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Posts in the ‘Product Marketing’ Category

Voice of Customers Challenge to Product Managers

VoC challenge to PMFor years I have been puzzled by the fierce resistance of product managers to integrate customers feedback into the products’ design and marketing process. Surely, many use elaborate survey and market focus group studies to validate and refine an original concept, but the use of the feedback to form an original concept is widely sneered upon as a fool’s errand.

Many practitioners are convinced that customers do not know what they want, until they experience a remarkable product they cannot live without. While there is some truth in the belief that customers cannot articulate their latent needs, it doesn’t mean they have nothing to contribute to the process of conceptual design. Product managers, who rely on their own vision, like to quote Henry Ford “If I’d asked my customers what they wanted, they’d have said a faster horse” without realizing that he never uttered those words. Meanwhile the dependence on Divine Intervention, i.e. visions of product managers, results in very high product failure rates and is a luxury fewer companies are willing to gamble on.

There are two basic reasons why customer feedback as source of inspiration is commonly rejected:

  1. Marketing Research proved to be very ineffective in the past in identifying truly original product opportunities. For many product marketers it offered a convenient excuse to throw the proverbial baby out with the bath water. However, the few who have learned that “The job, not the customer, is the fundamental unit of analysis for a marketer who hopes to develop products that customers will buy” – Clayton Christensen, experienced consistent improvement in bringing successful products to markets. In other words, research into the experiences of customers, who use currently existing products, will discover original product opportunities – not the research into product’s features and functions, customer personas and market sizing. The core question is why did customers buy it in the first place, i.e. what do they hope to achieve by using it?

 

  1. The traditional approach to the management of customer feedback is an analysis of what customers say, or how they feel, about your product and/or products offered by your competitors. However, analysis is only the first step of gaining an insight.

 

The terms “Voice of Customer” or “Customer Feedback” in this context do not include structured data compiled from closed ended survey questions. The response to such a question cannot help to discover a latent need, it can only validate one that was previously discovered. This discovery can only be done by a synthesis of previously analyzed open form feedback, such as unstructured commentary or review. As customers share their experience of currently available products, they often use different words and expressions to describe common frustrations or delights. It is not a trivial task to understand the specifics of their frustrations and to interpret this understanding into new product requirements, i.e. synthesis.

 

There are many tools available today to collect, aggregate and analyze customer feedback. The science of this process is well defined and commonly utilized. There are some capable technologies available for detailed analysis of unstructured feedback, even though they are not yet as easily productized and applied. However, the art of synthesis and translation is the domain of creative product practitioners that rely on data instead of vision.

Innovation and Customer Experience

We live in amazing times with endless opportunities to experience and participate in the process of many established industries being re-imagined. However, an innovation is a risky business and most attempts to re-think how things are done conventionally do not produce commercial success.

The single most important reason new products and services frequently fail to find massive commercial success is tInnovation and CX 1he misunderstanding of the core difference between innovation and invention.

Invention is about creating something new, while innovation introduces the concept of “utility” of an idea, process or method. An invention is usually a “thing”, while an innovation is often an application of one or more inventions that causes change in behavior, interactions and experience.

 

These terms are often used interchangeably and that inadvertently causes a shift of focus from experience to technology. That focus is what separates inventors like Dean Kamen from innovators like Elon Mask, Steve Jobs and Jeff Bezos.

 

Innovation and CX 2

 

The romance of novelty (invention) blinds many entrepreneurs to the fact that markets have relatively low capacity to absorb (adapt to) radical change. Consumers – your potential customers – are too busy occupied by the complexities of jobs they are trying to perform. There are not in the market for products or services, but for the desired outcomes these products promise to deliver. Therefore, unless the use of your product or service can dramatically simplify that “job”, they are not likely to “hire” (purchase) it in large numbers regardless how “new”, “improved”, “exciting”, and “innovative” your marketing describes it.

The domain of innovation is not defined by the best features, specifications or market segmentation, but by consistent simplification of the target customers’ experience.

Innovators should think less about market segments and more about the jobs customers want to do. The job, not the customer, is the fundamental unit of analysis for an innovator who hopes to develop products that customers will buy” Clayton Christensen (text in italics is added by me).

 

When I needed to re-publish a website for my wife’s business I was referred to Wix.com as the best website builder software provider. Initially, I loved its innovative design functionality until I had to actually publish the site at which point the software was not very helpful and the customer support non-existent.

After a few days of frustration I became a very grateful customer of GoDaddy.com that has substantially less creative website building software, but got me up and running within 2 days.

The examples of iPhone and Tesla show that discovery and reduction of complexities and frictions your target customers experience on their path to desired outcomes, is the shortest and surest road to innovation and creation of new markets.

The secret to high rate of customers retention

Customer retentionIt took me a few years to realize that happiness is based on one’s ability to manage expectations. We experience happiness when our expectations are exceeded. We may experience content and satisfaction when our expectations are met, or nearly met.  A disappointment is not an experience most people like to reiterate. Regardless of our age, gender, education or social status we all have expectations. Nobody ever enters into any business or social transaction without having an expectation of outcome.

Expectations are formed by multitude of our own experiences, experiences of people we know and by marketing messaging. A price of transaction or fleeing nature of social interaction may reduce an importance of meeting our expectations, but the repeat experience of being disappointed will most definitely change our willingness to try once again. Even when you buy on a whim a $0.25 lollypop packaged in orange colored wrap at a gas station, you will be disappointed if you experience a strawberry flavor in your mouth. This experience may not make you very unhappy, and may not cause you to drive a few extra miles next time you need gas – the first time that happen. However, it may start to erode your trust in the establishment and to question its ability to deliver quality customer experience. Here are some examples:

  • My sailing friend mentioned to me a few times about great experiences he had at the Dirty Cello I purchased tickets for the next one only to be bored by pompous “community” messages and the opening act that have lasted for over an hour, before the performance we paid for started. I noticed a few customers living in disgust.
  • After watching Ford Fusion commercials about their terrific fuel economy I went to a considerable effort to secure one for my last trip rental. While it is certainly a nice car, the fuel economy is nowhere near commercial’s claims. There is no doubt my next car will not be a Ford.

From a company’s perspective it is imperative to have a clear understanding of its “best” customers’ expectations. I placed the word best in quotes because there are multiple ways to differentiate your customer base. One company may consider their most profitable customers “best” and optimize its products and processes to meet or exceed expectations of these customers without sacrificing profit margins. Another company may see those who’s feedback indicate the best fit, between their expectations and the experience the company delivers, to be their “best” customers. Such company may decide to optimize their products and processes to leverage their “best” customers’ enthusiasm to increase its market share and its share of their valet.

The point is – you cannot expect to retain your customers if you fail to deliver what the customers expect.

Top 5 Warnings to Customer Experience Marketers

Never try to sell a meteor

  1. Stop designing products. Customers do not want to experience products and they care very little about product’s features and functions. Customers do not buy products, they hire products to do a “job”. Ultimately, you need to learn what is the “job” your customers would hire your products to deliver, i.e. what is a desired outcome. That learning is difficult as the customers can rarely articulate their desired outcomes in a way that is useful for writing standard market requirements document. That is why lesser marketers like to declare themselves visionaries, quote Steve Jobs out of context, and rely on advertising to deliver mediocre products.

“Making it easier and cheaper for customers to do things that they are not trying to do rarely leads to success. The job, not the customer, is the fundamental unit of analysis for a marketer who hopes to develop products that customers will buy”

  1. While designing for customer experience, it helps to think in terms of delivering the customer’s desired outcome. Customers yearn for simplicity on every step of their journey, from clarity of realization that your product is the best path to the outcome they desire, to simple and trustworthy ways of sharing their experiences with others.
  2. “Clever” messages are entertaining. Honest communications, in the language that resonates with your potential customers’ experiences, are selling your products and services. Do not try to engage with people you cannot help, because that reveals a lack of competence or authenticity. Both compromise your reputation and undermine trust.

 

 “Without trust, a business cannot grow. Without reputation a business cannot be trusted.”

 

Every few months I get an invitation to participate in Customer Experience survey from one of the best known consultancy in the field. Every time I am disqualified because my firm cannot be their customer. Every time the new invitation is received I lose a bit of trust that this provider can really help his customers, if they can’t help themselves to do it right.

 

  1. Technology can be a very powerful ally in supporting your customer experience marketing strategy. It cannot replace strategy. Regardless of what you hear from your technology vendors. Technology provides efficiency and scale, but most of us are challenged by effectiveness.

 

“The difference between efficient and effective is that efficiency refers to how well you do something, whereas effectiveness refers to how useful it is.”

 

If we don’t have the solution to the challenges faced by our best probable customers, technology will help us to damage our trustworthiness at a very low cost per unit.

 

  1. Don’t try to control the experience of your customers. Not only is it impossible to do, as customer experience is their perception of doing business with you and cannot be controlled, it is damaging to your reputation to try. The less friction customers experience on their path to realize the outcome they desire, the better is their perception of doing business with the company. From that perspective, removal of any unnecessary steps, keystrokes, questions, interactions, etc. from the customer’s path provides the best return on customer experience management investment.

Do you have enough information to make a sound decision?

Get all information you can findIn business and personal life we all face the challenge of making large and small decisions every day.

Depending on financial and/or emotional impact of our action, we often start to look for information that would help reduce uncertainties associated with a decision we are about to make. The more impactful the outcome of such decision is on your career, key relationship or financial status, the larger your thirst for supporting information.

Many of us experienced desperate attempts to hoard all available data about the subject matter only to find ourselves drowning in detailed, but meaningless to the decision, information. At times the tsunami of data makes us stall for time, paralyzed by lack of clear direction delivered by our analysis efforts.   So, how much information is enough? Considering  that information has a limited “shelf-life”, timeliness is another important criteria when you assess what it means to have “enough” information.

There are many, perhaps too many, technology “solutions” that promise “actionable” information or insight. This post is not about them. In this post I want to share ideas about the framework of  estimating what kind of information would help you reduce the risk of a particular decision and how the timeliness of such information impacts the outcome.

The first step is to ask yourself  – do I seek information:

  1. to form your decision,
  2. to protect yourself in case your decision produces adverse results, or
  3. to buy more time in hope you don’t have to make this decision.

These are all legitimate reasons for gathering information, but depending on your honest answer they would help   you to gather very different kinds of information.

If you believe you already know what decision should be made, you should focus on information that contain social and financial proof that supports your belief. People and organizations have very different approach to uncovering knowledge, but it is in our nature to mitigate risk by looking  for protection in numbers.

The knowledge we seek is subconsciously filtered by our specific goals and core value based belief systems.  So be honest with yourself, acknowledge your position and start to fortify it with facts and evidence to mitigate risk in case you are wrong. The timeliness of such information depends on a timeframe of your decision outcome expectation. If your decision is expected to yield result six month after it is acted upon, you do not really need real-time data feeds to illustrate that such decisions are likely to produce the expected outcome.

If you truly want a well-informed decision or to question your beliefs,  remember that the most difficult time to generate new ideas is when you think you already have the answer. For example, if you are a “visionary” marketer who “knows” your customers needs, do not waste your time, money and effort on market research. Just get enough “new” data to do validation, described in a previous paragraph, make your bet and hope for the best. However, if you have the ambition to create a new category or a category killer product, you are best advised to gather information about why people buy such products (i.e. what job do they hire such products to do), how they use them and what are the opportunities to simplify these people’s experience. One does not need a very high volume of such experiential information to discover unmet customer needs, but its timeliness cannot exceed the lifetime of current products on the market. There are technologies available to assist in aggregation and primary analysis of such data, but discovery and interpretation of experiential, i.e. anecdotal, evidence into product marketing requirements, requires true vision and an open mind.

The important thing to remember – it is impossible to eliminate risk, but there are practical methods to mitigate it by use of carefully selected information to reduce uncertainties.  According to Aristotle – “There  is only one way to avoid criticism: do nothing, say nothing & be nothing”.  However, even the avoidance of making decisions does not eliminate risk.

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.