A few months ago, I wrote in this blog about Musing on difference between successful product and Innovation.  This article was re-published in a few online venues and generated a few critical comments about lack of clarity in definition of terms, specifically about what makes a product “innovative.” Many people would agree that most products that the market considers innovative often do not include any technological breakthroughs.

I keep struggling with the definition of what is an innovative blockbuster product (or service), and this is yet another attempt: A truly innovative product is the one that delights its customers by anticipating their needs before they knew they have them. In other words, if you want to develop a blockbuster product, you should stop trying to better serve the existing needs of your customers and instead try to discover needs that customers may not realize they have and address them.

That definition was not quite satisfactory either, so I kept thinking about it, and I think this is a better version: An innovative product is the one that significantly simplifies customer experience of performing the “job” they “hired” this product to do.

I think simplification of customer experience in achieving the desired outcome is an ultimate goal of any product creator. In my opinion, the experience starts with the recognition that the product is a potential “candidate” for the “job” on hand, and continues from a process of acquisition of the product through different steps until the desired result is achieved. If a product can reduce the number of steps in that sequence by 30% or more without sacrificing the quality of the experience or by improving it, it is truly an innovative product.

So how one goes about creating one?

1. Stop seeing a product as a collection of functions and features. Specifications are not what makes a product innovative. Get a clear understanding of what is a “job” this product will apply to do.

2. Stop thinking of “competition” as products similar to yours, or products in the same price range and sitting on a store shelf next to yours. Think of “competition” as any alternative candidate for the product’s “job” regardless of technology, price or package. Would you think of a digital camera as a competitor of a mobile phone?

3. Gain deep empathy of customers’ experience on their journey to a desired outcome. Learn what is important to them, not to your engineers or marketing people. No disrespect intended towards your partners, but they will be first to thank you when your focus on customer experience will result in a truly innovative product.

We have developed a webinar “Why Companies Do a Poor Job Planning New Products” that provides more details about the ideas and process involved. Please click here to view the schedule.

This article titled “Best Buy struggling as shoppers flock online” was published in San Francisco Chronicle caught my attention and inspired me to question the title assertion.

“The one critical thing we offer the world is choice,” said the Best Buy chief executive officer Brian Dunn in a March 2012 phone interview. He was trumpeting in particular his company’s role in guiding customers through the expanding smartphone universe.

“We provide the latest and greatest choice of all technology gear, from Apple products to Google products, and that brings more opportunity to help people put technology to use. That is a great place for us to be.” A week later, reality intruded. The consumer electronics retailer posted a $1.7 billion quarterly loss and announced it would close 50 stores nationwide. On Tuesday, Dunn resigned.

Later in the same article, this reason was cited to explain Best Buy’s fall from grace of consumers:

“Shoppers are finding more choices online, primarily at Amazon.com, where they can often find a better deal.”

Price is the favorite excuse of every salesman who failed to earn the trust of the customer. It is interesting to look at the Customer Intelligence Analysis of the feedback given about experience of doing business with Best Buy. We have looked at 185 customer stories that describe their experience during a period from 1/1/2012 till 4/17/2012, the date this article was published.

I would like to point out that the “price” was opined on only 4% of all opinions expressed, and the sentiment is statistically neutral while “customer service” is the most mentioned by customers at 42%. It is decidedly disappointing to them with a “general satisfaction” score of 0.67 (see the score legend at the top right corner of the image above).

Perhaps the analysis of a larger number of customer feedback for a longer period of time would show exactly when Best Buy started to lose its competitive advantage and push their customers away. However, I would like to suggest that the “greater selection” strategy has definitely played an important negative role in the Best Buy decline. There are three reasons for this suggestion:

1. No brick and mortar store, regardless how big it is, can out-inventory an online operator like Amazon.com that does not need to have an inventory on hand to sell products and have a network of store to fulfill orders;
2. A very large selection of products on shelves results in poor support for most products as the store personnel cannot keep up with knowledge requirements for such a vast number of products. Many customers come to store seeking for help to select a “right” product for them, and Best Buy staff fails to do it;
3. The larger selection leads to lower quality of products being sold to consumers. Look at “reliability” bar on the chart above—26% of all opinions mined are indicating a miserable satisfaction with the quality of products sold by Best Buy stores
4. 

Couple this problem with the well publicized Best Buy return policy issues, and it becomes clear that it is easier for customers to deal with online stores than less expensive.

Before the year-end (2011), we have published Customer view of Smart Phones that used the results of customer-generated content opinion mining. That post was viewed over 75,000 times and was quoted in many online publications. Even more interestingly, the findings were subsequently echoed by major customer satisfaction surveys from J.D. Powers and PC Magazines, 3 months later and much less specifically.

Here is the Q1 2012 update. We have looked at 323 smart phones and mined opinions from 94,049 customer stories about their experience with these devices. In the interest of consistency, we again focus on smart phones that have been reviewed during the last 3 months, and aggregated at least 100 customer reviews each. Only the 29 phones, that actually were shipped to paying customers, are included in this study as we are interested only in actual customer experience, not in marketing accolades.

We have studied before the correlation between number of reviews published online and a number of units shipped, and therefore found it important to use it for comparison.

The most customer-reviewed smart phones that made through the filters for Q1 2012 are HTC Thunderbolt (5,891), Samsung Droid Charge (1,801), and Motorola Droid Bionic (1,479). Obviously, the time of a phone introduction impacts a total, aggregated number of customer stories published for that device.

Enormous popularity of the Thunderbolt, which starts to recede, keeps HTC brand as the most reviewed one by their customers.

It is worth mentioning the rise of a number of reviews for Motorola (from 19% to 26%) and Samsung (from 13% to 23%) brands, that comes at “expense” of the Apple, fell from 17% to 5%.

The reviews of Android phones absolutely dwarf ALL other operating systems, but I would caution any conclusions based on this fact. The Thunderbolt numbers are unsustainably high, and Apple’s switch from 4 to 4S model distorts this picture. I suspect we will see substantially different distribution by the next quarter. One thing that is worth noting is the growth of Windows phones reviews from 1% at the year end to 4% at the end of Q1 2012.

Customer satisfaction with Android phones has slightly improved from 1.18 to 1.20, but Apple 4S satisfaction has really jumped 12% with retirement of iPhone 4. Green bars represent Q1-2012 scores while the red ones measure 2011 CSAT. It is worth repeating that these scores are the aggregate, average satisfaction with the phones and not with their operating systems. We will look at those later in this post.

This time HTC Rhyme phone came with the highest general satisfaction score of 1.5, exceeding its customers expectations by 50% (N=213).  The Samsung Infuse (CSAT=1.47/N=304) and Apple 4S (CSAT=1.43, N=1,205) were the closest contenders, while LG Cosmos (0.81/424), Motorola Droid 2 Global (0.82/1,186) and Blackberry Curve 3G 9330 (0.91/387) have disappointed their customers the most.

Our Market Intelligence Analysis of the segment indicates that the following Attributes of Customer Experience are most important to them:

This 2-minute video explains the methodology in greater detail

More specific insights in customer perception have required application of additional filters to select models representing different Operating Systems in significant numbers. The following models were selected.

Apple 4S – 1.205 customers (iOS)

Blackberry 8520 – 356 customers (Blackberry OS)

HTC HD7 – 331 customers (Windows WP7)

Motorola Droid RAZR 4G – 1,144 customers (Android)

Nokia N8 – 575 customers (Symbian)

The graph below (a snapshot of MI Analysis dynamic dashboard) shows a level of satisfaction with these phones based on the Operating System experience. A score 1.0 represent “Satisfied” value as defined in our model and interpreted by our algorithms as an equivalent of this statement – “I experienced what I have expected”.

More details and customer feedback verbatim are available via access to the dynamic dashboard for this segment on request

Based on the questions I often get from marketing practitioners after webinars and speaking engagements, there is considerable confusion about the difference between Social Media Monitoring and Customer Intelligence methodologies. Below is my first attempt to establish a clear demarcation line between the two approaches. Please help me to refine this matrix with your feedback, comments and disagreements.

Last night, I noticed that Brother started to run again its printer’s Reliability commercials on TVknown as Printing Dreams. If you did not see it, the company makes a claim that their printers are the most reliable on the market.

Apparently, this claim is somewhat supported by the 2011 satisfaction survey conducted by PC World, also the survey results made Brother share the Reliability honors with two other brands. More detailed analysis of Customer Generated Content (CGC) indicates that Canon enjoys the highest reputation for Reliability, not Brother. Below is a result of Opinion Miner analysis of 32,309 customer experiences with 350 printers from major Brands.

Personally, I understand that advertising dollars are better spent to promote a brand as opposed to a specific product, but from a user perspective not all products often exhibit the best qualities a brand may be known for, hence I think that similar models comparison is much more meaningful.

Since our approach to Customer Intelligence does not involve expensive surveys and a lot of effort for crafting minimum-biased questions, I decided to run a quick analysis of customer reviews of five similar printers to satisfy my own curiosity. I selected the printers that have been available for a purchase at least for a year, so their customers had an opportunity to experience how reliable they are over time. The second selection criterion is the printers are still current, i.e., they are still available for purchase and their customers continue to publish their experiences this month. Thirdly, each model has a representative number of customers who described their experience with it. The following printers were selected based on the conditions above that were collectively reviewed by 1,224 customers and are listed alphabetically:

• Brother HL-2270DW
• Canon Pixma MX420
• Epson WorkForce 645
• HP LaserJet Pro P1102w, and
• Lexmark Prospect Pro205

One thing Brother definitely got right – Reliability is the most important attribute of customer experience. It is measured at 20.91% of importance. Here is the link to the short video explaining how it is measured. However, this particular printer (HL-2270DW) does not measure up to Brother’s claim for highest Reliability at all as it comes short of scores earned by 3 out of 5 competitors.

Printing quality is the second most important attribute of customer experience as 17.17% of all opinions expressed by customers relate to it. Price/value attribute is third in importance (8.41%) and Usability is forth (6.49%).

Canon is the clear leader in this group as it earned the highest satisfaction scores from their customers for most important attributes (7 out of 12):

• Color/picture quality (exceeded customer expectations by 27%)
• Customer support (met customer expectations)
• Printing quality (exceeded customer expectations by 41%)
• Reliability (exceeded customer expectations by 27%)
• Scanning experience (exceeded customer expectations by 26%)
• Speed/Performance (exceeded customer expectations by 68%)
• Wireless (exceeded customer expectations by 18%)

Further details can be seen on the snapshot of the Customer Intelligence Analysis dashboard below.

If you care to dig deeper into the details, lower importance attributes and verbatim, please let me know as this information is available on request.

Until last year’s publicity crisis, Toyota enjoyed one of the most formidable brand reputations in the automotive market. Hyundai, on the other hand, used to dwell on the bottom of the brands totem poll. Their respective sales numbers and price deferential have reflected the perception of value in their customer’s mind. The Times They Are a-Changin’  and here is an example of how customers describe their experience with their cars today. We focused on content generated by 386 customers who experienced 2011 Camry and 2011 Sonata, and shared their experiences with other consumers online. Below is Market (segment) Intelligence Analysis dashboard snapshot. The actual dashboard is interactive and provides the access to verbatim for contextual interpretation.

This is not a complete list of Customer Experience Attributes the Opinion Miner has discovered, but we selected the ones that have the most importance to their customers. The complete list is available on request. The bars indicate a difference between customer’s expectations and their experience with a specific Attribute, while the green line across the bars shows the Importance of these Attributes to the customers.

Our methodology does not utilize surveys, focus groups, panels or other forms of leading questions/bias forming market research tools.

Two findings are worth pointing out:

• Camry’s customers disappointment with their Customer Care experience is very surprising and troublesome. It may be worth measuring this Attribute across Toyota vehicles line-up to get a better assessment whether this is a data spike or beginning of a trend threatening the Toyota brand value.
• Road Noise and Transmission experiences have disappointed the customers of both contenders, however Sonata seems to provide more tolerable experience than Camry. In both cases the Transmission issues are illustrated in verbatim as

“Truly terrible [transmission] (violent shifts and indecision concerning gear choice.)”

“the transmission sucks! When ever the car shifts gears it always knocks and there is a ways a jerk while driving. It best to slap the gear shift in the manual mode and shift your own gears”

A deeper look into verbatim describing the Attributes can provide valuable hints into language that resonates with consumers of this market segment, and opportunities for targeted communication messages that clearly differentiate your product from it’s competitors.

Update (3/14/2012) – As Barry (see the comment) pointed out today, I did not select correctly the games for this comparative analysis. He asserts that Call of Duty Modern Warfare 3 is the appropriate competitor to Battlefield 3, not Black Ops I have selected. Fortunately the Opinion Mining Software I use for these studies allows for a very quick and easy turn around. Below is the result of the changes in game titles. The content for this sample was generated by 2,089 customers for Xbox360 platform.

(Original post) In the past we have analyzed customer generated content for many different consumer electronics and computer products. This time we want to look into Customer Experience of two popular computer games from Electronic Arts and Activision. We focused on content generated by 1,936 customers who experienced two specific games on the same gaming platform – Xbox 360. Below is Market (segment) Intelligence Analysis report of Battlefield 3 vs Call Of Duty – Black Ops.

This is an not-exhaustive list of Customer Experience Attributes (see explanation here) the analysis has discovered using our Opinion Mining methodology. The bars indicate a difference between customer’s expectations and their experience with a specific Attribute, while the green line across the bars shows an Importance of these Attributes to the customers.

I would like to point out two findings:

• Experience of Electronic Arts customers with Quality of Graphics and Sounds is decisively better than the Activision customers. The difference is quite significant and it would be interesting to see how it affects sales numbers.
• The Reliability and Customer Support experiences of both games customers are incredibly low and makes me wonder if any other competitor would be able to emerge if it decided to differentiate on these relatively important customer experience Attributes.  Many industries have been disrupted by focusing on improvement of customer experience in these areas, however not being a Gaming industry insider I leave this speculation to those who are more familiar with psychology of the gamers.

Somebody said that all economic activities are focused on reducing the uncertainty of our existence. If this is true,  a consistent rate of  customer satisfaction should bring your company high rates of retention. Their advocacy would help to reduce your expenses acquiring new customers.

Does your personal experience agree with this premise? Does your business experience make you wonder if it is true?

The study of this premise was sponsored by the London School of Economics and created very convincing evidence confirming that there is indeed a strong causation between a high rate of customer satisfaction, growth of advocacy, and growth of revenues in multiple industries.

I think there are two major reasons why many companies struggle to reap the benefits of high CSAT they deliver to their customers:

• Most businesses today measure CSAT using multiple methodologies, however the complexity and cost of these exercises make it more of an event or a campaign than a consistent process. The result is a series of snapshots of what the rate of customer satisfaction was at that moment or period. That practice contradicts the original condition of our premise -  ” A consistent rate of your customers satisfaction should bring your company high rates of retention”.
• Let’s assume your customers are very satisfied with your products or services, regardless of how you measure it. What has your company done to help them share their experience with other consumers? Does anybody know if in fact your Net Promoters actually promote? And if they do – what is the impact?

Many great ideas suffer from inadequate implementation and this  is just another example. However it is much easier to question the value of the original premise when it doesn’t agree with our immediate experience, than to have the courage and conviction required to change the status quo. Even after the “quo” has completely lost it’s status.

One of the interesting challenges Marketers are charged with is to make their product or service stand out in minds of the potential customers. Those who are not blessed with analytical talents commonly slide into well bitten path to differentiate by specifications or price. These approaches do not really require any expense and/or curiosity to seek deep understanding of the customers, but they are ultimately led to erosion of profit margins and brand equity. If you, brand “owner,” don’t care about the customers, the customers don’t care about your brand. Advertising alone could carry the brands a great distance in the “good, old days” but in the age of Social Customer, an advertising message is expected to resonate with customer needs or it will cause more harm to the brand image and product sales than good. When it comes to a product reputation or brand equity, the notion that “Any publicity is good publicity” is not the best strategy.

None of it is new to most marketers and some companies are spending serious money to develop processes for discovery of consumer/customer insights. However, most are struggling to convert the findings into specific actions. Measuring financial impact of these actions seems to be an even more formidable challenge. I would like to explore these challenges and perhaps offer some ideas for dealing with them.

Many marketers today are too insulated from their customers to develop a true, genuine understanding and empathy of customer experience with the products or services they market. One of the reasons is the use of outdated market segmentation methodologies based on demographic data that was developed to help marketers to quantify and forecast, but do not provide much help in understanding the needs and discovering opportunities for differentiation. More evolved methodologies that attempt to develop customer “personas” are much more helpful in learning needs of the specific, pre-defined groups of customers. Scott Sehlhorst of Tyner Blain offered a wonderful explanation of how such methodology can be used.

Use of both abovementioned approaches together will likely to improve your product traction, but will fall short of true understanding you need to differentiate your product because everything you have learned so far is based on your own original assumptions. You start with a hypothesis of who your potential customers are, what functions and features they would like in your product, and how much they will pay for it. Then you proceed with a number of potential customers’ validation and advisory activities that confirmed or cancelled your assumptions with various degrees of certainty. However, you still don’t know if the group and personas (within the group) are your best potential customers since you cannot possibly validate that with every potential segment. Additionally, I don’t think it is possible to effectively differentiate – by design, packaging or message – without ultimate understanding how the customers experience the product. All the steps you have taken so far cannot give you this knowledge for 2 reasons:

• You have started at the “wrong” place – i.e., demographic segmentation of market is a wrong starting point. Much better starting question is – what products/services my future best customers are hiring today to do the job they need done. I use here terminology and concepts developed by Clayton Christensen. Check this video where he explains why the basic thinking taught in business schools and promulgated by consultants is killing innovation and the US economy if you are not familiar with his work.

•  Any knowledge of customer preference you have gained so far is company-biased because it was obtained by methods of inquiry and/or moderation. The one who forms a question or selects the subject of discussion ultimately influences any possible outcome. I do not believe that there is such a thing as an unbiased research, and I prefer customer’s bias to a company’s bias for the purpose of learning how a customer experiences a product or a service. This is my preference because regardless of our opinion, that is what they are going to use while selecting to purchase your product or a product of your competitor.

I am not dismissing the value of traditional methodologies off hand, but I am suggesting that substantially better results can be achieved by using triangulation of these with true insights of customer experience. There are plenty of customer-generated content available online for aggregation and analysis; however, even if you find difficult to find good data, we had very good results by asking customers wide open questions designed not for validation and easy tabulations, but to help them tell their stories:

What made you interested in a product XYZ?

• How and where do you use it?
• What was your experience so far?

Let them know that you asking because you want to learn how to make their experience better and promise that you will let them know the results of the study. Most people are motivated and willing to help. These types of questions are traditionally reserved for qualitative research that in the past was considered expensive, and the results are often dismissed as statistically not representative as they are normally reserved for a small number of customers. Those who try to find insights manually in large volumes of data are quickly get overwhelmed by “drinking from a fire hose.” However, advances in opinion mining technologies significantly reduced cost of high volume content analysis and can offer benefits of qualitative research and statistically representative numbers to back up the value of insights. In the words of Clay Shirky, “There is no information overflow-it is a filter failure.”

Good use of right technology can provide a marketer with a substantial and representative number of clues and hints to how customers think and feel about their experience with a given product or a group of products. However, no automation or outsourcing can replace your creative power of interpreting these clues into actionable insight. You can see examples regularly published on our Google+ feed.

The language customers who used to describe their experience will also provide the source of how to communicate with the market in the way the message will resonate and connect on the emotional level.

Every great product starts with a great idea. Unfortunately, many mediocre products and outright flops have also started with an idea that seemed great at the time. I would like to evoke a memory of the patron-saint of Product Managers and quote:

“Deciding what not to do is as important as deciding what to do. That is true for the companies, and it’s true for products.” – Steve Jobs

Unfortunately, we fall in love with our great ideas all too often and tend to overvalue creativity at the expense of critical thinking. Let’s face it – we are paid to create great products, not to engage in “paralysis through analysis.” The cost and effort required to conduct market research is most frequently invested into finding evidence to support our great idea, not to challenge it; hence the survey questions and focus group discussions often default to a pro bias.

I do not believe that human beings are capable of processing information without a bias; however, customer bias is much more valuable than a company/product bias to support critical GO/NO GO decisions. Insights found in experience of consumers, who are most likely to become customers for your proposed product, are in my opinion the best information to help us make that decision.

Insight is a tricky concept that is often used without clear definition of its meaning. I would like to suggest a few ideas on how to define it:

Insight is…

• Penetrating understanding of consumers

• An undiscovered truth that suggests an unmet need

• Something that makes you go, “AHA!”

These came from member contributions to a Customer Intelligence LinkedIn Group discussion and do not pretend to be an exhaustive list. The classic example I have come across is:

“People don’t want quarter-inch drills. They want quarter-inch holes.” – Theodore Levitt, Harvard Business School

Here is a “best practice” used by some of our clients to make this decision:

•  Identify and articulate a “job” the proposed product (or service) is going to be purchased by its customers to do. If you are not familiar with this product/job correlation concept, you want to learn about research of Clayton Christensen.

• Identify the most successful products currently available on the market that people buy to do that “job.” These products may or may not have anything to do with the technology, features and specifications of your proposed product.

• Find and aggregate customer-generated content describing their experience with products identified in the previous step.

• Analyze this content to identify shortcomings or inadequacies of currently available products to fulfill customer needs from their experience and perspective. Our clients use Market Intelligence Analysis reporting service to save time and effort, but it can be done manually as well.

• “Deep Dive” into those elements of customer experience that score below customer expectations as a group to generate an insight.

• Ask yourself if your proposed product can improve customer experience based on the insights you have discovered in previous steps. If the answer is ‘No, but…’ follow the advice of Ron White who said, “If you have got an idea… let it go.” The best hope for this product is to become one of many options available to consumers “to-do-the-job” and no fancy marketing communications would be able to differentiate it in their mind.

The cost of error can be relatively low in an agile software development business, but it quickly escalates into millions if product has to be manufactured in volume and brought into consumer market to be tested. On that scale, even a small reduction of product failure ratio will generate outstanding return on investment in this methodology and effort.