I took almost a month to recover from my CES2010 and now I can attempt to write something more or less cohesive. The experience was absolutely overwhelming. Bright images on gigantic screens and loud sounds continuously blasting away are to be expected at Consumer Electronics trade show, but my mind could not function very well in these conditions.  I have not visited such large, noisy and heavily attended events for a few years and the assault on my senses was very difficult to bear, but I managed.

We are a new associate member of the Consumer Electronics Association and this was my very first visit to this event. CEA offers a terrific Mentoring program to its members and I came to Las Vegas to take advantage of it. It is amazing how much one can learn from truly knowledgeable and generous people even during a short personal meeting. I am very grateful to Bill Matthies of Coyote Insight for sharing his deep knowledge and understanding of the marketplace. I started this company with an idea of converting virgin data into actionable information, and we have almost succeeded – Bill made me realize that the link between our metrics and an action is very obvious to nobody but me, and advised to share that link with others using “stories” and “pictures” like this:

PRMIR – Deviation of Reliability Reputation scores for the Docking Station Product Category

Robert Heiblim of BlueSalve and my CEA Mentor, helped me understand the inter-workings of the CE community better and to meet people in CE product marketing to learn more about how they go about conducting their business. I only wish I could get more of Robert’s guidance and advice.

I need more examples of business processes where product managers have to “translate” data into “information” that suggest action.

Consider the actions a marketing product manager can take based on the data that their product ABC has a low satisfaction score. I can’t think of any other action than to learn more, i.e. to discover more data. Presumably information is created when our marketing product manager (or product marketing manager) compares ABC’s product satisfaction score with the one of a competing product, hence comparison of two points produce information, i.e. higher value.

Correlating the information produced by tracking these two data points over time with sales numbers can create knowledge – “product with an inferior reputation tends to undersell its competition by X%, when sold at competitive (i.e. similar) price”. Now, this is an actionable piece of knowledge as our MP/PM manager can attempt to discount the ABC product to stimulate sales or attempt to improve the customer’s opinion about it.

Can you suggest any scenarios where aggregated customer feedback about reliability of a product XYZ can lead to/suggest an action that protects and/or improves its profit margin? Your help will be deeply appreciated.

A customer review can produce one point of data relevant to a product. A statistically representative number of customer reviews of the same product can produce a much better quality of a single data point relevant to that product.  It is a very good start, but it is still just a single point of data-CSI, CSAT, NPS, etc., depending on the methodology used to collect this data. So what is the value of this point of data? Apparently it is quite significant when used for marketing as people do pay attention to the recommendations of their “peers” or “influence-rs”. Online retailers know that conversion from visit to purchase is much higher for products that have a significant number of relatively positive reviews, and that is why they invest in collecting and managing access to these reviews. The value of this data for a product manufacturer varies from industry to industry.

A couple of weeks ago I attended a presentation by Munjal Shah, the CEO of Like.com and one of his slides really made me think.

In other words data itself is not actionable. Consider the actions a marketing product manager can take based on the data that their product ABC has a low satisfaction score. I can’t think of any other action than to learn more, i.e. to discover more data. Presumably information is created when our marketing product manager (or product marketing manager) compares ABC’s product satisfaction score with the one of a competing product, hence comparison of two points produce information, i.e. higher value.

Correlating the information produced by tracking these two data points over time with sales numbers can create knowledge – “product with an inferior reputation tends to undersell its competition by X%, when sold at competitive (i.e. similar) price”. Now, this is an actionable piece of knowledge as our MP/PM manager can attempt to discount the ABC product to stimulate sales or attempt to improve the customer’s opinion about it.

I already wrote that most CE Marketing Product managers (area of my focus) do not think that they can actively manage a reputation of a product released into the field. However this belief is not based on any wisdom, empirical knowledge, or current data. It is based on the experience of working with traditional tools in an archaic (pre-social media) market environment. The availability of customer feedback about their experience with a product, combined with modern tools, capable to extract actionable knowledge, enable organizations to create causation “pro-active product reputation management produces higher profitability than price discounting and defensive advertising”.

Very interesting results of the survey:

A Social Media Survey conducted on behalf of PRWeek and MS&L by PRWeek and CA Walker found that marketers don’t make changes to their products based on customer feedback, despite monitoring feedback being one of the most common business uses of social media in the first place.

The survey found that 70% of marketers say they’ve never made a change to a product or marketing efforts based on feedback from consumers on social media sites.

I have to second Larry Malloy’s comment.

I believe there’s two reasons for this.First, we are still in the early stages of social media as a marketing tool. I believe as the technology matures, potentials are stretched, metrics are determined, and processes are developed this will change.

Second, there could be a disconnect between marketing and product management (you said the survey polled senior level marketers). As a product manager, I often used social media throughout the product lifecycle, and the executives I reported to often did not know where the new product ideas came from. And, what I learned through social media, I often further tested through more traditional marketing technologies like surveys, customer visits, interviews, etc.

Most Product Management and Marketing executives I have talked to are interested in listening, but have no strategy, processes, methodologies or best practices to act on customer feedback. Most tools available today are not providing particularly actionable data either. I am not sure what would or should come first, but without these elements you cannot produce any ROI. I attempted to come up with a “calculator” to measure an impact of customer feedback on product profitability, but it is just a rudimentary attempt for discussion and anybody who wants a copy can find it here.

I’ve been following a good number of discussions, on blogs and Twitter, about ROI in Social Media. While many of them are debating issues of advertising, public relations and marketing, the most interesting to me are those of Social CRM, or extension of CRM functionality into Social Media.

Within that area, I find the most exciting discussions to be those surrounding Customer Loyalty value, because it is so hard to define and to measure. While some CRM thought leaders, like Esteban Kolsky (@ekolsky) have flat-out declared that Customer Loyalty does not exist, others, like Kevin Stirtz of the AmazingServiceGuy.com attempt to come with methodology to estimate it.

Customer Loyalty Value Calculator does not provide ultimate answer for every business, but it does identify factors and logic that allows to illustrate the impact customer loyalty makes on bottom line.

“For any business, Top line is vanity, Bottom line is sanity, Cash flow is reality”

Product Reputation is another term which is difficult to define, measure and manage. It is often misunderstood as measure of Customer Satisfaction with a product, and both are certainly related, however the methodologies around measuring them are quite different and that makes measure such as CSI (Customer Satisfaction Index) or NPS (Net Promoter Score) results not as actionable, in my opinion, as Product Reputation scores. However all of these do, arguably, influence financial results, and overall brand value of the associated products.

I define a Brand Reputation as an aggregation of Reputations, Products associated with the Brand, enjoy with their Customers. Deterioration of Product Reputation can eventually erode the value of the Brand. We see Product Reputation as the delta between customer expectations and actual experiences, and this delta can be measured using semantic analysis and opinion mining tools.

Inspired by Kevin, I decided to build a similar simple calculator, which I called Product Reputation Impact calculator.

While it is a simplistic and rudimentary model, but it is useful for understanding how even small declines in the Product Reputation can result in sizable financial shortfall. The good news is that it also shows that there are opportunities to defend your Product Reputation, if you know what is (are) the cause(s) of the problem. In the above example the Product Functionality Reputation is under pressure and Customer Feedback verbatim analysis may indicate that modification of the marketing messages, that are creating these inflated expectations, can easily be adjusted to bring the Product Reputation into balance.

I would love to receive your feedback about this approach and if you would like to take a closer look at the Calculator, I will happily send you this spreadsheet.

Product marketing is surely not limited to advertising and promotion, but I would like to focus on this function of the job for this particular discussion. There is a great deal of debate about the role, effectiveness and ROI of social marketing efforts. The explosion of direct or indirect social interactions between people, using social media platforms, offers marketers two new opportunities:

1. To learn (research) market conditions very economically and as a continuous exercise, rather than random events (focus groups). A huge surprise to many is the willingness of individuals to disclose and share their private and quite specific data on the public domain of the Internet.
2. To practice “trust-based marketing” and “peer-to-peer marketing” methods in an effort to effectively reduce the uncertainty of a product purchase.

Elliot Schreiber – Clinical Professor at Le Bow College of Business, Drexel University, teaches courses in brand and reputation management. He has written in his blog:

“The best way is to look at the product from the outside-in, the way the customer sees it and to understand the needs and interests that determine the buying decision. I would suggest that there are two basic variables driving buying decisions: 1) the amount of fear, uncertainty and doubt (FUD) that the customer has in making the decision to buy; and 2) the complexity of the buying decision.”

Traditional marketing “push” methods are generating less and less return on their investment, as new technologies in traditional channels (Tivo, DVR, etc) help customers avoid advertising messages, and offer very little accountability. Pursuit of the same behavior among the new channels (Internet, mobile, etc) will cause a similar backlash. There are already browsers and plugins, enthusiastically discussed on Twitter, that enable the blocking of these advertising messages.

Glen L. Urban of the MIT Sloan School of Management published a paper called “The Trust Imperative”

“…the Internet is a great enabler for consumer power – consumers are more educated and more informed than ever before. Consumers now have more tools with which to verify company’s claims or to seek out superior product options. At the same time, companies have less power to push messages onto customers. Companies must decide what to do in the face of this overwhelming convergence of forces. One answer is to “push harder” with traditional marketing methods to torment customers. Another choice is “trust based marketing” and partnering with customers to jointly succeed.”

Like in any evolutionary development there are challenges to overcome:

1. Relevancy – the scale and the span of channels help to generate enormous volumes of data. Technology providers are more attuned to aggregation and management of new channels and more data than with providing actionable, filtered, relevant information; perhaps because there is too little process thought leadership is available. There are good monitoring or “listening” technology tools available on the market, however buyers (marketers) are often more interested in what channels they are monitoring than with “why” they are doing it and “what” they are going to do with the discovered information as illustrated in this “On Twitter, information beats Sentiment” blog post.
2. Authenticity – some people have always tried and will keep trying to substitute better product or better marketing with shortcuts of misrepresentation and outright fraud. Transparency of customer feedback practices is emerging and there are technological efforts under way to reduce the impact of those who are “slow” to learn.

This is surely not a complete list, but may be a good start. Your thoughts and comments are always welcome.

As a shopper for an all-in-one printer, comparing these two printers below on a retail site, the Epson Workforce is the easy choice – as customers on Amazon rate it at 4 out of 5 stars as opposed to the HP printer at 2.5 stars out of 5. Given the similar price and supply availability, this decision is a “no brainer”.

However, as a product marketing manager, responsible for the HP C4280, I would really want to understand the nature of  its  failure to earn a better reputation with its customers, before giving up on it and returning to the drawing board for the next model.

From the graphic above, a screen shot of our V2P Accelerator, the most noticeable diversions in reputation for these two competitors are in Functionality and Support scores, while customers expressed disappointment with the Reliability of both machines.

45 of 83 reviews (54%) explicitly addressing the functionality of the HP printer, expressed a negative sentiment about it. What’s even more telling is the intensity of the sentiment expressed – these customers’ negative sentiment intensity is an average of 0.073 which is nearly unacceptable. My hypothesis is the HP marketing organization has created unattainable expectations through its marketing communications. Let’s look more closely at what is causing this uproar:

Many customers point at software compatibility issues. I will only quote reviews from those authors who have identified themselves.

“This product does not work with VISTA. Their software upgrade that is supposed to fix it also does not work. ” nitropolo13;

“This is printer is a money pit. It constantly prints documents in color, no matter how I configure the software.” mcduck_rules;

“The software does not work and is not fit for purpose. If you have more than one user on xp it will insist on installing multiple copies of printers, each time corrupting you initial installation requiring the lengthy install and uninstall.” andrewmanly2;

“the software keeps trying to reinstall itself repeatedly! I have to keep task manager open to keep stopping the installs.” lequiqui;

“The c4280 is an exercise in frustration, at least with Windows Vista. Vista keeps forgetting the printer and then HP reinstalls the printer automatically so you end up with multiple copies in your “Printers” list. Prepare to spend lots of time waiting for HP to reinstall the c4280 several times a week. Oh, and HP installs all kinds of software on your machine — just nothing to resolve this problem.” dtfroats;

The software issue is, statistically, the most acute cause of “pain” to customers. Product managers should be able to produce a downloadable “fix” to remedy the problem and if the availability of such a fix is well communicated to the HP support organization and to existing customers, the reputation of the printer could improve significantly. In my view this is a low hanging fruit – fixable, low cost of distribution and a very high impact on Product Functionality Reputation.

Reviews related to the HP’s Product Support damages this product’s reputation even further – 16% of all customer reviews explicitly complain about their support experience:

“Spent an entire day with HP tech help trying to get the drivers installed correctly and when I did get them installed the print options menu was incomplete — I spent another day dealing with HP on the phone — it’s as if I don’t have better things to do – by massthreat”

“HP’s customer service is a disgrace. – by robert_walsh@condenast.com”.

“HP tech support is non-existent, I have spoken with customer reps in Canada, Philippines, and India and none of these people have used the printer or have a clue about the problem. The web tech support is also useless.This is the last Hp product I will own. – mcduck_rules”.

“I spent over 6 hours on customer support to try and fix the problem and I was told it wasn’t fixable. I climbed the customer service ladder and was finally able to speak to an English speaking “Case Manager” who clearly told me that “. . scan functions on any printer have a tendency to malfunction for various reasons. .- by philbechtel

“I called HP – and they have the worst customer service department I’ve ever dealt with. I spent hours and hours on the phone with them, and all they knew how to do was read instructions out of a book. – by nbasile”

It is hard to come up with any specific conclusions except that the cost of supporting this printer must be horrendous. I would love to run our analysis engine over the transcripts of the service calls and the email communications to extract the roots of the problems and recommend possible solutions, but these transcripts are not available to us.

By the way it took me about 15 minutes to conduct this analysis using our V2P Accelerator.

It seems that the major difference between product management practices in the software business and the consumer electronics business lies in the perception of how, or even whether, a life cycle of a product can be managed after its release.

In software, alpha and beta testing by actual users are a common practice, that results in multiple releases based on actual user experiences learned or observed during these processes. In other words the product is actively managed throughout its life-cycle.

In contrast CE product management practices do not appear to be very pro-active after product launch, and are limited primarily to promotional functions.  If a product is expected to have an 18-24 month life, focus groups are organized 12-14 months after product launch, to learn how to design and market its next generation. These exercises are very expensive  in that they require a lot of effort to organize, and a lot of special skills to produce truly valuable results, hence they are often contracted to specialists.

Most intelligence a company can gain about its customers’ experiences is by listening to its customers, literally. While customer satisfaction surveys are valuable, they are typically post-dated from the original experience and only solicit feedback based on topics the company deems important.

There are multiple channels available for finding this data, and multiple technology offerings to process it into a meaningful source of business intelligence, however I am not aware of many processes that use this intelligence to pro-actively manage launched CE products profitability.

At Samsung, using reviews as a source of feedback “has changed some aspects of the way we work, primarily because of the speed with which information comes in”, says Kris Narayanan, Samsung’s director of marketing. “It helps us look at issues as they arise. If there is a malfunction or a problem, then we identify it very early.”
The company has used reviews in this way for less than a year, but Narayanan says Samsung has already changed products in response to the new kind of feedback. For instance, large flat-panel televisions were initially produced with speakers on the side. When customers pointed out in their reviews that the units were too wide to fit into conventional cabinets, Samsung put the speakers below the screen.

The example above is a very positive one, but keep in mind it only addresses the issue of the “next” product design – not how to improve profitability of the “current” product. However I suggest that it can be done and I would love to learn about people and companies who are already do, before starting to speculate how I would approach doing it myself.

As usual, your comments, opinions and experiences are greatly appreciated.