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How to get (and keep) a customer-centric reputation

How to get CX reputationI admit to spending more time reading books, blogs and articles about customer experience, as well as analyzing customer feedback, than most people on the planet. As a result, my personal experiences  often fall short of my expectations dealing with companies unfortunate enough to have me as a customer. Even those companies that are most highly regarded as models of customer centricity by the customer experience management community often miss the mark.

I am well aware of the fact that my own experience could be just a momentary slip in customer experience delivery, and does not diminish a company reputation as a whole. On the other hand, I wonder how uncommon is my experience dealing with some of these high reputation companies. In other words, do companies that are known for their customer centricity deserve their reputation?

USAA tops every list of the most customer centric companies based on institutional surveys results and well orchestrated publicity of these results. The company’s own customer reviews site indicates that 91% of customers are satisfied enough to recommend their services. Yet, there are hundreds of others on the same site who are enraged about their experience with the company. If you look at the customer reviews and complains sites outside of the company’s control, the satisfaction numbers are much lower than the levels expected of the leader in customer centricity. In fact, they are only marginally higher than the satisfaction scores of their competitors. However, apparently it is good enough to keep USAA on top.  I understand that no company can satisfy every customer. I just want to illustrate that you don’t have to be the best to earn the top spot, you just have to be the best option available. Particularly, if you operate in regulated markets and your customers have to buy the products you sell (auto insurance).

Amazon is another poster child of customer centricity. This company competes in the markets where consumers have plenty of choice, unlike the previous example. Based on the ratio of customer praise and complains on the independent customer reviews sites, Amazon’s social reputation is much higher than most retailers. Bed, Bath and Beyond is the only other retail company that earned similar customer experience scores from non institutional sources. Analysis of the employees’ feedback available online, shows substantially more positive perception of the BBB than of Amazon’s. Yet, I’ve never seen Bed, Bath and Beyond mentioned as a positive example of a customer centric company.

So what helps a company to get a reputation that incites consumers to do business with them?

  • Passionate, visionary leaders committed to excellence in product design (Steve Jobs or Elon Musk) or customer experience (Jeff Bezos or Tony Hsieh);
  • Smart use of the customer satisfaction measurement industry (institutional) to get publicity;
  • Don’t suck more than your competitors.

How to keep this reputation? Here are a few suggestions

  1. Understand who are your best customers and why they choose to do business with you
  2. Recruit, evangelize and empower the best team to make your best customers happy
  3. Do not promise more than you are ready to deliver consistently across all steps of the customer journey
  4. Execute your business processes consistently and transparently

Every company should work hard to deliver better experience to its customers than it currently does …before competitors do. The major cause of company failure is company success.


Omni-Channel, Big Data and “Dreadful” Departamental Silos

This article was originally published on InsideCXM.com.

The basic idea behind omni-channel strategy is the reduction or elimination of customer experience fragmentation. Below are some examples of fragmentation from the most simple and obvious, to the more complex and inconspicuous:


  • A company’s mobile site design, color schema and navigation are not the same/similar to its website. Customers may feel that they have accessed a different company’s site;
  • A customer, who is in store or on an e-commerce product page, cannot find customer reviews they need to make an informed purchasing selection;
  • An internal change in a company’s financial policy impacts its enterprise customers’ projects delivery schedules.


These examples are certainly not an exhaustive list of customer experience fragmentation scenarios, but all of them have one thing in common – they all are by-products of out-dated business process design methodologies. The process design methods of the past did not take into consideration the perspective of the customer. They were focused, entirely or mostly, on the needs of an enterprise for scaling its growth.  The outstanding successes of customer-centric companies have made the rest to pay more attention to customer experience improvement methods. Unfortunately, too many think that an omni-channel strategy is a set of technology tools. Yet, the success of implementation and adoption of such strategy largely depends on a company’s culture and it’s leadership’s dedication to customer-centricity.


If you see the world and its markets from the perspective of your company and your company’s set of products, no technology can help you to unify customer experience. Even a subset of fragmented customer experience causes, that are within a company’s control and technological capabilities, cannot be successfully eliminated because of  cultural problems. I am referring to dreadful, departmental silos challenges that were supposed to be defeated by CRM, Data Warehouses, Business Intelligence and other technology “solutions”.


Make no mistake, a real change cannot be made without the leverage of technology, but technology cannot deliver the change without, changing the company’s cultural focus first.


When companies think

“customer experience they need to think omni. Its not about your customers or their customers, its about all customers. If a brand wants to start thinking omnichannel, then they need to be open and involved in making the customer’s experience continuous and universal.”


When the focus changes to a customer’s perspective of your company and products, the technology “toolbox” would have to include Big Data. Big Data is not about volume, size or velocity of data – neither of which are easily translated into financial results for most businesses. It is about the integration of  external sources of information and unstructured data into a company’s IT infrastructure and business processes.


Omni-channel strategy requires visibility into the customer journey, even when it continues outside the touch points of your company. If this visibility is not available, you continue to navigate the “seas” of the market with old school instruments like the compass, chronometer and sextant. Meanwhile, leaders like Amazon and Netflix, master the use of GPS and Chart plotters to accurately predict changes they need to make to their products, processes and touch points. That mastery helps them to expand their lead in the markets by providing a superior customer experience.

The road to hellish Customer Experience is paved with careless implementations of technology

Health, CX and TechnologyI am blessed with very good health and have no medical conditions to the best of my knowledge, but my wife insisted that it is time for a complete medical exam. She even supplied me with a link to setup my appointment online. Within 3 seconds after I opened a web form to see the availability of the doctor I wanted to visit, a pop-out survey blocked my view asking me to rate my experience using this scheduling service. Such pestering became so common that I don’t get irritated anymore when facing it. At least you can just refuse to “play” and continue most of the time. I just don’t understand why a company wants to “invest” in annoying their customers – after all it is not difficult to figure out this user of their “service” could not possibly rate his experience since he did not have one yet.

After selecting an available date and entering requested data into the two following forms, the service prompted me to click on a “Book the Appointment” button that followed by a message with apologies for not being able to book it and the phone number to call for help. It turns out the number was for technical support of the booking system. The support was neither technical nor supportive. They were not interested nor capable to help me book the appointment. The best they could do was to give the doctor’s office number to call.

It turned out the number was not for the doctor’s office, but for the “health program provider” charged with a duty to book appointments for a group of doctors. The person on the other end asked me for the same information I entered on the their web site, but before we concluded the process our call was interrupted. Imagine my “delight” when I heard an automated message cheerfully asking me to rate my experience. I had to hang up and call again to connect with another person who wanted me to start this process from the beginning. At this point I felt that this experience is destined to raise my blood pressure and the best thing to do for my health is to avoid this medical establishment at any cost.

This type of moronic implementations of technology is not limited to medical or government institutions. After all they have designed any accountability for their performance out off their “business” model a long time ago. I am not sure why they even waste money on the charade of “patient experience” or “citizen experience”.

Much more intriguing is how wide spread such examples of technology implementations are among honest business, large and small. Even the companies that advertise themselves as providers of customer engagement technologies for others are not immune to this disease of carelessness.

Change does not start with technology. It starts with realization that you have to change. In the case of the experience you deliver to your customers, you have to realize that the current level is not sustainable. You don’t have to care about your customers-you have to care about your ability to keep them. That realization leads to:
• a sincere attempt to walk a mile in the customer’s shoes and to look at your company through their eyes
• re-design of existing engagement processes from the outside-in perspective
• Acquire a technology to implement these processes to scale them for consistent delivery across the company

The careless implementation of customer engagement technologies amplifies the clear signal that the company does not really care about its customers and uses the customer experience buzzwords to cut their operating costs. Just like they did when they sold CRM “solutions”. It did work then. Now it may not work anymore because today a business is not about cost reduction. Today your customers can easily determine which vendors walk the customer experience walk, leaving those who just talk it, behind.

The way you engage your customers speaks so loud, they can’t hear your marketing messages.

Human Resources-The Forgotten Frontier of CX

Toxic EmployeeMost Customer Experience Management practitioners understand that the CX is a holistic discipline, but tend to focus disproportionally on a customer service delivery. It is understandable as CS is so often the last line of defense – working hard to salvage relationship with the customers wronged by other departments of their company.


I wrote in the past about CX being everybody’s business and went beyond the “slogan” to illustrate the real example of back office departments de-railing the best product, marketing or customer service efforts.  In my opinion there is no single function in a company of any size that does not impact the experience the company delivers to its customers:

  • Poor billing practices often repeal customers and motivate them to go to the competitors for better experience;
  • Sloppy shipping processes make customers hesitant to make a repeat purchase;
  • Inadequate janitorial practices incite customers to leave a store or a showroom before they made a selection.


The list is only limited to a number of functional groups in a company. Surely the impact of various departments on CX is not equal. That is why so much attention is given to the front office organizations. However, one back office group that is pivotal to every company’s capability to deliver competitive customer experience, manage to escape the scrutiny it deserves. That group is the Human Resources Management department. Failure to recruit, manage and empower the “right” employees takes the wind out a company’s sails on its course to deliver superior customer experience. Failure to let go of the “wrong” employees sets a chain of internal decay that eventually destroys a spirit of an entire group.


I was a T-Mobile customer for 7 years. Last week I decided that the company does not deserve my patronage any longer. All these years I was reasonably satisfied with the coverage, devices, billing and tech support. Not every experience I had was so outstanding, but overall I perceived it to be the best I could hope for, even though they had make some missteps over these years. In fact only a few weeks ago I was cheering the Twitter challenge of @JohnLeger promising to beat Sprint by a number of subscribers.


Without boring you with the details, I was sent by customer support to visit the company retail outlet (El Cerrito, CA) where I was insulted by a clerk (Noel) who was probably in a middle school at the time I became a T-Mobile customer. There were no arguments, I was not upset or had a reason to be rude or abusive to him. His appearance, demeanor and absolute lack of empathy with a customer were summarily insulting. The question is how T-Mobile HR can allow such a person to represent their company?


For the last few years Sprint was very successful in signing up a large number of new customers every quarter, only to see most of them go elsewhere as soon as their contracts were over. T-Mobile pioneered a very successful no-contract policy in their marketing. The customer support was consistently better than their competition. However T-Mobile’s Human Resources may sink their entire growth ambition, if my personal experience is indicative of the quality of retail personnel they hire. Interestingly enough a cursory analysis of employees online comments (6,367) about their experience of working for T-Mobile reveals that 38% hold negative perception of the experience the company delivers to it’s customers


After one bad call where I had to remove about $45 worth of services, my coach threatened me with my job. And that’s when I quit. This job is not worth the stress and is just a waste of time. Don’t bother. Advice to Management You are promoted a bad customer experience. Stop with the pushy selling.”


While 49% of the employees praised pay structure and benefits, the majority of these opinions belong to sales associates and coaches.  Perhaps the most troubling is the extremely low opinion (-44%) of the company management expressed by 57% of the employees.


“With all of the changes in the wireless industry, this company is overrun by politics. Human resources provides little help with any issues at the regional level (personal and coworker experiences). Little promotion from within. Advice to Management The employees who know how the company and stores run deserve a chance at promotion over those outside of the company. Promotion from within is cheaper and isn’t the number one goal of a business to maximize profit? District managers should be more professional and shouldn’t show up at stores wearing t-shirts, jeans, and sneakers. Commission scale is great but there’s always corrections and employees feel like they’re being robbed each month. “


I could think of a number of ways to measure the performance of HR and it’s impact on company’s overall customer experience, but I have yet to see any company that links them together.


Why Privacy Is A Part of Customer Experience

Easy TargetNot a month goes by without a revelation of a mass data breach at a major commercial or government institution. Since the Target fiasco the well being of customers who shop at Michaels Stores, Sally Beauty Supply, Neiman Marcus, AOL, eBay and P.F. Chung was compromised. The credit scores and reputation of 47% of US adults are compromised by white color criminals. Experts estimate the annual cost to US economy to reach $100B.  Google’s breach of their email users information is not included here because the users are not Google’s customers, the advertisers are and their experience was not degraded by the breach.


As the list of security breaches grows longer a common pattern of apologies and very rare firings is emerging. It appears that institutions, to which we entrust our vital information, treat these systematic failures as no more than Public Relations set backs. After empty apologies and stupid advice to change your password, there are no reports of real investment into fundamental change in securing our data.


To be fair, the commercial institutions affected usually do mitigate customer’s monetary losses directly attributed to their breach of security. However, they are not held responsible for any negative impact on these customer’s credit history or other non monetary losses cascading from the careless treatment of customer’s data.


I use the word “careless” intentionally, because these security breaches are not the result of irresistible technological prowess of international mad geniuses. They are a direct result of an economic equation – it is cheaper for an institution to reimburse customers than to implement a bulletproof data protection. Once again business leaders and government bureaucrats put short term financial results and budgetary priorities ahead of the long term interests of their key stakeholders – customers, investors and taxpayers.

Smartphone fraud

As consumers we should have the opportunity to assess the reputation and history of a business  guarding their customer’s data, before we decide to do business with the company.  Yet, when every government clerk or doctor’s office assistant demands my Social Security data, there is nothing I can do to protect myself. Meanwhile 1.84M people affected by medical identity theft in 2012.


Data security is not my field, customer centricity is. The reason I am writing about this subject is because I see an epidemic of customer data breaches and other forms of cyber fraud as a sign of fundamental disregard for customer safety. In my opinion these organizations have to be held accountable to a higher standard as their leadership breaches their fiduciary obligations.


An onslaught of technological innovation is marching on and I like the new, shiny toys as much if not more than most. However, I am aware more than most that designers, manufacturers and retailers who sell us these toys do not view our security as their responsibility. They should, before we stop buying.

Stop buying

Go-To-Market Strategies in the Age of the Social Customer

MarkInfluence mixet segmentation by demographics, geography, etc. is a common exercise that helps marketers to form their go-to-market strategies. Most of these segmentation efforts are based on hypothesis or inferences of which segment of the consumer population would be the best target market. These methods have served us reasonably well in the past, but “the times they are a-changin.” New research, innovative technologies and shifts in consumer behavior offer new opportunities to look at this differently.

In the past I wrote about the concept of segmenting by customer expectations, and how that became possible with the proliferation of online and unsolicited customer feedback. There is no doubt that the untamed voice of social customers is dramatically changing the marketing landscape, as they share their authentic and detailed experiences with specific products and services online. Shoppers actively seek this information when choosing their next purchase to see how their expectations match the experiences of others. Therefore, from the perspective of a marketing practitioner who develops go-to-market strategies, it is critically important to understand how their products are affected by this tsunami of information.

Every purchasing decision is influenced by a mix of information sources. Itamar Simonson and Emanuel Rosen, in their book “Absolute Value – What Really Influences Customers in The Age of (Nearly) Perfect Information”, proposed to organize these sources into 3 groups:

  • Past – a customer’s experiences, memories, perceptions
  • Social – advices and recommendations of other people
  • Marketing – all and any information originated by a seller

The power of influence by each of these groups is very different depending on the type of product the consumer is selecting. A clear understanding of how this mix relates to a specific product can maximize an impact of your financial and intellectual resources.

Every choice is based on expectation of experience, and carries an uncertainty of whether this expectation will be met. Some types of products inherently possess more uncertainty from the buyer’s perspective than others, and that is reflected in the raising impact of one information group at the expense of the other two groups of the influence mix. Additionally, one has to consider the customer’s financial and social exposure to risk if the product fails to deliver expected experience. Below is a chart that illustrates potential influence mix fluctuations based on different product samples.

Influence impact

This is only an illustration as every product category has to be closely analyzed from the influence mix perspective before an appropriate strategy is selected.

However, the practical implications of this approach are hard to overestimate. For example, the automobiles, baby products, or consumer electronics respond very well to influencer marketing. Developing brand “ambassadors” is the most effective strategy for these types of products. Within the automobile industry, the second best approach is to channel marketing dollars into customer service for re-enforcement of current customers’ perception of brand value. Traditional marketing techniques, like TV commercials, direct mail, etc. where most auto dealers waste their budgets, are the least effective investment for differentiating your brand.

The mantra to remember is – customers don’t buy products, they are shopping for experiences. And, they likely make their buying choices based on past experience with a brand, or experiences of other people.

How Employee Satisfaction Correlates to Customer Experience

Pharaoh's teamMany customer experience practitioners stress the importance of employee participation in companies’ customer-centricity efforts. Intuitively, it is hard to disagree with the anecdotes they tell and conclusions they draw from these stories. There are numerous studies that attempt to connect employee engagement with various business goals, but I could not find any that link it directly with customer experience. If you know of any such studies, please share them with me.


It’s important to point out that employee engagement, defined as “the emotional commitment one has to their organization and its goals”, is very different from employee satisfaction or experience. An employee can be very engaged even without being satisfied with her working conditions, and vice versa.  I would like to pose that in the long term an employee is not very likely to sustain his emotional engagement without the consistent commitment of the company to improve his experience working there.


Since both customer experience and customer engagement are very subjective perceptions any attempt to measure either one presents methodological challenges. Every one of such attempt usually attracts very vocal supporters and detractors. Based on conviction that human perceptions are best described by stories, we aggregated and mined the stories of McDonald’s restaurant employees shared by them  online (3,327) and the reviews of its customers (4,412). The Opinion Miner algorithms discovered patterns in these “stories” and measured frequency with which these patterns observed as well as a collective sentiment associated with each one. While such analysis can be much more detailed, for this article we decided to focus only on the most frequently observed patterns.


While McDonald’s employees, who shared their stories,  are quite satisfied with their benefits, learning experience and training, they don’t perceive their work environment positively. You can see the chart below. The size of the bars represent the intensity of a sentiment expressed.  MCD Emp chart   Even though the majority of employees who shared their story online are disheartened by their pay rate, this comes seventh in terms of its importance to them. The most important signal, from the perspective of this inquiry, is a negative sentiment toward customers that comes through the employees’ descriptions of their relationship with their company. It is hardly a surprise that customers reflect this attitude in their assessment of McDonald’s customer service (-4%) as it is seen on the chart below. MCD Cust chart

Despite relatively positive assessment of food, ambiance and cleanliness customers don’t think that McDonalds offers them a “good value”. The price matters less when you are served with disdain. Restaurants are not in a food business-they are in the hospitality business and unengaged employees do not seem to be very gracious hosts.


This is just one, randomly selected, example. However, the result suggests that companies serious about improvement of experience for their customers have to pay closer attention to measuring and monitoring the satisfaction of their employees.


Hell hath no fury like a customer scorned

Betrayed bardWhatever your definition of “brand” is, from your customers’ perspective a brand is whatever they experience with a product that is sold under the brand’s name. The only reason any company ever invested into graphics, messaging, advertising and your salary is to create a perception of consistency of its products’ value in the minds of consumers. Yet today, according to Jeff Bezos – “A brand is what people say about you when you’re not in the room.”

Over the years many enterprises have invested billions of dollars to grow and measure equity value of their brands. However, the rise of the social customer threatens the return on these investments as social media technology amplifies the power of many little voices that share their experience of your brand. When a brand fails to deliver the promised value, it’s high recognition can accelerate its downfall as former loyal customers feel betrayed and often start to look for revenge online.

Many marketers wrestle with technology issues today, chasing one tool “du jour” after another, but in this process they sometimes forget the fundamentals – delivery of a consistent customer experience is  paramount to your brand’s return on investment. Presumably, your past products’ reputation and  brand building investments created a strong perception of quality in the minds of your customers. You cannot hide behind the past achievements anymore. There are many steps on your customers’ journey, but if your product sucks it doesn’t matter how creative is your advertizing, how big is your big data,  or how slick is your customer engagement process. It all goes to waste when the scorn customers share their authentic tales of betrayal. These tales are sought by a multitude of consumers, who consider a purchase of that product, but now will put your brand on their “no fly list”. Here is an example.

Many years ago my wife discovered a bath and shower gelee that she became particularly fond of notwithstanding it’s premium pricing. The product had an intense green forest perfume that was very distinctive. For some reason it was not easily available in retail stores in our area, and my wife went out of her way to order it on Amazon in a quantity which was rather substantial. After years of faithfully replenishing her inventory of the gelee she was really upset with her last order – the forest perfume was replaced by some unpleasant chemical smell. That change was not communicated by brand in a form of label color, name or description – and we felt betrayed. Needless to say the product was returned to Amazon for a full refund.

Examination of the product’s reputation trend shows exclusively 4 and 5 star reviews published for the period of 9 years prior to the fragrance change. The average social NPS® estimate from 2005 to 2012  was approaching 88. After the switch that took place in 2013, the social NPS® collapsed to -63. Vitabath social NPS Such a violent swing in consumers perceptions in such a short period of time are not very common. In the past, it took at least a quarter to detect such shifts by company’s management. It took years of slow bleeding before consumers at large would realize they cannot trust the brand any longer. Today, a month’s data could indicate a fundamental shift in a market landscape. Remarkably, the consumers learn first about the sinking reputation of a formerly beloved brand, while company’s management wait for channels’ sales reporting. Meanwhile, the shareholders wait for the quarterly results which are often sugar coated to obscure looming problems of a sinking brand.


* 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.

More Signs of Decline in Brand Relevancy

Last week I was shopping for a new Bluetooth headset for my phone after my trusted Motorola  betrayed me in the middle of an important call with a client. It did not quite dropped dead, it just “ceased to be”, in the words of Monty Python parrot salesman, but a replacement was in order. That brought me to Amazon, searching for a set with the highest customer reviews rating.

Personally, I do not put a lot of trust into any product reputation ratings unless it has at least 50 authentic customer reviews. Lack of authenticity in paid reviews is pretty easy to spot. However, the higher the number of reviews provided by customers about their experience with a product, the more difficult for “idiot” marketers to manipulate the product’s reputation. The list of headsets that met these criteria was quite surprising since only 30% of these best rated products were from the brands that are expected to dominate this market segment – like Plantronics and Motorola. A skeptic would point out that high customer reviews’ ratings do not guarantee high volume of sales, however we have studied in the past the correlations between the number of reviews and the number of products sold. They suggest very strongly that high product reputation score, coupled with high number of customer reviews,  is predictive of strong sell through numbers for the product.

Use of these correlations for quick calculation reveal that :

  • LG, not a well known brand in the headsets market, sold an estimated 39% of total units
  • The best known brands sold only 31% of total units
  • Brands, I have never heard before, sold 30% of total units.

Can you recall any advertising that mention Kinivo or SoundBot in any context? I cannot. And yet, each one of these “un-brands” managed to outsell a premium brand like Motorola at very similar price levels. Together they outsold the former king of the segment (in terms of units sold) – the mighty Plantronics – by 7%. The Google search by their names finds very simple websites that list their products and a few retailers where you can find them. I could not find any fancy designs and mission statements commonly associated with the big brands marcom either.

This is not a new phenomena and it is not limited to any specific market segment. The authors of the book “Absolute Value” gave a number of examples where experiential information, provided by a product’ customers, propelled totally unknown “brands” to very significant sales numbers at the expense of well known and respected brands. There are also quantitative studies that help to understand the dynamics of brand value debasement by publicly available customer feedback.

Brands are falling

Certainly not every market segment is equally affected by this erosion. Specific market segment intelligence studies can quickly assess whether your brand is under attack and what are the monetary implications. Ongoing monitoring of the competitive landscape is commonly done by many brand and product managers, but most efforts are focused on basic sentiment analysis of a brand’s mentions found in social media, which is rarely insightful or actionable.

A highly disciplined approach to the management of data, containing unsolicited customer feedback, is required to produce meaningful sets for analysis. Deep analysis of such data sets, when focused on customer experience as oppose to features and functions, can help to understand patterns and dynamics of consumer perceptions. Such knowledge is imperative for competing in today’s markets because nobody is safe anymore to hide behind mighty brands of the past.

The “Agile” Approach to Consumer Product Marketing

When process succedsThe term Agile is most familiar to people involved with software development, but the basic concepts can be applied to consumer products successfully as well. At least two of its core principals – use of iterations and collaborative involvement of product users (i.e. customers) – were effectively practiced years before the term was introduced and became commonly accepted.

Wide acceptance of Agile methodologies arguably resulted in dramatic increases in software project’s ROI caused by:

  • reduction in the number of abandoned projects
  • cost reduction for user training and documentation
  • increase in user adoption of the “final” product

In other words, the application of Agile methodologies reduces the uncertainties of delivering an expected outcome.

Development of software to simplify business user’s jobs, has at least one critical similarity to the development of many consumer products – customers cannot clearly articulate their requirements. Particularly, the latent ones. Of course there are tools to help you do this, Kano analysis, being one of the most popular. Unfortunately, not enough consumer product marketing professionals are known to use these tools. That manifests itself in a very high failure rate of bringing consumer products to market. The actual rates of consumer product failure are quoted anywhere from 30% to 80%. The numbers vary by industry and are controversial because they do not clearly articulate what “failure” means. I define a product “failure” when it did not deliver the originally forecasted revenue.

Accenture research estimates that the CE (consumer electronics) industry alone has spent $16.7 billion a year to “receive, assess, repair, re-box, restock and resell returned merchandise.” More than two thirds of these costs, or $11.2 billion, are characterized as No Trouble Found (NTF). In other words, the products did not meet the customer’s expectations. Personally, I find the term NTF very disturbing – $11 billion waste caused by poor market requirement definitions and misleading advertising, is indeed a big trouble. That number does not include the cost of the customers time wasted, hit to the brand reputation and environmental costs of transporting and stuffing landfills with failed products and packaging.

The cause of the CE product NTF fail is relatively easy to diagnose – too many products are conceived by engineers who value the “cool” factor the most, without any reference to actual customer needs. That approach worked well while the price and advertising were the most critical factors in customers  purchase decisions. The last few years have seen a dramatic increase in the importance of customer experience delivery as the most influential factor in selecting a product.  The revenue growth of the leaders (Apple and Samsung) are cooling down, while the rest of the CE companies are seeing a drop in revenue and profit contraction.

Meanwhile, there is some evidence that small “un-brand manufacturers” are doing well by practicing “Agile” – looking methods to capture market share from the established brands.

  1. They “collaborate” with the customers of their competitors by analyzing product reviews they published online. They learn what caused these products to fall short of their customers’ expectations and why they purchased these products on the first place;
  2. They design products based on the results of that “collaboration” and their interpretation of consumer needs.
  3. They manufacture small lots of products to test the accuracy of their interpretation, market reaction and analysis of the feedback before going to the next “iteration”;
  4. They form customers’ expectations by “communicating” the product properties with the language used by customers to describe their experience.

“Agile” product marketing is a better approach when scale of design and manufacturing does not work anymore. It is not “cool” that sells your products today, it’s the experience your company delivers to the people who buy them.