personal but my phone is really personal; I’ll lend you my laptop but don’t fiddle with my phone as my relationship with it makes it feel like an extension of me!

A few years ago Vodafone ran an advert, I don’t think it lasted very long but it featured various Europeans leaving the house and checking they had got their keys and phone (Italian), umbrella and phone (English), sunglasses and phone (Spanish), knickers and phone (insert latest celebrity faux-pas here)… You get the point. Today that advert would look a bit different with the iPod being on most people’s list as well and – if O2 get their way – the wallet wouldn’t be on the list as the phone replaces that too.

So you’ve got a phone that does just about everything, people are conditioned to take it everywhere at all times and then along comes the Kindle and Sony eBook reader. Amazon is currently trying to flog books while Sony is trying to flog hardware but both are putting tablet computing devices in user’s hands which will only take a bit of development to become quite powerful devices. If Apple pitches in with a tablet device (which has been rumoured for years but finally looks close) then the battle for the desktop isn’t over, it’s irrelevant! All the computing power I’m likely to need is with me, all my data is in the cloud and if I’ve got an enlightened employer with a decent extranet then I can probably access most of my corporate apps through the web browser on my personal device as well.

So, back to the enterprise platform…

I recently spoke to a couple of very large providers of outsourced IT services who are pushing two similar objectives, one openly and the other very, very cautiously and quietly.

The first is to virtualise the desktop with everyone carrying their credentials on a USB stick that they can plug in to any connected machine in any office or hotel. Sun piloted something similar about twelve years ago (can't for the life of me remember what it was called) but the bandwidth wasn’t really there to make it viable.

The second is to stop supplying personal work IT equipment and “encourage” staff to provide their own (or actually re-purpose the machines they almost certainly have  anyway) providing access to all corporate applications and data through an extranet and java browser add-ins like Citrix.

If standards are open (and they are getting close for all the major document standards), applications virtualised and available through a browser, and all my data stored in the cloud then I’ll happily use my Apple tablet to work and play; provided I’m recompensed by my employer for giving up my clunky, old  laptop that is.

So Apple wins?

Probably not, as I'm sure that Google might be thinking along pretty similar lines with Android and Chrome, Microsoft apparently have plans for a tablet, Nokia are experimenting with netbooks, Dell are experimenting with phones and the list goes on. Should be an interesting couple of years though.