Why Your Business Should Be Terrified Of “Dumb Pipe Syndrome”
The giants are afraid.
The titanic network providers whose names, news, and stocks we watch in awe are putting a lot of plans in motion to stay relevant.
They’re adopting amazing technological developments. They’re changing their offers. They’re upgrading their management. They’re buying smaller companies. They’re constantly competing on price.
And they’re terrified.
Think about your network provider for a moment. If there’s anything that matters to you more than the monthly fee, it’s that they can repair outages as fast as you’d like. Even if your area only offers two or three providers, I’ll bet you’ve tried at least two.
You “get mad” at one and switch to the other. Then you see an enticing offer from your old flame and you’re back. The connection gets spotty in one part of the house, and back to the other side you go. It’s as easy as changing outfits, because in the end, the monthly fee and quality of service do not matter.
What matters is the data being carried by that fiber-optic cable or telephone pole to your computer screen. That’s where the value lies–and you don’t care how or from where you get it.
Network providers have no control or stake in the monetization of that value–at least, not yet.
So no matter how much faster, higher, or stronger they grow, giants like Verizon and Sprint are stuck. Their service is indispensable but identical in every customer-end particular to that of every other provider.
Instead, proprietary, “walled-garden” items like the iPhone–although they motivate customers to switch–often take complete control over the online experience: the gaming, productivity, and social gratification that provides real customer joy. That control causes network providers lose any opportunities to create relevant offers for or build solid relationships with their own customers while they’re using those devices.
And that’s what they’re terrified of: being used as “dumb pipes” pouring out a generic service that has created a notoriously fickle customer base.
Symptoms of dumb pipe syndrome in your own business.
I initially mentioned how network providers are competing on price. It’s the most telling symptom of dumb pipe syndrome. Other symptoms?
- You have no control over customer loyalty or relationships.
- You’re offering only the most universal products and services.
- The only memorable items you offer come from someone else’s brand.
Can you see why this is so scary?
Either you’re not offering something that offers its own gratification or you’re not communicating it well. I’ll give you the benefit of the doubt. But either way, you’re in trouble because customers have no real (or imaginary) reason to stay with you. If your customer base isn’t as enormous as Verizon’s, you’ll be left without a leg to stand on as it leaches away like quicksand. How can you fight back?
Leverage the control you do have wisely. Product pricing and service availability doesn’t have to flip-flop. Make it your policy to add extras that don’t take much out of your pocket–because you can. When Verizon opened its mobile network in 2008, it was a display of benevolent power that other network providers soon followed.
If you can time-travel, embrace changes in your industry ahead of time. If you can’t, do it now. Build affiliations that give you an interest in the “most interesting” piece of the pie–from your customer’s point of view–insofar as it’s reasonable to do so. Pay attention to what happens once your stuff leaves your hands. Can you brand a version of your own?
When Google created the Android platform–a direct shot at Apple–it became much harder for other companies to get a handle on just what kind of company Google was. Google isn’t a network provider, but as a search engine it was a “dumb pipe” in its own way for a while. Now it’s something more, and it keeps the press and competitors guessing. If your business is agile enough, try thinking and behaving like the members of the “new wave” in your industry. You can, too.
What do you think of this analogy? Any advice for the dumb pipe syndrome-suffers out there?
I was dealt the coup-de-gras within minutes of this post by the comment of esteemed solo PR practitioner and marketer Jayme Soulati, who had this to say:
You dug deep for this one, I can tell. But, I’m going to blow it out of the water with one simple word — relationships. I have found the only way I differentiate my product is to develop rapport and relationships which contribute to credibility. These biggies can raise my premiums 50% — Allstate — and I’ll go elsewhere for sure, but if my agent would’ve phoned to pave the way and sweeten the deal, I may’ve stayed (all other insurance companies raising rates, too). Human touch. Personal relationships.
I couldn’t have said it better myself, and somehow didn’t say it all in my article. Thanks for keeping this blog honest, Jayme!
To follow her up with proof, Milli Thornton of Writer’s Muse recounted her experience with Verizon versus AT&T:
Soulati, I couldn’t agree more. The magic R word. And it’s not impossible, even for the giants. I just had two distinct experiences in that regard that surprised the heck out of me. One was with my bank. I cancelled a service on its anniversary date and asked for the annual charge to be removed. I was told – by several different people during one call – that it was non-refundable. So I waited several days and called back.
This time I was lucky to dial just when a person with tremendous heart answered the phone. She went up against all the impossibilities (her supervisors told her it was not doable) and kept trying until she connected with someone at my branch who would agree to do the special paperwork to remove the charge. This not only renewed my faith in human kindness (someone out there cared), it prevented me from changing banks.
A few days later, I noticed that Verizon (who I’d been with for about 10 years) had eliminated the minutes plan I was on. My only option was to pay for too many minutes that I would never use. I used the online chat facility to find out if there was an alternative.
Nope. I asked the representative to check whether any of our phones were still under contract. Nope. I asked was I free to find another provider. The answer? And I kid you not. He typed:
”We will be very sad to see you go, but yes, you are free to leave.”
OMG. To lose a 10-year-old customer so easily is beyond wasteful. Nobody who is untrained in retention should be allowed to be frontline with customers. At the very least, the online chat rep should have attempted to connect me with the Customer Retention Department. (Surely they have one?) But on with my story.
We went the same day to an AT&T store to make inquiries about minute plans. We chose AT&T to approach first because my husband has an account with them for his business cell phone. From a long time ago, I had formed a negative perception of AT&T – can’t even remember why now – so I was highly skeptical and verging on resistant. (My exact belief was what was alluded to in the article: “All these companies are the same.”) But the young man in the store absolutely blew me away with his R-depth of customer service.
Nothing flashy. Just competent, well-trained, no sales pressure, took care of every detail, worked efficiently so our Sunday evening interlude at AT& T did not feel endless and boring. He made the entire process so smooth and stress-free I wanted to punch my Easy Button right there in the store in celebration. Needless to say, we switched from Verizon to AT&T the very same hour. I could almost hear the doors clanging shut on the rival company.
Everything that the young man at AT&T said he would do after we left the store took place as promised.I was so moved by this experience, I called the 800 number and asked if I could commend an employee. I was connected with someone in management, who took down everything I said and promised to contact the store manager to relay my commendations.
The contrast here is interesting. My first experience (with my bank) appears to have been sheer luck in reaching someone with a heart. My second experience, with AT&T, was unmistakably to do with excellence in training and the standards expected from their employees. That, to me, indicates a very deliberate awareness of the R word by this company.
Somehow–although I alluded to relationships throughout the article, I failed to add it as a tip for companies who need help gainimg or regaining control of their markets. So I’m posting these comments for posterity to benefit where I left off. Thank you, ladies.
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