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Posts tagged with ‘Customer reviews’

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.

Customer Experience and Devaluation of Brand

social consumer experience and value of brand

The rise of social customers triggered the devaluation of brand as an asset class. In the past a brand was recognized by businesses as the most valuable asset because they served as a proxy for quality of products sold under that brand. In the vast “ocean” of uncertainties of choice (“Life is like a box of chocolates. You never know what you get”), a brand served as a life raft. The loyalty to a brand reduced uncertainties of the market place.

Today, consumers have unlimited access to better tools for reducing shopping uncertainties – past experiences of socially connected customers.

“The new information environment allows consumers to predict much more accurately the experienced quality of products and services they consider getting.”

The quote above comes from Absolute Value: What Really Influences Customers in the Age of (Nearly) Perfect Information written by Itamar Simonson (Professor of Marketing, Stanford) and Emanuel Rosen (ex marketing executive). This book challenges very fundamental pillars of marketing that include the value of a brand to an organization. The authors argue that an easy assessment of absolute value of a product (experience) is eroding the influence of “relative forces” (branding, loyalty and positioning) that used to drive purchasing decisions. The implications of this transparency on traditional marketing practices are enormous because it accelerates the rise and fall of the brands exponentially:

  • It took only few short years for Blackberry and Nokia to reach the top of their category, and fall to the bottom
  • Do you remember the last time you’ve seen a Volvo commercial promoting its safety record?
  • It took 5 years for Asus to reach the fifth place in worldwide PC shipments at the expense of well established brands without heavy investment in advertising.

The “absolute value” term makes me somewhat uncomfortable, because the experiential value is also relative. However, it is relative to consumer’s expectations and ability to filter information available for making a better (for them) choice.  Compared to being manipulated by a brand, enabled by the lack of better information (i.e. “relative value”), the new paradigm is absolutely a better choice for consumers. Surely customer reviews are not perfect quality indicators, but their content provides real help in assessment of experience a consumer can expect. 

influence of customer reviews

 

For marketers, this new reality offers an incredible opportunity to tune in to “natural” customer intelligence uninhibited by your company biases and
manipulations. The intelligence, produced by social media marketing research, delivers significant increase in customer engagement that converts into much greater sales.

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.

 

The root of all great products

The root of all great productsGreat products come from a deep understanding of customers’ needs and wants. Such understanding is best formed by observation of customers using a product. Hence, the proverbial chicken/egg situation – a product that has not yet been developed cannot be observed.

One way to deal with this challenge is to start by identifying a “job” the customers of your future product needs to do. As Theodore Levitt observed,

“People don’t want to buy a quarter-inch drill; they want a quarter-inch hole.”

Therefore, a savvy product marketing professional can observe people doing the job with whatever tools (i.e. products) are available to them currently. A keen observation will likely reveal an opportunity for improving the customer’s job, i.e. simplifying the customer’s experience of obtaining the desired outcome.  This approach is championed by Clayton Christensen in his book The innovator’s solution: creating and sustaining successful growth.

Observing customers in the process of using products is not a new concept, and it is known as ethnographic research. However, it is primarily used for learning how to enhance existing products, not to improve customer job experience. The cost of ethnographic research is very high and that forces very limited scope and data samples which would be unlikely to help discover a market segment deficiency of unmet customer needs. That ocean is too big to boil by means of ethnographic research.

The latest developments in big data and opinion mining technologies, combined with growing availability of customer experience testaments available online, offer new opportunities for uncovering unmet customer needs on a market scale. However, there are no widely accepted methodologies available to take advantage of these developments just yet.

The remaining challenges involve:

  •  A market segmentation approach that identifies a job by expanding the view of competition from the products on the same shelf to any product or service that customers could deploy to get this job done. Traditional segmentation methods are based on the assumption that your customers are defined by the demographic group they belong to. Some use a secondary qualifier of buyer persona to refine the target segments. These methods worked reasonably well in the age of mass markets and clever advertising campaigns, before the rise of the social customer. Today we do have the data and tools enabling us to learn who are the customers that purchased products like this and how they experienced them. We can even map them back to the demographics and persona profiles which can provide much better understanding of their real needs.
  • Rigorous data governance methodology is focused on real customers and real communications. Higher volume and velocity of data does not translate directly into market intelligence that is capable of driving business decisions. It often creates even more noise at greater expense and results that are not relevant to business reality. We have to discriminate between endless repetition of mindless remarks by ambiguous digital entities and unique descriptions of real customers’ experiences with specific products or services. We should re-focus from inclusivity of content data sources to exclusivity of authentic content.

Please click here to request the iPod case study that illustrates this process.

A Product is Only a Part of Customer Experience

It is only a matter of time and success rate, before competition will re-engineer the functionality of your new product or service and bring to the market a newer, shinier, and more affordable offering.  When that happens your market share growth stumbles and starts to decline, price pressure starts to erode profit margin, and your brand becomes an also-ran instead of a leader. It is a much more complicated undertaking to re-engineer customer experience, but it can happen too if you don’t pay attention to the market landscape. Let me offer a couple examples:

  1. Dyson introduced to the market easily maneuverable vacuum cleaners that offered revolutionary design, much more functionality (“appropriate amount of suction”), and panache advertising messaging for a premium price. Its inventor was knighted (Sir James Dyson) and became a celebrity. However, after a few years of Dyson leading their segment of the market and winning patent battles against “wannabe” competitors, Euro-Pro came out with Shark vacuum models that performed as well or better at the lower price than Dyson. As a former customer of Dyson, I cannot re-call anything special about my experience of owning their product.

Dyson CX report The best part of it was the experience of being a Bed, Bath and Beyond customer—and that is where I bought my new Shark at the half of the Dyson’s vacuum price. Dyson vs Shark Now, Hoover and others are coming to market with comparable products that force Dyson to bring lower priced models. 2. A more controversial example involves a “religious” icon – the iPhone. Once a gift of elegance and simplicity, it used to be the gold standard in a product category it arguably created. The committed base of Apple fans, standing in line for days to get their hands on a new model, propelled iPhone consumer expectations for customer experience to previously unseen heights. While iPhone dominated the market for early adopters of technology, mass market participants failed to see an overwhelming difference in experience between iOS and Android products that would justify the price deferential and high expectations. Even the latest flagship model (5S) continues the pattern of disappointment with Customer Support. iPhones Market Intelligence analysis And while iPhone 5S leads the segment (flagship models) today with social NPS® score 53, it is below HTC One in terms of reliability (19% above average), and below Samsung Galaxy S4 in terms of audio experience, design and video quality (23%, 34% and 15% above average respectively). It is not surprising that iPhone market share is shrinking from quarter to quarter.

”The iPhone’s share of the smartphone market peaked at nearly 24% in the holiday quarter of 2011, according to research firm Gartner. But Apple’s share dropped to 21% the next holiday season, and again to 14% last quarter. Android dominates the market with a 79% share.”

The loss of market share is not caused by Apple’s failure to bring a quality product to the market. It is caused by Apple’s failure to live up to expectations of customer experience it has created. As functions and features of products become more commoditized, the holistic customer experience of dealing with your brand becomes the real differentiator in the market place. It cannot easily be infringed upon, reverse engineered, or acquired by competitors. And if you embrace customer centricity as a long-term strategy for your brand management, the customers will embrace your brand as the first and only choice for them.

Is Social Media Relevant to Business?

RelevanceThere are hundreds of companies that sell their Social Media Monitoring services. Many more startups are working hard on bringing more to the market. Clearly there is an expectation of great value from the intelligence produced by these efforts when applied to important business decisions. Based on the lack of examples available to the public, these expectations are not met very often. When they are met or exceeded, companies don’t rush to share their triumphs publically in fear of alerting competition.

Surely there are many stories about social media monitors providing data for tactical business actions, like customer support engagement and PR damage control. However, these are serving as triggers or alerts for engagement and only scratch the proverbial surface of value that can be derived if the data is transformed into information, and then knowledge.

Current use of social media as yet another channel for customer support does not strike me as a fiscally sustainable or strategically impactful business vision. So far it has not produced any evidence of improvement in Customer Experience quality or reduction of operating expenses – it is just another channel for obtaining a mediocre support for mediocre products at additional cost to business.

The challenge is to stop the fixation with data points and start working on connecting the dots. The sheer volume of data seems to induce Attention Deficit Disorder-like symptoms and causes us to disregard the relative meaning of the data in the context of business “reality”.

To become relevant we need to build a path from Data (one point) to Information (two points compared), to Knowledge (correlations), to Wisdom (causation). Below is an illustration of such transformation within a Marketing context. Click on the image to make it larger.

 

Data2Info

 

This illustration implies a much deeper analysis of social media content, than the practice of counting transactions, and linking the information to operational data. The importance of that linkage cannot be overstated because without it social media information is not relevant to business.

Ode to Customer Feedback from Social Media

VoC ResearchThere are 5 reasons why Voice of Social Customer is more valuable than traditional Customer Feedback programs:

 

1.     Social Media Voice of Customer is unsolicited – the customers share their experiences online motivated primarily by one of the following desires:

  • to help other consumers make a good purchasing selection
  • to get attention of the providers by making their grievances public
  • to assert themselves as consumer mavens

Solicited feedback, in the form of survey response or focus group results, is motivated by participants’ consideration for the emotions of the researcher or moderator. I’ve seen quite a few times when consumers, making enthusiastic promises to buy and recommend a food product they just tasted, spitting out with disgust after leaving the sight of a tasting booth.

2.      Social Media Voice of Customer is customer centric – the customers describe their own experience rather than answer somebody else’s close ended questions. They describe what is important to them in their own words. Sure, that is not easy to tabulate, but “easy” does not make it valuable.

“The first step is to measure whatever can be easily measured. This is OK as far as it goes. The second step is to disregard that which can’t be easily measured or to give it an arbitrary quantitative value. This is artificial and misleading. The third step is to presume that what can’t be measured easily really isn’t important. This is blindness. The fourth step is to say that what can’t be easily measured really doesn’t exist. This is suicide.”

Daniel Yankelovich. “Corporate Priorities: A continuing study of the new demands on business.” (1972)

3.      Social Media Voice of Customer is voluminous – it often provides much more representative data sets for analysis than traditional, company-controlled methods.

4.      Social Media Voice of Customer is inclusive – customers describe experiences that are not limited to your products or brand. It offers the opportunity to learn and compare how customer experience provided by competitive products measures to yours.

5.      Social Media Voice of Customer is authentic and transparent – everybody can see who said what, where and when about a product. Consumers can relate to how the product was sold and used. They can decide if its limitations and benefits would apply to their circumstances. Consumers are smart enough to distinguish genuine experiences of their peers from idiotic and illegal attempts to fool them into a purchase of product that does not fit their needs. They are also capable of understanding the difference between a legitimate grievance and an angry rant. Fostering social media customer feedback builds your brand and improves sales results in addition to providing customer experience intelligence. Traditional, company-controlled Voice of Customer is only meaningful for internal consumption and even that is often only for a self-serving pat on the back.

Study shows that 93% of people who conduct research on reviews sites typically make purchases at the businesses they look up

I am not arguing to abandon traditional methods – they can be very valuable for hypothesis validation. However, social media Voice of Customer can provide much richer market intelligence, second only to ethnographic research, but without its cost and statistical representation limitations.

 

How Online Customer Reviews can help “Brick & Mortar” Retailers

While marketers and researchers slice and dice social media noise, or chasing a diminishing number of customers who still are willing to respond to survey requests, customer review data is not being explored to its potential both online and off.

“Review sites operate effectively at a transactional level. They provide a day to day journal of the interactions between buyers and brands. They enable people to discuss experiences in a world where brands are adjudicated, at least in part, by the experiences of others. They are the basis for reaction. They enable people to pass judgment and to publish those judgments for all the world to see.”

Online retailers have been aware of the value customer reviews bring to improve their business results for a long time.  Numerous studies were conducted to discover and document their operational and financial impact. One of the latest is from Bazaarvoice

bazaarvoice stats

The impact of online customer reviews (customer generated content) on operations of brick and mortar retailers is less well understood. Nevertheless, it can be quite dramatic.

Here are just 3 examples how retail merchandising processes can be optimized leveraging customer reviews analytics:

  • More sales per visit – Too many choices often confuse consumers and prevent them from making a purchase. A few, customer-preferred products make it much easier for a consumer to choose from. Consumers trust their peers more than advertisers, even when they don’t know the reviewers personally.
  • Higher profit per store – Products with reputation for disappointing their customers are more likely to be returned. Handling returns reduces store employees’ time selling and serving customers. The transaction cost of handling returns drains a store’s bottom line.
  • Better customer service – According to our analysis, the “showrooming” effect is caused by poor service, not a price differential. Sales personal can leverage customer reviews to help consumers select the right product for them based on their personal priorities.

Apple at the crossroads

As many products and services are becoming more agile by design, even the best-designed products have shorter and shorter time to enjoy superior profit margins before competition starts to catch on. Patent protection and brand recognition do help to extend this time, but the clock keeps accelerating.

Apple’s iPhone provides a good case study for this phenomenon. Ever since its initial introduction by Steve Jobs, the iPhone was the gold standard for the smartphone product category. It became a status symbol of Silicon Valley technocrati and every new model was greeted by millions of lined up fan boys and girls. Apple bestowed the honors of selling it to a chosen few channels and demanded handsome subsidies in return.Social NPS apple vs galaxy The reason for this success was the iPhone’s superior customer experience, designed into the product, that exceeded any other one in that category by a wide margin. Well, this margin finally shrunk.

Last week’s financial news show that hegemony of iPhone may be over. Make no mistake, it is still a great product, but competition has caught on in creating a customer experience as good or better than Apple’s. People bought 31.2 million iPhones last quarter, but their experiences were rather underwhelming. Not because there is anything wrong with their iPhones, but because their expectations were too high as many new customers came to Apple for the first time. As Samsung, HTC and Nokia customers have “upgraded” to iPhone, they do not find the overwhelming difference they expected.

These scores may not likely match company-sponsored survey results, as they are extracted from sentiments customers express reciting their experience in unsolicited reviews they share online, often anonymously. However, what these scores say is that only 6% of iPhone 5 customers (Net Promoters) would actively put out a Word of Mouth to promote the phone, compared to 18% for Galaxy S4.

The differences are even more pronounced when iPhone is compared to Blackberry Z10, HTC One or Lumia 928.

Out of 25 attributes of customer experience that are most important to customers of these smartphones, Apple still dominates in one – Design, as customers rate it 28% above the group average. Details are available on request.

It appears that marginal improvements introduced in the last two iPhone models – 4S and 5 –  failed to separate the brand from the pack. In NPS trend by modeladdition, US carriers started to experiment with unbundling handsets from services, and the subsidies to the manufacturers like Apple are threatened. At this point the category shows signs of maturity. In the past, Apple’s market researchers were able to discover and exploit latent needs of increasingly demanding consumers. Is today’s Apple capable of inventing a new category of products to march on as the industry leader?