Customer experience is key - even in Ukraine

The Telco 2.0 blog is quickly becoming one of my favorites. Their analyses always combine broad, high-level, forward-thinking approaches to the mobile business with an in-depth understanding of the underlying technology that lead some really thought-provoking insights. That they tend to support my own views, albeit usually in more cogent and factual way, doesn't hurt either. ;-)

In this post from October 2007, the author makes three assertions about the mobile business that really resonate with me:

1. Communication is king and presence is a prince; content merely provides ways to communicate. The 3 types of communication are: presence, storytelling, and information transfer. Focusing on one type like storytelling misses the bigger problem with how we communicate. I also surpised by the supporting statistic that global revenue from games, movies and music are less than that of SMS.


2. The job of Nokia (and all device makers) is to create "fantastic user experiences" by helping the operators overcome structural issues and producing products that align with the current horizontal industry structure instead of trying to compete with them.


3. Customer data and the customer relationship has great value. Mobile operators own that and the handset makers shouldn't try to muscle in on that area.

These intuitively make sense to me, and I have expressed similar opinions in my work, particularly with operators here in Ukraine. In my conversations with mobile operator folks here in Ukraine, I have also emphasized the untapped potential represented by creating a better user experience, exploiting messaging services like MMS and premium SMS, and partnering with content providers. I expressed in one of several articles I've written during the past year. There is huge short- and long-term revenue potential being forfeited here all for want some very basic and relatively inexpensive improvements. For example, I have yet to be able to send an MMS with my Nokia N73 despite several attempts at downloading the settings and talking to my operator's customer care reps. Practically every other mobile user I've complained to about this tells me they have the same problem, and have long since given up trying. Upon telling this to one of the managers at my operator, he suggested that it's because my particular phone was probably illegally sold on the market and thus my local operator's settings would not work on this phone. Yes, illegal phones on the market is a big problem in Ukraine, but I've asked both a content product manager and a senior network manager at two other operators here and both of them said that sounds very strange. I can see now that there is likely substantial intertia against fixing this problem within the operator, as they have created a culture to blame it on piracy rather than invest the resources to try and fix it either technologically or through better business processes.

None of my aforementioned articles are online but if you'd like to read them, please email me and I'll be glad to send them to you.

Needless to say, as far as I know, my opinions haven't particularly inspired anyone in the industry. I'm not particularly surprised since the operators have done quite well financially so far merely riding the wave of rising consumer incomes and strong economic growth with "status quo" or worse services. As a shareholder in the two leading Ukrainian mobile operators, I haven't had too much to complain about the past several years. But, as an industry marketing professional here in Ukraine, I would love to see this market become a leader for mobile innovation, a laboratory for new products and services that could actually be leveraged in other markets. Drug companies find Ukrainians good enough to test new drugs in clinical trials, the results of which can be applied to other world markets. Apparently not so with mobile services.

Quoth one of my friends who has lived in Ukraine continuously since we both arrived in 1997, "It's never easy." Truer words were never spoken about today's Ukraine. The past 17 tumultuous years have thrown almost every aspect of life into some level of chaos - families, politics, markets, communication. Life for the average Ukrainian is quite difficult to navigate, from finding out why your water or electricity has been shut off and when it will come back, to buying a car and getting what you ordered, to setting up your mobile phone to send MMS and email. So when something IS easy, people notice it.

However, the paradox of the Ukrainian consumer is that while they have been conditioned to accept poor quality service and products, they often haven't recognized or rewarded brands that offer good quality. And they have rarely been willing to pay extra for better quality, primarily due to low incomes of most people. Companies understandably wouldn't want to invest in new and improved products if they will not reap more profit from them?

But I contend that this is yesterday's thinking. Incomes are rising quickly, particularly in the major cities. These rising incomes are driven by more demanding jobs, which in turn makes time and convenience more valuable commodities to people. New competitors are entering the market constantly, each one doing something different, if not better, than the encumbants. This is particularly evident in the retail business, specifically supermarkets, restaurants and cafes. Consumer credit is flooding the market to allow people to buy more big - and even small - ticket items (maybe too many items). So today's marketer, particularly one in the communications business, has more and more freedom to innovate. No, not freedom. They have more and more an obligation to innovate. Expectations of upwardly-mobile Ukrainians are rising with their incomes, and they have more and more alternatives to choose from.

Ukrainians' rising expectations, just like those of consumers in other countries, require the operators, device makers, application developers, content providers, and all other contributors to the value chain to decide which business each one is in, and work together to improve the customer experience. Only then will the full potential of mobile communication be unlocked. But, as pointed out by Marek Pawlowski in his article on the MEX (which stands for mobile user experience) blog, the leading device makers and operators still have an identity crisis about which business they are actually in.

Verizon and Alltel

Chalk this one up to one of my gleams of light that I'll have to take from a stranger. I'd thought several weeks ago writing a post about the regional mobile operators in the United States and how they might be a better model for the Ukrainian operators (at least the smaller ones) than the Big 4, because the regionals had to work harder for customers and therefore were doing more innovative things.

Well, the article Is Verizon Buying ALLTEL For Its Assets or For Its Culture of Innovation? tells me that others also recognize the spirit of innovation in these regional operators. In one of my consulting projects, I used alltel Wireless' "My Circle" campaign as a great example of an integrated marketing campaign that included online advertising. Alltel was the first mobile operators in the U.S. I'd seen who tried to create an elaborate viral campaign. Although the storyline and execution wasn't the greatest, it garnered Alltel national attention and respect as an innovative brand.

I also hold up Verizon Wireless' marketing as a great example of a brand that understood what was important customers (network quality), delivering on that brand promise (making sure their network quality was the best), and creating an extremely effective communication campaign to drive the message home ("Can you hear me now?").

For Ukrainian mobile operators, Verizon provides an excellent case study in the benefits of "blocking and tackling" marketing - knowing what is most important to customers, making sure your product best meets their needs, and communicating this message in a clear and focused way. And they can learn a lot from Alltel about innovation.

Wood doesn't grow on trees, you know.

I just got back from my weekly lunch with my wife. Don't think I'm a cheapskate, because as with most things of this nature in Ukraine, it's not so much about the money as it is the principle.

As Ukraine watchers know, Ukraine is going through a serious inflation problem. Prices rose about 30% here since January, on top of 16% for 2007. Plus the National Bank of Ukraine recently lowered the official hryvna-dollar exchange rate by about 4% UAH 4.85/$1, strengthening the hryvnia to fight this inflation. Anyway, the point is that consumer prices for everything are rising.

My wife and I usually eat at a Japanese restaurant in her building. Although there are more expensive restaurants in Kyiv, it is a relatively "upscale" place. Our lunch usually runs about $30 and we don't eat a lot. Today I ordered sushi (chopstick food) and my wife ordered grilled salmon (fork and knife food). When we get the bill, I found something on the bill I didn't recognize and when we asked, we found out that we were being charged for using two sets of chopsticks. Yes, it was itemized on the bill - UAH 6 for two sets. We just started laughing. On top of that, my wife hadn't even used her chopsticks. When we asked the manager about it, she said that it is due to inflation costs of the sticks. Mind you, these are disposable wooden chopsticks. The kind you'd get from any carry out.

We'd actually experienced this type of pricing system years earlier while visiting relatives in a smaller city, Mirgorod. At this restaurant, they charged us for lighting the candle on the table. No, it wasn't a "special" candle or a request on our part. It was the same candle that was on all of the tables. And, of course, the lights were turned down very low so you actually needed the candle to read the menu.

As for the chopsticks, I know we're talking a whopping $1.20. What's the big deal, right? The big deal is not so much the cost, but what this says about the brand to a customer:

First, it tells me you are greedy. I'm no restauranteur, but I doubt a pair of chopsticks is a significant cost to you. A quick check on eBay shows me I could buy 400 pairs of chopsticks for $10 ($0.025/pair). And I'm sure a restaurant could get a volume discount and a cheaper source. Therefore, you are not merely trying to recoup increasing costs, you are trying make more profit off of me - at 1000% margin no less.

Second, it tells me that you put little value on my loyalty. In this case my relationship with your brand is worth less than $0.03 to you.

Third, it tells me that either you are stupid or that you think I am. The clientele in this restaurant are well-educated business professionals. You don't give us enough credit to know that two 8" pieces of cheap wood cost less than $0.60? Or is it that you, Ms. Manager, don't know?

Fourth, you don't understand me. Yes, I come because your food tastes good and I can (almost) always trust the quality. I also come because it makes me feel somewhat classy and cool. By using a pricing technique practiced by low-priced holes-in-the-wall you ruin that experience.

Now, we took this somewhat in stride, but if we (a regular customer among many) decide to go somewhere else (which we could easily), or let's say to fair just skip one meal in protest (which we're considering), the restaurant has lost at least $29.95 - a $30 sale to save $0.05 right off the bat. And if we find a more inexpensive place to have our lunches (which there are many alternatives) the cost goes up.

In management's defense, I don't think they've raised their menu prices (yet). It seems to me a very small increase in menu prices would be more acceptable alternative for diners, and might even bring in more money. Most of the customers can probably afford to absorb it. Maybe there are other costs to this alternative, but I have a bad habit of giving Ukrainian businessmen here the benefit of the doubt. The only cost I can see now is to reprint the menus.

But if inflation continues eating into this restaurant's profits, I suggest charging for the following overhead items:

• Use of other eating necessities like plates, forks, spoons and knives.
• Use of soap, hot water to wash the aforementioned.
• Each paper napkin used.
• Soy sauce and other garnishes. (Don't laugh, this some places actually do charge extra for lemon and sugar packets for your tea, ketchup and mustard. McDonald's even used to charge for extra barbeque sauce with your McNuggets.)
• "Pay-per-use" pricing in the restroom (e.g. per trip, toilet paper sheet, squirts of soap, paper towels, toilet flushes). Again, the paper-per-sheet thing is practiced in some public restrooms).
• Additional charge for a smile or thank you. That requires energy and training costs, you know.

Hey, I think I just came up with a new concept - "bring your own" dining.

Boosting Ukraine's market efficiency with e-commerce

A former colleague of mine at Sonopia in Ukraine, Vasily Burov, just launched a new e-commerce site called ВСЕАВТО (trans. All Cars) for people looking to buy or sell their cars. Vasily is a bright, entrepreneurial guy who earlier created and sold one of the most popular consumer websites for "everything mobile" called Мабила.

While websites like this launched in more developed markets years ago, this is something innovative for Ukraine. I've never had to buy or sell a car here, I know that overall market efficiency in Ukraine is extremely low. Unfortunately, Internet penetration is also low. No more than 10% of the population has access, let alone know what to use it for. However, Internet usage is growing rapidly as is broadband access. I'm interested to know if he plans to create a mobile version? Mobile penetration, of course, is much higher - around 70% of the population - and I'd say at least half of the mobile devices can access the Internet.

E-commerce, m-commerce and online marketing are still in their infancy in Ukraine, but the affluent and younger generation of Ukrainians are tech-hungry and tech-savvy so I think we're going to see a lot happening in these areas over the next 5 years.

Marketing in Ukraine: liars and bridges

Futurelab's Marketing & Strategy Innovation Blog recently had a thought-provoking post about the connection between customer experience and marketing. It resonated with me for a few reasons. One, it challenges marketing professionals to choose who they want to be:

"... liars spinning fabrications around inferior products and services who depend on traditional marketing to make themselves appear more appealing. Or, we can be honest, and figure how to actually make the product, service, and brand better - so marketing initiatives will become a natural extension of the experience a customer has with that brand."

I think most marketers who want to choose Door #2, they find themselves at odds with bosses, companies or clients who have either chosen Door #1 or apologetically say "that's all we have to work with right now". In Ukraine it is even more difficult because marketing is still mostly equated with advertising, PR or sales, all of which are very much seen as ways to gloss over product shortcomings. Thinking of marketing as a bridge between the product/service and driving customer satisfaction/experience is still years away for most companies in Ukraine. Generations of Ukraine's citizens have been lied to by their politicians, employers, and each other. Not just little white lies, big lies. So skepticism and mistrust is built into the society's psyche. Despite this, Ukrainians generally have high expectations for whatever they buy and are disappointed easily. Therefore, Ukrainian consumers do not give their trust to a brand easily. It is easily broken once it is broken it is extremely difficult to get it back.

To date, the only protection for brands that lie and disappoint customers has been Ukrainians' low incomes and lack of alternative. Both of these problems are improving quickly. Those companies who now truly understand their customers and are looking to meet their needs in novel and innovative ways will see their market shares grow tremendously. These are the companies who leverage the power of marketing and its strategic role in product development and communication to Ukrainian consumers. They regularly track customer satisfaction as their primary benchmark for success and use it as a driver for product and service innovation.

I'll leave you with an example from a few years ago which demonstrates the lack of marketing sophistication in this part of the world. The example is from Moscow, but the situation isn't much better in Ukraine. The photo to the left is for a company selling apartments. And based on outrageous Moscow real estate prices, they probably cost at least several hundred thousand dollars. The offer reads "Super Promotion! Buy an apartment and get a free baseball cap!" Need I say more?

What is this blog? Take 2...

Well, my first post of this, my second attempt at starting a blog, has gotten off to an inauspicious start. After spending a few hours on a carefully-worded introduction, Blogger.com abruptly deleted my draft before I finished. Ironically, this kind of thing is one of the topics I plan to address in my blog: user/customer experiences. In this case, a bad one. What makes it worse is that the help forum shows that this has been a problem for at least a year and hasn't been fixed. The amount of negative energy, lost ideas, and forgotten creative turns of phrase over that time must be huge. And for a person for whom it's taken a few years to get up the gumption to start a blog because it takes so much time and mind power, it makes me again question my decision to start one.

Anyway, I'm not really a negative person, so don't think this blog will be regular rant about what's wrong with everything. On the contrary, I plan to include observations, insights and ideas about cool, funny, sad and maybe even helpful things from different aspects of life: society, culture, business, politics.

This is a very broad list of topics, but there will probably be a few common threads and themes in all of my posts:

Ukraine and the US: I am American and live in Ukraine.

Telecom/Tech marketing: Pretty much my entire career has been in this area, so I tend to see things through this prism.

Customer/User experience: From a business improvement perspective but also my personal perspective as a customer and user.

In case you're wondering, my blog name comes from Ralph Waldo Emerson's essay, Self Reliance, which I first read in high school and which has stayed with me since then:

"A man should learn to detect and watch that gleam of light which flashes across his mind from within, more than the lustre of the firmament of bards and sages... Else, tomorrow a stranger will say with masterly good sense precisely what we have thought and felt all the time, and we shall be forced to take with shame our own opinion from another."

Some of the gleams you read here may be dim and small, but hopefully there will also be a few that are big and bright. In that spirit, I encourage you to leave your own gleams that may flash across your mind as you read this blog.