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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.

 

In Defense of Anecdotal Evidence

During the last two decades traditional retail business has experienced a disruption similar to an earthquake delivered by the proliferation of ecommerce. That earthquake caused tsunami-like floods of online customer reviews describing personal experiences with specific products. Those retailers, who embraced this wave of untamed customer feedback, surfed it to higher “visit to conversion rates”, growth and profitability.   The way I feel isToday millions of customers share their experiences online about a wide variety of products and services, both personal and business related. Based on multiple studies, the trust other consumers give to these reviews is increasing from year to year.   While the flood of experiential information provided by customers and its influence continues to grow, many marketing researchers still question its value to business. To be fair, there were some interesting studies conducted that found correlations between the quantitative aspect (star rating) of customer reviews and the restaurants’ revenue. However, qualitative research of the actual reviews is being sneered upon and labeled “anecdotal”.

“The expression anecdotal evidence refers to evidence from anecdotes. Because of the small sample, there is a larger chance that it may be unreliable due to cherry-picked or otherwise non-representative samples of typical cases. Anecdotal evidence is considered dubious support of a claim; it is accepted only in lieu of more solid evidence. This is true regardless of the veracity of individual claims.”  The underscore is mine.

Interestingly, the above quote comes from Wikipedia, that itself has been attacked by status quo defenders as “inaccurate”. Yet, this quote is the best definition I could find online, after checking more “official” sources like Oxford and Merriam-Webster.   Since Customer Experience is a perception, there is no more meaningful evidence to communicate it than an anecdote. Based on the definition, two primary reasons for not using it to form strategic decisions are the size and quality of the samples in terms of representation. When it comes to customer reviews, the available volume (sample size) often exceeds the size of samples collected by most quantitative marketing research projects. Mining of these anecdotes produces very meaningful insights with a real business return on investment that quantitative methods are not capable to discover. Such techniques allow:

  • discovery of patterns and trends within the multitude of “anecdotes”,
  • measurement of their relative importance to customers,
  • measurement of the sentiments associated with these patterns.

The cross-sectional representation of these findings may subsequently be validated via traditional quantitative methods.   The internet democratized many aspects in our lives and not everyone likes it. The selection of sampling strategies for research used to be the prerogative of professional researchers, who often act like high priests of the illusive cross-sectional representation probability standards. In reality, very few of them actually practice any probability sampling methods beyond relatively basic demographics. The proliferation of inexpensive online survey tools enable people, without special training, to conduct marketing research. Most marketing executives, the recipients of this research, have neither the background to venerate these methods nor have experienced a measurable advantage using them. On the other hand, customer reviews often can be subjected to sampling based on gender, geography, age, time published, etc. to improve probability of more full representation of the customer base.   Those who continue to belittle a value of untamed customer feedback to business will fall victim of their own elitism and become even less relevant than they are now. Change before you have to.

The Gospel of Customer Centricity

Customer centricThe price of a product, the brand value and the other pillars of marketing are no longer the most important factors in a consumer’s selection process. At a certain level of affluence the “absolute value” of experience, a company is likely to deliver, becomes the pivotal point in making the selection. Global trends point to a dramatic growth of consumers who are reaching, or about to reach, that level. Therefore, customer-centric companies are likely to outperform their competitors, who’s leaders cannot see beyond the next quarter’s financial results.

Customer centricity starts with realization that your company cannot deliver a superior customer experience to everybody who wants to buy your product or service.

 

Customer centricity is about:

 

  • knowing who your best customers are – beyond demographics and persona definitions.

Regardless of the type of business – B2B, B2C or any other combination of letters, it is people who decide whether they had a good experience as your customers or they should try someone else. These people share their opinions with others, like they always have. However, now these opinions have as much, or more, impact on shoppers as advertising.

  • knowing WHY your best customers buy what you are selling.

According to Peter Drucker -

“The customer rarely buys what the company thinks it is selling him”.

It is critical to understand what “job” they “hire” your products to do. Go beyond sketchy marketing requirements, and deliver the ultimate simplicity of experience to perform that “job”.

  • exclusivity – it may not be politically correct or culturally easy to accept, but a company cannot deliver a top quality experience to any customer – only to those it is best focused on to serve profitably.

That means it is better for such a company’s culture, it’s employees, it’s target customers, and the consumers at large to clearly communicate what type of customers it will not serve, because it cannot deliver the quality of experience they deserve. The best example I know is USAA that leads every chart as the top customer experience provider, but will not take your business if you are not a member of the military family.

Enterprises deliver operational efficiencies through departmental silos that can easily lead to fragmentation of customer experience.  Business intelligence data warehouses can integrate internal data flows to produce a holistic view of the enterprise performance, in terms of growth and efficiencies. However, without connecting it all to customer’s perceptions of their experiences, the enterprise’s sustainable effectiveness cannot be measured.

 

Customer centricity is not a project or corporate initiative. It may or may not involve investment in technology and if it fails, it is an ultimate failure of the company’s leadership and not IT, Customer Service or any other of its departments. Customer centricity is a cultural transformation that leads to embracing a customer into the inner circle of the company’s stakeholders. Without customers, employees and shareholders – there is no company.

 

Why are Consumers Jaded by Marketing Messages?

Try this product because we screamWe live in the age of abundance. From tropical fruit during winter to a choice of tools for any conceivable job, most of us have more “stuff” than we really need. One thing most of us are short of – is an attention span. Our post-industrial society suffers from collective Attention Deficit Disorder.

 

This problem manifests itself in Politics and Marketing above all. It is very difficult to communicate complex issues clearly in the confines of 30 seconds or 140 characters. This leads to  ambiguous communications designed to elicit simple, strong and binary reactions. Agree or disagree, love it or hate it! In politics, such practices result in a highly polarized society. In marketing – it drives consumers to look elsewhere for help in making choices. In most cases, the end result is  failure to act constructively.

 

There are two main reasons why collective ADD became such a problem – too much noise and too little trust. From traditional advertisers to content marketers, we all want to grab that elusive attention of our potential customers. We construct catchy titles that have little to do with actual messages we want to convey, and broadcast them as often as we can. By trying to be heard we create even more noise and distrust.

 

In evolutionary terms, an overload of “noise” inevitably leads to “better” filters. Attempts to break through the filters puts one on the “wrong” side of evolution, the side without a bright future.

 

Every time my entertainment is interrupted by a car commercial, I yearn for driving Tesla S. I’ve never seen it advertised anywhere and yet they sell every car they make before they make it. How do they do this? I suspect Tesla knows precisely Who wants to buy their cars and Why, before they design and build them. The distinction is Why customers want “it”, instead of What they want. People actively seek  fulfillment of their desires, but build protection against unwanted interruptions.

 

Fortunately technology can enable both. There are means and tools to learn Why people would want products you may be able to build. All you have to do is to figure out How. If you select to continue “screaming”, your former customers have technology to “filter” you out. Click!

Disclaimer: This post was written to have every sentence not to exceed 140 characters. Think of it as a string of Tweets. :)

3 Steps for Improving the Value of Voice of Customers

Every company collects customer feedback in one form or another. It is the ability to HEAR what their customers SAY that separates successful companies from “also run”s. Below are 3 steps that can help your company to improve its hearing:

  1. VOC value 1Stop manipulating it

 

The availability of inexpensive survey tools, that allow you to produce and send your questions to thousands of email addresses, does not translate into valuable knowledge of how your customers experience doing business with your company. The type of questions you ask, inevitably influence the type of answers you receive. Implement ation of a shiny new “customer engagement” software, does not translate into meaningful insights for improving your products and services. People’s motivations for choosing to engage and conditions of their engagement, inevitably corrupt a value of their input.

“Just because something isn’t a lie does not mean that it isn’t deceptive.” Criss Jami

Just because you have no intent to manipulate Voice of Customer does not mean your efforts produce trustworthy results. Focus on listening to what customers have to say on their own accord and without any guidance.

“It’s not at all hard to understand a person; it’s only hard to listen without bias.” Criss Jami 

 

2.  Stop being an order taker

 

It became fashionable to quote Henry Ford and Steve Jobs in arguing that VoC is not a source of innovation. I am not sure there is an VOC valueargument to be made – if customers were able to produce Market Requirements Documents, who would need innovators? It only means that if you expect customer feedback to spell out MRD for you, perhaps innovation is not your calling. The VoC is one of the best sources for learning the problems customers trying to resolve by “hiring” products available to them. Understanding of their problems and empathy with their experience, inspire true innovators to “translate” customer feedback into breakthrough products and services.

“The aim of selling is to satisfy a customer need; the aim of marketing is to figure out his need.” P. Kotler

 

  1.  Stop using selective hearing

 

Just because you pretend that VoC is limited to the customers who answer your questions, Word of Mouth does not stop influencing the rise or fall of your product’s fortunes. You can hide your head in the sand, but that will likely accelerate the distraction of your brand reputation. According to Jeff Besos, who knows a thing or two about customer-centricity:

“If you make customers unhappy in the physical world, they might each tell six friends. If you make customers unhappy on the Internet, they can each tell 6,000.”

You are more likely to learn from Word of Mouth analysis what really is important to your customers and why they buy your product, than from their responses to your survey.

3 Questions for the Author of “Hooked on Customers”

2014-07-05_130104Last week I had the opportunity to ask Bob Thompson, the author of the book “Hooked on Customers”, a few questions. Bob  is an international authority on customer-centric business management who has researched and shaped leading industry trends since 1998. He is founder and CEO of CustomerThink Corporation, an independent research and publishing firm, and founder and editor-in-chief of CustomerThink.com, the world’s largest online community dedicated to helping business leaders develop and implement customer-centric business strategies. His book reveals the five habits of leading customer-centric firms.

CX-IQ.COMBob, many industry observers, as well as practitioners, agree that a culture and politics of organizational silos negatively impact experience of the customers. Have you encounter in your research any specific practices of customer-centricity leaders,  that allow them to overcome this challenge? Can you share it/them with our readers?

Bob Thompson – People often blame organizational silos for customer experience dysfunction, and for good reason. But the answer is not to “bust” silos, because they also serve a purpose: specialization. However, you can’t expect silo managers to cooperate on their own without encouragement from their boss. Having shared metrics and rewards can help. For example, if one team is responsible for the web experience and another the call center experience, management can encourage cooperation by setting up metrics and rewards that focus (and reward) both groups on the overall customer experience. Sprint used this technique, and also rallied around an internal metric that drove the business case: cost.

CX-IQ.COMIn your book’s “Habit 1 – Listen” chapter, you shared lessons for managing VoC from perspective of different companies. Some of these lessons mention benchmarking of the company metrics against their industry averages obtained from 3rd party providers. There is a debate in CXM community about methodological integrity, and therefore a value, of comparing a company’s numbers with the ones produced externally. How critical, in your opinion, is a benchmarking practice for an improvement of customer experience?

Bob Thompson - I agree that it’s difficult to benchmark, but it’s important to understand how one company compares to another in the customer’s mind. Customers make decisions based on what is different between options in their consideration set, not the absolute raw scores. I would recommend benchmarks produced by an outside firm to ensure it’s an apples to apples comparison.

CX-IQ.COM – Bob, you quote Jeanne Bliss “human duct tape” role definition of CCO. I am a big fan of duct tape – for a quick repair that needs to be done right later. As you point out through your book – customer-centricity is not a destination, it is a journey. How long can a “ship” sail, patched together with a duct tape? Isn’t a CCO only needed where CEO and CMO have failed?

Bob ThompsonAny change requires specialized help, and customer-centric change is no different. An effective CCO can help bridge the gaps in the short term while implementing systemic reforms that, eventually, will mean the CCO is no longer needed.

CX-IQ.COMBob, thank you very much for the great book and for sharing with us the lessons you have learned in your research.

For more information you can visit HookedOnCustomers.com.

We are re-branding

Some of you may have noticed the changes in the name and the logo on our site and this blog. The focus of our research, and of our technology development efforts, have pivoted over CLOUD-TYPOS-Editedthe last few years. We feel that the new name – Customer Experience IQ – reflects more accurately the type of service we provide. The new, shorter url (http://cx-iq.com) also makes it easier to find us.

The effort may take a few weeks to proliferate through our website screens and data dashboards, that are open to our registered users.

Please forgive us for this temporary inconsistencies in your experience.

Social Media Research of Customer Experience is a Smart Marketing investment

Dudley squatListening to customers through social media channels, is a well established practice for support of  Customer Service and PR business processes. Marketing organizations are less known for their successful attempts to use social media to engage customers. Many of these attempts were widely publicized as clumsy, some even caused an adverse reaction. This underscores how far marketing has parted from its original purpose – ‘The management process responsible for identifying, anticipating and satisfying customer requirements profitably.’ From that perspective, Customer Experience Management discipline belongs under the Marketing umbrella. Brands, that enjoy well above average growth and profitability, understand that customers don’t buy products or services – they buy experiences.

Marketing investments in social media can produce much better returns when they are focused on customer experience research. Instead, marketers try to use this technology in advertising mode, like traditional media channels. Below are just a few reasons that make Social Media Research of customer experience a better investment than traditional marketing research:

  1. Survey participants’ opinions are less valuable than the opinions of online customer reviews. Only personnel that conduct surveys are impacted by the participants’ opinions. In contrast, a very large number of prospective customers are directly influenced by a product’s online reviews. Shoppers, who are aggressively searching for social media recommendations, would not make a purchasing decision without reading the stories of customer experiences. The content of these stories is inherently more valuable for product marketing than satisfaction scores.

 

  1. The volume of a product’s customer reviews, and other social media mentions, is often substantially larger than a sample size of even a professionally conducted survey. This translates into better Confidence Interval/Margin of Error rates.

 

  1. A survey will tell you that your customers are really satisfied with their purchase and would likely recommend your brand to their friends, family members or colleagues. Whether they will or will not do it is shrouded in mystery. In contrast, over 64% of online review writers, share their recommendations with members of their social circles via Twitter, Facebook or Instagram. Actions speak much louder than words. Particularly when it comes to predicting consumer behavior.

 

  1.  Social Media Research allows one to easily benchmark customer experience metrics against competitive products. Such intelligence is very valuable for product management and planning professionals who commonly straggle to predict future demand, looking at 3 months old and static numbers instead of up to date trends.

 

In the words of Brian Solis, the author of “WTF-What’s the Future of Business” – The future of branding is experience architecture.