©1996, ProMotion, inc.
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In the Placeless Society, ideas and technologies flow at such a rapid pace that manufacturers can no longer differentiate themselves on product features alone. Each manufacturer has access to the same machine tools, the same global labor pool, business school graduates and engineers, computer technology, and patent licenses. In such an environment, how can the manufacturers of the future compete?
The manufacturing companies that survive will increasingly view themselves as service companies. It is no longer enough to provide a thing: when physical objects become so easy to stamp out, their value to each of us declines unless the object is conceived so cleverly that it renders superior service.
For service, we will pay.
We are now learning that all economic activity can be viewed as a service. Some manufacturers understand this and respond by embedding the service into the product itself. Computer programs have built-in personal tutors, and complex machines come with how-to-use video tapes. In the future, we will see cars that wash themselves inside and out, and vacuum their carpets. Books will listen to the children reading them, and correct their pronunciation. Cameras will electronically download pictures at night, and glossy prints will arrive the next day by mail.
But even with these design upgrades, it is impossible to provide everything that is needed in a physical package. With cars, no matter how clever the design, we still need to buy gas or electricity to make them run. Clothes need cleaning, food needs cooking, televisions need programming. We are continually forced to pamper our things, when all we want is the end -- service of "to go," "to dress," "to eat," and "to be entertained."
The successful manufacturers of tomorrow will understand that things alone don't fully satisfy the needs of the customer. They will look at what they are offering the customer as a holistic package of goods and services, providing the appropriate mix of things, information, training, customer service, and personal attention to fully answer the consumers' real needs. It is no accident that Toyota Lexus enjoys the highest repeat purchase rate of any luxury car in the world. Toyota, synonymous with effective manufacturing, has now shifted its expertise into streamlining service. Instead of a luxury car, you buy a luxurious transportation experience. Even manufacturing something as low-tech as enchilada con frijoles qualifies for entering the Service Age. PepsiCo's Taco Bell has grown to revenues of $4 billion by shifting out of food manufacturing to food delivery. The chain has established over 15,000 omnipresent "points of access" where hungry people are likely to be found-school cafeterias, college campuses, airports, and street corners.
To get out of the food manufacturing business, Taco Bell has shifted its heavy-duty food preparation-like dicing cheese, crushing beans, and washing lettuce-to outside contractors. These changes have turned kitchen space into customer space, and kitchen personnel now focus on customer service.
Our needs are rarely satisfied by a pure service or pure thing alone. Over the next two decades, the distinction between "service" and "product" will become blurred-everything will be a "service-prod": some combination of information and instruction, service, and access to a physical thing or things.* This is already the case whenever a doctor prescribes pills, a waiter delivers a dinner, or a teacher educates a child-and will soon characterize every facet of our economy.
(*I will often use the terms service or product as substitutes for the term service-prod. But the reader should understand that they are merely two forms of the same essence.)
The quintessential marriage of products with service is found in retail operations. To gain vision into the future, let's look at what many regard as America's best-operated retail organization: Home Depot. By packing 35,000 different products into an arena-sized emporium, by attracting top-quality store personnel with lucrative benefit packages, and by providing a no-frills bare-concrete-floor environment, Home Depot offers a high-quality service at can't-be-beat prices.
By stocking shelves at night after closure, store personnel are free to circulate and help customers, and take the time necessary to answer questions. By offering free clinics on plumbing, tiling, and home repairs, the store has converted once helpless homeowners into hammer-swinging contractors who keep coming back to the store. Home Depot also arranges full installation right down to a computer-aided interior decorator. As a result, the company enjoys extremely high repeat sales, and is among the most profitable and fastest growing retailers in the country.
Another example of the coming Service Age is provided by Hertz with its ubiquitous rental cars. To be a member of Hertz's $50-a-year Club Gold program is to travel into the twenty-first century. By calling a toll-free number, you can make a truly personal car appear at any major airport in the world. On arrival, a Hertz courtesy bus picks you up and takes you directly to your car. The driver radios ahead to others who start the engine and set the air conditioner or heater. Above the car, your surname is glowing in bright lights. On departure, you simply show your driver's license at the exit gate-no counter lines, no signatures, credit card stubs, no lengthy insurance forms. Even if one had a private car already parked in the airport parking lot, the service could not be better.
In these examples, placelessness is the key to providing service. In a breakdown, Lexus provides road service anywhere, any time. Hertz provides personal cars at any airport that can be reserved from any phone. Taco Bell serves food wherever hungry people can be found. Home Depot conveys knowledge to its do-it-yourself customers, and installs cabinets for the others. "Service" entails providing things, knowledge, and ideas ubiquitously, regardless of where they are needed.
Citicorp even knows what items are hidden away in millions of kitchen cabinets, bathrooms, and linen closets. It has over 2 million households wired in selected supermarkets, where every purchase is tracked to each household. The information is then relayed electronically to companies like PepsiCo, Ralston Purina, and Pillsbury so that they know who is buying what and when.
In the Fourth Dimension, use of the telephone is no longer anonymous. When we dial a toll-free telephone number, computers are busy tracing the call not just to the city prefix, but down to the phone from which the call is placed. Customer service representatives are trained to be discreet about what they know, and that's quite a lot: even before they answer the phone, high-speed computers have already sifted through billions of records to display name, address, past account activity. . . .
Even lifestyle. Some scan automobile registrations to see how often individuals purchase new cars and which ones they buy. Credit card records tell who borrows money and where they shop. Magazine subscriptions show whether one is interested in guns and pornography, or home gardens and music.
Increasingly, computers are cross-comparing information from multiple sources. Databases show whether one is likely to donate, pay or default, reorder or not, how much money one makes and how much one's house is worth. In the Placeless Society, we leave permanent electronic fingerprints everywhere, and few of us are strangers. The salesman will know all about us before we even "enter" the store. Even after a product or service is purchased, the smart companies will continue to track their customers and satisfy their needs.
Perhaps the quintessential company providing top quality postpurchase customer support is WordPerfect Corporation, who developed one of the most successful application programs in the history of the computer. With corporate offices close to no major metropolitan center, in Orem, Utah, WordPerfect's customer service telephone system can handle up to 1,300 calls at any one time. Technicians are immediately at customers' desks, wherever in the world, taking them through difficult problems. The result has earned WordPerfect one of the highest ratings of all word processing packages; but it has also given technicians insight into every conceivable product glitch, and ideas for future product designs and improvements. WordPerfect could not have become a dominant player in word processing without such intimate contact with its customers. The competitive battles of the twenty-first century will be those of service.
©1996, ProMotion, inc.