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Posts in the ‘Product Marketing’ Category

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.

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.

 

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.

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.

Market Segmentation and the Myth of Demographics

Market SegmentationDo you really believe that all 24-36 year old men buy your product for the same reason? If you do, I have a slightly used bridge at a very attractive price for you.

Demographic segmentation strategy is based on the assumption that a specific group – based on age, gender, etc. – is the primary consumer of your product or service. Regardless of the validity of this assumption, it does not often provide insight on why this demographic segment selects the product in question or how they use it. For that reason segmenting a market by demographics has very limited utility. It has become so popular only because no better intelligence about customers was available at the time it was introduced.

Today, a much better approach to market segmentation is available. Grouping potential customers according to the expectations they would have from a proposed product is much more useful. This outside-in approach is similar to the “persona” concept often used by product managers, but uses actual market intelligence instead of imaginary characters.

The first step is identification of “the job-to-be-done” by the proposed product to be “hired” by the customers.

The second step is identification of the products/services the customers use today to do that “job”. This list will likely include products/services that you would not normally consider your competition, but customers may.

The third step is aggregation and analysis of a statistically representative set of “stories” describing the experience of customers who have used currently marketed products/services to do that job. I use the word “stories” deliberately to describe unsolicited and unstructured descriptions of the experiences in the customer’s own words. Any use of survey or focus group methods will “color” the output with a 3rd party bias. The best content is customer biased only.

The result will expose the attributes of the experience that are most important from the customers’ perspective. It will also provide an assessment of how well each attribute met the expectations of these customers. Focus on the attributes with low scores may provide important insight for designing a product that is very likely to take this market segment by storm.

Click here to request a copy of the Mining Social Media to Boost Segmentation paper published by QUIRK’S Marketing Research Review.

If demographic data is pertinent for your product, you can compile it’s distribution by an attribute to improve your chances for success even further. As the GPS
technology taught us: The multiplicity of signal sources results in better decision quality.

Loyalty vs Reputation-Which sells your product better?

Loyalty is based on prior experiences a customer had with a specific brand, while reputation is based on the aggregated experiences of others with a specific product. Both influence purchasing selections consumers make, but each can make a different impact on that decision. The importance of brand loyalty is decreasing, but the impact of product reputation is on the rise.

This trend does not affect all product categories the same way. The brand loyalty of frequently purchased products, like toilet paper or coffee, has a much stronger hold on a consumer than the less frequently purchased products, like a phone, a car or an appliance. Consumers are faced with less uncertainty selecting FMCG products due to:

- Relatively low price/risk levels

– Product continuity compared to endless introductions of new models

– Consistency in quality of a product experience.

On the other end of this spectrum, the selection of highly priced products, every few years, is associated with a higher level of uncertainty that cannot be easily alleviated by prior experience with that brand. A wide variation in the quality of products associated with a brand taught consumers not to rely on a brand as a dependable quality proxy. The availability of specific, nuanced descriptions of experiences, other customers had with this very product, helps shoppers to assess how likely their expectations will be met, and hence to reduce the anxiety of that choice.

My wife doesn’t spend more than a few seconds to pick out paper towels off the store shelf every week, but agonizes for a few days to chose a smartphone every two years. She is not alone in this behavior pattern.

There is plenty of research about the impact of customer reviews (experiential content) on shoppers behavior. The studies established a clear connection between a sufficient number of reviews and the visit-to-purchase conversion rate in online shopping. However, the similar behavior patterns are observed in the brick and mortar stores as well. Given the fact that 79% of consumers trust customer reviews, this is not surprising. The fact the product marketers and agencies are still trying to control product information flow to consumers, is a surprise. Most are still stuck on the first two stages of Loss and Grief denying the obvious (consumers trust the stranger’s experience more than the marketers) and angrily questioning the integrity or bias of customer reviews sites. Some, so called marketing “professionals”, are trying to regain control with ill-advised, unethical and illegal attempts to contaminate the information flow with fake reviews. They are incapable of managing their paid advertising addiction and learning to ethically stimulate customer-word-of mouth instead. My best advice is to avoid the Bargaining and Depression stages all together, and go directly to Acceptance to cause your company’s reputation the least damage.

Loyalty vs Reputation

With the growing impact of absolute value on consumer purchasing decisions, the challenge of marketing is shifting from positioning and segmentation to generation of interest among consumers and fostering creation of experiential content. Between the increasing noise and shortening consumers’ attention span, this task is getting much more difficult than it used to be.

 

Experience of Customers Helps to Forge Shoppers’ Expectations

I thought you would be tallerIf you believe, like I do, that happiness is about expectations management, customer reviews are your best bet for selecting your next car, smartphone or restaurant because they will likely deliver an experience you expect.

“The big advantage of a major brand over a small competitor is a residual expectation in a consumer mind of reduced probability to be disappointed. When quality is hard to predict a brand serves as a proxy to likelihood of good experience. The detailed and product specific experiences, shared by actual customers, help to decide if this product is for you. Surely, this information is not perfect, but if it is in statistically representative volume, it the best way to shrink the gap between your expectations and your experience.”

Skeptics often cite that reviews from customers, who may not be like you, make the usefulness of these reviews highly questionable because people have very different attitudes and product adoption skills. While this is undisputable, the large number of reviews and filtering options available allow for a reasonably easy match between a shopper and the customer profiles. The personality and attitudes of a customer shine through the language of the reviews and help a shopper to “try on” an experience of people like her. The absence of a “story” is one of the key reasons why ecommerce sites that substitute actual reviews with score cards experience lower traffic and visit-to-purchase conversion rates than their competitors who publish complete reviews.

Most of content generated by customers is fact based. There is no sugar coating or attempts to manipulate your emotions. The language of reviews tend to be more specific, more matter-of-fact and focused on the personal experience the writer had with a product in question. Warm and fuzzy is much less effective when it faces meaningful competition from more “rational” sources.

The language also betrays fakers and dumb marketers who sometimes try to manipulate the market. Faking reviews effectively is not as easy as people may think. The language used, vague description of details and lack of personal experience knowledge are easily noticed not only by an attentive reader, but even by algorithmic filters that consistently give them low confidence score. In addition, it is impossible to tip the scale with an occasional fake review, and a sufficient volume of them can be easily spotted and tracked to the source. The financial penalties imposed by FTC for publishing fake reviews have run into hundreds of thousands of dollars, but that fades compared with damage to the reputation of the company that commission such activities.

It is surprising how few marketers consider customer reviews to be a valuable source for marketing intelligence because they cannot control and/or manipulate it. Instead they prefer to rely on “big data” acquired without customers’ consent and often against their wishes. Those marketers who do hear what real customers want to tell them quickly discover what specifically make one product more valuable than the alternatives to their best customers and prospects. Actual use of this intelligence to support their product marketing processes helps them consistently outsell their competitors by a wide margin without price discounting.

You cannot eliminate an uncertainty, but experiential information provided by customers helps to resolve it much faster and much more specifically than any brand advertising or company centered survey.

 

 

 

 

 

 

True Value of Social Customer Experience to Future of Brands

Consumers are becoming more connected and social about their customer experiences. The number of customer reviews sites and volume of the content published on these sites grow exponentially. More tools are being developed and adopted to make this experiential information easily available to shoppers. More shoppers find this information more trustworthy and valuable to their purchase selection process than marketing collateral and advertising.

So what are brands doing about it?

A few brands, like martial arts masters, learn how to leverage this momentum to come out even stronger. They use this content to learn what is really important to customers about their experience, and how that experience differs from those who purchased competing products. These brands employ the newly found intelligence to improve their customers’ experience, and the customers reciprocate by sharing it with connected consumers, making the brands’ product an easier choice for shoppers.

Some brands are trying to use these new channels of communications to insert themselves into the consumers conversations with selling messages, calling it social media marketing engagement. These brands seem to be less interested in their customers’ unsolicited opinions than in opportunities to ping them with offers to resolve a problem or sell something.

Yesterday I tweeted a link to a magazine article speculating about Comcast’s hidden reasons for acquiring Time-Warner.

Comcast tweet

 

 

 

 

That inspired a Comcast competitor’s social media “expert” to tweet to me an “offer” to switch to their service.

DirectTV tweet

 

 

 

 

How awkward is this? I did not tweet about my experience, negative or positive. I was their customer before. Their offer was not available to me as a “new customer”.

If authenticity is a currency of social media, this brand is running a serious deficit. I think they can benefit from Mark Twain’s wisdom: “Boy, if you can learn how to fake sincerity, you’ve got it made”.

But most brands’ efforts look like a deer caught in the headlights. They just throw money at collecting “likes” on FB and Pinterest and hope for the best. These brands use pre-defined keywords to monitor social media in an effort to protect their reputation, while customers use the words which are meaningful to them to describe their experience. These brands count keywords mentions instead of learning the contextual meaning of customer experience. They still think that social media is just another channel for brands to advertise and maybe provide occasional customer support and find it annoying that they cannot control the conversation.

RIM RIP

Blackberry Reputation & Units Shipped

 

 

 

 

 

 

The future of brands is in learning from consumer conversations as opposed to controlling them. Those  who think they know better than their customers are not likely to have a bright future.

Do not confuse Customer Experience with Customer Service

CX is not CSThere are too many people who use the customer experience and customer service/support terms interchangeably. Even well respected authors and customer centricity consultants, like Don Peppers, occasionally slip into this ambiguous trap. Here are some basic definitions found on the web with a simple query:

 

“Customer experience (CX) is the sum of all experiences a customer has with a supplier of goods and/or services, over the duration of their relationship with that supplier. This can include awareness, discovery, attraction, interaction, purchase, use, cultivation and advocacy.”

 

“Customer Service is the assistance and advice provided by a company to those people who buy or use its products or services. “

 

Customer service is just one of the attributes that comprise customer experience, but it is most definitely not the same thing. For some businesses it could be the most important ingredient, and for others in could be completely inconsequential one.

 

Here are some examples to make the distinctions a little more clear:

 

• You can have great customer experience without the participation of the customer service department at all, but sometimes even the best customer support efforts cannot salvage overall customer experience:

o The most attentive waiter can’t improve a poorly cooked dish, but a scrumptious meal can be remarkably experienced in self-served establishment.

o Expertly installed TV cable service does not guarantee quality entertainment.

o Customer Success Managers can only help to retain customers for a short period of time if the software does not perform as expected.

 

• A product plays the leading role in delivering customer experience, not efforts of customer-facing employees. If a product sucks, no heroics of the front line personnel can deliver excellent customer experience. From this perspective it is difficult to understand how product managers, and even more so product marketing managers, manage to avoid the customer experience responsibility spotlight. These are the people who interpret customer needs and wants into a product design. It is a best practice to have them handle customer support lines on a regular basis to learn firsthand how accurate were their interpretations.

 

• Marketing is the group that creates customer expectations, and when these expectations do not meet reality of a product, customer experience suffers. Classical marketing is supposed to “learn” what customers need and translate this learning to product designers and advertising messages that attract the “right” customers to the “right” product. Instead, marketing is too often focused on “pimping” products designed by engineers overseas without any connection to actual consumers. Focus groups and survey are designed to figure out how to sell what they have got, rather than to make what customers want. No wonder the distinction between “market research” and “marketing research” is so blurry. Customer service can be very helpful to facilitate the return of an unwanted product and deliver great product return experience, but it cannot deliver a great customer experience.

 

Confusing customer service/support with customer experience puts an unfair and unbearable load on the shoulders of an organization that already is the second most stressed group, after sales, in the company. Even though its performance has relatively limited ability to influence delivery of customer experience, it is measured, dissected and optimized completely out of proportion. When you see that happen, it is the first sign that the company is focused on financial engineering – not on their customers.

 

Top 5 Reasons why Customer-Centric Efforts Fail

 

Customer CentricityCustomer Experience Management is a holistic discipline involving all functional departments of a company (see examples here and here). However, many companies treat it as a set of “initiatives” limited to customer-facing units of the organization. The use of the term “initiative” often disguises a lack of commitment to the customer-centricity strategy and hints at the ephemeral nature of these efforts.  While even these tactical campaigns can generate positive ROI, the long-term impact on sustainability of the enterprise is not meaningful without commitment to an overall strategy of transformation into a customer-centric organization. 

 

Most business leaders are receptive, if not enthusiastic, about the customer centricity concept. Some even think that they are leading their companies toward that goal. How successful they really are in pursuing this goal can only be assessed by their customers. However, most companies talk the talk but fail to walk the walk. Here are the top 5 reasons why customer centricity is such an elusive target: 

 

  1. Lack of Customer Intelligence –  knowing How many customers one has, how many times they visit or buy, and how much money they spent over a period of time are operational data points, but not intelligence. You have to learn and measure who your customers are, and why they selected to do business with your company—then correlate this information with the operational data points.
  2. Optimization for operational efficiency first (i.e. cost reduction) instead of effectiveness (i.e.  customer lifetime value growth) – you have to adopt an outside-in perspective and design every step of the customer journey to make your company the first and only choice for your selected customers.
  3. “Shotgun” Marketing – mass marketing is going away with mass manufacturing. When you leverage your customer intelligence to design products and services that are simple to understand and simple to use by your selected (chosen) customers, the customer journey stops being a challenge. The best customer-centric companies do not distinguish customer support from marketing. Practice simplicity and prevention.
  4. Marketing designed for churn – everybody knows that a repeat customer has more value than a new one. How do you think an existing customer feels about the promotional offers you advertise for new customers, but then you exclude them? Practice Trust Marketing and remember that loyalty is a two way street. 
  5. Short-term perspective – leaders have to practice what they preach when it comes to priority of customer experience as a long-term strategy. That involves a fundamental change in belief system from a focus on quarterly profit targets to the long-term sustainability of the business. Contrary to popular belief there is no inherent conflict between the interests of customers and interests of the shareholders. However, there is an inherent conflict between the interests of investors (shareholders and customers) and share-traders, who demand quarterly improvements in sales and profits regardless of how harmful it may be for long term health of a company. “Take a long-term view, and the interests of customers and shareholders align,” says Jeff Bezos in a letter to Amazon investors.