Highs and lows: the new value equation in the social economy?

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The dynamics of customer service are shifting. Not so long enough, the ultimate goal was to deliver customers “high tech, high touch” – a highly digital experience that was nevertheless comforting and personalised.

Increasingly that framework is becoming a paradox I believe as brands sort new economic models for dealing with cross-channel customers. The current trend of sift online, buy offline is unsustainable in so many circumstances. High tech is jeopardising the economics of high touch. It encourages customers to price hunt, and then to bargain down prices in a physical environment using what they’ve found online as a cost index.

The implied “plus” between high tech and high touch doesn’t work. So I think we’re going to increasingly see it change to “or”. And with that shift will come more delineated choices for consumers. Brands will seek to attract customers by experience or by engagement.

In fact, the separation of those two thoughts – engagement (focused on cost conscious availability) and experience (focused on one-on-one immediacy) is interesting because it suggests that rather than trying to integrate their online and offline service offerings, it may make more sense for brands to look to segment consumers according to what’s important to buyers. In other words, we could perhaps expect the on- and off-line markets to radicalise rather than homogenise.

In a post on the dramatic shifts that brand face in the social economy, J Walker Smith refers to a marketplace dynamic in which nothing is worthwhile or valuable unless it is shared with others. He also quotes Ted Levitt’s observation that consumers “don’t buy things, they buy solutions to problems.”

Applied to the discussion over high-tech, high touch, the opportunity for retail brands in particular as I see it is to define in much more precise terms what gets shared, where, how and what perceived problem can be solved as a result.

In a social economy, I think high tech will become increasingly low margin – as organisations move budget-conscious consumers online to cut the cost of service, and then use their technical nous to engage them to cart. No surprises there. Plenty of brands are doing that now. The emphasis will be on the spontaneous. You’ll be able to buy efficiently and at a discount through brand stores online, and much of the communication that you have with the brand will take place across social media, with offers to mobile and plenty of online interaction through blogs and tweets. Fast and fun.

As J Walker Smith points out, “It’s about brands delivering more opportunities for people to have the kinds of conversations they want … Customer service should no longer be based solely on consumers having to engage with brand representatives. People should be able to seek help from other people to fix what’s wrong. In other words, build service around the relationships people have with other people.”

Such interactions are as much about the economics though as they are about the social. Encouraging people to interact amongst themselves online will lower the cost of serve and make the model more viable.

But I also believe that the ability to engage with brand representatives will evolve from a given to an option – one that brands will increasingly ask consumers to pay for. That’s because the high cost end of the market – what we used to call luxury – will revert increasingly to high touch. I’m expecting more and more of these brands to go back to face to face in a bid to match eye contact with margins. I’m also expecting many of those stores to be smaller and much more enjoyable as environments. The value add in those spaces will be the quality, experience and working knowledge of the staff. Pricing will be less flexible but service standards will for the most part be far higher than they are now. Concierge.

So high tech will become increasingly low value, and high touch will be increasingly low tech. Isn’t it interesting how value equations change?

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