Most company executives don’t think that their accounting department is in the Customer Experience business. True, very few members of financial management teams normally have a reason or opportunity to communicate directly with their company’s customers unless they have to chase accounts receivable problems.

The new CFO of a start-up I was working for took pride in maximizing operational cash flow velocity. One of the minor tactical tools used was a few days’ increase in the window for reimbursing employees’ expense reports.  This change handsomely improved the short term cash flow statement. However, over the next few quarters, a noticeable trend in the growth of outstanding accounts receivable started to raise red flags and call for analysis.

You may ask what this has to do with Customer Experience Management. Interestingly enough, all measurements of customer satisfaction and loyalty, both objective and subjective, started to move in the opposite direction from the operational cash flow velocity metric within the first two months of the change in reimbursement policy. The Customer Experience Manager was reporting this troubling trend for months, but nobody thought of a connection. In fact, nobody ever looked at financial and loyalty metrics together at all, and that is why it took so long to link the cause and effect.

Cashflow velocity and NPS

It turns out that the technically complex product the company sells routinely requires professional services personnel to visit customer’s premises to help them ensure successful implementation and operation. The company’s engineers spent a lot of time making customers happy, and the company was paid well and on-time for their efforts. However, improving the velocity of the company cash flow negatively impacted personal cash flow of the front line employees, as they had to wait for sizable expenses to be reimbursed and had less cash for their personal expenses. They started to avoid and delay the projects that required travel, and customers fell victim to financial efficiency efforts.

Lessons Learned:

• Customer Experience is a holistic matter – every single function of the company affects how customers perceive the entire enterprise. Of course some functions affect more than others, but they all do.
• The Customer Experience measurements are predictive of the growth or demise of a company (product or brand). The trends are critical indicators of trouble, particularly if they are gauged against market averages.
• Monitoring the correlations of trends between Customer Experience, Operational and Financial metrics allows for the fast diagnosis of potential treats to the health of your business.

October is here, and that signals the arrival of Piplzchoice quarterly smartphone Customer Experience report. The past reports are available upon request.

Here are a few words of explanation of the methodology used to produce this report:

• We interpret and measure “Customer Experience” according to a definition and understanding articulated by Forrester Research analysts as “how customers perceive their interactions with your company.” However, we expand it further to “your brand” and “your product” to make the measurements more actionable by branding and product management.
• we do not conduct any surveys, pose any questions, or contact any customers in any form or shape. That also means that no assumptions or keywords are constructed by Amplified Analytics personnel to produce this report. The information published here is based on proprietary, automated Opinion Mining of unsolicited and customer-generated description of their experience with specific smartphone models.
• We start with a view of a “universe” of 355 smartphone models described by 108,963 customers. We then focus on smartphones that have been reviewed during the last 3 months (39 models).
• Opinion Miner® software discovers specific attributes of customer experiences with these smartphones and measures the customers’ sentiments for each attribute.
• This is not a “buzz” sentiment monitoring exercise, as we ignore any content that cannot be reasonably attributed to experience of a paying customer. More on the methodology can be found here.

Spotlight on Brand

A share of customer reviews illustrates a level of their engagement with a brand and correlates with dynamics of their market share performance. The chart below shows a share of customer engagement with the smartphone brands during the third quarter of 2012.

As predicted in the last two reports, HTC’s share of engagement had finally come down as the Thunderbolt customers stopped describing their experiences with the long-obsolete model. Apple’s share of attention will likely rise substantially in the fourth quarter since the slow delivery of iPhone 5 has just started to produce a trickle of their customer reviews.

The big winner of customer share of attention this quarter is the Samsung at 39%. However, it is not a surprise, as its engagement with customers was growing consistently for each period on which we reported. The only other brand that shows consistent increase, albeit on a much smaller scale, is Nokia (6%).

The Average Customer Satisfaction per Brand chart paints a picture that is quite different from the results of most popular surveys that were published in a recent past. We calculated the average Customer Satisfaction of a Brand by averaging Customer Satisfaction scores of each model that belongs to the Brand.

This approach highlights how specific models can impact overall Customer Perception of a Brand. A wide range of Customer Satisfaction scores with Samsung models, from Galaxy Note=1.47 to Intercept=0.88, is responsible for lowering the Brand average. I think our approach provides better guidance for proactive Category/Brand decision management.

Spotlight on Operating Systems

Android keeps dominating the share of Customer Engagement, but Windows OS’ slice of the pie continues to grow.

The trending picture below shows the surprisingly consistent increase in Customer’s engagement with Windows OS from quarter to quarter. This is the first period WP Customers “out” reviewed the Apple Customers by 83%.

The rate of engagement correlates to a high level of Customer Satisfaction, as Windows-powered smartphones are locked in a statistical tie with Apple iPhones as five out of ten most popular models are Windows phones from different manufacturers.

It will be interesting to see how the inflow of iPhone 5 customer reviews impact that battle.

It is worth repeating that these scores reflect aggregate, average satisfaction with the phones and not with their operating systems. Let me know if you need the detail view of Customer Satisfaction with operating systems themselves.

Spotlight on Smartphone Models

Samsung Droid Charge Customers generated the largest number of reviews at 2,084 of all smartphones reviewed during this quarter. The latest arrival, Apple iPhone 5, understandably has the smallest number at 56. I expect it to change dramatically during the last quarter of 2012.

The complete list of all models included in this report can be found here.

This quarter, the HTC Radar smartphone came with the top general satisfaction score of 1.78, exceeding its customers expectations by 78% (N=406). Another HTC Window phone, Titan II (CSAT=1.69/N=83), and HTC Amaze 4G (CSAT=1.56/N=208) were the closest contenders. That is a sweep for HTC. The cellar is occupied by Blackberry Bold 9900 (CSAT=0.69/N=84), LG Cosmos (CSAT=0.76/N=644), and Samsung Intercept (CSAT=0.87/N=441). Both Intercept and Cosmos have been on the bottom for the last three quarters, and I wonder why the brands managers continue to allow the overall equity erosion to perpetuate.

In the previous installments of this report, I have presented a detailed account of Customer Experience measurements for selected models. Since the volumes of information become too large for this format, and a level of the readers’ interest in the details is not clear, I will conclude the analysis here. The detailed comparison of specific smartphone models for personal use can be found by following this link. If you are interested in SmartPhone, or other market’s, Customer Experience Measurement (CXm) dashboard implementation, please email to me directly.

“Happiness is in expectations management.”

Let’s try to apply this wisdom to Product Marketing and Marketing Strategy. For eample, your company expects a product to generate specific and positive cash flow over a period of its life, and your customers expect the product to reliably perform functions you have promised them in your marketing communications.

I would like to pose that pro-active management of  your customers expectations will dramatically improve the probability of your product’s success.

It is important to take a look at the entire cycle of creation and management of expectations process:

•  Pre-Announcement Speculation Stage- Think about rumors and speculations about the “next” version or release that start to appear out of nowhere soon after a new product is launched. Regardless of the sources or “accuracy” of the information floating around, the consumers started to expect that Apple iPad3 will have smaller size/track form than iPad2 just two quarters after iPad2 was launched.Who knows how they will react on the announcement day if this expectation is not met? Should the speculations be ignored? Can they provide early predictions, hints and insights that help to form consumer expectations? Can they negatively affect the market performance of the current model as they influence consumers to delay their purchase until speculated new model is launched? Most importantly should they influence the strategic planning process?

• Product Announcement and/or Launch- Now, the mysteries of a product’s specifications and major functions are revealed to the public; however, the interpretation of this data is done not by the consumers at large, but by a relatively small group of analysts, pundits and bloggers who are well aware of expectations created at pre-announcement stage. Some of them probably have created or at least communicated these rumors and speculations. Now they have to reconcile the speculations with the announced specifications, and of course to write about it because that is what they do.Many uncertainties are removed now, but performance speculations are sometimes intensified. A good example is the RIM PlayBook battery’s poor performance media storm which somehow petered out by the time the tablet started shipping. By that time the PlayBook was perceived by consumers at large as a problematic product. I am not suggesting that this issue alone caused the tablet to fail RIM’s expectations; however, a mismanagement of “signals” like this one is not a recipe for success.

• Pre-shipment- It is quite a common practice today to let influential industry/market analysts experience product before the general population of consumers. There are pretty strict guidelines involved in this process to maintain proper relationship and ethical standards. I am not writing about a practice of buying endorsements to full consumers; this practice is now illegal. You probably read critical acclaims to a movie that yet to be released to the theaters or criticisms of video games that are not available yet to players. The idea is to create a positive impression enough that would engage early adopters into a first wave of product moving through the channels.The articles and reviews published by the pre-shipment stage influencers are a gold mine of the feedback for potential “last chance” reconciliation between expectations and experience. However the time for analysis of this feedback, the identification of “low hanging fruit” opportunities for changes, their prioritization and the implementation is very, very short.

•  Product Shipped – Now, the early adopters – your very first customers -  got the product in their hands. Their expectations are formed by your marketing messages, their previous experiences with your brand, and the reviews of the pundits published during the pre-shipment stage. These early customers start to share their experiences generating Word of Mouth (WoM) online as well as off line which, according to multiple research studies ( example 1, example 2), is the most trusted source of information that influences consumer decision to purchase your product, or select the competitor’s.Many marketing pros told me that they are aware of the WoM’s importance, and confessed to searching and reading as much as they possibly can. Some use Social Media monitoring tools to detect a sentiment and to know whether their product is liked or not, but cannot figure out WHY. None of these approaches can detect and consistently measure the difference between customer’s expectations and experience, but it can give you some hints. The critical question is, “what are you going to do with such information?”

We have seen the most powerful results achieved and the most attractive ROI, when marketing used the feedback analysis results to:

1. Engage market players by clearly communicating these results and the company’s plans to act on them;
2. Fine tune Marketing Communications messages and media to resonate with customer’s perspective found and measured in WoM.

This approach may involve multiple departments in some organizations, from Product Marketing to Marketing Communications, PR and Customer Service, to mention a few. Each has its own perspective on interpretation and value of customer feedback and WoM – some treat it as Crisis Management and some ignore as anecdotal trivia. However, this is the best expression of how well your product met customer expectations well before the sales numbers spell it for you. By that time the “game” may be over.

This article was originally published at CustomerThink.com and being re-posted with some updates and modifications.

Marketers used market segmentation methods for a very long time. However, as our abilities to collect and manage information continues to improve, the new methods of segmentation become available to enable more targeted marketing efforts for marketers and better products and services for consumers. One of the most commonly accepted strategies utilized is demographic segmentation based on an assumption that a specific group (based on age, gender, etc) is a primary consumer of your product or service. Sometimes this assumption is based on the product purchase history. Regardless of the validity of an assumption, it does not often provide an insight on “WHY” this demographic segment would select the product in question or “HOW” they would use it. In other words, there is a lot of guessing that has to take place or additional segmentation strategies to be deployed. In my opinion, the popularity of demographic strategy lay mostly in its low cost and ease of access as behavioral and psychographic segmentation requires a lot of research that translates into high cost and time-to-market constraints.

The advances in technology start to offer new opportunities for market segmentation based on automated analysis of customer-generated content which is becoming available with the proliferation of social media and the rise of Social Consumer. Essentially instead of assuming what demographic group would be the ideal target for our marketing efforts, we could look at a group that already expressed their interest by purchasing specific types of products or services and learn “WHAT” elements of their experience were important to them.

Joel Rubinson, one of my favorite authorities in the field,  posted this on Google+ ”as I review materials for the NYU social media class I am about to teach, I believe that Facebook will lead to the end of demographic targeting for media. Of course, content consumption and sharing behavior also enable this but Facebook will be the catalyst. Why not target on interests and actions? Thoughts?”

Most companies of any size use online survey techniques in an attempt to engage their customers, but the method does not support discovery of customer perspective; it validates assumptions of the company based on questions posed and deemed important. Again, the primary driver of survey method popularity is not the quality of the output and ability to provide better market intelligence, but the cost of implementation. I would suggest there are better alternatives today to learn unbiased market segment knowledge in applications of Opinion Mining technology to unsolicited customer-generated content.

The Opinion Mining approach offers much better quality of market segment intelligence and often rivals Survey approach in terms of implementation complexity and cost. I would like to offer an example to illustrate my point. Let’s look at tablets market segment defined by a few popular products in this category; however, non-like products that compete for the same wallet share can be used to get valuable insights:

• Apple iPad2 (666 customer “stories”)
• Blackberry Playbook (255)
• HP TouchPad (650)
• Motorola Xoom (576)
• Samsung Galaxy Tab 10.1 inch and (502)
• Toshiba Thrive (433)

These products were selected based on their popularity that manifested itself in a number of their customer-generated content references available online in a form of customer reviews, forum comments or social networks product page messages.

The first level of Customer Intelligence gained by Opinion Mining of this customer content is a list of customer experience attributes, sorted by their importance. The importance is measured as a percentage of total number of unsolicited opinions expressed by the customers. This answers the questions – WHAT is important to the customers and HOW important that is.

The next level allows the measuring of the difference between customer expectations and their experience and measures HOW well the customers’ needs are met. We use a two-point scale to visualize that difference (0=unacceptable, 1=experience meets expectations, 2=delighted); however, the measurements can easily be converted to any scale of choice without losing their meaning or accuracy. The chart below focuses on the top four attributes of customer experience by their importance to illustrate the approach.

There are practical implications of these measurements as they reflect on marcom messaging that have created customer expectations the product needs to meet. In the example above, most of the products exceeded the expectations of their customers in attributes most important to them by a significant margin. As an illustration, I would suggest that perhaps messaging about usability of these products could leverage customer sentiment to assure consumers who are hesitant to make a purchase and increase their products market adoption. That calls for a next level of intelligence that provides an answer to WHY customers feel this way and provide a context in which they express their opinions.

Above is a very small sample to illustrate the use of words and expressions (in square brackets) people to describe their opinions, and how they are attributed to a specific element of customer experience. These words, expressions ad even quotes can be used to fortify marketing messaging. Think of the very successful marketing campaign by Tempur-Pedic.

The flip side of the coin – early understanding of root causes of customer disappointment – can help to alleviate larger problems, turn the problem situation around or even present an opportunity for differentiation as illustrated below.

Looking deeper reveals a lot of unhappiness about compatibility:

And even deeper analysis will provide a context that is invaluable for taking an advantage of the opportunity (click on the image below to make it larger):

To sum it up – this type of market intelligence can be produced within a few hours at cost of a few hundred dollars without any installation, implementation or training investment which makes it difficult to ignore as an alternative or addition to survey and panels approach. As GPS technology thought us – multiplicity of signal sources results in better decision quality.

The discussions on importance of innovation are all over Social Media. The calls for innovating ourselves out from the current economic malaise are coming from the President of Consumer Electronics Association to the President of the United States. In the words of Louis XIV (or was it Mel Brooks?) – “It’s good to be the King!” – for the rest of us it would be helpful to put some definitions around these terms. I do not pretend to be an expert on the subject of innovation, but I like to be specific and want to offer some ideas for discussion.

So what differentiate commercially successful product or service from the innovation?

I would like to propose that successful products gain market traction, meet their sales forecasts and generate anticipated profit margins.  Innovative products re-shape the market place, create new categories, and generate blockbusting profits. Innovative products successfully defeat the competitors’ assaults for long periods of time.

Development and introduction of successful products or services is a very challenging and risky endeavor, as we are well aware.

The Recent Portfolio Management Benchmark Survey sponsored by Planview, reported that only 52.3% of products meet with commercial success, while 21.2% were “killed prior to launch”.  They did not specify the type of products or industries covered by this survey, but my personal experience pegs the success ratio well under 40% mark.

The risk level for innovation is even higher. It is estimated that only 1 out 3,000 new innovative ideas becomes a commercial success. We also know that most innovative products rarely have anything to do with technological inventions, but have everything to do with the scale of market adoption. Peter Dreker, the father of modern Management Science, wrote in his book “Innovation and Entrepreneurship”, that a 15 year “gestation” period is the average time observed between the time of an original invention and the time of its commercial realization.

We all know examples of such innovations as Ford T, Microsoft Word, iPod and iPad to name a few that dominated and still dominate their product categories. These are very different products, however the thought process, methods and techniques of the people who are behind the creation of these products, are a mystery we want to discover.

I would like to propose that the key difference between really good Product Managers and the Innovators is in a way they perceive and understand the markets they target.

While a Product Manager segments the markets in terms of demographics or personae for which they develop a product, an Innovator is focused on the Customer Experience of people, who struggle to use existing products to do their chores, and interprets these struggles into the definition of innovative vision for new generation products.

In other words they concentrate on improvement of EXPERIENCE as oppose to improvement of a PRODUCT.

I am honored to present this webinar sponsored by Grandview Product Management community on June 22nd, 2011.

There is a heated debate in a Product Management community about the Role of Market Research in creation of innovative products and I have mused on this subject earlier on this blog.

Product managers, who subscribe to a “thought leadership” (as oppose to “customer participation”) model, love to quote Henry Ford who supposedly said – “If I asked my customers what they want, they simply would have said a faster horse.”  The “customer driven innovation” camp proponents are swearing by Customer Feedback and Voice of Customer based methodologies. However there is no clear evidence that either site consistently out-innovate their opponents.

During this webinar we will explore and analyze traditional methods of product definition process, their limitations and their applications that often lead to incremental improvements as oppose to true innovation. We will talk about

• What separate a successful product from INNOVATIVE product
• What are differences between a Product Manager and a Star Product Manager , and
• How the knowledge of the market helps to close the gaps between the two.

Please click on this link to register

With introductions of new tablets from major players taking place almost every week now, we decided to check the “pulse” of customer perceptions with products of this market segment. We limited the list to four most popular products in the interest of keeping the chart neat, but you can check the reputation of other tablets we track by going to http://tinyurl.com/aaidemo, entering the product name or number like “Apple iPad 2″ and clicking on “Submit” button. The system will aggregate and analyze customer reviews to calculate the reputation metrics for you and will let you read the reviews if you want to. You can also compare it to the other tablets reviewed.

Below is a screen shot of Customer Intelligence Analysis dashboard (in private beta) that compares scores of the attributes that are most important to their customers. The importance value is indicated on the right side  and measured as an average percentage of all opinions expressed for these products.

Click on this image to enlarge it.

6,314 customer reviews were processed by the Opinion Miner® software to produce these results. It appears that Reliability (i.e. availability of the device’s to provide intended functionality to a customer) is the most important attribute of the tablet devices as 8.21% of all opinions expressed are focused on that part of the experience. Please contact us for the access to the detailed analysis of ALL attributes for these, or any other products of interest to you. Our customers use this information in their product planning process and for tuning their marketing communications.

Our research shows that customers who purchased Apple iPad 2 report their overall (CSI) expectations were exceeded by over 36%. It is 8% higher than the results achieved by original iPad and newly released Motorola Xoom.

These results, particularly about the newly introduced tablets, will most likely change within a few weeks as the customers will have more time and opportunity to experience them in wider range of circumstances, and more reviews will be posted online. We will continue to monitor the market segment perceptions as new products are introduced and keep you posted.

Many Social Media proponents, activists and analysts express strong believe that its advance creates revolutionary changes to role and importance of consumer voice in market dynamics.

So far it gave birth to hordes of consultants and marketing services that promote ideas of influencer chasing and reputation management monitoring technologies, however the “scream” of offerings seem to counteract the idea of increasing the volume of the voice of customer.

One example is a number of websites, offering depository of customer reviews about products and/or services, outnumber the customers who are willing and capable to contribute to these depositories. The end result seems to be counterproductive as consumers who look for such information are hassled to sites that have no content to offer.

Some companies spend substantial energy to explore and pursue some form of activity involving Social Media and there are very few, but loudly celebrated examples of those. However that doesn’t seem to change overall reputation of these companies. One of my favorite whipping “boys” – Comcast is still rated dismally for the delivery of their customers experience, despite heroic efforts of their Social Media team on Twitter and Facebook.  Here is another example, a darling of the Social Media mavens – LinkedIn. Based on Customer Service Scoreboard scores

LinkedIn is ranked #253 out of the 273 companies that have a CustomerServiceScoreboard.com rating with an overall score of 19.35 out of a possible 200. This score rates LinkedIn customer service and customer support as Terrible.

There 56 negative comments vs 1 positive one and most of them by paying subscribers, who cannot get their issues resolved. Ironically the 19.35 score is below the LinkedIn lowest monthly subscription fee of $24.95.

I know that 56 complains is a very small number considering millions of people who use the network, but I wonder what is a percentage of them who actually use it actively enough to care, and even more interesting is how many actually pay for it. I personally am one of them and my experience is one of neglect. I have an issue outstanding for almost two years without resolution. The issue resurface from time to time and causes me a lot of aggravation and waste of time. I finally decided to use LinkedIn Inmail to escalate the problem to the founder of the company, Reid Hoffman.

On 7/2/10 12:18 PM, Gregory Yankelovich wrote:
——————–
I am expending a valuable Inmail credit and hope that you will read it.

This is the 3rd time I am erroneously locked out of my ability to ask for Introduction. I am paying customer, but I cannot get resolution for almost 2 years. The 1st time I have experienced this problem, I reported it 10/27/2008 and I am having problems with it once again and it negatively impacts my efforts to bring my product to the market.

I rely heavily on my network to reach out to potential customers and partners. However every time I encounter this problem I have to wait for 2-3 days for your Customer Support to reset the system’s counters. 2-3 days are a long time to waste in the life of a startup. I understand the power of reputation more than most people and don’t want to scream #fail all over Twitter. Please help.

To Reid’s credit he responded

Gregory,
I am reading it; I’ll put your issue into the executive escalations. Since I don’t know what you’re doing that hits problems, I don’t know if we support what you’re doing or not. (For example, not saying that this is what you’re doing, but we have very clear messaging limits to prevent spam.)
Hope it all works out. (And, btw, you can write what you feel is right on twitter: I apologize for where we step when we’re wrong or slow.)
all the best,
Reid

However his response was the only one, I am still waiting for any contact from the Customer Support. I eventually did express my frustration on Twitter:

Wasted yet another day waiting for help from #LinkedIn technical support – still no love.

What is a reasonable response time for #customersupport? Does anyone else has #LinkedIn Introduction Withdrawal or is it just me?

and here the reaction I have received

@piplzchoice Do you have a free linkedin account? If so, be thankful you get to use linkedin at all. Just sayin.

I did not write this to whine about my “misfortunes”, but to explore what, if anything, is actually changing with advent of Social Media in respect to the treatment of the customers. Advertisers keep complaining how difficult it is to gain share of consumer attention, yet when a company like LinkedIn or Facebook, does manage to do it, and end up raising enormous amounts of capital based on that fact, our attention doesn’t seem to be that valuable anymore. Let’s face it, Social Media is nothing more than another communication channel, like a next generation of telephone, radio, TV and email. All of these improved our life experiences at some cost to our privacy or quality of life, but how we use these channels is the only thing that may influence how Market delivers our Customer Experiences.

As consumers we all can recall the experiences that have left us feeling abused and mistreated by companies we have selected to give our money to. In some instances I promised to myself never to come back for more and kept my promise – I would rather go back to dial-up ISP than deal with Comcast.

According to the research of Bruce Temkin, former Forrester analyst and an authority on Customer Experience management,

In Forrester’s 2010 Customer Experience Ranking of 133 companies, Comcast came in 126th for it’s Internet business and 125th for its TV service. It also came in 105th/109th out of 114 companies in the 2008 rankings and 95th/101st out of 112 firms in the 2007 rankings.

The point of this writing is not to bash Comcast, even though it definitely deserves bashing, but to ask an important question: Does the Customer Experience (or Customer Satisfaction) really matter if in spite of its miserable scores a company like Comcast can produce healthy profits?

These financial statements show steady growth in revenues and profits over the same periods, and the numbers do not provide any evidence to support the belief that mistreatment of the customers is a good business practice.

I have posed this question to Bruce and his response

“@piplzchoice Good question. Cust exp is a long-term asset. Comcast (and others in the industry) are squandering it. It will catch up to them.”

This response is encouraging, but not entirely satisfying because it appeals to emotional belief (faith). I would prefer some empiric evidence of correlation between profitability and customer experience ratings or reputation.

I have heard about Claes Fornell of CFI Group who has done very interesting work in that field, but yet to learn more about that methodology.

To be fair, one example, particularly of a company that operates in rapidly growing market with very few competitors, does not offer any meaningful insight and I would love to find some other, more representative examples.

Woody Allen once said – “I would gladly accept existence of God if he would give me some evidence of his existence, like transferring $5M to my Swiss bank account”. Please let me know if you are aware of any definitive studies and/or methodologies that quantify and/or predict financial performance based on the Customer Experience – I am still faithful, but yearn for evidence.

These days a huge gap has formed between listening to our customers and actually understanding what they are saying.  It’s now evident to most companies that Social Media has opened new doors for listening to customers.  Although it seems they are drowning in volumes of voices, without good tools and/or methods to extract clear and actionable signals.  In a sense they can’t see the forest for the all the trees.

While CRM has become the hottest way to connect with customers, it is often mistaken as a form of technology used to disclose customer feedback throughout a company.  CRM is much more than technology; it’s an ongoing process to improve relationships with your customers resulting in better customer service, improved customer satisfaction, retention and loyalty.

So what is Social CRM?  Simply defined, this new advancement is a way to manage social relationships.  Its function is collecting data found in social networks and disseminating among the areas within the company that can respond to it. In the words of Paul Greenberg:

“Social CRM is a philosophy & a business strategy, supported by a technology platform, business rules, workflow, processes & social characteristics, designed to engage the customer in a collaborative conversation in order to provide mutually beneficial value in a trusted & transparent business environment. It’s the company’s response to the customer’s ownership of the conversation.”

Typically, it has taken a drastic measure such as decreased revenues, customer churn or product issues to compel us to reach out to our patrons. On average, this knee-jerk reaction is short-lived and dropped once the next crisis appears.

Customer satisfaction surveys are also utilized by many companies as a way to ‘connect’ with consumers. Although well intentioned, satisfaction surveys are often self serving and primarily give management the impression they are accomplishing something.

A good place to start connecting with your customers is by way of:
- Buyer behavior – adopt a ‘buyer orientation’ vs. the typical ‘seller orientation’
- Voice of the Customer (VOC) programs – go beyond satisfaction.  Bruce Temkin, a principal analyst at Forrester, defines VOC as “a systematic approach for incorporating the needs of customers into the design of customer experiences.”
Empowerment – make sure your organization is focused and able to make changes based on customer feedback.  Lack of this key element is often why customer satisfaction surveys are typically a flop.

Another interesting fact is the correlation of customer satisfaction with a company’s market performance.  A study published in the Journal of Marketing found that companies at the top 20% of the American Customer Satisfaction Index greatly outperformed in the stock market, generating a 40% return.

There is also a strong correlation between customer satisfaction and financial performance.  A study by JD Power and Associates discovered that organizations with the highest levels of customer satisfaction experienced profit margins at three times the growth rate than those with medium levels of customer satisfaction and more than 21 times that for low customer satisfaction ratings.

Often an organization may possess various methods of obtaining customer feedback but they are not able to comprehend it, creating action plans while many do not have the resources to try.  As a veritable strategy, perhaps we should be focusing more than ever on CRM (& Social CRM) development to bridge the enormous gap between listening and understanding our customers.