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?
Photo credit: Jeremy Noble, courtesy Flickr, CC 2.0.
UPDATE:
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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Great additions, if I do say so myself; ahem! Seriously, thanks for considering what I said so valuable. There is so much wrong in the world today, and you know what? The answer is all about that word -- relationships. Touch me, hear me, listen harder to me, deliver services because you know me, understand me, talk with me (I'm not saying me as a reference to myself here).
When those few things are slapped on a few foreheads, then maybe we can better deliver services adamtoporek that RockHot.
@Soulati | PR adamtoporek "When those few things are slapped on a few foreheads, then maybe we can better deliver services adamtoporek that RockHot."
Indeed!
ShakirahDawudadamtoporek@soulati Shakirah, thank you for including my customer service stories as part of the actual blog post. I'm honored to be there with @Soulati (and thank you for the paragraph breaks ;~)
~ Milli
adamtoporekShakirahDawudSoulati | B2B Social Media MarketingWriters Muse The comments on this post so far have been really good. I feel like I'm watching a roundtable discussion on CNBC about customer service and customer retention, complete with the great relationships between the participants.I'm halfway through the CNBC documentary Adam and Shakirah are talking about (recorded it via DVR -- "Customer (Dis)Service," right?), and have to agree with the narrator that no matter how wonderful the service has been so far with a service provider, nothing gets me more frustrated than spending a great deal of time on hold to solve some issue or ask a question, only to end up with a customer service rep whose accent I can't understand. Why? Because as the documentary pointed out, I'm very pressed for time, and after wasting it on hold, I I know the language barrier is going to require me to spend even more time on the phone, trying to be understood and to understand. Scott, on the other hand, doesn't seem to mind that at all, and engages the representatives in conversation! He does that with ANY customer service rep, accent or not. And believe it or not, I get annoyed in the background, thinking, "Oh my word, you are wasting TIME!" Sheesh. I think I have some issues....
I do think it's about relationships, as Jayme said first. But this time, in an interesting twist to the relationship factor, it's SCOTT'S ability to build a comfortable rapport and relationship with the customer service representative, right out of the gate, that gets us what we want and need to stay with a company. I remember the time he got a banking officer to give us overnight check clearance -- no matter where the check was from -- when we were brand new to the bank, having just opened our account that week. It was a BIG bank, too. What do you think the relationship is between our own attitude as customers, and the ability to get what we want?
Darn you, Livewire and your paragraph break issues! I'm going to have Scott contact them.....
New England Multimedia Just send a tweet to @LiveFyre and they will be all over you to respond. VERY responsive.
New England Multimedia livefyre P.S. What's that say about you long-winded peeps? Writers Muse Heh
Soulati | B2B Social Media MarketinglivefyreWriters Muse Lifefyre says they're on it. But that was couple of weeks ago, too. This is definitely the post to send them to, though, huh? ;)
@Soulati@WritersNew England Multimedia | PR livefyre Muse Right--just did. Hopefully someone will be by.
New England Multimedia adamtoporekShakirahDawudWriters Muse Shakirah, I think you need to add Michelle to the next blog post, too! You raise excellent point about "engage or be engaged".
@Soulati@WritersNew England Multimedia adamtoporek Muse My father has that natural ability to create a rapport (liking that word!) with any perfect stranger and get what he wants as well. Delivery people, repairmen, in-store employees--I call it "charm," but I don't think that's all it is. It's something I've tried to cultivate myself.
Well Shakirah, we are dealing with an entirely different animal when we talk about utilities or oligopolistic situations like network providers. For the most part, it seems as if most do not think that relationships scale and give a positive ROI. I think it is a lack of imagination and trying to find a model that works.
We talked about this a bit regarding that CNBC documentary. Customer service is an investment in the long term, but for accounting purposes it is treated as an expense. For a public company that is subject to quarterly earnings expectations, this presents a divergence that most executives are not courageous enough to try to straddle. I think the companies in these fields that are willing to take the short term pain can win the long term battle and gain market share.
adamtoporek Lack of imagination--Yes! Much appreciated, Adam. We all noticed how among the behemoths, it was the more agile companies that consistently had the courage to change, and I didn't want to go into it, but it's because these oligopolies know they're basically playing ping-pong that they have this unwillingness to change. But when the playing field was changed by companies like Apple and Google, they were shaken up and are now trying to find ways to change as well. I mentioned a couple of examples of strategies for companies who share the same symptoms, although they're probably not oligopolies. But because they're not, relationships are a go-to.
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.
@Soulati | PR I didn't put relationships in there...? Somehow skipped it; can I cheat and add it back in?
Either way, yes, of course! I was focusing here on strategizing from the back-end and foundations in ways that impact the customer. Customer-relationship training is one of them.
Soulati | B2B Social Media Marketing
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.
Writers MuseSoulati | B2B Social Media Marketing
My apologies for the no paragraph breaks in such a long comment. I did put them in, but they disappeared after I hit Submit.
Writers MuseSoulati | B2B Social Media Marketing Amazing experience, Milli. Considering very much adding your and Jayme's comments to this post so they don't get lost. Huge part of re-jiggering a company: relationships. Embarrassing I left it out somehow after having alluded to it in the beginning.
ShakirahDawudWriters MuseSoulati | B2B Social Media Marketing
No, not at all. I think you wrote what you needed to write. And then it triggered discussion, which is the perfect result for a blog post. :~)
Thank you for giving me the opportunity to air those two incidents. They both affected my feelings and attitudes a great deal.
I hope if you add mine and Jayme's comments to the post you'll give me the opportunity to put the proper paragraph breaks back in. I hate for people to have to read such a slab of text. :~) I'm fairly new to the Livefyre commenting system and I didn't realize it would post without them. So I guess we're equals on the embarrassment part. :~)
~ Milli
@Writers Muse @Soulati | PR Lol, don't worry about the paragraph breaks--I can see where they should be. Livefyre's been having issues with those for some reason. So glad to have your comment.
Writers Muse Excellent stories. I have always been with ATT for reasons of call accessibility; Verizon doesn't work at my house. Beyond that, its service (for its size) has improved in my opinion, and what you get at the retail stores IS top notch.
I've mentioned insurance, you've mentioned finance and mobile telecom; the common thread? Relationships; the human touch. (Just to dig atcha, Shakirah!) Teasing.
The only way we cut through corporate clutter is via a personal touch -- whether it sways our decision to stay or go. adamtoporek eat your heart out!
Soulati | B2B Social Media MarketingShakirahDawud Shakirah, why do you let these troublemakers in here? :)
adamtoporekShakirahDawud I cannot ignore that slam. Unacceptable behavior. #ThatIsAll
@Soulati | PR adamtoporek And here I was about to thank someone for their diplomacy...
ShakirahDawudadamtoporek@soulati
Best skirmish I've seen in a coon's age. ;~)Of course, the word "terrified" in the post title was guaranteed to attract trouble.~ Milli(Just kidding. I actually discovered this blog because I spotted a tweet from @Soulati announcing that she'd made a comment on this post. It was my curiosity about the meaning of “Dumb Pipe Syndrome” - and why I should be terrified of it - that brought me here.)
ShakirahDawud@soulati I would reply further but Jayme said #ThatIsAll and I always listen to Jayme!
@Writers Muse adamtoporek Welcome, Milli--yeah we play just a little rough around here sometimes, but we're all harmless--right guys? If you like a skirmish, though, you should meet Jayme on her own turf--you'll find loads more colorful people. I'm not so quick with repartees, but watching them fly is just as much fun!
ShakirahDawudadamtoporek@writers
As the newbie, I definitely stayed outta this one till I felt I wouldn't plunge in over my head. ;~)
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