Apple has set the bar for customer experience in so many ways. Let’s begin to count them:
• Product/service design
• Product/service introduction
• Out-of-the-box experience
• Service (iTunes) experience
• User experience
• Brand experience seduction and advocacy
• Retail experience
• Customer service in the store
• Customer service on the phone
• Returns/replacements/exchanges
©
2010 Apple
Recently, I’ve been impressed by the number of stories I’ve head from Apple users about amazing customer service experiences around returns, exchanges, and upgrades with no questions asked—essentially exceeding customers’ expectations. I’ve also heard lots of great stories about Apple’s skill at setting (and exceeding) expectations for deliveries of scarce products.
I’ve also been noticing the difference between the Apple retail experience and magnetism and that of all other stores. For example, in downtown San Francisco, the two-story store is always packed, yet there’s ample room for several dogs to be lying on the floor near their owners, and nobody has to wait too long before they can get their hands on an iPad to try. And the checkout lines are expedited. In sleepy Ardmore, Pennsylvania—in a downtown area that was originally designed to serve rich Main Line women who had nothing to do all day except shop and lunch with their friends—all the department stores and boutiques are now virtually abandoned since that lifestyle was replaced by busy two (+)-career families. The chic shopping section of Ardmore is now a ghost town. But there are two vibrant retail establishments: Trader Joe’s and the Apple Store. You walk down a nearly empty sidewalk to the Apple Store, open the door, and feel like you’ve entered a different universe. It’s teaming with customers and activity. Your immediate thought is, “Buy Apple Stock!”
Partnering with Suppliers Who Can’t Match the Apple Experience
Since Apple has raised the bar so high, it’s tricky for Apple to find partners who are up to the challenge of supporting the experience that Apple users have become addicted to. Given the care with which Steve Jobs imbues every atom of the customer experience he creates when designing a product or service, why doesn’t Apple have better quality control for vetting its partners’ experiences?
Why Does Apple Stick with AT&T in the U.S.??
So the question I’ keep asking myself, and have been asking ever since the launch of the iPhone, is why the near-exclusive partnership with AT&T (in the U.S.)—a brand in mobile telephony that has become synonymous with lousy coverage? In the U.S., Apple has persisted in giving AT&T long periods of exclusivity for the iPhone. Verizon is still dithering about when its iPhone will become available.
But why? AT&T has been notorious in letting customers down. Let’s count the ways:
• Spotty wireless coverage in the U.S.
• Too little bandwidth for data-intensive users
• Bad customer experience dealing with AT&T
• Hacking of iPad Users’ Data
• AT&T’s handling of the iPhone 4 Launch, including a second data breach!
Adrian Kingsley-Hughes has a wonderful post entitled, “Oh AT&T, could you have FAILed any harder on iPhone 4 pre-order day?” In the post, he says, “I really don’t think so…” then he lists all the failures on AT&T’s side….and goes on to say:
“This is a complete and utter mess, and it’s amazing to think of Apple standing on the sidelines looking on at this disastrous handling of the pre-order of a flagship product.”
©
2010 Apple
Why Did the iPhone 4 Not Work During Jobs’ Announcement?
On June 7th, Steve Jobs announced the next iPhone—the product whose popularity swamped AT&T’s infrastructure and reportedly caused Apple to halt order acceptance after 600,000 orders were placed. Less widely reported, but important, was the glitch that occurred DURING the announcement itself. As everyone knows, Apple announcements are carefully staged and prepared. So it came as a surprise to everyone, including Steve Jobs, when he couldn’t do his iPhone 4 demo! He wound up having to ask everyone in the audience to turn off their computers and phones so that he could have enough bandwidth to complete the demo. Jordan Robertson reported this in “Data congestion thwarts Steve Jobs' iPhone demo,” an AP wire story picked up by The Washington Post, Forbes, and many other news sources.
Network Data Congestion Will Damage the Customer Experience
One of the people who noticed this glitch at the iPhone 4 announcement was my husband, Tom Hagan. He has been ruminating about wireless spectrum capacity recently, ever since he attended my brother Andrew Seybold’s Wireless University seminar in Las Vegas this Spring. As Andy described in detail how spectrum is allocated and managed, Tom’s head was spinning. Then, during a break, Andy and several other folks whipped out their smartphones to show each other their video-on-demand capabilities. When Andy played his video, it looked great! When the second user launched his, it was slower. By the time the fifth user in the group tried to launch a video, all of them started to degrade. Tom’s “Aha!” was that there’s no way our current wireless infrastructure will deliver the kind of user experience that people are expecting.
Here are some of his thoughts on this topic, from his post, “Video on Cell Phones? Not Soon”:
My brother Andy Seybold, the family guru on mobile wireless, expounded further on how the wireless providers are dealing with this data congestion—by changing their pricing models. In his recent post, “Data Congestion and New Pricing Models,” Andy Seybold explains:“One of the things that ‘everybody knows that just ain’t so’ is that we will all soon be watching videos on our cell phones.
The rather sudden appearance of wideband Web access via cable, largely due to the enormous capacity of fiber optics, has induced many to believe incorrectly that the same is about to happen for wireless communication, via either 3G or 4G phone networks. Not so.
The entire available wireless spectrum available to cell phone users must be divided among the concurrent users reached by a single transmitter at the base station for the cell. That spectrum is sufficient for thousands of voice users, but only for many fewer concurrent video users — maybe 100 or so. Even five concurrent video downloads can confound a given base station in a cell tower at present.
There is just not enough spectrum available to provide video to the thousands of concurrent cell phones within the footprint of a typical cell tower today. Those towers are dotted around the landscape in church towers and fake pine trees, each one covering many square miles of geography containing many wireless cell phone users. Coverage is annoyingly spotty today even for voice, both because towers are not numerous enough, leaving dead spots, and also because some base stations are trying to serve too many users at once. And that’s just for audio. Even low quality video, equivalent to old analog VHS tapes, soaks up the bandwidth of more than 20 voice channels."
Having too many users attempt video streaming brings the cell to its knees. To get coverage for video comparable to what we have today for voice means that the essentially fixed bandwidth available to each base station must be divided among a much smaller number of users. That will require at least 20 times the number of base stations — or a base station on every fifth telephone pole, not just a few in the center of town in the church steeple. Demand will rise rapidly as more and more Web video clips become available, especially for ads. But the 20X multiple of base stations needed to provide the needed bandwidth per user will take longer to happen — maybe 10 years.
Meantime, we can all expect the kind of confusion and service interruption that prevailed when Steve Jobs attempted to demonstrate the new Apple iPhone last week to an auditorium full of people who were already online with their wireless phones and computers. To demonstrate his new phone, he found he could not get a reliable connection, and had to ask everyone in the auditorium to turn off their phones and computers before he could proceed. Steve was irked and seemed surprised that he had the problem. He should not have been. We are all going to have it, and we won’t be able to solve it like he did, when the users soaking up the available bandwidth, rather than being gathered together in an auditorium, are spread across the several miles a cell phone tower covers.
What does this mean? It’s not clear. People have become very dependent on their cell phones, and service interruptions like the one Steve experienced will not go down well with the public. Limited bandwidth is one reason that wireless providers have been arguing they need to be excluded from any “net neutrality” legislation. One way to provide for orderly allocation of the available bandwidth is to charge for its use. Just as people were once very sensitive to “minutes of use” of airtime for cell phones, they would be quite sensitive to using wireless video if it cost them enough per minute. Is that what we want? And would it still be necessary after there is indeed a base station on every fifth telephone pole?”
“Managing wireless bandwidth is part science and part art. A network operator’s goal is to provide as uniform a user experience as possible to all of its customers and to be able to serve as many customers as possible most of the time. We all have heard the stories about AT&T’s network and its reportedly poor 3G service in major metro areas because of the high demand placed on the network by iPhone customers who have become heavy data users. There are only a few ways to increase the capacity of a network: You can add more spectrum at each site, if there is some spectrum available; you can build more sites, which typically takes several years of planning, permitting, and building, so this is not an overnight fix; you can start using femtocells that are similar to Wi-Fi access points but are for wide-area networks to improve in-building coverage; and you can move users off the wide-area network (or Wi-Fi as T-Mobile does); and, of course, work toward off-loading the network by providing Wi-Fi service in certain areas as AT&T is doing in Times Square in New York.
But even with all of these options, there will still be data abusers who are only concerned about their own ability to use as much data as they want and don’t care if they are having an impact on other users on the network. This attitude is interesting since when they are operating in a wired environment and pay for unlimited data access, they are limited by the speed they pay for. Typical DSL and cable providers charge different amounts for different speed levels, which equates to the amount of data available to a user in a given period of time. Cable modem service is also a shared service, like wireless. The more customers that use cable broadband in a given area, the slower the data rate for all of the customers—but not to the extent that access is totally denied to anyone. With wireless, it is possible that the last ones into a cell sector won’t have service.
The final method for managing bandwidth and capacity usage is what we are seeing from network operators today. They are doing away with all-you-can-eat data plans in favor of plans based on usage. One network, Clear/Sprint, recently stated that it will not move away from its all-you-can-eat pricing at the moment, which is understandable since it has more spectrum than the other operators AND it doesn’t begin to have the customer base or number of devices being serviced by the other operators. In fact, Sprint just launched its first 3G/4G smartphone within the past few weeks.
Pricing is moving toward data usage models and typical plans are for 250 MB or 5 GB of data. They are still based on a flat rate up to the maximum allowed and then an overage price kicks in. When LTE is launched, there will probably be other pricing models as well. LTE enables operators to use what is called “quality of service” (QoS), which means data speeds can be varied based on usage. For example, we might see pricing based on 2 Mbps service, 5 Mbps service, or for those who want the best, say 10 Mbps service. The rate you pay will depend on the data speed you choose, much more like the wired and cable models we are accustomed to. However, I also expect to see monthly caps on data amounts and perhaps another pricing step that would be invoked for large file downloads that might work something like this: If you want to download 20 MB of data at 2 p.m. in the afternoon, you might have to pay an extra $5 for that download, but if you defer the download until 2 a.m. when network loading is much lighter, the download would be free.”
Apple’s iAds Will
Contribute to Network Congestion
AT&T’s network aside, there’s also a corollary issue about bandwidth congestion and Apple’s part in increasing demand on mobile and even Wi-Fi networks that aren’t up to the challenge of supporting millions of data-hungry users. This is going to be compounded even more as more and more people try to pour onto 3G and even 4G networks and try to use video on demand, including Apple’s new iAds service, which will launch on July 1st and is expected to account for over 50 percent of mobile advertising in 2010.
The whole point of iAds is that they are interactive video. According to iAds, the video is streamed not from the advertiser’s Web site, but from iAds site (now Apple’s) so that the video performance won’t affect the advertiser. But what about the network itself? All that video will still be streaming across the network. iAds will consume bandwidth for the end-user and for all the other users who are trying to access the same network.So, bottom line, we’ll get to see wonderful ads, inserted into free iPhone apps and/or free content. But if we try to access this content using the mobile phone network, we’re going to be adding to the congestion and driving up our own bandwidth costs.
This sounds like a customer experience challenge that even Steve Jobs may have trouble wrestling to the ground!
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Great post! Also of interest is this recent post: http://www.instituteofcustomerservice.com/1711-6870/Apple-intangibles-and-profit.html which highlights some of the mistakes Apple makes which due to its customer experience it can nonetheless get away with
Posted by: Joe Talent | March 07, 2011 at 02:10 AM