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Customer Experience and Balance of Power

Social Media protestDuring the last few years we witnessed tremendous political impact of social media on politics, both in  government and corporate realms. The examples abound from the social media fuelled Arab Spring demonstrations and political campaign funds collections, to the well publicized resignations of corporate leaders.

The role of social media protests focused on removal of specific individuals from their positions is somewhat troubling. It brings distant and horrifying memories of lynch mob parties and witch hunts. The fact that today’s victims are not physically harmed and cannot see the faces of their tormentors, does not make this practice fair or progressive. However, these protests were very effective in achieving their goals so far.

I wonder if this approach would also be as effective in compelling businesses to treat their customers better. Organizations and agencies that are charged to protect consumer interests are not doing a very good job for variety of reasons. Imagine Comcast customers start to protest the proposed acquisition of Time Warner Cable via a heated social media campaign. There are two reasons why the customers, and consumers at large, would consider to join such protest:

  1. If this proposal is accepted by the government agencies considering it, Comcast will be allowed to control both what content their customers consume AND how they get to consume it.
  2. Some consider Comcast to be the worst company in America.

I am not sure how this title was “awarded” to Comcast and don’t vouch for accuracy of the process that reported this distinction, but according to 2013 Temkin Experience Ratings, the TV Service Providers are firmly on the bottom of the poll as a group. Our own measurements produced Comcast social NPS® ratings below the Time Warner’s that are not particularly high either. However, this article is not about Comcast – it is about effectiveness of a social media protest and its potential application to consumer rights. If you are a lucky person who did not have a personal customer experience with the US cable companies you may want to see this video



Customers have been flooding social media sites with their complains about Comcast for years. Yet, the government has consistently allowed  them to acquire competitors that may have provided comparatively better experiences to their customers.

It appears that protests against faceless corporations do not produce the desired effect – provide better customer experience or let others do it. What will happen when consumer rights’ activists learn to become more effective by targeting specific politicians of the Senate Judiciary Committee, or other such agencies, who vote to allow a specific corporate merger that is detrimental to customer experience?

When and if this happens, the first political demotion or resignation will signal to businesses that their customers are not their assets, to be acquired or sold, they are the stakeholders and should be treated as such.

Social NPS® is an algorithmic estimate of customers response to the question – “On the scale of 0-10, how likely would you recommend this product to a friend or a colleague?”. It is produced by applying Opinion Mining technology to online CGC (customer generated content).

NPS, Net Promoter, and Net Promoter Score are registered trademarks of Satmetrix Systems, Inc., Bain & Company and Fred Reichheld.

What a CMO could learn from Ed Snowden

Big data effectivnessIt is hard to find anyone who is not familiar with revelations about mass collections of private data conducted by NSA and other international security agencies. Regardless of what one feels about the methods Edward Snowden used to make these revelations public, there are  lessons to be learned from that affair.

    1. Most people are not happy about the unauthorized, covert collection of their personal data. When you plan investment into big data methods and technologies for marketing projects, you have to consider the risk to your brand equity. The consumers will likely punish your brand when they discover that you have used their data without their permission. The excuse, you’ve done it to improve their customer experience will not likely get your brand off the hook. Even though the NSA claims to collect only the meta data and do it only for our security, it has been threatened with disbandment. Many marketing big data models need very specific personal data to deliver (hopefully) what they promise. 
    1. During the SXSW televised address, Snowden questioned the actual effectiveness of mass data collection to protect us from external treats.  Volume and velocity of data does not linearly translate into actionable intelligence for the NSA or for a CMO. Ease of monitoring huge volumes of data and measuring clicks are likely to result in failure because they distract us from focusing on the real problems. “How much”, “how many”, “how often” and other such quantitative data is plentiful, and can be relatively easily aggregated for pattern analysis to understand what has already happened. However, such data is not sufficient to generate meaningful and actionable insights without understanding “why” consumers behaved they way they did.

 “The first step is to measure whatever can be easily measured. This is OK as far as it goes. The second step is to disregard that which can’t be easily measured or to give it an arbitrary quantitative value. This is artificial and misleading. The third step is to presume that what can’t be measured easily really isn’t important. This is blindness. The fourth step is to say that what can’t be easily measured really doesn’t exist. This is suicide.”

― Daniel Yankelovich


In this age of the social consumer, qualitative information is widely available for analysis and opinion mining without encroaching on consumer’s privacy rights. However, the complexity of translating  unstructured content into the metrics needed for predictive modeling, prove to challenging for most marketers. They find it easier to focus on volume and velocity of data instead for now.

According to IBM Global CMO Study

“While 82% of CMOs plan to increase social media use during the next three to five years, only 26% are currently tracking blogs, 42% are tracking third-party reviews, and 48% are tracking consumer reviews to help shape their marketing strategies.

56% of CMOs view social media as a key engagement channel, but they still struggle with capturing valuable customer insight from the unstructured data that customers and potential customers produce.”

The CMO’s need the conviction and courage to stop pretending that low hanging fruit is a complete diet, and challenge their teams to engage with consumers on consumer’s terms.




Loyalty vs Reputation-Which sells your product better?

Loyalty is based on prior experiences a customer had with a specific brand, while reputation is based on the aggregated experiences of others with a specific product. Both influence purchasing selections consumers make, but each can make a different impact on that decision. The importance of brand loyalty is decreasing, but the impact of product reputation is on the rise.

This trend does not affect all product categories the same way. The brand loyalty of frequently purchased products, like toilet paper or coffee, has a much stronger hold on a consumer than the less frequently purchased products, like a phone, a car or an appliance. Consumers are faced with less uncertainty selecting FMCG products due to:

- Relatively low price/risk levels

- Product continuity compared to endless introductions of new models

- Consistency in quality of a product experience.

On the other end of this spectrum, the selection of highly priced products, every few years, is associated with a higher level of uncertainty that cannot be easily alleviated by prior experience with that brand. A wide variation in the quality of products associated with a brand taught consumers not to rely on a brand as a dependable quality proxy. The availability of specific, nuanced descriptions of experiences, other customers had with this very product, helps shoppers to assess how likely their expectations will be met, and hence to reduce the anxiety of that choice.

My wife doesn’t spend more than a few seconds to pick out paper towels off the store shelf every week, but agonizes for a few days to chose a smartphone every two years. She is not alone in this behavior pattern.

There is plenty of research about the impact of customer reviews (experiential content) on shoppers behavior. The studies established a clear connection between a sufficient number of reviews and the visit-to-purchase conversion rate in online shopping. However, the similar behavior patterns are observed in the brick and mortar stores as well. Given the fact that 79% of consumers trust customer reviews, this is not surprising. The fact the product marketers and agencies are still trying to control product information flow to consumers, is a surprise. Most are still stuck on the first two stages of Loss and Grief denying the obvious (consumers trust the stranger’s experience more than the marketers) and angrily questioning the integrity or bias of customer reviews sites. Some, so called marketing “professionals”, are trying to regain control with ill-advised, unethical and illegal attempts to contaminate the information flow with fake reviews. They are incapable of managing their paid advertising addiction and learning to ethically stimulate customer-word-of mouth instead. My best advice is to avoid the Bargaining and Depression stages all together, and go directly to Acceptance to cause your company’s reputation the least damage.

Loyalty vs Reputation

With the growing impact of absolute value on consumer purchasing decisions, the challenge of marketing is shifting from positioning and segmentation to generation of interest among consumers and fostering creation of experiential content. Between the increasing noise and shortening consumers’ attention span, this task is getting much more difficult than it used to be.


CRM, Omnichannel and the Quest for Customer Intimacy

Once upon a time, before consumer markets became dominated by large corporations and big box stores, customer centricity was a relatively common practice. Small manufacturers and shop keepers could not do it any other way to attract and retain the relatively small number of customers who were financially capable to support their businesses. The real, personal relationship often existed between people who worked for the companies and people who consumed the products and services these companies provided.

As population and affluence grew exponentially, companies followed by scaling their growth to satisfy the needs of their markets. They largely succeeded in building efficient organizations to manage their growth, but at the expense of the “personal” relationships they once had with their customers. During this process of scaling “George” and “Gladys” were replaced by customer persona, segments, demographics, etc. 

I am not waxing nostalgically over the “good, old days” and have full appreciation of the progress that made our lives a lot better in many ways. However, as a customer I do miss the experiences associated with a personal relationship.

Once or twice a week I frequent a funky coffee shop (French Hotel), in the heart of Berkeley’s Gourmet Ghetto. The other day I was standing in line to order my cappuccino, ready to give a barista my order. Before I had a chance to open my mouth, the barista gave me a cup made up exactly they way I usually order: with a smile and “hello”, and “how are you doing” to follow.  This kind of experience you can only get in a place where the same 2-3 people work all the time and a transaction is very simple. Can it be re-created in a place like Starbucks? Best Buy? Comcast?

The technologies capable to create such a transformation have been available for over two decades. The enterprise culture, designed for unlimited scaling, did not find the motivation to leverage technology for re-focusing itself on its customers. It has used these technologies to reduce the costs of doing business instead. Organizational silos bring efficiencies to operations, but they also create a broken view of the customer, as each silo has it’s own perspective on how a customer looks: “innovator” or “slow payer” or “support hog”. To make it worse each department thinks that their perspective is the complete and accurate picture.

CRM has promised to create a complete, holistic view of the customer, but failed to break organizational silos and to deliver better customer experience. Now, different technologies make similar promises again. Should we take these promises seriously this time? Let’s look at mega trends to help answer this question.

  • The trend in global population growth is not slowing down. Therefore we cannot expect a stall in the market size growth to moderate the enterprises’ appetite for scaling.

World population growth

  • The affluence of consumers, appears to have moderated in the developed countries, yet continues explosive growth in the high population developing economies of the world. Given the global reach of modern enterprise, the higher demands for better customer experience from a less important customer base, is not likely to force corporate management to review their fundamental propensity for use of technology as a primary cost cutting tool.

Global trends in consumer Affluence

  • During the last decade we witnessed the shift in balance of influence on consumer behavior from brands (enterprise) to their customers. That shift was powered by the proliferation of social media technologies and its adoption by millions of consumers in the developed markets. There is a strong evidence that this mega trend is growing in the developing markets as well.

Affluence and absolute value

The social consumers influence in China is over 50 points below that of the US and Britain. However, if it continues to grow, the enterprise would be forced to review it’s historic strategy and start to compete on quality of customer experience instead of the traditional 4 pillars of marketing.



Death by Confirmation Bias

There is no more expensive mistake than the rejection of new findings without the critical examination of methods and data used. Continually spending money for research that confirms what you already know is a pointless exercise.

Confirmation bias (also called confirmatory bias or myside bias) is a tendency for people to favor information that confirms their preconceptions or hypotheses regardless of whether the information is true.

The assumption that you already know how customers feel about your products or service, is the first step on the path of destruction of your brand’s equity. At first, this assumption will make you subconsciously filter any information about your customers, accepting only that which supports your beliefs. The marketplace changes very quickly and if people are afraid to bring executives any new intelligence that challenges their bias, the gap between customer expectations and the experience the brand delivers, can open very fast. The longer this change is ignored the wider the gap becomes. Here are some examples:

Many brick & mortar retail executives are convinced that their problem is price competition from online retailers. Meanwhile the customers say that the customer service is the most important attribute they hope to experience when they shop at brick & mortar stores – and they don’t get it there. Below is an example of Best Buy customer feedback analysis.

BestBuy Customer Intelligence


As US retail executives continue to hold on to their assumptions and refuse to hear what customers really want, their stores’ traffic keeps declining and profit margins follow the trend. The latest news is about Radio Shack closing 1,100 stores in cost-cutting move, but they are not alone. The gap keeps widening as the ill conceived cost-cutting measures are reducing in-store product inventories and floor personnel training. That perpetuates the self-fulfilling prophecy of loosing more and more customers to online retailers who provide a better experience at the same (not lower) price levels.

Whenever company executives ask which model of their brand the customers like most, they always expect to hear that their customers love their flagship product. When customer experience research points to a “lesser” model as a customers’ favorite, most executives dismiss the findings outright, without any attempt to examine the data. The chart below illustrates the middle range Nokia Lumia 925 (NPS=73) outscores the Nokia flagship 1020 (NPS=28) in the customers popularity. In our estimation it also outsells Lumia 1020 by at least 2:1 margin.

Nokia phones social NPS


Data set=2,871 customers feedback (unsolicited).

A deeper look shows that the barely acceptable reliability, touch screen and web browsing experiences Lumia 1020 customers reported, are the causes of the much lower Net Promoter Score.

Root cause of low social Net Promoter Score


Positioning of a product based solely on features, functions and tech specifications, without regard to the realities of the market, reduces the value of the brand. Designation of a weaker model as the flagship product sends a signal to consumers that the company does not value the experiences of it’s customers. The irony is that these customers are the ones who create a value of the brand.

“When I think I know enough about a subject, I stop learning. Yet, the world continues to evolve without me.” – @briansolis

Farce of Data-Driven Marketing

data-driven marketing fakes intimacy“Eat your own dog food” is a term often used in technology startup circles. It refers to a practice of using the technology your company develops to support your own company business processes. Indeed, if your tool can benefit your customers so well, how come you don’t take advantage of it? Startups rarely have the resources for large marketing departments and “eating your own dog food” helps them to learn intimately how their customers experience their technology, and the consequences of its use.

Of course this concept is not limited to startup marketing. It is very difficult to professionally “communicate the value of a product or service to customers, for the purpose of selling that product or service” without intimate understanding of customer experience with this product or service. Personally, I find the above definition of marketing discipline too limited. The purpose of the exercise is the creation of customers, and that process does not end with “selling that product”. The creation of a customer is based on an experience that meets or exceeds expectations set by the promise communicated by marketing. Yet many marketers persist in futile attempts to buy shortcuts to trust. More often than not it backfires.

As more transactional data becomes available every day, marketers try to use big data technologies and concepts to reach more consumers more effectively. The problem is: how they interpret “more effectively”. It seems the technological complexities of implementation often obscure the fact that intimate understanding of customer experience is not buried in a pile of data points.

“data-driven marketing is trying to “fake” intimacy, to recreate true relationship through a series of data points.”

Intimacy is borne by trust, yet when some brands try to win consumer’ trust,  their opening move is to violate their privacy.

“Emily Wilkins, a blogger, wrote about receiving a huge “Celebrate Baby” catalogue from Target after she miscarried, along with mailings from Gerber, American Baby magazine, and Similac. “None of them got the memo that I’m no longer pregnant,” she noted. Another writer wished aloud that Amazon.com would stop showing her deals for strollers and car seats, adding, “It kind of doesn’t help that corporate America is knocking on my door with daily reminders.”

Farce of Data-Driven Marketing

Perhaps data-driven marketing efforts should be re-focused on how people experience the products. Grabbing consumer data without asking for permission, in search of trigger points to activate a cash register, creates an effect opposite to trust. Asking for permission to use your data alone, can start a meaningful relationship that may lead to intimacy. There are no shortcuts to trust.

In the age of the automation of everything, authenticity is a rare and precious currency. Use data to learn what your potential customers want to experience as opposed to faking intimacy.


Experience of Customers Helps to Forge Shoppers’ Expectations

I thought you would be tallerIf you believe, like I do, that happiness is about expectations management, customer reviews are your best bet for selecting your next car, smartphone or restaurant because they will likely deliver an experience you expect.

“The big advantage of a major brand over a small competitor is a residual expectation in a consumer mind of reduced probability to be disappointed. When quality is hard to predict a brand serves as a proxy to likelihood of good experience. The detailed and product specific experiences, shared by actual customers, help to decide if this product is for you. Surely, this information is not perfect, but if it is in statistically representative volume, it the best way to shrink the gap between your expectations and your experience.”

Skeptics often cite that reviews from customers, who may not be like you, make the usefulness of these reviews highly questionable because people have very different attitudes and product adoption skills. While this is undisputable, the large number of reviews and filtering options available allow for a reasonably easy match between a shopper and the customer profiles. The personality and attitudes of a customer shine through the language of the reviews and help a shopper to “try on” an experience of people like her. The absence of a “story” is one of the key reasons why ecommerce sites that substitute actual reviews with score cards experience lower traffic and visit-to-purchase conversion rates than their competitors who publish complete reviews.

Most of content generated by customers is fact based. There is no sugar coating or attempts to manipulate your emotions. The language of reviews tend to be more specific, more matter-of-fact and focused on the personal experience the writer had with a product in question. Warm and fuzzy is much less effective when it faces meaningful competition from more “rational” sources.

The language also betrays fakers and dumb marketers who sometimes try to manipulate the market. Faking reviews effectively is not as easy as people may think. The language used, vague description of details and lack of personal experience knowledge are easily noticed not only by an attentive reader, but even by algorithmic filters that consistently give them low confidence score. In addition, it is impossible to tip the scale with an occasional fake review, and a sufficient volume of them can be easily spotted and tracked to the source. The financial penalties imposed by FTC for publishing fake reviews have run into hundreds of thousands of dollars, but that fades compared with damage to the reputation of the company that commission such activities.

It is surprising how few marketers consider customer reviews to be a valuable source for marketing intelligence because they cannot control and/or manipulate it. Instead they prefer to rely on “big data” acquired without customers’ consent and often against their wishes. Those marketers who do hear what real customers want to tell them quickly discover what specifically make one product more valuable than the alternatives to their best customers and prospects. Actual use of this intelligence to support their product marketing processes helps them consistently outsell their competitors by a wide margin without price discounting.

You cannot eliminate an uncertainty, but experiential information provided by customers helps to resolve it much faster and much more specifically than any brand advertising or company centered survey.







Can Customer Experience be managed?

Customer Experience Management

Most Customer Experience professionals would find this question to be ludicrous, but in the article “Is Customer Experience Manageable? An Industry Pundit Says No” Esteban Kolsky lists 5 arguments to convince them otherwise.

It is critical to start any discussion with definitions of what is being discussed in order to prevent this discussion to become as pointless as debate about the gender of angels – as engaging as it may be, there are very few practical implications.

There are a few definitions for Customer Experience, but this one is sufficiently appropriate for the discussion:

Customer experience (CX) is the sum of all experiences a customer has with a supplier of goods and/or services, over the duration of their relationship with that supplier. This can include awareness, discovery, attraction, interaction, purchase, use, cultivation and advocacy.”

There are many more definitions for “management,” such as

management in business and organizations means to coordinate the efforts of people to accomplish goals and objectives using available resources efficiently and effectively. Management comprises planning, organizing, staffing, leading or directing, and controlling an organization or initiative to accomplish a goal.” 

Any definition of organizational management that includes the word “control” supports Esteban’s position – Customer Experience cannot be controlled by a company. However, if we agree that management means coordination, planning, etc., then Customer Experience is absolutely manageable.

A Twitter exchange with @billholland inspired me to think about it a little deeper than usual, where he pointed out that

BillH tweet

The objective of Customer Experience Management is very similar, if not identical, to original objective of Customer Relationship Management efforts – to allow an organization scale fast without losing its focus on customers. CRM has promised a 360-degree visibility of a customer and failed miserably to deliver it, sidetracked by inability to break organizational silos beyond Sales, Customer Service and Marketing. Specialization helps organizations to scale very fast and very efficiently, but the price it pays is a loss of effectiveness as every department is focused on their domain, while the goal of business gets out of focus completely.

Today, Customer Experience Management faces the same challenges and experience of CRM veterans, like Esteban, is very valuable. This is what he has to say (in bold):

  1. Customers are not listening to what you have to say. This is because Social Media gives them more authentic, informative and relevant information about your company and your product.
  2. Customers know more about your business than you do. In this chapter Esteban specifically questions value of “Customer Journey.” I agree with him that too many customer experience professionals focused on customer journey too much – often to the detriment of the overall objective, like many CRM professionals before them, who proudly delivered glorified contact management to celebrate a “mission accomplished” moment. Personally, I think that customer journey charting is a valuable exercise, for some businesses more than others, to get better empathy and understanding. Just remember that customer journey is a relatively small subset (interaction management) of overall effort.
  3. Customers create their own experience. Customers can create their own experience just as successfully as companies can control it – it is not possible. The experience is created mutually by all parties to this relationship. The more flexible and better informed the parties are, the better likelihood of the great experience for all parties involved. Today, customers seem to be better informed than manufacturers and retailers participating in the process of delivery.
  4. Customer interactions are complex and unpredictable.
  5. Customer (and user) communities are where the knowledge is at.

I am not convinced that the last two chapters gave good reasons to throw a towel on attempts to manage efforts for improvement of customer experiences. One thing to remember is – don’t stop trying just because you cannot provide the best experience for your customers. That is not the goal. The goal is to provide better experience to your customers than your competitors provide to theirs, and live to fight another day.



True Value of Social Customer Experience to Future of Brands

Consumers are becoming more connected and social about their customer experiences. The number of customer reviews sites and volume of the content published on these sites grow exponentially. More tools are being developed and adopted to make this experiential information easily available to shoppers. More shoppers find this information more trustworthy and valuable to their purchase selection process than marketing collateral and advertising.

So what are brands doing about it?

A few brands, like martial arts masters, learn how to leverage this momentum to come out even stronger. They use this content to learn what is really important to customers about their experience, and how that experience differs from those who purchased competing products. These brands employ the newly found intelligence to improve their customers’ experience, and the customers reciprocate by sharing it with connected consumers, making the brands’ product an easier choice for shoppers.

Some brands are trying to use these new channels of communications to insert themselves into the consumers conversations with selling messages, calling it social media marketing engagement. These brands seem to be less interested in their customers’ unsolicited opinions than in opportunities to ping them with offers to resolve a problem or sell something.

Yesterday I tweeted a link to a magazine article speculating about Comcast’s hidden reasons for acquiring Time-Warner.

Comcast tweet





That inspired a Comcast competitor’s social media “expert” to tweet to me an “offer” to switch to their service.

DirectTV tweet





How awkward is this? I did not tweet about my experience, negative or positive. I was their customer before. Their offer was not available to me as a “new customer”.

If authenticity is a currency of social media, this brand is running a serious deficit. I think they can benefit from Mark Twain’s wisdom: “Boy, if you can learn how to fake sincerity, you’ve got it made”.

But most brands’ efforts look like a deer caught in the headlights. They just throw money at collecting “likes” on FB and Pinterest and hope for the best. These brands use pre-defined keywords to monitor social media in an effort to protect their reputation, while customers use the words which are meaningful to them to describe their experience. These brands count keywords mentions instead of learning the contextual meaning of customer experience. They still think that social media is just another channel for brands to advertise and maybe provide occasional customer support and find it annoying that they cannot control the conversation.


Blackberry Reputation & Units Shipped







The future of brands is in learning from consumer conversations as opposed to controlling them. Those  who think they know better than their customers are not likely to have a bright future.

Customer Experience and Devaluation of Brand

social consumer experience and value of brand

The rise of social customers triggered the devaluation of brand as an asset class. In the past a brand was recognized by businesses as the most valuable asset because they served as a proxy for quality of products sold under that brand. In the vast “ocean” of uncertainties of choice (“Life is like a box of chocolates. You never know what you get”), a brand served as a life raft. The loyalty to a brand reduced uncertainties of the market place.

Today, consumers have unlimited access to better tools for reducing shopping uncertainties – past experiences of socially connected customers.

“The new information environment allows consumers to predict much more accurately the experienced quality of products and services they consider getting.”

The quote above comes from Absolute Value: What Really Influences Customers in the Age of (Nearly) Perfect Information written by Itamar Simonson (Professor of Marketing, Stanford) and Emanuel Rosen (ex marketing executive). This book challenges very fundamental pillars of marketing that include the value of a brand to an organization. The authors argue that an easy assessment of absolute value of a product (experience) is eroding the influence of “relative forces” (branding, loyalty and positioning) that used to drive purchasing decisions. The implications of this transparency on traditional marketing practices are enormous because it accelerates the rise and fall of the brands exponentially:

  • It took only few short years for Blackberry and Nokia to reach the top of their category, and fall to the bottom
  • Do you remember the last time you’ve seen a Volvo commercial promoting its safety record?
  • It took 5 years for Asus to reach the fifth place in worldwide PC shipments at the expense of well established brands without heavy investment in advertising.

The “absolute value” term makes me somewhat uncomfortable, because the experiential value is also relative. However, it is relative to consumer’s expectations and ability to filter information available for making a better (for them) choice.  Compared to being manipulated by a brand, enabled by the lack of better information (i.e. “relative value”), the new paradigm is absolutely a better choice for consumers. Surely customer reviews are not perfect quality indicators, but their content provides real help in assessment of experience a consumer can expect. 

influence of customer reviews


For marketers, this new reality offers an incredible opportunity to tune in to “natural” customer intelligence uninhibited by your company biases and
manipulations. The intelligence, produced by social media marketing research, delivers significant increase in customer engagement that converts into much greater sales.