Why Internal Competition is a Bad Idea

A Vice President for a large financial services company recently asked me about the merits of creating internal competition.

He was thinking about creating a kind of scoreboard that would show branch managers how their particular location stacked up against other branches. The scoreboard would contain metrics from a variety of categories such as customer satisfaction.

The idea was to motivate managers to find innovative ways to improve the performance of their branch.

I told him I thought the scoreboard would cause an unintentional problem while preventing another one from being resolved.

By the end of the conversation, I think (hope) I convinced him. Here's my explanation.

The Danger of a Scoreboard

Competition can spur innovation, but it also rewards selfishness.

A branch manager who wants her branch to be at the top of the scoreboard may come up with innovative new ideas, but she might be reluctant to share those innovations with another manager she views as a competitor.

She'll keep those ideas to herself instead to increase her advantage.

Then there are the other branches. What if a branch manager sees his branch is far behind on the scoreboard? He might feel embarrassment that his branch is performing so poorly, but that embarrassment might not cause him to try harder as intended. It may make him feel uncomfortable, disengaged, and defensive. Or he might just stop trying.

Then there's the impact on customers. It's great for customers of the high-performing branch. But what happens when one of those customers visits a low-performing branch?

The inconsistency will reflect poorly on the entire brand.


Raise the Bar Higher Instead

Here are the Yelp ratings for the 10 Starbucks locations that are closest to my house:

Every single one is 3.5 or 4 stars. 

Would Starbucks like to do better than 3.5 stars? Absolutely, but the graph also reveals why Starbucks is so popular.

Very few people would say Starbucks is their favorite coffee shop or the best coffee shop. But Starbucks is incredibly consistent and dependable. No matter where you are in town, you can expect a similar experience.

The opportunity for Starbucks in my neighborhood is also clear. The chain would have an even stronger presence if they could get all of their stores to a 4 star rating.

My advice to the financial services branch manager was the same advice that seems obvious for Starbucks when you look at this graph:

Try to raise the bar for all branches.

The competition isn't against other locations. It's against external competitors. And the way to do better is to raise the performance of all locations while maintaining consistency.

Here are a few ways to do that:

  • Discover what top-rated locations are doing differently and share those best practices.
  • Uncover what low-rated locations are doing differently and help them improve.
  • Encourage all locations to raise their level of service together.

New social media stats: helping is better than entertaining

An article in the latest issue of Fast Company magazine provides some great lessons on effectively engaging customers through social media. It uses real data and real companies to highlight each of the key points. The first comparision was Dunkin' Donuts vs. Starbucks.  Dunkin' Donuts has approximately 80% fewer Facebook and Twitter followers, but those people are 35% more likely to recommend the brand. Quality clearly seems to work better than quantity in this case.

Read the article from Fast Company

The common themes from this study support the findings from my social media experiment. Here are a few of my take-aways from the article:

  • Engaging your customers leads to better results than just generating buzz
  • Not every company needs to use social media
  • The key is communicating with your customers and not just at them

Success stories wanted... It is sometimes easier to identify what isn't working than to see what does work well. If you know of a social media success story, please share it by commenting below.

Social media experiment: the #1 way to engage customers

I ran a fun experiment throughout the month of March to test how well companies that I do business with can engage me through social media.  I gained a lot of insights along the way, but here’s the number 1:

If you want to engage your customers through social media, you have to communicate with them, not just at them.

There it is.  Stop reading if you want.  Profound, right?  No, not really, but sometimes we need a Blinding Flash of the Obvious to help us out. 

Below are the rest of my major discoveries from the experiment.  You may want to first read about the experiment itself, or check out an overview of the four strategies I discovered.  I’ll be releasing a ‘how to’ white paper in the next week or so that goes into even more detail.  The white paper will be announced via this blog, Twitter, or you can send me an old-fashioned email and I’ll send it to you directly.

Am I more or less engaged?

The ultimate question is whether I was more or less engaged with these companies now than when the experiment started.  Since I was already a customer, I wanted the answer to be “more” for all 12 companies in the test.  The actual results were disappointing. Here are the companies in the test along with how they did:

  • More engaged.  These companies responded to me quickly and directly.
  • Neutral.  Office Depot is neutral simply because I didn’t have much interaction with them.
  • Less engaged.  These companies ignored me on Facebook, Twitter, or both.

5 Questions Answered

I started my experiment with three questions.  Two of my colleagues, John Curran and Grace Judson, suggested two more.  Here are the answers to all five:

#1 Engagement: Does the business proactively try to engage me as a customer when I connect with them on Facebook and Twitter?

The answer is “no” for all twelve.  I didn’t expect any “welcome to Facebook” messages or “Thanks for the follow!” Tweets, but I know some companies that do it so I thought I’d check.  This didn’t affect my engagement since I didn’t expect any proactive response.

#2 Interaction:  Does the business respond when I reach out to them via Facebook and Twitter?

The table below shows the results.  A “N/A” means I didn’t try to contact them this way. (I tried to contact companies via Facebook or Twitter only when I had a legitimate reason to do so.)

#3: Social, Media, or both?  Does the business focus on the social element, the media element, or both?

The graphic below represents my general observations of how much “social” and how much “media” the companies used.

#4 Does company size matter? (Thanks, Grace!) 

No, size did not correlate at all with my level of engagement.  Best Buy, one of the biggest companies in the group, does an amazing job of connecting with customers via social media.  Their blueprint is one that large and small companies alike should follow.

  1. Monitor frequently and respond quickly.  Best Buy accomplishes this by dedicating several employees to social media.  Small business owners need to make this a priority, trust an assistant, or get out of social media. Your customers really won’t care if you are ‘too busy to respond’.  One business day is a good rule of thumb.
  2. Personalize it.  Coral is a ‘Community Connector’ at Best Buy.  She responded directly to me via Facebook and Twitter, and was always friendly, enthusiastic, and helpful.  Communicating with Coral was much more enjoyable than communicating with a nameless, faceless “Best Buy”.
  3. Help in public, resolve in private.  Coral and her co-workers make helpful information to customer questions available to all who are on their Facebook page or following them on Twitter.  Have a gripe?  Coral or one of her colleagues will politely request that you send them more details in private (via email or Twitter direct message) so they can help you out. 

#5 Do companies have service level agreements? (Thanks, John)

I was surprised to learn that most companies don’t make it clear what their customers should expect.  Only two companies (Studio Diner and Best Buy) provided information on why you should connect with them via Facebook.  And, just two companies (Best Buy and Ultra Star Cinemas) described why you should follow them on Twitter.

A best practice would be to clearly identify what customers should expect from you on each social media outlet you choose to use. You can see more here.

What's next?

I’m recruiting a few companies to implement some of the best practices identified in this experiment to see if they really do work with other customers.  Stay tuned for more details.  In the meantime, please post your questions, comments, and ideas. 

Social media strategies: the Placeholder

All ideas are subject to revision when better ones come along, right? Last week, I discussed three social media strategies I had observed companies using when trying to engage their customers. This week, I offer a small modification that yields four strategies along with a description of the first one: the 'Placeholder'. Tomorrow, I'll discuss the "Sell and Tell" and next week I'll discuss the last two and reveal all the companies in my experiment.
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State your purpose when using social media

The most basic definition of customer service is how well you meet your customer’s expectations.  If you meet their expectations, that's good. If you fall short of their expectations, that's bad. If you exceed their expectations, that's great.

Telling your customers up front what they can expect from you is a great way to avoid disappointments and misunderstandings.  That’s why I can’t figure out why so few companies in my social media experiment are clear about why they are using Facebook and Twitter.

Facebook was a total strikeout.  Nobody in my experiment explicitly states “here’s what you can expect from us on Facebook”.  Best Buy comes the closest with a set of ‘House Rules’ that you have to scroll down the page to find:



Twitter is a little better.  Here you can see the difference between Best Buy (clear purpose) and Starbucks (some guy named “Brad”):


As always, your comments and suggestions are very much appreciated!

Is McStarbucks a perception or a reality?

I know I'm not the only one to notice that Starbucks and McDonalds are starting to compete over the same customers. What's interesting to me is the customer service delimma Starbucks is apparently facing. Do they continue to appeal to more and more of the same demographic as McDonalds? Or, do they hold firm to their coffee house roots (with the power of a global brand). Is it even possible to be both?
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Starbuck's listens to me (and you) with Pike Place Roast

Starbucks launched a new roast today in response to customer feedback about their often burnt-tasting brews. I was an unwitting 'early adopter' when I stopped by a Starbucks this morning and tried a cup. To my great surprise, it was very good. As in, the best cup of Starbucks coffee I've tasted in a long time good.

Starbucks launched the new flavor after soliciting extensive customer research. They are also reconnecting, it seems, with the reason many people started going to Starbucks in the first place -- the taste of the coffee.

"We are returning to the very best elements of our heritage and bringing back the simple romance and excitement of coffee,” said Howard Schultz, chairman, president and ceo. You can read all about the Pike Place Roast here.

Passionate Customers

My recent posts about Starbucks gave me an opportunity to research what other people were saying. Not surprisingly, a lot of people are very passionate about what Starbucks is up to. A few bloggers have even started some very interesting conversations, such as Becky Carroll (Customers Rock!) and Jay Ehret (The Marketing Spot). Carroll and Ehret are collaborating on what they call "The Starbucks Project" to help "Howard get it right." (Howard Schultz is the CEO of Starbucks.)

This got me thinking - how nice would it be if we all had customers who were so passionate about our products and services they went to great lengths to give us feedback and help us get it right.

  • I love Jimmy Dean sausage, but this guy takes it to the next level. Listen to his complaint call (careful, his language is a bit 'colorful').
  • Fanpop.com is a fan club website with pages for many companies (including In-n-Out!).
  • Fans, regular customers, and employees can all interact at Get Satisfaction. Check out the examples on the Timbuk2 page.
  • Burger King even tried to create this sort of 'consumer enthusiasm' with their Whopper Freakout campaign.

What can we do about it?

Creating a passionate, self-motivated base of fanatical customers is both an art and a science. This could be a big discussion, but here are my top 3 strategies.

Strategy #1: Be consistent. I love In-N-Out and they rekindle that romance every time I visit, no matter which store I go to. Their service is always enthusasiatic and friendly and the product is always good. Very few companies can achieve this level of consistency.

Strategy #2: Resolve problems like a hero. This is the classic 'hero' opportunity. A customer experiences a problem and someone becomes a hero by swooping in to save the day. Kearny Mesa Acura in San Diego does a great job here. I've occasionally experienced a problem in the service department, but they've always made it right and then some.

Strategy #3: Overdeliver. The best strategy is to give customers more than they expect. The Prado Restaurant in San Diego is outstanding in this aspect. I can distinctly remember many times I've been there because they almost always incorporate an unexpected surprise. The ambience and food are both outstanding, but the service even surpasses both.