SERVICE

How Technology Is Reshaping Customer Service

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Arnold On explores cultural, social and consumer trends that are directly impacting businesses today. Through a combination of cultural observation and proprietary qualitative and quantitative research, we aim to uncover meaningful shifts in consumer attitudes and behaviors and provide marketers with ways to harness these trends to benefit their brands and businesses.

CONTENTS
The Twin Pillars of Service 3 Elevating the Service Experience 11 The Impact of Technology 25 Implications 33

Service has traditionally focused on a face-to-face specific interaction, but now it’s about creating an experience that transcends the transaction. Today, many brands are elevating service from basic (addressing a specific question or service issue) to exceptional or luxury levels of service. And importantly, technology is helping brands to move beyond basic customer service to deliver these more elevated service experiences. From enabling more efficient and cost effective service interactions, to building stronger relationships with consumers through social programs, to using customer data to anticipate needs – brands have leveraged technology to alter the service dynamic.

Still, many brands are failing to deliver. According to a survey conducted by Arnold Worldwide, 80 percent of consumers expect good service, but 20 to 30 percent of respondents say they aren’t getting it. Most important, 71 percent have stopped doing business with a brand due to poor service. So, what separates fan favorites, like Apple, FedEx, Toyota and John Lewis, from struggling brands, like AOL, Best Buy and Blockbuster?

In this issue of Arnold: On Service, we’ll explore three themes that are shaping the service experience: 1. The Twin Pillars of Service: How Technology is Redefining Responsiveness and Personal Attention 2. Elevating the Experience from Basic to Exceptional to Luxury 3. The Impact of Technology: Three Ways Brands Should Refocus

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2

The Twin Pillars of Service:
How Technology is Redefining Responsiveness and Personal Attention
The spirit of service remains unchanged in the 21st century. According to Arnold’s survey on service, consumers worldwide regard responsiveness and personal attention as the twin pillars of positive service. But technology has revolutionized how brands should deliver service now that the Internet has reset consumer expectations, requiring brands to be faster and more targeted than ever.
RESPONSIVENESS

SERVICE se rv ice
PERSONAL ATTENTION

“Immediate results without hassle is good service.” –U.S. “Solving the problem in a timely manner is good service.” –China

“Good service is unforgettable when they know the customer’s wants and needs.” – Brazil “Good service means they are genuinely caring, listen to my needs and make me feel like my purchases are important to them.” – U.K.

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Q. Please describe your best service experience. Q. What makes good service unforgettable?

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Expectations of Speedy Service

Responsiveness
According to our survey, 76 percent of consumers feel that a speedy response is the surest route to customer satisfaction. The Brazilians and Chinese felt this most strongly, rating a quick answer as most important 80 to 84 percent of the time. One Brazilian respondent said, “I went to a store and had immediate attention. They answered all of my questions politely and gave me the necessary instructions for service to be performed quickly and with quality.” Consumers expect an immediate and helpful response to their inquiries, regardless of whether it’s in person, over the phone or online. Failure to provide one can cost an enterprise repeat business and result in negative word of mouth. More and more, a consumer’s first interaction with a brand is online, not in a brick-and-mortar store. If consumers cannot have a speedy and satisfying experience online, they may never set foot on a sales floor. Brands must develop strong customer relations across all brand properties, in store and online, in order to woo consumers who can tap in across multiple devices and channels.
U.S.

49%
U.K.

Want a brand to respond to a service issue in one hour or less

Brazil

China

43%

39%

57%

56%

Benefits of Speedy Service

50% 37%

Of people globally would be more likely to purchase a brand that provides a speedy response to a service issue

of people globally would tell others about a brand that provides a speedy response to a service issue

34%

of people globally would be more loyal to a brand that provides a speedy response to a service issue

Q. How fast do you expect a brand to respond to a service issue? Q. How do the following service attributes impact your relationship with a brand?

6

Expectations of Personal Attention

Personal Attention
Personal attention is the second service pillar, with 74 percent of people wanting to be treated as individuals by the brands they do business with. “I made a hotel reservation, and the manager remembered me, made sure I was treated well because of my past business,” said one American respondent. Our survey also revealed that this kind of individual recognition drives loyalty and purchase intent. About 48 percent of consumers told Arnold that they would be more likely to purchase a brand product because they were given personal treatment. And 36 percent said they’d remain loyal to that brand and tell others about it.

74%
U.S. U.K.

Want the brands they prefer to treat them like an individual

Brazil

China

73%

75%

73%

78%

Benefits of Personal Attention

48% 36% 36%

Of people globally would be more likely to purchase a brand that provides personal attention

Of people globally would tell others about a brand that provides personal attention

Of people globally would be more loyal to a brand that provides personal attention

Q. To what degree do you agree with the following statements? Q. How do the following service attributes impact your relationship with a brand?

8

Technology is Redefining Service
Companies are beginning to understand the role technology plays in developing personal relationships. Recently, a Digiday article reported that Marc Pritchard, global marketing and brand building officer of P&G, is deeply committed to ensuring that the organization forges deeper personalized connections. He said, “To address these [technology] forces, our vision is to build our brands through lifelong, one-to-one relationships in real time with every person in the world…Technology will mean that people will increasingly expect brands to understand their unique needs and deliver.” While technology allows for tailored experiences online, good old-fashioned human intuition delivers the best results offline. Most retail chains have intricate employee handbooks and policy guidelines that aim to ensure a consistent experience at all locations. But shackling employees to company policy can discourage employees from delivering warm, personal service. Companies that are known for delivering responsive and attentive service train employees and empower them to make decisions. Brands like Southwest Airlines and Four Seasons trust employees to anticipate customer needs and then to act on their judgment. At the Four Seasons, for instance, a concierge who sees a family with small children scheduled to check in may call ahead to see what fruit juices should fill the mini-fridge. As more people become brand agnostic, brands must better understand how technology and employee empowerment are redefining “responsive” and “personal attention” online and off.

service in action

WARBY PARKER
Online eyewear purveyor Warby Parker was conceived in a flush of consumer indignation, so it’s no surprise that customer service is one of the pillars of its brand. Fed up with paying up to $300 for prescription glasses, the founders set out to design and sell spectacles directly to consumers for less than $100 a pair. Warby Parker has flourished with the stylish set, but its reputation really turns on its 21st-century-style service. The company provides online tools that recommend what styles will look best on what types of faces and provides an online try-on tool. Customers can order up to five sample frames to try on at home for five days, 100 percent free. The policy keeps Warby Parker competitive with the traditional eyewear brands sold through opticians and shows that the company understands today’s consumers. Warby Parker realizes that consumers might be reluctant to purchase frames online since they’re afraid they’ll wind up with the wrong ones. Its policy, therefore, anticipates the wishes of its customers, who want to try on their stylish, inexpensive frames before buying. There isn’t a flesh-and-blood sales rep helping with an in-store selection, but Warby Parker gives customers a personal experience by letting them customize their sample set and then buy the specs that suit them.

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Elevating the Service Experience from Basic to Exceptional to Luxury
Personal attention and responsiveness may be at the core of all positive service experiences, but in the 21st century they’re just table stakes. Brands need to surprise and delight customers if they want their reputations to shine. Our survey results showed that there are three levels of customer service – basic, exceptional and luxury – and that moving up takes focus and commitment.

BASIC
approachable, honest, expected

EXCEPTIONAL
caring, personal, flexible

LUXURY
innovative, proactive, exclusive

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service in action

Basic Service: Approachable, Honest, Expected
The basic level of service is transactional and aims to solve problems as they arise. It is defined by approachable associates, honest communications and common courtesy. Consumers that expect only a basic level of service from brands engage with limited expectations. Interactions that are friendly, if perfunctory, generally satisfy people at the basic service level. “When you go to the supermarket and you’re looking for a tube of toothpaste, the likelihood that you’ll engage with people when you pull something off the shelf is not very high,” said Milton Pedroza, CEO of The Luxury Institute and a speaker on the topic of customer service. “You’re looking for price and convenience.” While basic service used to be most closely associated with big-box stores, mass-market chains and quick-service restaurants, brands that go a step further can outpace competitors in any category. Supermarket chains Waitrose and Marks & Spencer in the U.K., and Costco and Wegman’s in the U.S., for example, consistently rank among the best customer service companies across all categories. They’ve transcended basic service by offering high-quality products, treating their employees well and adding personal touches to the service experience. Customers may walk in for toothpaste, but they walk out with a greater love for the brand.

ORANGE
Orange, a telecommunications company in the U.K., has a very comprehensive online help-and-support center meant to problem-solve for all of its customers. The support is segmented into topics such as mobile, broadband/home phone, business help, traveling and calling abroad, and then these categories are further segmented into more specific subcategories. The site is approachable and comprehensive, and it enables customers to solve their issues. But it does not allow for the brand to connect with the consumer on a personal level.

NEWEGG
Newegg, a technology e-commerce site, has a very in-depth online customer service presence. Their website features a very organized and detailed FAQ page as well as easily accessible contact information for service via email, mail, chat or phone. Customers can also easily check the status of their orders online and see a list of rebates they might be able to apply to current, or even previous, orders. Since Newegg is selling products they don’t make themselves, they also provide contact information for every major
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electronics manufacturer. Newegg’s site seems to be adequately prepared for any customer service issue, and their customers may naturally be “doit-yourself” technology types. However, Newegg is not proactively providing service or going out of their way to connect with customers – they’re providing static information for those who seek it out.

Basic Service

Attributes

Approachable and honest, but also impersonal and expected

51%

Traditional

Approachable

49%

49%
Expected

48%

Impersonal

47%
Honest

Functional Benefits

Problem solving for the masses

Treats me as well as other people

47%

Provides me with a simple way to get what I need

45%

43%

Helps me solve my problems

Emotional Benefits

Makes people feel satisfied and calm

Satisfied

43%

Calm

41%

40%
Content

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Q. What characteristics do you associate with the following types of service? Q. Which of the following attributes below do you associate with the following types of service? Q. How do the following types of service make you feel?

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service in action

JOHN LEWIS

Exceptional Service: Caring, Personal and Flexible
To elevate service from basic to exceptional, brands that have mastered efficiency must mix in emotion. Enterprises have to teach employees protocol, but they should also encourage them to be “caring,” “personal” and “flexible.” In our survey, respondents told Arnold that they associated these three words with exceptional service, building on speed and personal attention. Forty-one percent said a brand with exceptional service also rewards them for their patronage. Web retailers like Amazon, Patagonia, L.L. Bean and Zappos achieve exceptional levels of service by injecting a human element, offering personal attention and exhibiting a higher level of expertise. Customers are more likely to expect the brand and its associates to understand them and their needs and provide knowledge that will point them in the right direction. These companies consistently invest in enhancing their product and service offering as well as in training their employees. In addition, they often go above and beyond by offering perks like free or expedited shipping and no-hassle returns to ensure that the customer completes the service experience feeling valued and appreciated by the brand. Zappos is often a go-to example for 21st-century exceptional service, and for good reason. It has 500 employees in a call center in Las Vegas who receive seven weeks of training on how to make their customers happy. In addition, Zappos offers new employees a $3,000 bonus to quit if they no longer want to work there. As a result, they are known for delivering very personalized attention to their customers, with some employees going so far as to send a free pair of shoes to a best man who arrived shoeless at a wedding. Zappos goes beyond basic, impersonal service to connect with its customers, understand their needs and help meet those needs in whatever way possible.

No one expects turn down service at a department store, but in 2009, that’s just what shoppers got at John Lewis in High Wycombe, U.K. When a heavy snowstorm blocked roads and stranded shoppers, the staff opted to close the store but let shoppers stay the night. Associates made hot chocolate, unpacked fresh linens and made up display beds for their overnight guests, according to BBC reports. They kept children entertained by providing television and kept adults informed via regular reports over a PA system. It is hard to imagine such treatment elsewhere. John Lewis, which is regularly voted Britain’s favorite retailer, has a company culture that empowers staff to follow protocol but make their own decisions. First, John Lewis has no employees. They’re all partners who share in the company’s profits. The better the service, the more they make. Second, one of the company’s core values is to

“show enterprise.” Staff can make service decisions on the spot, allowing them to step up and be exceptional and, occasionally, historic – as they were during the great sleepover of 2009. Finally, the company’s customer service ethic carries over online, where reps answer tweets in an average of 3 hours and 23 minutes and respond to roughly a third of Facebook postings.

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EXEPTIONAL Service

Attributes

Reliable, flexible and smart

41%
Reliable

Caring

41%

40%
Flexible

40%
Expertise

40%
Personal

Functional Benefits

Personalized, responsive and rewarding

Provides me with personalized attention

42%

41%

Provides me with a speedy response

41%

Provides me with expertise

41%

Rewards me for doing business with a brand

Emotional Benefits

Makes people feel cared for and confident

Cared for

44%

44%

Appreciated

43%
Satisfied

42%

Rewarded

42%
Confident

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Q. What characteristics do you associate with the following types of service? Q. Which of the following attributes below do you associate with the following types of service? Q. How do the following types of service make you feel?

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service in action

Luxury Service: Innovative, Proactive, Exclusive
Luxury customers not only want to feel cared for, they want to feel pampered and unique. Sales associates at all levels are an extension of the brand, but none more so than at the luxury level. As Pedroza has said, luxury associates must “out-behave” their retail peers by “bringing your humanity to work every single day.” Luxury service builds on exceptional service by layering on innovation, initiative and exclusivity. The Ritz-Carlton, a paragon of customer service, teaches its associates to call guests by name, escort them door-to-door and anticipate unexpressed needs, like a hot cup of tea after a full day of skiing. Apple has modeled its own retail service around the Ritz Carlton, also greeting “guests” at the door, addressing them by name and setting up a concierge-like help desk. Innovation is also key to luxury service, as 20 percent globally expect luxe brands to deliver new experiences. Automotive brands, such as BMW, Mercedes, Lexus and Volvo, may be at the head of the pack here. Mercedes has adopted a “Driven to Delight” philosophy that has become the guide for each and every interaction with the customer. The automaker views its customers as exceptional and believes that they deserve incomparable, personal treatment. Its employees pledge that every day they will look for opportunities to surpass expectations and delight their customers. Technology is helping to blur the lines between luxury and exceptional service. Brands that deliver exceptional service are using technology to better anticipate customer needs and be more proactive at delivering superior service to customers. Brands that deliver luxury service will need to continue to push the boundaries, providing customers with experiences that are completely unexpected and tailored even more precisely to the individual. And when it comes to service in general, one thing is certain: Consumer expectations will only rise. Whatever service a brand currently provides, it must continually explore ways to keep ahead of customers through better and better service.

AMERICAN EXPRESS CENTURION CARD
The American Express Black Card, officially named the Centurion Card, is known as a paragon of luxury service. Members are personally invited to join the exclusive club of cardholders. While airline and hotel upgrades and access to airline lounges are seen as great perks for those carrying lower-tiered American Express cards, those carrying the Centurion Card – many of whom have their own private jets and homes around the world – seek something more. A 24-hour concierge service is dedicated to Centurion Card holders. The Centurion Concierge is shrouded in secrecy, but the rumor mill suggests the company has gone so far as to gather and ship Dead Sea sand for inclusion in a London student’s school project.

QUINTESSENTIALLY
Quintessentially is a luxury concierge service that is receiving global attention for specializing in “extreme service, from the elite to the impossible.” Billed as wish-fulfillment, the service provides well-connected experts 24 hours a day to engineer the most exclusive and unique experiences for their members. They also have an online, invitation-only social network, ELEQT, where members can wheel and deal with hundreds of like-minded (and similarly well funded) peers and gain access to exclusive events. From high-end travel to exceptional gifts to everyday services, Quintessentially promises to provide an exceptional and uniquely tailored experience for all of its members.

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LUXURY Service

Attributes

Exclusive and innovative

44%
Exclusive

Expertise

33%

30%
Caring

30%
Personal

29%

Innovative

Functional Benefits

Proactive and unexpected

Provides me with personal attention

36%

Provides me Provides me with with expertise personalized recommendations and guidance

31%

30%

30%

Anticipates my needs and delivers proactive service

29%

Provides me with new experiences

Emotional Benefits

Makes people feel pampered and unique

Pampered

43%

Special

38%

36%
Unique

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Q. What characteristics do you associate with the following types of service? Q. Which of the following attributes below do you associate with the following types of service? Q. How do the following types of service make you feel?

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The Impact of Technology:
Three Ways Brands Should Refocus
In today’s world, the service experience extends beyond the transaction. Technology has enabled brands to move beyond basic customer service to deliver 24/7 service experiences. Consumer expectations have grown, too. Consumers want more than a solution to a problem. They want to understand how their brands can improve their lives. Brands can harness technology in numerous ways to deliver a superior service experience, but there are three key areas on which we believe every brand should focus.
Integrating technologies to make service more efficient and cost-effective

Building social programs to forge stronger relationships and dialogue with consumers

Using data to anticipate customer needs and deliver better service

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Technology delivers Better, more, responsive service

Integrating technologies to make service more efficient and cost-effective
Brands that are tapped into the latest technologies have a huge advantage in providing better service to their customers. In addition, it’s easier than ever for companies to integrate new software and platforms into the service experience; there are countless startups specializing in niche services for brands, from e-commerce solutions to digital in-store enhancements to mobile payments. However, brands must be willing to experiment. Starbucks, for example, recently announced a deal with mobile-payment startup Square to speed up the checkout process. By downloading an app to smartphones, customers show a barcode to the barista to have payments automatically deducted from their accounts. Eventually, customers will be able to pay for their grande skim latte simply by saying their name. The mobile app will use GPS technology to sync with Starbucks’ registers. When customers enter a store, their names will automatically appear on the registers’ screens.
U.S. 75%

76%

Globally believe technology improves the overall service they receive

U.K. 74%

Brazil 72%

China 84%

78%
U.S. U.K.

Globally believe technology improves the speed of service they receive

Brazil

China

78%

77%

71%

85%

Q. To what degree does each of the statements below reflect how you see technology impacting the service you receive from brands today?

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Technology allows for an ongoing level of dialogue

Building social programs to forge stronger relationships and dialogue with consumers
U.S.

71%

Globally want to have an ongoing conversation with brands they prefer about what isn’t working

U.K.

Brazil

China

62%

60%

79%

84%

When it comes to social media, according to Arnold’s survey, 59 percent of people globally have posted either a positive or negative comment about a brand regarding a service experience. Social media provides a unique opportunity for brands to have a direct and casual conversation with consumers, and many companies have benefited from great PR due to the personalized relationships they’ve built with customers. However, social media has the potential to go far beyond Twitter banter, and it’s important for brands to explore how they can uplift the service experience through social programs.
U.S.

Globally have posted about a brand’s service on a social media site

59%

U.K.

Brazil

China

48%

45%

68%

74%

Singapore-based AirAsia, for instance, is working with Eptica, which provides multichannel customer-interaction management software, to put customer service at the heart of its online and social media strategy. The software is integrated into the low-cost airline’s website and provides customers with immediate answers to their questions. It’s also integrated into the airline’s Facebook page, where users can receive additional information. In addition, U.K. supermarket giant Tesco is experimenting with its loyalty program through a Facebook integration called Share & Earn. A test run of the program in July allowed savvy online shoppers to earn double points by using Facebook to like, share and buy products. In exchange, Tesco learned more about its consumers’ likes and interests through Facebook analytics. Plus, its products are shared across every customer’s friend base, amplifying the brand’s reach.

59%

Globally expect brands to respond to posted comments on social media at least most of the time

U.S.

U.K.

Brazil

China

39%

40%

83%

74%

Q. To what degree do you agree with the following statements? Q. Have you ever posted comments through social media about a positive or negative service experience? Q. How often do you expect a brand to respond to comments made through social media?

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Technology delivers more personalized experiences

Using data to anticipate customer needs and deliver better service
U.S.

67%

Globally are willing to share personal information with brands that are relevant to them to improve service

U.K.

Brazil

China

56%

52%

72%

86%

One of the greatest benefits to arise out of the digital revolution is the ability to capture a wide range of consumer data that helps brands deliver better service. Brands can use data to better understand customer behavior and shopping habits and to build highly targeted and effective customer-relationship management programs. A sophisticated, well-planned CRM program allows brands to relate to current customers while also pursuing new ones. More than ever, consumers are open to providing personal information. According to our survey, 67% of people globally are willing to share personal information with brands that are relevant to them in order to improve the service they receive. Carnival Cruise Lines, with the help of Arnold Worldwide, revamped its CRM process by creating an email series that was highly personalized, educational and interactive. Through its website, Facebook page and other channels, the company identified potential cruise-goers and provided them with content geared toward their interests and requirements. The effort has helped to increase lead conversions by a staggering 56% over previous emails.
Q. How willing are you to share personal information with brands that are relevant to you to improve the service you receive? Q. To what degree does each of the statements below reflect how you see technology impacting the service you receive from brands today?

60%

Globally believe that technology makes the service experience they receive more personal

U.S.

U.K.

Brazil

China

54%

50%

59%

77%

service in action

BIRCHBOX
Birchbox is an online beauty company that supplies its members with personalized beauty samples once a month. Birchbox asks customers to fill out a profile to customize their experience, with questions including age, ethnicity, skin type, hair color, eye color, level of beauty knowledge, beauty style and special interests, to name a few. Birchbox then uses all of this information to send products to the customers that fit their needs and deliver a personalized beauty product experience.
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Implications
BE RESPONSIVE ACROSS MULTIPLE CHANNELS
Consider all of the channels that you can use to respond to your customers, and how quickly you can address their needs. Consumers are looking for service in the channels that best fit their lives. And brands that prioritize responsiveness score highest among today’s Internet-enabled consumers. Our survey revealed that 46 percent of consumers worldwide said they respect brands that respond and contribute to discussions about customer service. Online and off, consumers expect answers at fiber-optic speed, and your brand will need to maintain contact by every means available.

BE CREATIVE AND IMAGINATIVE
Brands that surprise and delight customers in unique ways are those that win a lot of love. Especially when they provide consumers with highly personalized, innovative experiences that make them feel special. Creativity and imagination are critical components of elevating a brand’s service experience from basic to exceptional or luxury.

ANALYZE AND OPTIMIZE
Any platforms, software or programs that brands integrate into their service offering should have a layer of data capturing and analysis that allows them to better understand their customers and iterate how they operate. The ultimate goal is to become proactive, instead of reactive – learning from your past interaction with customers is a key step in this process.

PROACTIVELY LISTEN
Find ways to pre-empt customer service requests and proactively listen for your customers’ needs. Today’s consumer demands more than reactive service. The good news is that there are more ways than ever to listen to the consumer. Through surveys, social media, face-to-face conversations, email and beyond, there is no limit to the amount of feedback consumers can offer when it comes to helping brands meet their needs. In fact, your customers are likely already talking about your brand – you just need to find out where, and tune in.

INTEGRATE SOCIAL AND DIGITAL
There are no boundaries to today’s service expectations. Brands need to seamlessly integrate their mobile and social strategies with their overall service offering, using these channels as ways of engaging and, most important, interacting with consumers. Consumers are demanding an ongoing conversation with the brands they love through mobile and social channels. However, while opting out of these technologies is a surefire way to get left behind, treating them as a throwaway add-on to “real” (i.e., in-person or call center) interactions can be just as bad. Approach them the same way you would any other customer communication – the online world and the “real” world are one and the same now.
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GET PERSONAL
Consumers spoiled for choice are uninterested and downright annoyed when brands don’t take the time to get to know them. By providing a tailored experience, brands are showing an interest in consumers’ lives, targeting the right customers with the right service and wasting no one’s time. Thanks to shared data, you might already know your customers better than you think you do – harness what you’re already collecting to ratchet service up a notch.

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ARNOLD STRATEGIC INSIGHTS GROUP
S T R AT E
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I NS IGHT

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Arnold On is brought to you by the Arnold Strategic Insights Group. This edition is
based on the results of a global online survey of 2,400 adults conducted in April 2012 on general attitudes and behavior, as well on secondary research. The Arnold On series provides analysis and consumer insights across a variety of topics and their relevant impact on how marketers communicate with consumers. The content of this edition of Arnold On was developed by Sean O’Neill, VP, Director, Business Strategy; Deanna Zammit, Director, Digiday Content Studio; Neela Pal, Managing Partner, Global Director of Brand and Business Strategy; and Lisa Borden, EVP, Global Director of Human Nature. If interested in further discussion or a workshop, please contact us:

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Lisa Unsworth Chief Marketing Officer lunsworth@arn.com 617.587.8242

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