Hello, Peter, did your order arrive?
When you dial some call centers, you hear may hear three rings before your call is answered. On the first ring the system checks to find out who is calling (is the calling number in the database for an existing customer or client?). The second ring looks up the database to see which customer service operator spoke to you the last time you called. If this customer service agent is not on another call, your details and your past purchases and customer record is displayed on their computer screen. The third ring is routed to this particular customer service agent, who answers. The agent can then, immediately say "Hello Peter, this is Jane, I am your personal account representative, I spoke to you last week. Did your order arrive OK last Tuesday?"
Using a system that retrieves customer-specific data is perceived by the customer as personal service. The technology is programmed to reconcile the specific with the diffuse customer needs.
Let's return to Dell. Dell had to get to grips with the dilemma of selling to a broad array or to a special group with whom deep relationships were developed. This dilemma was exacerbated by Michael Dell's youth, which made him a latecomer in a maturing industry who faced the prospect of pushing into a crowded field, full of existing attachments, many well established. Could Dell push entrenched competitors out of their trenches? It turned out to be unnecessary.
In fact his newly developed direct selling model had the advantage of being simultaneously very broad and at the same time deep, personal, and customized (Trompenaars and Hampden-Turner, 2001). He broke with the conventional wisdom that you either aim for many customers or you aim for just a few with complex problems and specialized needs who need high-end service. The first strategy is cheap but rather superficial; the second is intimate and personal but typically niche-oriented and attracts premium prices. The reconciliation he created was as powerful as it was simple. By direct sales via face-to-face interaction, telephone, and the Internet he reconciled breadth with depth and complexity. Dell reconciled both this degree of involvement dilemma and the global/local dilemma through the same thinking.
Dilemma 3: High Tech versus High Touch: Face-to-Face versus Internet Selling
The financial services in particular are facing a major dilemma in this arena. The struggle to integrate the specific culture of Internet-based business activity with the diffuse and deep relationships that financial consultants have developed with their clients is still ongoing, but we are confident that it will lead to success. How can it be done?
The challenge to financial service companies has come, in part, from the unbundling of services into specific pieces. You can buy information, research, trading facilities, and advice from separate sources and the combined fees may be less than those paid to six- and seven-figure professionals. While the Internet is overflowing with data, this is not the same as knowledge or information. We are informed by facts relevant to our questions and concerns. We "know" when we get answers to our propositions and hypotheses. The larger the Internet becomes, the more customers will need a guide to what is relevant to them.
The dilemma can be analyzed as follows. On one hand we find low-cost specific data and transactions on the Internet. The risk here is that you create a high-tech solution where brokers are bypassed by technology. On the other hand, we can see the rich, meaningful, diffuse personal relationships that brokers have developed with their clients. This maintains a high-touch environment where people are (over)paying for their dependencies.
It is obvious that in specific cultures like the US and Northwest Europe, the Internet can take a lot away from traditional face-to-face business. This is true for financial services, but also for buying a dishwasher, a CD, a book, and even a car. However, people from more diffuse cultures - like Arabs, Latins, and most Asians - see the relationship as so crucial that no one would ever give it up for an anonymous service that they might get through a click.
One American Merrill Lynch consultant was working in Saudi Arabia, a country that didn't easily take to the Internet. Saudis love to have their consultant with them. However this consultant's American colleagues said that you couldn't ignore the fact that their more internet-driven competitors were gradually taking market share away. This was best pictured as the situation in Figure 8.6.
Figure 8.6: The unaffordable relationship
Merrill Lynch had a situation where Charles Schwab was eating away at their market share through high-level online services. Their answer was close to brilliant. They understood that instead of relationships being eclipsed by the Internet, they actually got more and more important in interpreting the possible meanings of data flows. What was available was growing ever larger, much more than was relevant to each particular client.
Charles Schwab's appeal goes beyond discounted fees. Indeed, compared with rival discount brokers, it is not among the cheapest. Schwab's appeal is that it transfers its own professional expertise to customers. It is that rarity among professionals, a company who educates customers in its own secrets so that they can in time, if they wish, become fully independent. This could be a losing strategy if it were not for an ever-increasing number of "pupils" eager to be taught who replace those who have "graduated." Schwab is in the "customer mentoring" business as opposed to the financial services business, but existing "graduate customers" keep coming back for more because both their needs and the market keep changing.
For many older Americans and people between jobs, managing their own share portfolios is their "last and most meaningful employment," providing funds they can leave to their families to ensure their continuing influence. Schwab was helping customers to help themselves in time-honored American tradition.
Merrill Lynch saw that this challenge would have to be met; yet they could not risk alienating their own army of professional brokers. Increasingly, however, financial services were being unbundled. You could buy top information and research and then pay as little as $5 per trade on the Internet. This was far less than the brokers' inclusive fee. Nor are brokers' judgments infallible. Given the exigencies of markets, it is not unknown for the Dow Jones average to out-perform professionally managed portfolios. Luck is quite a leveler in this game.
Merrill Lynch's response to its dilemma was to refocus its efforts on reconciling new technology with customer service. John Steffens at Forrester Conference announced its strategy in May 1999: "By combining technology with skilled advisors, clients are given the convenience of interacting when, how and where they want."
Dave Komansky, their CEO, clarified the policy. "Anyone, anywhere, anytime, can log onto the Internet to get free quotes, market data, and stock picks from a variety of chat rooms. Yet at Merrill Lynch we are confidently making unparalleled billion dollar investments in our Financial Consultants, research analysts, and in our technology and products. We're doing this because we know success in the online world - as it was in the offline world - will be defined by meaningful content for the individual. Hence in this phase we will discover that intelligent dialog about the bewildering complexity of financial markets is a formative influence on the Internet influencing the financial markets" (Steffens, 1999).