It seems words like “hope”, “change”, “renewal” help us to detach our actions from their inevitable consequences, at least in our own minds. At the turn of the New Year  we habitually make ourselves (and others) insincere promises to change, to start working out, to start learning languages or skills, to lose or gain weight, etc. We also like to make predictions nobody takes very seriously or calls us on.

Here is an example predicting the Death of Marketing

Gone are the days when marketers could carefully craft messaging and then broadcast that message in a few channels to huge portions of their audiences.  Oh, you can still spend money that way if you want to but in our transparent world, no marketing budget can possibly overcome the actual experience consumers have (and share with friends, followers and Google) with the product, service, or organization.  It no longer matters what you say;  in 2010, your brand will be more defined by what you do and who you are!

I wish Augie Ray, the author of this prediction and a new Forrester analyst, was right, but we both know that he is not. I am hoping that we will see consumers re-gain their power of choice and intelligent, rational selection and I believe that it has already started happening as reported by many observers. Here is an example from the Gerson Lehman Group quoting a McKinsey report:

“Two-thirds of the touch points during the active-evaluation phase involve consumer-driven activities such as Internet reviews and word-of-mouth recommendations from friends and family” .

I just don’t believe that “it” will happen in 2010, primarily because the fundamental change is not an event, it is a process. A process that takes time and a lot of education as too many consumers have willfully relegated their power of choice and are more comfortable to see themselves as victims. Here is an example of a discussion “Does your Company’s Reputation Really Matter?” that illustrates my point:

Perhaps things will change if capitalism develops into a more socially equable system, or a new form of leadership evolves for the 21st century. In the meantime, what do you think? Is reputation still something to be valued and maintained? Does it really count for anything? And how do we ensure that our voices — customers, citizens, taxpayers — are heard amid the deafening noise of spin?

It is interesting to see a victim-hood mentality spilling over from Harvard Business Review by a “Leadership Coach”. I suppose if you don’t believe you have the power – you do not have it.

All the moaning, blaming everything in sight and somehow hoping for a better outcome, meanwhile continuing our patronage of those who don’t deserve it, is not going to bring any change for the better.

I rather do without many things I deem to be necessary – many are not. I stopped buying products that do not deserve high regard from customers who experienced them. I’d rather be without or pay more for quality if it is available. I have enough headaches, thank you very much. I stopped flying anywhere I can drive within a reasonable time, and I do a lot of my long distance meetings using technologies ranging from Skype to Cisco.

For the same reason you cannot change your weight without changing your diet, you cannot get the quality you deserve without demanding it — consistently. Change before you have to.

This time I played out a different scenario. It is quite common that customers of the products with high reputation for reliability, do not have much to say about support. It is understandable as they have no reason to experience Support Organizations. So I applied an unusual combination of filters to expose very popular and reliable products with negative customer experiences of Support.
This report helps to focus and to research root causes of problem by quickly exposing negative sentiment reviews about support.
I have used the following filters:
Product Reviews>50
CSI>1
PFS>1
PRS>1
PSS>1

Webcams that earned high reputation from their users, but have Support issues

Here are the resulting report

In MITSloan Management Review Article “A Plan to Invent the Marketing We Need Today”, Yoram Wind wrote

This world has led to a new breed of consumers. They expect customization (make it mine), communities (let me be a part of it), multiple channels (let me call, click or visit), competitive value (give me more for my money) and choice (give me search and decision tools).

In this post I would like to focus on the combination of the first (customization) and the last (choice) and call it “personalization” for the purpose of this discussion.

As a consumer selecting a product to purchase, I rely on marketing collateral to form my expectations, and on the comments of my peers who already experienced the products I consider to buy. Any decision is made with a relative shortage of information required to make this decision. An unavoidable ambiguity of available information from marketing collateral and product scores from online retailers or advertisers, does not help the consumer to reduce uncertainty of their decision easily. I want to know how likely this product will satisfy me, because while I know that other customers, who described their experiences are my peers, their product scores do not help me to understand whether we share and value the same aspects of a product experience. The only way to figure that out is to read carefully the descriptions of their experience. That takes a lot of time and effort.

The higher number of customer reviews and more detailed their description of a product experience (more data), the more useful and accurate are the results of personalized information to support the purchasing decision.

The key element for me, as a consumer, is the reliability issues of the Garmin product when it is compared to very similar Magellan GPS. These reliability reputation issues are not “visible” looking at traditional 4.5 stars customers gave to Garmin. However for me reliability of GPS device represent the highest differentiator, and allows me to “personalize” my choice.

A very similar problem facing marketeers who want to understand specific, personal characteristics that affect the reputation of their products and brands, and how they influence their competitive position in their market segments. Their problem is multiplied by a number of products, brands and competitors they have to follow and lack of consistent methodology to produce effective output. The technologies are complex to implement and costs are staggering.

Professor Wind continues

Through its maturation as a discipline over the past half century, marketing has emerged as a rigorous field. Tools such as conjoint analysis, economic and econometric modeling, behavioral economics, data mining, and techniques derived from mathematical psychology have raised the level of rigor and strengthened the insights that marketing can contribute to the enterprise. But many of the most rigorous tools were developed years ago. Today’s challenge is how to move from using old tools that are focused on solving problems of the past to developing new and rigorous tools that are relevant to the challenges of today and the future.

I would like to pose that “personalization” is the new “segmentation”, and certain aspects of personal Customer Experience provide a lot more guidance for marketers than demographics, ethnicity, etc. because they are much closer correlate to  how your customers use and experience your products in their circumstances.

Marketing is divided between behavioral and quantitative approaches to marketing questions. Increasingly, the recruitment of faculty and doctoral students, and the design of workshops, are focused separately on behavioral and quantitative approaches. Ideally, the
two sides should come together. Markets can be seen through either a behavioral or quantitative lens, but as with binocular vision, we gain more depth when we look through both.

These 29 netbooks are selected from 98 available on the market and the result of sentiment analysis and opinion mining of 16,402 customer reviews.

I used the Product Reputation Market Intelligence Reporter with the following filters:

1. Number of Reviews per product >50
2. CSI >1
3. PFS>1
4. PRS>1
5. PSS>1

Netbooks that earned highest Product Reputation Scores

The resulting report can be seen here. The information can also be downloaded as a Excel file format to produce graphs, presentations and additional analysis.

The positive effects of Word of Mouth references in customer acquisition (btw I hate that term) are very well documented.  Often I see the term “peer to peer” marketing being used in the same context interchangeably, however not being a marketing professional I am not sure if there is a difference or if they are really synonymous. Wikipedia defines WoM Marketing as

Word-of-mouth marketing, which encompasses a variety of subcategories, including buzz, blog, viral, grassroots, cause influencers and social media marketing, as well as ambassador programs, work with consumer-generated media and more, can be highly valued by product marketers. Because of the personal nature of the communications between individuals, it is believed that product information communicated in this way has an added layer of credibility. Research points to individuals being more inclined to believe WOMM than more formal forms of promotion methods; the receiver of word-of-mouth referrals tends to believe that the communicator is speaking honestly and is unlikely to have an ulterior motive (i.e. they are not receiving an incentive for their referrals).^[2]

Customer Reviews, describing personal experiences, opinions and recommendations of individual customers, are one of the best examples of WOMM. Amazon pioneered the approach and now there are many retailers like NewEgg, Best Buy and others, with technologies from BazaarVoice and PowerReviews that collect, manage and publish Customer Reviews.  I have both contributed and used them as guidance for my purchases for many years, and even though I understand that the reviews sometimes tell more about the reviewer than the product reviewed, I still find them the best tool for reduction of purchasing decision uncertainty. I know some tech pros and gadget mavens, who’s advice is sought and respected by many, to use customer reviews as an important part of their product evaluation process.

Consumers have no squabbles over paying for independent advice and recommendation, often called unbiased which is incorrect as such a thing does not exist IMHO. The Consumer Report was a very successful example and provided great service to generations of shoppers who subscribed to their magazine and its online version, however their model has difficulties to cover an ever expanding breadth of the products offered, and it does not really deal with customer experiences. The point however is that their approach is not misleading – you, the customer, pay them to learn their opinion and recommendation and thus the only incentive is to provide you with good and honest information.

I want to make very clear that I am not attacking profit motives or the marketing profession. I love profits when they are honestly earned by providing quality customer experiences, and I love marketing that helps me find providers of such experiences. The problems arise when some people or companies decide to focus on deception instead. Many years ago, one of my good friends shared with me her great admiration for Amway products. I was very grateful for her zeal to “help” me find a good product, until I realized the concealed motivation. Needless to say, we are no longer good friends, just acquaintances and I would never buy anything associated with the Amway brand. That is not to say that Word Of Mouth Marketing cannot be incentivised, just that marketers have to understand that it could become a double-edged sword and can easily create unintended adverse consequences. It also creates a challenge for us, at Amplified Analytics, to develop an effective approach to weigh authenticity of reviews we analyze for producing Product Reputation metrics.

I used to have a sign in my office that said – “Happiness is expectation management” that could be interpreted as “It’s hard to be disappointed if you don’t expect much”. Apparently this wisdom does not resonate with a lot of consumers:

A recent Brandweek article titled “Retail Customer Service Stinks” reported that the service received by shoppers in over 1000 retail interactions in the study rated 48.2 out of a possible 100 points – a flunking grade. The study, conducted by the research firm The Salt and Pepper Group, examined retail interactions in 73 stores over a four-month period.

This quote, and the others to follow, came from an excellent article by @RetailProphet appropriately called  How Consumers Killed Customer Service. In this article, the writer puts responsibility for deteriorating Customer Service on the shoulders of Consumers with our focus on low price.

We demanded the lowest airfare wherever we flew. We went to the buy-one-get-one sales. We made Walmart what it is today. We camped out for Black Friday. We built the dollar store channel. The bottom line is that we voted with our wallets and customer service lost. We killed customer service.

I’m glad this is finally articulated as I’ve felt this way for a long time. It is rare to see an advertising campaign that is focused on quality of experience, and the only differentiator seems to be the price. These unbalanced optimization attempts inevitably trigger a “law of unintended consequences”. Results range from retail stores, that both feel and smell like dumps, to rising costs of waste disposal caused by purchases of low quality products, that do not last and are priced too low to fix. Apparently most of us do not value the extra time, effort and energy wasted to deal with inferior products and services, to balance the economics of our decisions.

Examples of better balanced services (Apple Store, Nordstrom, etc) point to the fact that market segmentation works as intended and some of us, who expect more than just the lowest  price, can still find better experiences.

For most of us it’s become a matter of making trades and concessions based on the type of product, the brand, or the store we choose to shop at. Just as we don’t expect the lowest price for a laptop at the Apple Store, we can’t in good conscience demand brilliant service at Sears, whose stores have become a virtual sea of sale banners. And if in fact we really can’t live with that trade-off, then I’m afraid we’ll need to rethink our definition of value as consumers and as a society.

We continue to test and debug the PRMIR (Product Reputation Market Intelligence Reporter), to get it ready for private beta. Original scenarios were focused on use of the Product Reputation data by product marketing managers of Consumer Electronics manufacturers to spot “systemic” failures of the products they are responsible for, and provide them with information to assist in developing corrective actions. However as I test the PRMIR, I keep coming up with new ways to focus and filter the information from different perspectives. The consumer focus (i.e. “what is the most reputable 40″ flat screen HDTV?”) is the most obvious example.

Best 40 inch TV

All 30 of very popular Asus netbooks have very high reputation for their functionality and design, but over half of them have some support problems. If I was responsible for Asus technical support or Customer Experience management, I would surely want to look at the source of that information (verbatim). The problem is that these metrics are based on 4,882 customer reviews and any meaningful analysis would take a significant amount of time to locate specific references to the support issues.  The Support “filter” below helps to focus on the subject of investigation.

Asus Support Filter

Click on the image to enlarge.

I found an interesting post by Jeffrey Henning today. The article is touching on emotional attachment people have for different measurement  scales used in Market Research. I can see how easily it come into play as we try to find one method to fit variety of research projects. Every method or tool has it’s limitations and therefore the challenge is to find the most appropriate one for the task at hand. Jeffrey quotes Brad Borther who provides an excellent advise:

Ten-point scale: “A five-point scale is totally inappropriate for customer satisfaction studies. Why? It lacks enough granularity and robs companies of a burning desire to take corrective action. It commonly leads executives to believe that ‘80% rate us four or five; that’s great, let’s move on,’ without realizing that it simply means that 80% are at least somewhat satisfied. Further, many people will never rate anything a ‘five,’ resulting in ‘four’ including those who are really very satisfied and those who are only somewhat satisfied. To avoid this topping effect, use at least a 10-point scale and count nine and 10 ratings as fully satisfied. This will also allow easier analysis of what bottom-line effects satisfaction has, since such tools as regressions work better with a more granular score.” – Brad Bortner, principal analyst with Forrester Research, “Best Practices: Why Customer Satisfaction Studies Fail“

Since our approach to measuring Product Reputation (delta between Customer Expectations and Customer Experience) is focused on competitive position of multiple products within their category, and our method does not require to ask people to measure it,  I have decided to use “0″ to “2″ balanced scale with 2 decimal points for more granularity. It is interesting how infrequently people want to challenge a value of our methodology or accuracy of our analysis, compared to the selection of the measuring scale. By now I gave up any attempts to change their mind. We arrive to the scores using our algorithms to analyze Customer comments and reviews, not by asking them to measure according to any scale, therefore is much easier for us to recalculate Product Reputation scores to appear in a customer “favorite” scale. The integrity of the finding is not compromised by the conversion.

I wish all religious wars could be settled that easily.

Today on request of a friend, I extracted the list of the least reliable small laptops on the market. I suppose he wants to avoid buying a lemon. The list was produced by Product Reputation Market Intelligence Reporter (PRMIR) that we are testing in preparation for private beta. The scores for Reliability (and the rest of them) are based on our analysis of 137 laptops available for purchase and 7,530 customer reviews.

Click on the image below to see the report in PDF viewer

Next time I will ask more about a context for inquiry like that. I probably could produce much more meaningful result if I new more.