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271: When Innovation Stops Serving the Customer · Customer Service Revolution | Customer Experience & Employee Experience for Business Leaders

• 0:59
  Hello, listeners, welcome back to the Customer Service Revolution Podcast.
• 1:03
  This week, John and I are going to talk about when big brands stop listening
• 1:07
  to customers. As most of you have already heard by now,
• 1:10
  Nike has lost roughly 224 billion,
• 1:14
  I think it is, in market value and is being removed from the S P 100.
• 1:18
  Apple just introduced a $2,000 foldable iPhone.
• 1:22
  While making AI an even bigger part of the customer experience.
• 1:25
  And today, some of the biggest names in artificial intelligence are warning that
• 1:30
  AI itself may d be developing way too quickly.
• 1:33
  very different stories, but I think they raise the same question,
• 1:36
  John. Are companies becoming so obsessed with innovation,
• 1:40
  efficiency, and growth that they're forgetting who all this is supposed to be for,
• 1:44
  the customer?
• 1:44
  hello, Denise. and some examples.
• 1:47
  I mean there's some examples where yeah,
• 1:49
  you know, the Nike and other examples,
• 1:52
  they totally got away from bo both their core customer and innovation.
• 1:57
  Apple, you know, it got away from innovation,
• 2:01
  but they they do it completely different.
• 2:03
  they don't want to be first, they wanna,
• 2:06
  you know, be the best and do it right.
• 2:08
  And so
• 2:09
  takes them longer to get there,
• 2:10
  but they they achieve that in most cases.
• 2:13
  So at what point I wanna think about does innovation stop being customer centric
• 2:18
  and become, I don't know, corporate ego?
• 2:21
  Have we entered an era where efficiency is maybe mistaken for experience?
• 2:27
  You know, they've lost, like I said,
• 2:29
  roughly 224 billion in market value over the past five years.
• 2:33
  And being removed from SP 100 has gotta be really scary for them.
• 2:37
  Its shift toward direct to consumer sales also reduced its presence with
• 2:42
  re traditional retail partners and competitors like Hoka on New Balance.
• 2:47
  They all gained ground from that.
• 2:49
  So in their case, the retailer is
• 2:53
  also their customer. It's not just the end consumer,
• 2:56
  right?
• 2:57
  Yeah, I mean they have multiple customers here,
• 3:00
  but it's the one that they got away from,
• 3:02
  which is the direct to consumer the pivot under CEO John Donahue from twenty twenty
• 3:09
  to twenty twenty-four. You could see why he's gone.
• 3:11
  But you know, there's there's at least six reasons of Nike's downfall.
• 3:17
  First one is they pulled back from their wholesale retail tailor.
• 3:21
  starting, you know, during the pandemic,
• 3:23
  they deliberately cut ties with many wholesale accounts,
• 3:27
  Footlocker, DSW and others, to push sales through its own stores app and website,
• 3:33
  you know, betting that owning the customer relationship directly would boost
• 3:37
  margins. that backfired. It reduced Nike's culture of visibility
• 3:41
  and shelf presence right as competitors moved into the space that Nike vacated.
• 3:46
  you know, the second
• 3:48
  you know, reason why the Nike strategy failed is it stopped innovating
• 3:52
  on product and lead on leaned on its you know old hits.
• 3:56
  You know, they leaned heavily on legacy franchises like Air Force One,
• 4:00
  Dunk, Jordan one, rather than pushing new performance innovation which made
• 4:06
  the brand feel stale and overexposed a sneaker resell you know,
• 4:10
  to to its competitors. the third reason
• 4:13
  under heavily invest under invested in sports and over invested in lifestyle.
• 4:19
  So they kind of went away from you know what made them Nike,
• 4:23
  you know, the sports, the the the initial running shoe and and and you know
• 4:27
  all all that to more athletic wear.
• 4:30
  and you kind of started competing with everyone.
• 4:33
  They started competing with like the Lululemons of the world,
• 4:36
  and you know companies as you said like
• 4:39
  Is it hookah or hoka?
• 4:41
  I always said hookah. Is it hookah?
• 4:42
  It might be, it might be. New balance.
• 4:43
  Isn't hookah something you smoke out of?
• 4:44
  I don't know. Yeah, yeah, yeah,
• 4:45
  Isn't that
• 4:46
  yeah. Maybe that's what
• 4:48
  they're selling. and indeed is to win over you know,
• 4:50
  to to for those brands to take over the,
• 4:53
  you know, the s performance based customer with a better better product.
• 4:58
  it it i it it it's bet on China,
• 5:00
  soured. you know, they thought you know,
• 5:03
  that Nike's big bet on the Chinese market flopped.
• 5:06
  While the investment initially seemed,
• 5:08
  you know, strong, conditions since have soured as the Chinese shoppers have shown
• 5:13
  a growing preference for their domestic brands like Anta and Lening,
• 5:17
  compounded by tariffs and trade tensions.
• 5:21
  ~ the fifth reason Ooh sorry. Yeah.
• 5:22
  Yeah, I was just gonna say I wonder what tariffs affected that.
• 5:25
  Go ahead.
• 5:26
  The fifth reason
• 5:29
  wholesale partners didn't come back.
• 5:31
  you know, a after the new CEO came in in twenty twenty-four,
• 5:36
  or the the former CEO came back trying to build the the wholesale relationships,
• 5:41
  but the damage was already done and and they they they just never regained that.
• 5:47
  And then the sixth one is the old terminology,
• 5:51
  if you go woke, you go broke.
• 5:53
  So I don't you know I I never think this is,
• 5:57
  you know, ever happens by itself,
• 6:00
  but it certainly doesn't happen.
• 6:02
  So what Nike, you know, was was you know what what maybe hurt their reputation
• 6:07
  is in 2019 they did the Colin Kaepernick ad campaign,
• 6:11
  which drew boycotts from you know a a large percentage of their
• 6:15
  c a significant percentage of their customer.
• 6:18
  2023
• 6:19
  campaign featuring transgender athletes.
• 6:22
  and you know, obviously that, you know,
• 6:24
  can trigger significant backlash and boycotts and and and and then there's
• 6:29
  a broader criticism that Nike's marketing leaned into social political messaging
• 6:34
  at the expense of the athletic performance identity.
• 6:38
  So Nike tried to own its customer relationship more tightly than you know direct
• 6:43
  you know
• 6:44
  direct to consumer, which weakens its retail ecosystem and marketing presence,
• 6:49
  while some simultaneously losing product innovation adds to you know more nimber
• 6:55
  competitors. We actually have a client that we worked with or work with that it's
• 7:01
  interesting because they their approach and and and a lot
• 7:06
  of Nike's competitors approach
• 7:08
  is to go after the peripheral sports.
• 7:11
  So obviously Nike was huge and I think their initial thing was running,
• 7:15
  track and field and and all that.
• 7:17
  And then, you know, huge in, you know,
• 7:19
  the the the main sports. I mean I think they they probably represented every sport,
• 7:24
  but obviously football, baseball,
• 7:26
  basketball was was you know their primary and so like one of our c clients
• 7:33
  They went for one of the peripheral sports that Nike didn't care about.
• 7:36
  And wrestling, yeah,
• 7:36
  Wrestling? What was that?
• 7:39
  but yeah, you know, then there's other ones that,
• 7:41
  you know, go after the, you know,
• 7:42
  lacrosse or whatever that just doesn't make up a lot of Nike's profit margin.
• 7:48
  but that's how they start coming in and gaining,
• 7:51
  you know, market share and and and attack them.
• 7:54
  Curious, how often do you actually go into a store to buy sports shoes versus
• 8:00
  ordering online?
• 8:01
  a hundred percent into stores,
• 8:04
  probably the well, I wanna say first time to get advice,
• 8:09
  maybe to get fitted, you know,
• 8:11
  those you know, when I I was into running,
• 8:14
  which I hate running, but that I I I I I I used to do at those,
• 8:19
  you know, running stores, sometimes dicks.
• 8:22
  And then if I liked it and, you know,
• 8:25
  I wasn't
• 8:26
  having too many problems from a injury or nagging nagging injury standpoint,
• 8:32
  then I'd reorder online. Th that that same product.
• 8:35
  But, you know, I think when you're serious,
• 8:38
  Until they change it. And then
• 8:39
  whatever, until they
• 8:40
  change it. Yeah.
• 8:42
  Yeah, I don't know if you're like me,
• 8:43
  like I become really loyal to that one shoe and then when they change
• 8:46
  it and it's like, no, it's heartbreaking,
• 8:48
  I have to find another another one.
• 8:49
  Yeah, well what's your answer on that?
• 8:49
  But I go into the store I go into
• 8:51
  Yeah.
• 8:52
  the store also. Same same thing.
• 8:53
  I go into the store, I want their advice.
• 8:55
  You know, they look at the way that you walk,
• 8:58
  the way that you run, and what is best if you super supinate,
• 9:02
  pronate whatever. but
• 9:04
  I think that's that has worked for me.
• 9:06
  I've tried buying online and I get something that's just too wide or or
• 9:10
  the toe box is too narrow or whatever it might be.
• 9:12
  So I like going into the store.
• 9:15
  So the idea, I don't know, maybe I'm and I've worn Nike shoes a lot in the past,
• 9:20
  but
• 9:21
  You I do have you good are you going into,
• 9:23
  you know, the the third par you know,
• 9:26
  the the vending stores, dicks,
• 9:27
  sporting goods stores and and stores like that?
• 9:29
  Or you were you going into a Nike store?
• 9:32
  No, a specialty store. Not a not a big box store,
• 9:37
  but a specialty running store.
• 9:39
  Right.
• 9:40
  But that's their what they, you know,
• 9:42
  got away from because they are trying to,
• 9:44
  you know, go direct to consumer and but they there's just I don't think there's
• 9:49
  enough Nike stores. You know, it's not on it's not like a Dix or
• 9:54
  you know a Starbucks on every corner at every main shopping store.
• 9:58
  So, you know, when they start taking it out of their wholesalers network,
• 10:03
  y you don't see it anymore.
• 10:06
  Yeah, and you know, honestly, if I'm looking for my perfect running shoe,
• 10:10
  I'm not going to I wanna go to a store where they have multiple brands.
• 10:13
  You know, to try multiple things on.
• 10:14
  Yeah. And listen, Nike would definitely was a brand,
• 10:17
  It's
• 10:18
  a a sm you know a cult brand.
• 10:21
  you know, probably, you know, eight nineties,
• 10:25
  two thousands, maybe trickled into the you know,
• 10:28
  two thousand and tens, but it's lost its its its luster right now.
• 10:32
  And it's gonna be an interesting case study on if they can,
• 10:35
  you know, do a turnaround. And Denise,
• 10:37
  Do you think it's possible for go ahead.
• 10:38
  you said the I'm sorry, you
• 10:40
  said the S P one hundred.
• 10:42
  Was it the one hundred or five hundred?
• 10:44
  That they got ru I don't know.
• 10:45
  I thought it was the one hundred.
• 10:47
  Look it up real quick.
• 10:48
  I will.
• 10:50
  Let's correct that if
• 10:51
  and while you're looking it up,
• 10:52
  think about this. Do you think it's possible for them to salvage those wholesale
• 10:58
  relationships?
• 11:00
  Right.
• 11:01
  Alright, I'll answer that. You could look it up.
• 11:02
  All we have is historical.
• 11:04
  they were in the S
• 11:05
  P one hundred for nearly eighteen years,
• 11:07
  but removed being removed on September twenty first,
• 11:10
  twenty twenty six. One hundred.
• 11:12
  So it is the one hundred? Okay.
• 11:15
  Yeah. And their stock is down almost two percent today.
• 11:18
  Just saying.
• 11:20
  Hmm. Well, let's answer your question.
• 11:23
  Let's look at other examples that did something similar,
• 11:26
  right? you know, of of chasing new customer ch channels at the expense of
• 11:33
  of the you know the base that built their brand.
• 11:35
  this is you know ironic how often this happens.
• 11:39
  JC Penny's did it. And and and the funny thing when JC Pennies did it,
• 11:43
  they did it.
• 11:44
  when they hired Apple's former president of retail stores,
• 11:49
  Ron Johnson. and so from 2011 to 2013,
• 11:53
  he you know killed the JCPenney coupon discount culture and swapped in every
• 11:58
  day low pricing and boutique style sho you know with with boutique shops alienating
• 12:04
  the deal hunting coupon clipping core customers you know literally overnight
• 12:09
  sales dropped twenty five percent in a single year and Johnson
• 12:13
  was fired within seventeen months.
• 12:16
  Now JC Pain's has never fully recovered and filed bankruptcy in in twenty twenty.
• 12:21
  the Gap has done it. you know something similar you know the the 2010s they they
• 12:27
  you know chased a younger trendier customer with logo heavy fast fashion style while
• 12:32
  it's core customer bake basics
• 12:35
  Focused, value driven, drifted to Old Navy,
• 12:38
  which the Gap owned, Uniglow
• 12:39
  Mm-hmm.
• 12:40
  and Target. Gap brand sales have been in decline for over a decade.
• 12:45
  old old old Navy you know now outperforms it.
• 12:49
  So they kind of cannibalize themselves under that.
• 12:53
  But Abercrompian
• 12:53
  Yeah.
• 12:54
  Fitch built its brand on exclusively exclusivity and and a narrow controversial
• 13:01
  Cool kids only image, alienating abroad's you know,
• 13:06
  group of potential customers and eventually facing serious backlash over
• 13:11
  its hiring and marketing pr practices.
• 13:13
  sales collapse through the 2010s.
• 13:16
  And now this is a brand that, you know,
• 13:19
  has recovered you know, since 2017.
• 13:23
  Harley Davidson, another example,
• 13:25
  spent years trying to attract younger.
• 13:27
  Urban riders with smaller bikes and lifestyle marketing,
• 13:30
  while its core aging customer base,
• 13:34
  older rural brand loyal felt increasingly unaddressed.
• 13:38
  Core U.S. sales have declined for most of the past decade,
• 13:42
  even as the companies have pushed into new segments.
• 13:44
  So Peloton went from the premium dedicated at home fitness enthusiasts base to
• 13:51
  overexpanding into mass market territory during their boom during the COVID
• 13:57
  and you know their stock fell ninety percent from its peak.
• 14:01
  so there's examples. One example Chipotle,
• 14:04
  the food safety, slightly different.
• 14:06
  I mean it they didn't go away from their core customers,
• 14:09
  but you know, with the outbreaks,
• 14:11
  but they've recovered. they've recovered.
• 14:13
  That's a you know example, but it's not apples to apples.
• 14:16
  But
• 14:17
  The one that, you know, is to me apples to apples is Starbucks.
• 14:21
  So so many companies got away from their core customers or what made them great
• 14:26
  during the pandemic. but they over shifted their business focus.
• 14:31
  So, you know, what made Starbucks great was a third place,
• 14:34
  you know, eighties, nineties, two thousand,
• 14:36
  two thousand and ten. And then they went and you know reduced their footprint inside
• 14:42
  the stores.
• 14:43
  less chairs, less you know, friendly environment.
• 14:47
  And they just focused on the drive through and to go orders and and and
• 14:53
  and to the point where they were only opening up those types of models.
• 14:56
  Now after their you know model and stock collapsed,
• 15:01
  the former s Chipotle CEO Brian Nickel came in and and and
• 15:06
  you know, closed all those stores that didn't have the the the that were only
• 15:12
  dedicated to to go and and drive through and now they're trying to get back
• 15:16
  and it's literally their theme back to Starbucks,
• 15:19
  back to the third place, writing names on cups,
• 15:22
  you know, having more friendly places that people can s hang out for a while.
• 15:27
  So the common thread a cup company facing
• 15:31
  Slowing growth and its core market tries to expand into a new demographic
• 15:35
  or channel to reignite growth,
• 15:37
  underinvest in what made the original customer loyal in the process
• 15:41
  and ends up disappointing both groups.
• 15:43
  The new audience wasn't there for the brand originally,
• 15:46
  and the old audience feels abandoned.
• 15:48
  So you know, when it happens, aside from a few players,
• 15:52
  almost always comes from, you know,
• 15:54
  the leadership change and a a and a deliberate return.
• 15:57
  you know, trying to get back to its core identity,
• 16:00
  but they're they're chasing they're chasing their old audience that they
• 16:04
  a customer base that they drove away.
• 16:06
  curious with the Starbucks stores,
• 16:09
  how often do you pre order and pick up versus order when you're there?
• 16:13
  You know, I did it a couple ti literally a couple times.
• 16:16
  I I'm sure I kinda on one hand.
• 16:18
  probably when it first came out,
• 16:21
  a pre-order and pickup. now I just always will go drive through or go inside.
• 16:27
  and I didn't have a bad experience,
• 16:29
  I don't think. I just I I'm I'm more worried that they won't get my drink right.
• 16:32
  Like like the great thing about Starbucks is you can order it a hundred
• 16:37
  and seventy thousand different ways,
• 16:38
  but
• 16:39
  You know, the the bad thing is that it's not always consistent and even when
• 16:43
  I go through drive through, I try to be as clear as possible and you know,
• 16:47
  my order is, you know, s somewhat complicated.
• 16:49
  ~ you have the Diva Order. Yeah,
• 16:50
  Yeah, yeah, yeah.
• 16:52
  I forget the Diva order. Yeah.
• 16:54
  Right. So it doesn't always doesn't always come out the same as from place
• 16:59
  to place day to day.
• 17:01
  It's the tea made with water, not lemonade.
• 17:04
  What is it, the refresher? What's the John de Julius drink?
• 17:06
  Mango l a venti mang
• 17:09
  yeah, mango a venti mango dragon fruit refresher with water base
• 17:15
  and energy. That's ~ energy I think is extra caffeine.
• 17:17
  And and 'cause you need more energy.
• 17:19
  I know,
• 17:20
  Yes.
• 17:21
  I know.
• 17:23
  Hey, I also wanna talk about what you brought up,
• 17:26
  woke went broke. How does that contribute?
• 17:30
  Yeah, I mean, you know, so there's that,
• 17:32
  you know, term, you know, when you go woke,
• 17:34
  you go broke. And you know, the companies are most cited for it you know,
• 17:38
  in recent passes. Target, you know,
• 17:40
  where w their new CEO at the time,
• 17:43
  you know, you know, really you know,
• 17:44
  they they did things around pride merchandise,
• 17:47
  got a bad b you know, a bad backlash.
• 17:51
  you know, it they they scaled back its DEI program,
• 17:55
  which alienated progressive leaning customers in the opposite direction,
• 17:59
  tariff drizz driven cost pressures,
• 18:02
  which, you know, obviously you know,
• 18:04
  they they can't control that. But it genuinely,
• 18:07
  you know, it i i it i it it's it's it's it's it's hard to isolate if that
• 18:12
  has ever really been, you know,
• 18:14
  the the leading indicator. Bud Light did it.
• 18:17
  most commonly cited you know back in twenty twenty three sales dropped sharply from
• 18:24
  I think I think what did they do?
• 18:25
  They they they they god I I I forget what they're guilty of something about where
• 18:31
  their their brand endorsed GLPT?
• 18:34
  did I just say that wrong? Yeah.
• 18:35
  I think
• 18:35
  so. Something LGBT
• 18:37
  And the ~ thank you,
• 18:40
  LGBT. and
• 18:42
  GLP one? Are
• 18:43
  you
• 18:43
  Yeah, yeah,
• 18:44
  yeah. That's what I'm getting f you know.
• 18:46
  but it was the top selling, you know,
• 18:48
  beer, and it lost its position as America's top selling beer to Modella
• 18:53
  and hasn't reclaimed it. I wasn't aware of this one.
• 18:55
  Jaguar. Did you know about Jaguars controversy?
• 18:58
  No. No. You think I would?
• 18:59
  ~
• 19:02
  Yeah, really. the company saw steep sales collapse and ended up replacing
• 19:07
  its at Design and Cheap, so I'm wrong.
• 19:10
  we can kill that because it's not really a woke controversy,
• 19:14
  more of a brand identity backlash.
• 19:17
  but bottom line is you know these companies,
• 19:20
  Nike and i you know, their their stock price went down and and
• 19:25
  all these companies stocked, but they were also combined with so many other things.
• 19:29
  Disney's had it recently.
• 19:31
  you know, a lot of companies have it and so I don't know.
• 19:34
  I'm I'm no political advisor, but I feel like in some cases it's best
• 19:40
  to stay neutral because you're always gonna,
• 19:42
  you know, run the risk of pissing off fifty percent of your customers.
• 19:46
  Or own it. If it's who you are and
• 19:48
  Or own it.
• 19:49
  yeah, and and own it. yeah.
• 19:52
  Yeah, what's your feeling
• 19:53
  on it? Does that deter you when they may choose a political side that
• 19:58
  you don't agree with?
• 20:00
  Probably. Yeah. I I
• 20:03
  Yeah.
• 20:03
  think it's yeah. I think there well,
• 20:05
  you know, I just think politics in America today is so polarizing.
• 20:09
  it's you know, it's not it's not as
• 20:12
  centric as we'd like to imagine it could be.
• 20:15
  But yeah, I think it I think it could make a difference.
• 20:18
  Sure. I mean you
• 20:19
  Yeah.
• 20:19
  spending your hard earned money and if somebody's putting it out there in
• 20:24
  a way that is not neutral or is not inclusive,
• 20:28
  then yeah, I think it could be a it could affect
• 20:32
  Know if Chick-fil-A's an example
• 20:33
  of going woke, they might be the opposite,
• 20:36
  but you know, 20 years ago, their Dan Cathy was being interviewed
• 20:40
  by a religious magazine, and that's where he claimed that he didn't agree with same
• 20:46
  sex marriages and all that and that.
• 20:49
  But it was funny when it happened,
• 20:51
  obviously they you know, all this picketing and controversy.
• 20:56
  But they also said it was their their they had a record breaking week
• 21:00
  in sales at the same time, right?
• 21:03
  So depending on what side of the aisle.
• 21:04
  But since then, Chick fil A has really made significant grounds
• 21:11
  in supporting LGBT, not not to be mistaken as GLPs.
• 21:15
  GLP once.
• 21:16
  Yeah, yeah.
• 21:17
  You can see where my head space is.
• 21:21
  I'm hungry.
• 21:22
  all right, let's get on to Apple.
• 21:24
  you are a techie person and you love new gadgets when they come out.
• 21:28
  What did you think when you saw the foldable iPhone,
• 21:31
  the duo, starting at two thousand dollars?
• 21:35
  Yeah, which means it has to go up to,
• 21:38
  you know, maybe three with all the bells and whistles.
• 21:42
  yeah, I love technology. I have serious FOMO.
• 21:46
  but however for for that I I haven't bought I think my my current iPhone
• 21:52
  is a fifteen. So I I don't know if they're before this are they
• 21:56
  Yeah, and this is ~
• 21:57
  at seventeens or eighteens?
• 21:59
  well it's the eight the eighteen now that's coming out is p it's
• 22:02
  Is ka also coming out with the duo.
• 22:05
  yeah, and that's the one that's pushing deeper into AI.
• 22:09
  Your intelligent personal
• 22:10
  Yeah. Yeah. So
• 22:12
  hub, they're calling it.
• 22:14
  Yeah. So I w you know, like a lot of times I'm I'm like with Apple 'cause
• 22:19
  I'm so loyal to them that it's about time 'cause I just haven't seen
• 22:24
  a reason to upgrade each year or every couple years 'cause you know,
• 22:28
  they they always come out and the only thing I see is you know
• 22:31
  the the battery's better and the camera's better.
• 22:34
  And for me that's just not enough to justify spending back then
• 22:39
  fifteen hundred dollars, twelve to fifteen hundred dollars every year.
• 22:43
  But I love it. you know, I'm excited I will have to get it,
• 22:47
  just 'cause I have that FOMO. but I use my I'm sure everyone thinks they do.
• 22:51
  I use my my my phone for multiple things.
• 22:54
  It may replace the iPad. I as you know I like to use this in
• 22:57
  my clicker during presentations so I can,
• 23:00
  you know, it's a confidence monitor.
• 23:02
  But
• 23:03
  You know, I always bring an iPad with me with you know,
• 23:06
  when I travel, in case I wanna watch a movie on a plane.
• 23:09
  now this looks like, you know,
• 23:11
  it it will be big enough. It looks like it it resembles the mini size once
• 23:15
  you open it up.
• 23:17
  Okay, do you usually carry your phone in your pocket?
• 23:20
  Yeah.
• 23:22
  Do you think this will be double the thickness?
• 23:23
  I I I think foldable.
• 23:24
  What's the yeah, it's foldable,
• 23:26
  but is it double the thickness when it's folded?
• 23:28
  Yeah, I don't know. They say it's the thinnest ever when it's open.
• 23:32
  Okay.
• 23:33
  But what's your thoughts? 'Cause you la you you I I believe you like Apple,
• 23:38
  but you're not you don't have the the same issues I do
• 23:39
  I do. I'm yeah.
• 23:42
  of like you need it today.
• 23:45
  Right, right. and I and I like technology,
• 23:47
  but I like things to be I like to know it's going to work.
• 23:51
  I don't wanna get something and have to take it back.
• 23:54
  I don't wanna I don't want the first version usually.
• 23:57
  You know?
• 23:57
  You're right. The first generation's always
• 23:59
  bad. I mean, when you think about Apple's I think it was three,
• 24:03
  I don't know why it was Apple Three,
• 24:04
  the first phone, iPhone. I mean,
• 24:08
  it was so bad. Didn't have a keyboard.
• 24:10
  Like there were so many things that when you think it you like it's like,
• 24:14
  you know, how how did you exist?
• 24:15
  How did you exist without running water and electricity?
• 24:18
  Like the basics,
• 24:20
  But I mean Apple's strategy is just,
• 24:23
  you know, it's it it's so different,
• 24:25
  right? They're not trying to be the first,
• 24:27
  they're trying to be right, right?
• 24:29
  And their playbook has consistently been let competition sh competitors ship
• 24:34
  an immature version of you know the product,
• 24:37
  let the market and and tech figure out what they like and don't like about it,
• 24:41
  and then Apple enters with a more polished,
• 24:44
  more integrated version. the iPod.
• 24:48
  wasn't the first MP3 player. The iPhone wasn't the first smartphone.
• 24:51
  The iPad wasn't the first tablet.
• 24:54
  They were actually, you know, ten years late to the I you know,
• 24:58
  iPad it wasn't called an iPad back then,
• 25:00
  but tablet. AirPods weren't the first wireless AirPods.
• 25:03
  Apple Watch wasn't the first smartwatch.
• 25:05
  but in every case, competitors had hit come out with it,
• 25:09
  grabbed an initial part of the market share,
• 25:12
  but then Apple sweeps in with a a more refined
• 25:16
  experience and and takes over.
• 25:18
  Yeah, and Apple has historically been brilliant about getting customers
• 25:23
  to want things that they didn't even know they needed.
• 25:25
  At what point does innovation become innovation for innovation's sake?
• 25:31
  Well, I mean, so, you know, the y you you can criticize them
• 25:34
  and or compliment right?
• 25:38
  Because they weren't just they didn't produce a the w it's called the duo,
• 25:43
  but the flip phone, you know and Samsung's had that out for six or seven years.
• 25:48
  And I did have, you know, smartphone envy.
• 25:51
  Like one of my friends has the Samsung and he'd open it up and I'd be like,
• 25:56
  my God.
• 25:57
  But that's what makes Apple so great.
• 25:59
  You know, they weren't innovating just for innovation's sake.
• 26:02
  And listen, you know, Samsung has,
• 26:05
  I think, you know, they own the flip phone,
• 26:07
  whatever you want to call it, market share.
• 26:10
  not smartphone market share. Apple has you know twenty to twenty-five percent
• 26:15
  of that, but the flip phone you know,
• 26:19
  Samsung has, and they're gonna.
• 26:21
  the i I i I don't think it's any doubt.
• 26:22
  I mean Appa Apple has proved that you can make price irrelevant.
• 26:26
  that you that we're talking about,
• 26:28
  you know, buying a phone that starts at two thousand,
• 26:32
  right, is crazy. That you know,
• 26:35
  I just I j I I would I would have said that was to the point,
• 26:38
  but you know, I gotta have it.
• 26:40
  their their premium segments, six hundred phones or more I s I'm sorry,
• 26:45
  six hundred dollars or more.
• 26:47
  They own 65% of that market. That's where they really dominate.
• 26:52
  And you know, and and and they're growing nine percent year over year.
• 26:56
  and even more striking is their profit.
• 26:59
  you know, Apple Apple ships twenty-three percent of all smartphones sold globally,
• 27:05
  but captures f almost fifty percent of all industry profit.
• 27:12
  So the real story is Apple's smartphone dom you know d you know,
• 27:15
  dominance it doesn't need to win,
• 27:17
  you know, in every category. They focus on you know where the the markup
• 27:23
  and the margins are are strongest.
• 27:25
  I wonder what percentage of people left Apple to get the Samsung foldable flip,
• 27:30
  Yeah.
• 27:31
  whatever they call it.
• 27:32
  Yeah, ~
• 27:32
  If they I mean, if that's
• 27:33
  something that made it worth them innovating and creating their own.
• 27:36
  But
• 27:36
  but what prevents you from doing that?
• 27:38
  If you had ~
• 27:39
  What prevents
• 27:40
  if you had smartphone envy, why didn't you jump to Samsung?
• 27:48
  Honestly, I thought it was cool when I saw it.
• 27:50
  I have a friend that is on her third,
• 27:52
  not because of the new gens, but because of the first two broke,
• 27:57
  and that was like, mm, no. Like the something with the when it folds.
• 28:01
  Yeah
• 28:02
  She had issues. So that was a turn off for me.
• 28:04
  What what I do like about Samsung that has made me think about switching before
• 28:09
  though is their cameras better.
• 28:11
  Yeah, that is what I hear all the time.
• 28:14
  But but you haven't switched. And and I I don't know,
• 28:18
  No. No, I'm I
• 28:19
  I I thought you
• 28:20
  am like Mac across the board. I Yeah.
• 28:22
  That's my point. So they get you in the ecosystem
• 28:25
  I'm loyal.
• 28:27
  and if I ever thought of cheating on them in one category,
• 28:32
  right? Phone, tablet, airpods,
• 28:35
  computer, I have everything. I have two of everything,
• 28:39
  which is really, you know, I don't know what that says about me.
• 28:42
  I I
• 28:42
  Are you a hoarder?
• 28:43
  I just like backup. Like, you know,
• 28:46
  this we I I don't know if you remember this.
• 28:47
  You need it with what you do,
• 28:48
  Last week we were
• 28:49
  yeah.
• 28:50
  Well, last week on the
• 28:51
  when we filmed our last week iPad,
• 28:53
  I go, I got something wrong with my can you see that my screen's blinking
• 28:57
  and you said no. Well right after our I our podcast it went a it went dark.
• 29:02
  So I had to take it in and they're gonna replace it,
• 29:06
  but it's a w I you know, I won't have it for a week.
• 29:09
  So maybe it's just the justification of my mind,
• 29:12
  that's why I have two laptops that are mirrored because
• 29:15
  God forbid I well I mean really they I don't know what I would do,
• 29:18
  you know, you know, to get on a plane and have meet all those presentations.
• 29:22
  But
• 29:23
  Yeah. Yeah.
• 29:24
  my point is I thought you know I thought it would be your first answer
• 29:28
  out of your mouth and it was is your third or fourth,
• 29:30
  is the ecosystem of Mac products that you don't want to monkey with.
• 29:35
  Yeah, I've been on Mac for I don't know how many years?
• 29:39
  I went to it in two thousand and nine.
• 29:40
  I don't know why I knew that, but I know it.
• 29:42
  And I I'm sorry, I went to a MacBook in from a PC in two thousand and nine.
• 29:48
  I'm sure I already had the iPhone.
• 29:52
  Well, I was before you because I remember you used to get upset when
• 29:55
  I would send things in pages or and why do I have to
• 29:57
  ~
• 29:58
  why get rid of that Mac?
• 30:00
  Right. And I'm sure when I switched I thought I c I yeah,
• 30:02
  Eventually I convinced you.
• 30:04
  yeah. I'm sure I thought I convinced myself and probably told you you need
• 30:08
  You maybe. That must have been what it was,
• 30:08
  to get on Mac. Like I always do.
• 30:12
  Yeah.
• 30:12
  John. Yeah. That was it.
• 30:14
  What
• 30:14
  But again, here here's the point.
• 30:15
  All right.
• 30:18
  Right?
• 30:19
  So Apple is the you know perfect definition of a brand.
• 30:25
  what makes a brand, an organization,
• 30:27
  a brand you can't live without.
• 30:29
  And there's six things. first one is great product or service.
• 30:33
  Whenever we ask people,
• 30:36
  audiences to name a brand they can't live without,
• 30:38
  that they'd be extremely upset that we took away from.
• 30:42
  they mourn the the loss of this brand.
• 30:45
  the brands are always the same.
• 30:47
  And then when you ask why, before the most common answers,
• 30:51
  the two common answers you don't hear,
• 30:54
  or uncommon answers I guess that you'd expect to hear,
• 30:57
  is that the product or s you know,
• 30:59
  service is superior. No one ever,
• 31:01
  you know
• 31:02
  really says anything about that and and it's said but a small percentage.
• 31:07
  The second thing is the the price,
• 31:09
  like how cheap it is. the six things,
• 31:12
  you know, yes, product quality and service quality is there.
• 31:16
  But as we've shown or and discussed,
• 31:19
  you know, there are better products arguably in some categories than Apple.
• 31:26
  But Apple blows you know the the market share away.
• 31:29
  So by itself, your product or service against what you know your
• 31:34
  top five percent competitors probably is is not any better.
• 31:38
  You know, it's marginal at best.
• 31:40
  the second one is ease of doing business,
• 31:42
  self-explanatory. Third one is consistency,
• 31:45
  which is sh so huge. fourth one is brand evangelism,
• 31:50
  which
• 31:51
  their you their employees are are brand evangelists of three things.
• 31:54
  They love the industry, right?
• 31:57
  In Apple's case, they're geeks.
• 31:58
  They get excited to talk about it and share it with you.
• 32:02
  They love who they do it for Apple and the vision and and the purpose
• 32:08
  and how it ties into them. And they like to help people connect those two,
• 32:12
  the the Apple and product that can make your life better.
• 32:15
  And then the the the last thing is the hospitality,
• 32:18
  how they treat you, how they make you feel,
• 32:20
  all those things. And I I I Apple is the king at it.
• 32:25
  It yeah, they are they are personalizing the experience and yeah,
• 32:29
  they know how to do it. so John,
• 32:31
  when we look at like the different stories that we talked about today,
• 32:34
  a lot of this goes back to leaders and making enormous bets on what customers will
• 32:40
  want next. If you're sitting in CEO's chair today
• 32:44
  How do you make sure the voice of the customer remains louder than the voice
• 32:48
  of Wall Street and the latest business trend that's out there?
• 32:52
  Yeah, it's so surprising 'cause you think that these leaders,
• 32:56
  you know, s mom and pops and less experienced entrepreneurs,
• 33:00
  I could see chasing the new shiny object and thinking this is gonna
• 33:06
  be where the market's trying. And it's hard,
• 33:08
  right, to see around Curse, 'cause then you have the opposite
• 33:10
  of Blockbuster that was stubborn,
• 33:12
  BlackBerry that was stubborn and they didn't evolve fast enough.
• 33:17
  and then you got, you know,
• 33:19
  but I I I think you gotta know who your customer base is,
• 33:22
  your primary customer base, and be stick to it,
• 33:26
  be loyal to it. I'm sure there's some brands out there that went out,
• 33:30
  maybe it's old Navy in the Gap,
• 33:32
  where instead of well, obviously Gap was guilty of it,
• 33:36
  but you know, have a different brand underneath their business model,
• 33:40
  so it you know, that chases a different market and doesn't,
• 33:44
  you know, alienate
• 33:46
  the original brand and the original customer base.
• 33:49
  All right, so before we close this episode,
• 33:52
  what is one question every leadership team should be asking before approving their
• 33:58
  next major innovation?
• 34:00
  Well, I mean you know, i i i i it who what's our customer base?
• 34:04
  Today, yesterday, today, and where do we think that's headed?
• 34:09
  And obviously, you know, everyone's customer base is aging.
• 34:14
  I mean, it doesn't matter. You know,
• 34:16
  you know, it it's aging, even if you're you're you're going after
• 34:19
  a young customer base, they're aging.
• 34:21
  So you gotta try to be significant for
• 34:25
  the next generation without sabotaging.
• 34:30
  the ones that major great and and the ones that,
• 34:32
  you know, have been loyal and you know,
• 34:35
  so it's a crawl, walk and run.
• 34:37
  So really understanding you know,
• 34:39
  with innovation, if that's gonna alienate,
• 34:42
  you know, the bulk of the customers who buy from you.
• 34:46
  Well, thank you, John, for another great episode of the Customer Service Revolution
• 34:51
  podcast. And listeners, we'll see you next week.
• 34:54
  Yeah.
• 34:54
  Thanks, Denise.
• 34:57
  Thanks, John. See you next week.
• 34:58
  Thank you.