headertext headertext promolink

Posts in the ‘Product Marketing’ Category

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.

 

 

Finding the Fine Line: Customer engagement into a product development

Customer Engagement into product developmentMost startups, and many well established companies, utilize “agile” methods to develop new products. These methods involve customers trying early versions of a product in order to validate conceptual viability and provide feedback to be used for further iterations. There are books and training courses sold to promote “lean” development approach, which I have no quarrel with, but I have  yet to see a clear articulation of what stage of such product development process it is appropriate to start billing customers for use. 

Here is the dilemma – wait to charge until the product is completely developed (and foot the expenses while early adopters enjoy the benefits without knowing if they ever going to pay) OR start early and risk repelling valuable development partners.

Both parties in this partnership have to see a benefit to participating in the agile development process to get involved. Customers anticipate that the product will improve their life, when developed, and developers need the customers’ knowledge and experience to develop marketable products. The balance of risk and reward for each party should be periodically assessed to produce a list of necessary conditions to be met before billing can be initiated.

The risk for the development team depends on how much knowledge they possess about the market they plan to address, the processes they target to optimize, and the customer experiences they want to simplify. The risk for the customer is in disruption of their existing process, time investment in learning new workflows, and political capital that may be lost if the product does not materialize.

The trust is the most critical condition for any partnership:

  • Do not ever try to masquerade “puppy” sale strategy as product development partnership;
  • Always communicate how and when, if ever, you will use the feedback given to you;
  • Help the customers sell your product when it is ready to be sold. They will be much more effective than your sales team. 

Validate that the product as-is meets initial customer expectations in terms of functionality and performance before starting to bill the customers. Functionality allows customers to simplify their workflow and process, i.e. save time/effort by a measurable amount. Performance means customers have the functionality available to them consistently and without interruption. Even though these customers are a part of your development effort you cannot expect them to pay for debugging your product. The balance is critical because too much agility can be too disruptive.

I don't always test the code

I’ve experienced both sides of such partnerships. When they worked it was a glorious experience producing very successful products, but when they don’t the developers can lose more than time and money they have invested into the project.  Customers can share their negative experience with the development team publically, before the product launched, to destroy any chance of it to succeed.

 

How to Develop Awesome Products? Focus on Customer Experience

Awesome productsInvolving customers into the product development process is one of the most controversial subjects in product marketing/management communities. Like with most “religious” issues, the arguments are more about the extension of  and the form of involvement, as opposed to product development in a vacuum.

The works of Clayton Christensen, the author of the seminal book “Innovator’s Dilemma“, inspired our thinking about the development of new products methodology that is focused on Customer Experience. Over the years, a few of our clients used this method in their processes to one degree or another, and every time the resulting increase in product sales exceeded their expectations.

We used MindMiester to put together a new interactive e-book “How to Develop Awesome Products”. Please click on the image below to see the table of contents. Contact me for the access, or check back later for download availability.

NPD e-book table of content

Customer Experience is Everybody’s Business – Marketing

VoC shoutMost CEM practitioners and writers are concentrating their attention on the delivery stages of the customer journey that involve front line employees and processes. In many cases it is a low hanging fruit area, where a high return on relatively low efforts can be found. However, remember that customer experience management is a holistic discipline – every single function of the company affects how customers perceive the entire enterprise. Of course some functions affect customer experience more than others, but they all have an influence.

I described previously one example where a company’s financial department process change negatively impacted customer experience and, as a result, led to decline in revenue and profit growth. In this post I address a marketing function impact on customer experience.

Every purchase decision starts with a conscious or subconscious expectation, and marketing function is in the business of creation of these expectations.  When consumer selection, influenced by a company promise of product performance, does not live up to the expectation created by that promise, no amount of delivery or support process improvement will increase the overall customer experience sufficiently.

Consider an example of a woman in California who chose to purchase car A over car B, based on company A’s advertised fuel economy rating. Her actual experience was at least 30% higher fuel consumption over the advertised rate, so she filed a small claim against the company (and won). I want to stress that this example is not about legal implications, but rather about creating expectations that are not likely to be met by customers.

Marketing folks, just like most of us, are very self-centered –

“Presbyopia is an occupational hazard of the marketer” (@AriNave).

More than any other function of a company, they have to re-focus their thinking to an “outside-in” perspective.

Marketing communications is not a simple art, and it would greatly benefit its practitioners to put more effort in learning how the consumers they target communicate their experiences and expectations. That effort will pay off in messaging that resonates with their target market much more effectively to engage the right prospect with the right product. You can find more details about how to do that here.

It is a strategic imperative that operational metrics, used by a department to measure its performance, are coupled with a proper measurement of customer experience affected by their decisions.  Strategic planning is very important, as long as your remember that success comes from executing your plan, not from mapping it out.

Click on this image for more practical suggestions

building trust


Social Consumer challenge to Traditional Brand Management

As most marketers are well aware, when consumers have trust in a brand the products associated with this brand are capable of delivering higher margins than the competition and sustaining adverse economic conditions without loss of their market share. Unless consumers consider a product/service to be a commodity, or choices are limited by regulatory authorities, brand reputation often outweighs price considerations.

Brand Reputation over price

Historically, brands managed their reputation mostly by means of PR and advertising efforts. However, with the advent of Social Customer these efforts became much less effective.

As more customers become publically vocal about their experiences many brands started to see their reputation as being threatened. Since publically expressed sentiments often do not match customer satisfaction data collected by a company, it easy to adopt a defensive attitude toward social media word of mouth. Some marketers feel that social customers are there to rant and most of the online feedback is negative. The data does not support this theory – of over 49 million reviews for products left on Amazon, the median Liekert score is 3.78 (out of 5). The analysis of customer reviews posted on Yelp and TripAdvisor provides similar results.

Here are few ideas for managing brand reputation in the Age of Social Consumer:

  1. Accept that you cannot control customer behavior. Word of Mouth has been around for a very long time. In the past, very few people could hear it and it was easy to out scream it with paid PR. You cannot control it anymore. The more you try the more your brand reputation suffers. If , or should I say when, you get caught manipulating Word of Mouth, it will damage your brand reputation a lot more than a bad review.
  2. The best way to improve the social reputation of a brand is not to hunt and attempt to destroy the negative comments of customers who were disappointed with their experience. The best practice is to understand the root cause of their disappointment and correct underlying problems with your product or service. If you do that and let them know publicly, the social reputation of your brand will soar.
  3. Most negative reviews point businesses to ways of improving their offers. They also help consumers decide if negative comments resonate with their own expectations or not. Consumers are smart enough to understand a difference between legitimate grievance and angry rant.Ostrich Strategy
  4. Public sentiment, regardless the measurement scale, may not match your internal Customer Satisfaction or NPS® scores, but they often correlate. Most importantly, consumers trust social sentiment more than a brand’s internal metrics. Resistance is futile and amounts to the Ostrich Strategy.

Social Levers for Effective Brand Management

Growndswell

This article is a sequel to The Essence of Brand and Customer Experience post that I wrote a few months ago. It explores further how to use Social Reputation metrics as the levers for pro-active brand management.

Over five years ago, Charlene Li and Josh Bernoff wrote in “Groundswell”

“Marketers tell us they define and manage brands. […] Bull. Your brand is whatever your customers say it is. And in the groundswell where they communicate with each other, they decide.”

These words inspired software entrepreneurs to create hundreds of social media listening tools and sent brand managers to shop for them in droves. However, these words did not motivate many marketers to abandon futile attempts to “direct” a groundswell and to start “surfing” it instead.

Tools (i.e., technology) cannot change the way people conduct business. A change in business process, leveraged by technology, is needed to achieve that. As long as business practices are focused on inside-out “shouting,” no “listening” technology can help to ride groundswell to larger market share and better margins.

Here are a few ideas for the integration of social levers into brand management process:

  1. Customer Satisfaction or Loyalty metrics are much more meaningful if they come transparently from Social Customers as opposed to company controlled surveys. Internally generated metrics may make your management feel good, but they don’t help to increase your brand value in the minds of consumers who learn about your brand reputation in social media you cannot control.
  2. A single point of reference, your brand CSAT or Loyalty metric, is meaningless in terms of a business process. You need to understand the competitive position of your brand to chart a course for improving that position.
  3. Brand sentiment alone is not sufficient for understanding which products associated with your brand are detrimental to its social reputation. Optimization of a product mix by channel, based on social customer feedback and operational metrics, can substantially improve overall brand reputation.
  4. Linkage of operational and financial metrics with social media signals produce the most reliable estimates of the suggested action impact.

The entire process description, along with specific examples, can be downloaded from Amplified Analytics website.