Front to back

Thanks, Debre, for pointing out the strategy that Starbucks have been following: cutting costs and downgrading service in a bid to stave off competition from MacDonalds.

From the Guardian...

The troubled coffee chain Starbucks, renowned for its elaborate frappuccinos and mochas, is going back to basics by testing a cut-price brew costing only $1 (51p). Fighting slowing growth at its US stores, the firm is offering an eight-ounce "short" measure of ready-made coffee for a price undercutting fast-food rivals such as McDonald's in a trial at branches in its home city of Seattle.

This looks like an appalling strategy. For the simple reason that it focuses on coffee.

Experience vs Commodity

Starbucks didn't build a business on selling coffee. Coffee is cheap. They built a business on selling a customer experience.

The term they used was a "third place" a restful, aromatic, aesthetically pleasing, sociable space that is neither work nor home. Coffee was the hub of it, but without the surrounding experience, would any of us really consent to pay two pounds a cup?

Apparently, the experience is now all but gone. And hence it's becoming rather difficult to justify the price tag for coffee alone. More from the Guardian...

Schultz recently warned in a leaked internal memo that the brand's charm was in danger of diminishing as it became a mainstream "commodity". He said the sense of theatre had evaporated, thanks to automatic espresso machines, and he complained some stores even no longer had an aroma of fresh ground coffee due to vacuum-sealed packaging.

Innovation pundit Bruce Nussbaum relates his recent experience of walking into a Starbucks in New York City…

I thought […] I’m going to feel like a sausage on an assembly line, waiting, talking to people not paying attention, then waiting again. And for what? A cup of coffee? It was all so transactional. I don’t need Starbucks for that.

CEOs who get it

Apple has been down this road. During their darkest hour, they were producing a bewildering array of uninspiring machines and an ageing, unreliable operating system. They wanted to compete with the frequently drab IBM PC clones, and in so doing seemed to forget their "think different" mantra. It was Steve Jobs, much to everyone's surprise, who put Apple back on track by helping it deliver a unique user experience again - starting with the brightly coloured iMac.

It seems that Starbucks has also smelled the coffee. Howard Schultz, the newly appointed chief executive is the guy who built Starbucks up in the first place. He does seem to know what he's doing - note that he talks about the "sense of theatre".

So why the $1 cup of coffee? No matter home much pressure Starbucks is under, competing on price to "lure" customers back in doesn't make sense for an experience-based company. Better to refurbish the stores, refocus the staff and refresh the coffee. Then let word of mouth bring customer back for what they were always buying anyway: the experience.

The strategies, as mentioned in the previous post:

1. Innovate your way out
2. Optimise, to squeeze more from what you have
3. Cut costs by improving the customer experience

Let's take a look at strategy 3.

Cut costs by improving the customer experience

Customer experience got a mention in the previous post. It's the idea that every interaction that a customer has with your organisation, via whatever channel, contributes to the impression they form of your brand. Your branding and advertising makes a promise. Customer experience is about delivering on it.

There are two ways to use customer experience design to save money:

1. Encourage your customers to migrate to lower cost channels
2. Reduce the overall service load by building a customer experience that works

Encourage your customers to migrate to lower cost channels

Many businesses have found that the web is now channel to market. That's great, customers love the flexibility and business love the cost savings. So, to reduce costs in a downturn, make sure that your customers migrate to the channels that cost you less. Hardly rocket science.

But actually getting customers to migrate can pose a challenge. How do you persuade them to move?

Some businesses have been known to deliberately increase call queuing times to encourage customers to try online self service. This is a good way to annoy customers. Others have tried customer education campaigns - generally a good way to bore customers. In reality you can't force people to use a channel they don’t want to. You can only entice them with a great website customer experience.

A great example: British Airways. Their strategy is to reduce the number of staff on check-in desks. To do that, they need to reduce the duration of each customer check-in. And to do that, they need to get customers to adopt online check-in. The BA.com website has been steadily optimised over the years. It has reached the point now where I actively choose to fly BA, just so that I can use their online check-in. It's easy and clear, you can select your seat easily, and you get to zip through check-in quickly. They've enticed me to use their online channel and everyone wins.

Reduce the overall service load by building a continuous customer experience

When things go wrong, customers want to talk to a human being quickly and set things straight. Enabling human contact is a reality of delivering a good overall customer experience. But a typical call centre call can cost between 7 and 20 pounds to handle, when you factor in facilities, training, salary and benefits. So avoiding the events that generate call customer service calls is very important for controlling costs.

Customers call when they encounter a breakdown in the continuity of a customer experience. A breakdown can occur at different levels:

• Within channel: Eg. One member of staff has no information about a previous conversation with a customer. This kind of stuff is quite rare, mercifully.
• Between channels: In one project, Flow found that customers referred to the online channel found registration so difficult and confusing, they had to call the call centre back to get help.
• Between organisations: In one Flow project, we discovered that customers could not top up their mobile phone accounts because the 3rd party retailer they had bought from had not correctly registered the sim card and provided the customer with a PIN. Another example: incorrect payment details on an airline website generated calls to a the airline, but also to the customers banks.

How to build a continuous customer experience:

• Hunt down the discontinuities. Look at call centre logs. Look at website logs. Interview retail staff. Run a research project to get "mystery shoppers" or real consumers to try the process out for you.
• Work out the cost of the discontinuities. How many calls does it take to address the problem? What opportunity is missed if the customer fails to resolve the issue? How many customers are encountering the problem? Multiplying the numbers up will give you a rationale and a business case for choosing particular problems to address.
• Fix the discontinuity. Often, a small fix makes a big difference. Making sure a piece of information is made available in the right place at the right time often does wonders. But sometimes the fix will require major system alterations. If those changes can't be justified or undertaken in the short term, look for a way to patch the service: a work-around. (I blogged an amusing example of this a while back: Microsoft's new software boxes are hard to open, so Microsoft patched the issue and published instructions online).
• Measure the results. To prove the project made a difference, look for reductions in the relevant call types. Look for increases in usage of the problem channel. And the most powerful evidence of all: look for improvements in your bottom line.

Organisations that work to improve the customer experience benefit from reduced costs. They can entice customers to the most cost-effective channels and they generate fewer negative customer experiences and fewer expensive service calls.

Charlie Brooker in The Guardian...

"I love a complicated TV remote. They should have more stuff on them: dials and joysticks and flashing lights. I dream of a remote with its own mouse."

Charlie Brooker's rants in the guardian are usually entertaining, and I'm always delighted when they touch on user experience.

This one is a giggle because some of the readers seem to have take Charlie seriously.

"I couldn't agree more. Technology is the one area in which people are proud to be utterly ignorant and helpless. No one would say 'I can't feed myself, and I have no control over my bladder, because it's just too complicated' but not knowing how your phone works is a badge of honour for many. I've asked my mother point-blank 'You honestly think a few hours of learning how to use the remote is less appealing than not being able to use the telly?'"

"I completely agree with the whole customisation thing. I customise my PC settings to the nth degree and get unnecessarily irritated by my nearly entire office who still have the default settings for screensaver, etc.. How people can handle the bright blue XP default skin is completely beyond me."

Scroll through the comments and have a look (also worth it for the hilarious examples).

I guess it highlights this point: to people who have a strong aptitude for technology and enjoy working with it, the subject of user experience seems bizarre and pointless. These people are very often the ones who design and build the interfaces we use. I often end up working with them...

"Do we really have to cater for these idiots who don't know what they are doing?" they ask me, exaggerating the problem for effect.

"Yes," I reply, "because those 'idiots' constitute most of your target market and their money will pay your salary."

The antidote is usually a round of usability testing. Watching real folk try out and struggle with the prototype product has a very sobering effect.
Charlie puts forward an alternative...

"And if people still refuse to learn, let's force them into it. Replace all supermarkets with complex remote-control vending machines that dispense food only if you can successfully navigate your way through a 25-tier menu system. And make it illegal to pass the food to anyone else. Before long, we'll starve the idiots out of existence; manufacturers will never have to simplify anything ever again, and we'll enjoy a golden age of buttons and options and adjustable sliders and a/v input connector 1. Now that's progress."

The strategies, as mentioned in the previous post:

1. Innovate your way out
2. Optimise, to squeeze more from what you have
3. Cut costs by improving the customer experience

Let's take a look at strategy 2.

Strategy 2: Optimise to squeeze more from what you have

This is primarily a marketing strategy. The idea: find out why your customers buy, and what stops them from buying. Then do more of the good stuff, and fix the bad stuff.

Digital marketers make a lot of noise about acquiring new customers. That's certainly an essential element of a successful business. But keeping your customers happy when they get to you is worthy of at least as much attention. There's a rule of thumb: acquiring a new customer is 6-10 times more expensive than retaining an existing customer. So a solid strategy when times are hard is to plug the holes in your "leaky bucket," and stop website visitors from pouring out as fast as you can pour them in.

(The data that actually supports the rule of thumb is hard to come by. And I think the cost of retention is tricky to calculate because customer retention comes from good customer experience, and that comes from every area of your business. But there is some useful data quoted here at Wikipedia).

The key words: conversion and loyalty

Conversion is about making a prospective customer actually complete a transaction and buy something from you. Loyalty is about bringing them come back to shop with you again.

Ways to improve online conversion

Some good, cheap tactics:

• Take a look at the findings on Marketing Experiments, optimise your product lists [PDF], and generally follow e-commerce guidelines
• Look at data such as search logs, web analytics
• Run A/B testing to get data comparing the success of different site designs.

But there's a problem. None of them ever brings you into direct contact with target customers. And that means that although you when customers drop out, you never know why customers drop out. What was missing from the product descriptions? How did the buying process not match customer needs? What did competitor websites do for them that yours didn't?

The best way to optimise is to mix stats with usability tests. Stats tell you what is going on on your site, and where trouble spots may lie. Usability tests tell you what the causes of the problems are and what customers really want from you.

So. Killer tactics to really improve conversion:

• Run face to face customer tests to understand usability, customer intention and customer workflow
• Use intercept and track tools on your website to mix free-form response with clickstream recording

Ways to boost loyalty

Loyalty comes from an emotional connection. Here are some things that cause positive emotions about websites:

• Human engagement. Two good solutions: an approachable style and an online community. (Firebox.com is a good example of both).
• Polite interaction. As customers we want suggestions and ideas, but we want to stay in control. We don't want hard sell, intrusive questions or spam. If we feel free to walk away, we feel safe to come back.
• Getting what you want. Google has built the world's most powerful brand by giving people the information they want reliably. And Amazon suggest books and CDs you didn't even know you wanted, but invariably find that you do. Both of these sites have gone the extra mile in making it easy for customers to find things. Because if customers can't find things quickly, they won't stick around.
• Customer-first behaviour at all touch points. As a customer, I have to know that you will look after me. If my item is lost during shipping or if I want to return it - give me the facility to sort my problems out quickly and efficiently online. And of course, Amazon is reknown for the high standard of care they offer right through the customer experience. And they're looking good because if it.

Improving conversion rates, and building customer loyalty are really important strategies for surviving and prospering in a downturn. And often, its easy to make improvements in small steps too.

You'll love part 3: Cut costs by improving the customer experience.

There's a fundamental change coming in the way we interact with computers. Multi-touch and gesture are here. Although the iphone and the Nintendo Wii have already build products featuring these new approaches, it might still be 10 or 20 years before the technologies area really mature. It has taken 20 years to get this far.

Still, things are moving and there are plenty of exciting things to look at.

Johnny Lee from Carnegie Mellon University is hacking the Nintendo Wii to come up with some heath-robinson, motion-based interaction ideas - that don't cost a fortune. His efforts include the head-tracking desktop VR display and a multi-touch whiteboard.

More about Johnny Lee's projects here.

The reactable is mixing real objects and on-screen action, and doing it for several users at once.

LG.Philips have launched a mammoth-size touch screen (they only allow two touches at once, but still - not bad).

And this depth-sensing camera allows computers to track your motion in 3 dimensions. It promises Wii-style gaming, but with no remote, by the end of 2008.

Thanks to Aoife Ni Mhorain, Haroon Kwahja and Gerrit Giliomee for the pointers.

The economic prospects for 2008 don't look too promising for the world's most developed economies. We're in for a slowdown, or possibly something worse.

When market conditions change, it stands to reason that a change in strategy can make sense. I've got 3 design related strategies that will prove useful if there are lean times ahead.

1. Innovate your way out
2. Optimise, to squeeze more from what you have
3. Cut costs by improving the customer experience

There's quite a lot to each one of them so I'm going to post them one at a time.

Strategy 1: Innovate your way out

If you're not going to make enough money from what you're already doing, come up with something new for a new source of revenue.

Apple provides an impressive example. Here’s a quote from the San Francisco Chronicle in 2001, when times were hard for the IT industry and the whole US economy:

"Apple has maintained its workforce at about 11,000 throughout the year. In a meeting with analysts last week, Chief Executive Officer Steve Jobs said: "Almost every single competitor has been doing massive layoffs and retrenching and restructuring, but we're doing quite the opposite. We're not laying off boatloads of people. We're taking those talented people and saying that if we're going to get out of this, we're going to get out of it by innovating our way out of it."

If you have managed to put some cash put by for a rainy day, Steve Job's approach is a good way to go. But only if you know how to innovate properly. Innovation doesn't mean throwing money at blue sky projects and hoping for miracles. You can cut out masses of risk by using a structured design process:

• Contextual research. This isn't market research with surveys and focus groups. Contextual research is about observing and participating in people's lives to get the dirty truth about what they need, what they want and how they behave. The innovation often seems obvious when you've got the right information.
• Conceptual thinking. Get your team together. Have lots of ideas. Stay out of the details and explore the new and usual stuff - that's where inspiration comes from.
• Evaluation with target users. Make cheap prototypes any which way you can, and watch target customers try it out. Even if the feedback is not what you want to hear, it's better to face harsh reality in the R&D lab than out in the open market.
• Iteration. Your first attempt will be shaky. Keep testing and fixing your product's design until your customers tell you its ready.

Start now, and ride the up-cycle

Depending on your line of business, getting a new product design and launched can take a while. So innovate during the downturn, when talented staff are at their most faithful and affordable, and be in position to ride the up cycle when it comes.

When times are hard, it feels safe to keep a low profile - cut back, don't take risks. But if your current strategy doesn't fit the climate, doing nothing might well be riskier. If you'd like more insight into how innovation can help businesses prosper, Bruce Nussbaum has a list of ten books you should read.

Strategy 2 will be: Optimise, to squeeze more from what you have.

On the 12th November, the One Laptop Per Child initiative will begin a limited "give one get one" programme. For $399, people in the USA can buy an XO1 laptop for themselves, and at the same time have one donated for use in a developing country.

This seems to be because OLPC isn't going to sell nearly as many units as expected to governments of developing countries. There was lots of nodding and smiling when Nicholas Negroponte talked to the world's education ministers and heads of state, but not much signing on the dotted line.

A good while back the Indian Ministry Of Human Resource Development rejected the XO1 as "pedagogically suspect." China also rejected it. For both countries, reasons are more likely to be political than pedagogical - but whatever the reasons, they are big markets to lose.

The Libyan government's promised order is not materialising.

"I have to some degree underestimated the difference between shaking the hand of a head of state and having a check written," said Nicholas Negroponte, chairman of the nonprofit project. "And, yes, it has been a disappointment."

Competitive pressure

The competition aren't hanging around.

Intel's Classmate is making headway, and the pricepoint is not far from that of OLPC. Intel doesn't want to see the global educational computing market dominated by the OLPC's AMD chips. There are allegations of Nigeria switching allegiance to Intel after some shady dealings.

Microsoft have similar concerns to Intel. They're working on a version of windows that will install on the XO hardware.

Not that there is much XO hardware yet. Manufacturing has got off to a slow start. There are not going to be enough machines to satisfy Paraguay's order by Christmas. (Paraguay loves OLPC - and they are putting their money where mouth is).

OLPC supporters called for a change of sales tactics and a new initiative to "get them out in the market." The belief is that the XO1 laptops will prove themselves once people can see them in action. Hence the "Give 1 Get 1" idea.

I still love this project

I'm a big fan of this project - even though everyone tells me I'm an idealistic fool.

I personally want and XO1. I'm pondering whether to ask my friend in the states to get me one. Why?

• They are wonderful objects, well designed by committed, talented people

• They represent a vision for kid-powered education that transcends politics, propaganda, race, class, poverty and geography. There's power in networks that delivers unexpected, astonishing results. Look at Google, Facebook or the blogsphere. I want to see that happen again. (I think I may be a constructivist).

• In spite of all the controversy no one is saying that the user experience of the machine itself is anything other than wonderful.

A report from research in India...

"Even when English and Marathi are so different, even when the keyboard is in English, even when the interface is in English, even when we don't speak each other's language, and even when they are so new to computers, the XO is so user-friendly that I can manage to get across to them, to show them how to do something with it. And in little time, and having lots of fun, the children of a completely different language are doing this or that on their XOs."

A headmistress in Nigeria...

"You know education is not static. Education changes, and as it changes the world it self changes. The way I passed through education is not to compare with nowadays education. Also children themselves today are more curious than before."

Harsh realities

Well, the debate rages on. And I mean rages!

It looks like a very rocky road ahead for the XO1. All the designers I know in Africa say the XO1 doesn't stand a snowball's chance in hell. Life out here is just too tough, they say.

A sobering example: XO1s can run on Solar power. But the networks that support them can't. They need generators.

"From the Nigeria Chapter of the Club of Rome, we learn that the generator has to be stored in the principal's office to prevent theft, requires costly gasoline, and servicing that can take days. Worst of all, the generator broke down, burning out the UPS for the Internet, and its still insufficient for all the power needs of the school."

Ah well. A man can dream, can't he?

Jeff Han, who blew us all away with the video of multitouch from his NYU project has founded his own company called Perceptive Pixel.

His demo reel is appropriately stunning, and now he does it on an even bigger screen.

As I've said before, we're entering a whole new chapter of user experience. I'm genuinely excited. Multitouch is like magic and the future looks like a lot of fun. But hopefully we won't have to do it in darkened rooms all the time. 

Take a look at the video  and see the future of Google Maps, the future of Flickr and the future of YouTube.

Sandy (www.iwantsandy.com) is an email bot. Typically mail bots handle mailing list subscriptions. Sandy manages to-do lists and calendar - you email her things to remember, and she reminds you at the right moment. Thanks to Harry Brignull for the pointer.

What's interesting is the interaction approach they have taken:

1. They've created a retro secretary avatar called Sandy.
2. Sandy talks in the first person and is very, very polite.

Mind your Ps and Qs

In their book "The Media Equation", sociologists Byron Reeves and Clifford Nass set out to show that (to some degree) we treat computers as if they were other human beings. We follow social rules when working with them, including being happy when a computer flatters us, and expecting politeness in our dealings with them.

Politeness is incredibly important in web software. Politeness greases the wheels of a transaction between humans, and since we expect the same behaviour from computers, politeness must be important for online transactions too.

Politeness is all about emotion, and hence its value is hard to quantify, especially to software developers not famed for their sensitivity. From a purely logical perspective, saying "Error: you have entered invalid data" is just the same as "Ooops. There's a small problem with what you typed in". But emotionally it's completely different. People delivering customer experiences in restaurants and shops know it, though. And good interaction designers, thinking about how humans and computers will exchange information over time, know it too.

Sandy must exude

Sandy is very polite. Quite charming. Her status messages say things like "I've saved your settings for you". She signs off her email with "Always here to help". It makes the service pleasant to use.

I think there are two important reasons why the folk at Iwantsandy.com emphasised politeness so much:

• Politeness builds trust: To use the service at all, you have to give Sandy complete access to your inbox. That requires a lot of trust. Sandy is so polite and solicitous that she builds trust quite fast. On one part of the site she gives you the option to " stay in the loop with my delightful, occasional newsletter?" And I almost said yes!
• Politeness is a brand experience: A lot of your interaction with Sandy will be via plain text email, so there's no graphics or layout to speak of. The only way to convey Sandy's brand values is via her tone of voice.

Flowery language is not enough

All this talk of politeness reminds me of Allan Cooper's "14 principles of polite computing" [PDF, 300K]. He points out that politeness goes further than just putting "yes, please" on your dialogue button. It's also about remembering user preferences, making it clear what's going on, and not asking "are you sure you want to...?" all the time.

In the end, I didn't sign up to Sandy's newsletter because even though she was very sweet about it, she didn't give me the facts I needed: how often, what's in it, why is it valuable? Providing the information I need to make a decision is polite - it shows a consideration for my time. Maybe Sandy's just nice on the outside, but doesn't really care.

Being untrustworthy is one of several software personality types summed up by Kathy Sierra at Creating Passionate Users. Here are a few of them...

Do you want Sandy or Brad?

Ultimately, I'm not sure I need what Sandy's offering. I think it's aimed at mobile email users, and I have not yet succumbed. But if you decide to use Sandy, do let me know how it goes.

One other question: is the Sandy brand sexist? There's a 1960s, Bewitched/I-Dream-of-Genie feel to the Sandy graphic. At worst, she conjures up images of patted bottoms and "be a good girl" condescension. My wife, Debre, suggested that there should be an parallel iwantBRAD.com site, offering a cartoonish hunk interface paradigm. But with a tan like that, would you trust him?

Stephen Fry, captain of wit, brains and volatility has started a technology blog on the guardian website.

I'm a big Stephen Fry fan, so I was slightly disappointed by his first posting- a sort of extended apology/justification for even admitting an interest in technology. As Stephen himself would say: Bah!

I'm certain Stephen will find his stride very soon. He recently wrote a much pithier posting on his own site.

We know that sick building syndrome is real, and we know what an insult to the human spirit were some of the monstrosities constructed in past decades. An office with strip lighting, drab carpets, vile partitions and dull furniture and fittings is unacceptable these days, as much perhaps because of the poor productivity it engenders as the assault on dignity it represents. Well, computers and SmartPhones are no less environments: to say “well my WinMob device does all that your iPhone can do” is like saying my Barratt home has got the same number of bedrooms as your Georgian watermill, it’s got a kitchen too, and a bathroom.”

We spend our lives inside the virtual environment of digital platforms - why should a faceless, graceless, styleless nerd or a greedy hog of a corporate twat deny us simplicity, beauty, grace, fun, sexiness, delight, imagination and creative energy in our digital lives? And why should Apple be the only company that sees that? Why don’t the other bastards GET IT??

Now that's more like it!
(Thanks to Martin Storey and Debre Barrett for the pointers).