The Service Pivot

“The best minds of my generation are thinking about how to make people click ads” – Jeff Hammerbacher a 28 year old Harvard mathematician who was one of Facebook's first 100 employees.

I saw this quote in a Bloomberg Businessweek article talking about the technology energy focused on “getting shoppers to buy” and the “life dream of Silicon Valley” of ad-based business models and marketing-driven culture. Folks point to Groupon, Zynga, and Facebook as examples.

The fascinating part of this focus on monetizing ads is how many of the entrepreneurs loathe marketing itself. Larry Page has openly critiqued marketing, saying at one point "if we have to use marketing then we have failed". Yet Google made $36 Billion on advertising revenues in 2011. They are reliant on a business model that they don't wholly buy into themselves. Larry Page is not alone. Robert Stephens, founder of Geek Squad, stated that "marketing is a tax you pay for being unremarkable.” It has taken on almost a mythic notion in the technology sphere. Facebook is sincerely trying to create more personalized recommendations based on social connections to make ads and deals more relevant. But it is still all about ads as a revenue model for Facebook as far as the eye can see.

And the fact is, even as a marketer, I believe their issues with ads aren’t necessarily misguided (or at least the way a lot of advertising goes to market). I get their point. Many consumers loathe “disruption” and the amount of marketing in today’s world, too. And many businesses are struggling to find the return since marketers need scale and ROI. The struggle between consumer experience and advertising results has been messy, and it's getting messier.

Service instead of advertising business models?
So here's the rub: technology companies need to make money to fund the amazing tools and fascinating products people crave – let alone rationalize their very high valuations to shareholders. But is advertising the only place to fish? I don't think so.

If the ultimate goal is to create a profitable, scaled business model that benefits both businesses and consumers, why not pivot to focus on service rather than advertising? What are the yet undiscovered business models in service? 

It's a huge market opportunity.
Companies spend billions of dollars a year on traditional customer service: support wrapped around a purchased product. Think call centers, email response, social media monitoring, refunds, bad service recovery. More than advertising, customer service can be one of a company's biggest expenditures. For some high tech companies, for example, service costs can go as high as 60% of total expenses. Other multinational studies estimate as much as $338.5 Billion is lost annually from companies due to poor customer service. Amazon and Starbucks have shifted marketing budgets to service and experience long ago. Zappos does, too.

This is just the beginning. Billions of marketing dollars where even a portion could be shifted to customer experience and care. Is that the marketing of the future, not advertising? It isn't lost on big brand marketers that some of the most valuable brands today were largely built without traditional advertising for themselves: Amazon, Starbucks, Google, Twitter, for example. Traditional media marketing budgets can be shifted into experience and service such as free shipping or product features for alerts.

Customers' notion of service is expanding in definition and importance.
There is an iconic article from 1964 about the railroads realizing they were no longer in the business of making trains, but rather moving people. Service is ripe for that (re)perspective. It isn’t about answering customer complaints, it is about nurturing relationships, creating amazing experiences, and anticipating people's needs and wants. There is a lot being written about this now. Marketing and Customer Service are meeting in the middle at relationship building.  In the customer journey, advertising tactics and service transactions need to be desiloed, resequenced and summed beyond a series of transactions to a lifelong relationship.

And as customers' notion of service expands, it will become an even more important and bigger investment for companies. Service is increasingly more than answering a question or fixing an issue today. It means personalization, being frictionless, and well-designed. It means a company is listening and responding. It is segment-of-one.

It feels better.
Service is laudable. It just feels better than selling. The end may ultimately be the same: higher sales and deeper bonds of loyalty. But the means feel better.

It is a hairy audacious challenge.
Entrepreneurs have obviously seen opportunity in the service industry and have automated call centers (eg Microsoft Tellme), CRM (eg Salesforce) and social media (eg GetSatisfaction). But that is largely focused on innovating the traditional scope of service. They aren't looking far enough on the forefront of marketing as service and experience. Hack that.

To the VCs, entrepreneurs and engineers out there, let me throw up a challenge: Pivot. I don't just mean that in the Eric Ries sense of the word. Literally, turn your head and look at the world differently. Shift your perspective. Break free from the labels of marketing and service. Get past the tactics (advertising) to the objective (customer engagement) and hack that.

Instead of looking at the open graph for likes or deals, imagine it for service. In essence, Twitter is allowing customers any time anywhere to raise their hand when they need help. The customer doesn't have to go to a website or call a representative. The representative comes to them. That is incredible. With a smart phone, wherever they are, they just asked for help with something as simple as @ or #. What if Facebook “likes” were doing the same? When will Facebook or FourSquare launch "help"? The dissolve between off and online can make this possible.

Imagine companies offering personalization, delight, anticipation, information or simplification in situ? Taxonomy from FourSquare is a start.

Imagine smart devices that proactively service themselves. We are starting to see this with refrigerators and cars signaling when they need service, but that is just the beginning. Start broadening the aperture to look at the economics of warranties and purchase protection. Hack that.

Imagine putting together a set of IKEA shelves and when you get stuck, you don’t need to read the instructions or find an Internet connection and hope someone put up a video on YouTube with instructions. Just grab your iPhone and an IKEA’s augmented reality app could show you how to put the pieces together when you look at them through your smart phone.

Advertising when it's storytelling has a role and can be a powerful way to raise awareness of something, engender emotions, and start a conversation. I'm not saying service can disrupt all parts of the funnel. But it would be really fun to look at it that way. To break down service into personalization, anticipation, delight, security, simplifying -- all in the moment when a customer most needs them and to see if those "tactics" could achieve the same or better results to attract, engage and keep customers as advertising. Humbly, I am sure someone is thinking that way, but what if everyone was trying to solve this? What are the yet undiscovered business models in servicing? The world truly would be a better place for customers, the businesses who serve them and the technology companies enabling them, right?

Imagine the smartest minds of your generation thinking about that.