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Posts tagged with ‘Customer Centricity’

CRM, Omnichannel and the Quest for Customer Intimacy

Once upon a time, before consumer markets became dominated by large corporations and big box stores, customer centricity was a relatively common practice. Small manufacturers and shop keepers could not do it any other way to attract and retain the relatively small number of customers who were financially capable to support their businesses. The real, personal relationship often existed between people who worked for the companies and people who consumed the products and services these companies provided.

As population and affluence grew exponentially, companies followed by scaling their growth to satisfy the needs of their markets. They largely succeeded in building efficient organizations to manage their growth, but at the expense of the “personal” relationships they once had with their customers. During this process of scaling “George” and “Gladys” were replaced by customer persona, segments, demographics, etc. 

I am not waxing nostalgically over the “good, old days” and have full appreciation of the progress that made our lives a lot better in many ways. However, as a customer I do miss the experiences associated with a personal relationship.

Once or twice a week I frequent a funky coffee shop (French Hotel), in the heart of Berkeley’s Gourmet Ghetto. The other day I was standing in line to order my cappuccino, ready to give a barista my order. Before I had a chance to open my mouth, the barista gave me a cup made up exactly they way I usually order: with a smile and “hello”, and “how are you doing” to follow.  This kind of experience you can only get in a place where the same 2-3 people work all the time and a transaction is very simple. Can it be re-created in a place like Starbucks? Best Buy? Comcast?

The technologies capable to create such a transformation have been available for over two decades. The enterprise culture, designed for unlimited scaling, did not find the motivation to leverage technology for re-focusing itself on its customers. It has used these technologies to reduce the costs of doing business instead. Organizational silos bring efficiencies to operations, but they also create a broken view of the customer, as each silo has it’s own perspective on how a customer looks: “innovator” or “slow payer” or “support hog”. To make it worse each department thinks that their perspective is the complete and accurate picture.

CRM has promised to create a complete, holistic view of the customer, but failed to break organizational silos and to deliver better customer experience. Now, different technologies make similar promises again. Should we take these promises seriously this time? Let’s look at mega trends to help answer this question.

  • The trend in global population growth is not slowing down. Therefore we cannot expect a stall in the market size growth to moderate the enterprises’ appetite for scaling.

World population growth

  • The affluence of consumers, appears to have moderated in the developed countries, yet continues explosive growth in the high population developing economies of the world. Given the global reach of modern enterprise, the higher demands for better customer experience from a less important customer base, is not likely to force corporate management to review their fundamental propensity for use of technology as a primary cost cutting tool.

Global trends in consumer Affluence

  • During the last decade we witnessed the shift in balance of influence on consumer behavior from brands (enterprise) to their customers. That shift was powered by the proliferation of social media technologies and its adoption by millions of consumers in the developed markets. There is a strong evidence that this mega trend is growing in the developing markets as well.

Affluence and absolute value

The social consumers influence in China is over 50 points below that of the US and Britain. However, if it continues to grow, the enterprise would be forced to review it’s historic strategy and start to compete on quality of customer experience instead of the traditional 4 pillars of marketing.

 

 

Customer Experience is the “New” Marketing

customer experience is the new Marketing Sincerity and competence are the currencies of customer interaction. Consumers may sometimes engage with a brand after seeing clever commercials or hearing a catchy jingle, but they are not very likely continue to be the customers after they encounter indifference and incompetence

Nowadays brands wrestle with the challenge of engaging customers, but they fail to deploy the most powerful weapon in their arsenal – their employees. Instead they employ slick campaigns and technology to shield the employees from the customers. I infer they do it to save cost, but considering the expense of their marketing activities and questionable results they often produce, an investment in quality employees may be much better choice.

I wrote before about my customer experience with Nissan, the brand considered by many to be a competent marketing player. Every time Nissan marketing attempted to engage with me, they created a desire to severe my relationship with the brand. Every offer for service they mailed was accompanied by frustration with my inability to make an appointment without a switchboard hassle. The new “loyalty” program email, outsourced to a “specialist” company and signed by its president, sent me through another phone tree hell. You really do not need an expert to figure out that an email with do-not-respond return address is NOT a great way to grow loyalty! All these marketing shenanigans drove me to do my car service at any place but the Nissan dealership that paid for them.

Recently, my car keyless car entry dongle started to lose its power and I needed to replace the battery. The auto parts stores and a garage, where I went to do an oil change, could not help me. I stopped by the dealership to setup an appointment and was blown away with their sincere desire to help and the competence of the people I met there. When I recall all 3 interactions I had with the dealership employees over the years of my relationship with Nissan, every one of them was extremely positive. Next time I am there, I should explore an opportunity to remove my name and address from their marketing list. If this is possible, I may consider buying my next car there.

This is only one example, but this problem is not limited to Nissan. Our analysis of customer reviews  shows traces of this problem experienced by customers of many other brands.

Technology can be a very powerful weapon, but if it is used by a company to shield its employees from its customers, it will backfire, as both the customers and the best employees will leave the company in frustration. Marketing is about trust and the companies that hide behind technology will not be trusted.

 

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.

 

 

B2B Customer Experience Management – a story from the trenches

B2B Customer Experience Management – a story from the trenches

You may have noticed that most publically available research into Customer Experience is   focused on consumer products and companies. There are a few good reasons why this happens:

 

  1. We all are consumers, and it is easier to write and to relate as a reader to examples and ideas that involve consumer related issues and experiences.
  2. The evolution of social customer affords greater transparency – consumer goods/services customers are rarely limited in their capacity of sharing their experiences (customer feedback) publically. Corporate customers are severely restricted from doing that, limiting the opportunity for open analysis and discussion of specific examples and practices. We, humans, learn best from stories.
  3. B2B Customer Experience Management practitioners often limit their ambitions to Customer Satisfaction and User Experience areas of the discipline. Tim Carrigan explored the set of beliefs in this excellent article – B2B versus B2C – Debunking Five Customer Experience Myths.

It is important to design the research based on outside-in perspective because poorly focused B2B CX inquiry can miss business targets entirely and discredit a CEM initiative.

Outside-in perspective

Here is an example.

A couple of years ago we were working with a medium-sized B2B software company that was relatively well known to business community in its market segment. The company engaged with most of its sales prospects via their website, where visitors could learn about the products and download a free copy for evaluation. While the site traffic and the rate of downloads were reasonably healthy, a conversion from freemium to paid use license was miserably low. Two possible hypotheses were developed to explain this problem:

  1. Download and installation complexity may have prevented users from experiencing the value of the products. We could measure a number of downloads, which was reasonably good, but not how they were installed, configured or used.
  2. The paid product lack of valuable functions and features compared to the free version and did not provide sufficient motivation for users to convert.

Marketing launched a survey initiative to validate the first hypothesis and designed a 5 question form that was emailed to the visitors a few days after they downloaded the free version of a product. Despite a very low participation rate (below 1%) the survey responses overwhelmingly rejected the first hypothesis as 89% of respondents had no negative experience with download and installation.

The second supposition proved to be much more difficult to tackle. Survey questions about product functionality yielded even lower response and provided no clear guidance. A focus group was presented with a list of functions and features considered for future development which participants were asked to prioritize. They were asked if inclusion of these high priority functions into the paid version of the product would help them justify conversion from the free copy, and the majority gave the positive answer. However, upon the new version release the conversion rate did not improve at all, and corporate management was coming hard on Marketing, who pointed a finger on Engineering who pointed it right back – the blame games began!

 

I will continue with the conclusion of this story next week.

Customer Experience: Easy to Measure, Hard to Change part 2

This sequel was inspired by comments and questions posted in multiple LinkedIn groups where the first part was published. Special thanks to Richard Hatheway.

Cheif Customer OfficerOne of the first reason people give, to explain the difficulty of customer change implementation, is lack of leadership support. This causes a debate in customer experience management communities about the need, some say the rise, of the Chief Customer Officer. Personally, I always thought that was the role of the Chief Marketing Officer of an organization, but apparently they, as a group, do not live up to that expectation – i.e. focus on priorities other than making their companies more customer centric.

In my experience, the addition of another title, without P&L accountability, has never magically created the leadership presence the CX communities are yearning for. In most instances the CxO’s political power directly relates to their proximity to revenue generation (in fast growing companies) or spending control (in the rest).

I am not an expert in leadership theories, but I would like to suggest that if you really want to see a change in the way your organization relates to its customers, you would have to take the risk of doing what needs to be done to enable such change. Here are a few challenges to consider:

Common knowledge is often a myth

 

not my jobIt is a common misconception within executive ranks and their subordinates that the Customer Service organization is responsible for Customer Experience.  If you are reading this article I assume you know better. If you need convincing, read this before you go further. The best way to debunk this convenient myth is to use evidence in the form of data that comes directly from customers’ mouths.

 

 

Holistic experience is the synthesis of many attributes

Holystic

 

The use of aggregate and derivative metrics will not be very effective if people, who need to change their thinking, cannot see the connection between their actions and the effect of these actions on customer experience. Brandeis offers the guiding principle:

“If the broad light of day could be let in upon men’s actions, it would purify them as the sun disinfects.”

You have to isolate and link specific and measurable attributes of your customers’ experience with operational and financial metrics of an appropriate department and/or process within your company, or your channel, to expose cause and effect.

Linkage adoption is the most critical condition for actionability

 

FactsIn the Customer Experience business we often are not dealing with facts, but with evidence-based opinions. Using the survey method – the best for validating a hypothesis – as a primary source of evidence will inevitably taint these opinions with the bias of the survey designer. The best practice for overcoming the bias and representation arguments is to provide multiple sources of evidence that point to the formation of a coherent opinion. That will not eliminate argumentation, but will make it much more constructive. A fact is often nothing more than commonly accepted opinion, supported by commonly believed evidence. Therefore, it is paramount to socialize proposed linkages very extensively, to gain acceptance of the concept and subsequent adoption, before publication of any measurements.

 

Measure and benchmark a change.

 

challenge to do betterPeople are motivated to act to catch up to a leader or to maintain the leadership position.  When people accept your metrics, they surely are inspired to do the right thing, particularly if they can see that their actions produce desirable and measurable results.

“Static” measurements do not motivate action nearly as much as measuring how CX, and linked operational metrics,  have improved since the change in a process was implemented. These are particularly effective if there is relative competitive information available for comparison. Example – a company we have worked with measured a social reputation of their consumer product a quarter after its launch. It was lower than expected and about 6% below the average reputation of products in its segment. Detailed CX analysis discovered that some customers figured out how to program the product to control home appliances (not intended use). Marketing was very hesitant about doing anything about the finding, but eventually decided to publish instructions for programming and communicated them in Social Media. The quarter after, the NPS jumped 22% and the product took a lead in the segment. That change alone was attributed to 17% increase in the sale through rate.

The suggestions above are obviously not a comprehensive guide to organizational change management of customer experience, but they are focused entirely on what CEM professionals can do to provide operational leadership in spirit of the words of Mahatma Gandi

You must be the change you wish to see in the world.

Social Customer and the Quest for Better Margins

New Product DevelopmentIt is no secret that most new products taken to market do not perform to management expectations. While there may be a myriad of reasons to explain the high rate of failure, I would like to focus on the fundamental inadequacy of commonly used market segmentation methods. Don Peppers wrote that

“Many, if not most, corporate CRM efforts have floundered or failed because they were oriented exclusively around segmenting customers by their value to the company – diamond, platinum, gold, whatever. But if you want to be smart about your customers, then you have to know how customers differ from each other in terms of what they need from you, not just what you want from them.”

Following this line of logic, most product developers fail because they segment their customers by their demographic characteristics (age, gender, education, income, etc.) rather than their needs. The assumption these marketers make is that similar demographic segment would have similar needs.  The introduction of customer “personas” allows marketers to assign a proposed product’s functions and features to specific customer groups within the demographic segments. Subsequently, all these assumptions are validated by surveying consumers, who belong to the chosen segments and correspond to a “persona” as defined by product developers.

I see three fundamental flaws in the described methodology:

  1. Multiple layers of assumptions are constructed before the validation of an entire construct;
  2. The validation methods are highly subjective and often produce low integrity results;
  3. The method uses an inside-out view of potential customers.

These flaws lead to the introduction of products that are very difficult for consumers to differentiate, and as the result lead to lower profit margins.

The advent of The Social Customer provides product developers with an alternative segmentation method – an approach that at once zeroes in on a market segment composed of customers (not consumers) who have purchased existing products that the planned product intends to challenge. In particular, it analyzes actual customer experience with those existing products. The relative frequency with which customers mention certain attributes tend to indicate those attributes’ importance to the customers. On the other hand, customers’ satisfaction or dissatisfaction with a product in terms of those attributes tends to denote particular strengths or deficiencies. Accordingly, those white spaces where existing products are unable to meet key customer expectations present potentially lucrative opportunities for new product differentiation.

This outside-in approach may be reminiscent of ethnographic market research, but instead of actual observation of customers it relies on analysis of online customer reviews to generate much more statistically representative results much faster.

Customer Experience is Everybody’s Business – Connecting the Dots

CX is everybodys' business

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 Cash flow velocity and CEM

 

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.

 

HTC sweeps Customer Experience challenge

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.

 

Strategic Marketing of Managing Expectations

“Happiness is in expectations management.”

Let’s try to apply this wisdom to Product Marketing and Marketing Strategy. For example, 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 fool 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.