Everything Done Wrong, Yet Everything Gone Right!
Santa Claus - the man, the myth, the legend - is an old-money mogul who carved out a business empire by manufacturing and distributing toys to children around the world - free of charge - one night each year. He is recognized around the world - whether as Father Christmas, Saint Nicholas, Sinterklaas, Papa Noel, Peré Noel, Christkindl, or Kriss Kringle. Santa made his billions using a once-revolutionary business blueprint: 1) provide an invaluable, innovative product/service, 2) give it away for free, 3) market your brand like hell, 4) make a fortune through advertising, endorsements, and guest appearance fees. It's a business model that few others, with the notable exception of perhaps Google, have ever attempted or mastered.
Yet, despite his great successes in the past, many analysts question whether Santa will be able to adapt and thrive in today's new business reality. Santa seems oddly out of place in the 21st century. For example, in today's health and fitness-conscious world of no-fat and low-carb, here is a man who doesn't exercise or diet; in fact, he is openly and jovially obese. And while the rest of the world slowly shifts toward smoking bans to protect public health and reduce sky-rocketing health insurance costs, Santa clings to his pipe and rings of smoke encircling his head like a wreath. Not only is Santa out of touch with current health trends, but he seems decades (if not centuries) behind the fashion trends as well. While today's young fashionistas wear plaid prints like the characters in the popular Twilight film saga, Santa skulks around in his old red bishops robes from the 1800's. And, most importantly, while other businesses and organizations have rushed into Web 2.0 technologies and Social CRM capabilities to enhance their customer service offerings, Santa still lumbers along with slow, antiquated communication channels like the postal letter. Forget about Web chat, co-browsing, email response management, or social networking - Santa still hasn't even implemented Fax or Electronic Data Interchange (EDI).
In fact, Santa seems to ignore all guidelines about how to run a modern business. While the rest of the world is enacting new legislation to encourage local manufacturing and to protect worker's right, Santa outsources his manufacturing activities to a remote third-world location outside the jurisdiction of any government or human-rights agencies. He skirts potential child-labor laws by claiming his small, youthful laborers are not children, but magical creatures from middle earth. And he avoids paying healthcare costs, 401K, and government taxes by classifying his workers as "contractors" rather than "employees." I wouldn't be surprised if he is also involved in stock-option backdating or insider trading. Perhaps the only area where Santa shines is his use of an environmentally friendly "green" reindeer-powered sleigh rather than a coal-powered alternative he prototyped, but never implemented, back in the early 1900's.
Will Atrocious Customer Service Bring Down Father Christmas?
Let's be honest. There are a lot of companies who have been taken to task by customers for delivering really bad customer service (think AOL, DirecTV, Qwest, Comcast, Sprint, Capital One, HSBC, Abercrombie & Fitch - all of whom appear on the 2009 MSN Money "Customer Service Hall of Shame"). Yet Santa Claus is probably the worst offender of all. To begin with - let's face it - he rarely fulfills an order correctly. In the ten years that I wrote to him as a child, the deliveries were routinely laden with errors and omissions. Every year he got multiple things wrong, including the items and quantities. Some years he even failed to bring anything I asked for. Even when I placed my order directly with him in person at the mall, the deliveries were similarly botched. And to make it all worse, he doesn't allow customer returns. That's right - he sends you the wrong items and quantities, and you can't exchange or return it. That's worse than Abercrombie and Fitch's overly-restrictive return practices.
Not only did Santa manage to screw up the most basic orders (come on, how hard is it to remember "Atari 2600"), and refuse to accept any returns or exchanges (what exactly was I supposed to do with a "Pet Rock"), but he doesn't publish the telephone number of his customer service center anywhere. I'm starting to doubt if he even has a customer service center. I did an Internet search and found a dozen different Web sites claiming to be affiliated with Santa Claus, as well as several different mailing addresses for the North Pole including addresses in Canada, Alaska, Finland, Denmark, and Sweden. You would think Santa would at least offer some kind of annoying, poorly designed IVR phone tree that forces callers into an endless loop of confusing menu options, while repeating ad naseum that users should visit the Web self-service site for faster service. Alas, Santa offers no such IVR or Web self-service site. If you want to do business with Santa your only option is to pen a letter, put a stamp on it, and send it off to the Northern abyss - hoping that it one day ends up on the doorstep of Father Christmas.
With such a laisezz-faire approach to customer service, it is not surprising to learn that Santa's customer satisfaction ratings and Net Promoter score have dropped significantly in past years. Customers - even toddlers - are becoming increasingly sophisticated and empowered. Four-year-olds are tweeting on their iPhones and posting scathing (though often infantile) customer reviews on sites like Epinions, Yelp, my3cents, theSqueakyWheel, and measuredUp. According to my own research, there is a 43% likelihood that Santa will lose significant market share to rivals who embrace Web 2.0 and Social CRM strategies in the next five years. Potential up-and-coming challengers to keep an eye on include:
- The Easter Bunny - Most of his business and revenue currently comes in the month of March and he is looking to diversify into other seasonal holidays like Halloween and Christmas to provide a steadier annual revenue stream.
- The Tooth Fairy - She is currently bleeding money and will likely burn through another $100 million in 2010. She desperately needs a more profitable business model. Her experience at sneaking into homes late at night and leaving behind cash without being detected should translate well into Christmas toy deliveries. However, questions remain about whether her flitty image will resonate with the much coveted male-toddler demographic.
- Amazon.com - Amazon has the money, the online infrastructure, and the physical distribution network in place to give Santa a run for his money. But there are concerns about whether the Net retailer can eat into Santa's extremely loyal customer base. Watch for a potential acquisition or partnership.
- Private Equity - Private investors could potentially make a fortune buying Santa's operations on the cheap and then dismantling and selling off his various assets such as intellectual property, North Pole production facilities, reindeer and magical sleigh - not to mention his invaluable customer database containing a wealth of detailed, personal information on nearly every consumer in the world.
Santa Claus - like many established, blue-blood companies - has a long history of business success, but a strategy that hasn't fundamentally changed since he built his first wooden sleigh hundreds of years ago. In the meantime, modern technologies and communication channels have evolved to include tools like Web self service, email response management, Web chat, SMS text messaging, and social networking. Santa, along with all the rest of us who have perhaps been a bit slow in keeping up with technologies and communication channels demanded by our customers, risks losing customers to up-start competitors who may suddenly come out of nowhere. The risk is that while we kick off our boots by the fire with some fresh-baked cookies and eggnog after a hard night's work, the Easter Bunny and Tooth Fairy are out there working on a business plan. A business plan that most assuredly doesn't involve a team of caribou pulling a hand-made wooden sled.
Cross posting: View the unedited, full-length, director's-cut version of this blog at http://johnburton.typepad.com/freerange_organic_blogs/2009/12/santa.html.