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Posts tagged with ‘Customer reviews’

More Signs of Decline in Brand Relevancy

Last week I was shopping for a new Bluetooth headset for my phone after my trusted Motorola  betrayed me in the middle of an important call with a client. It did not quite dropped dead, it just “ceased to be”, in the words of Monty Python parrot salesman, but a replacement was in order. That brought me to Amazon, searching for a set with the highest customer reviews rating.

Personally, I do not put a lot of trust into any product reputation ratings unless it has at least 50 authentic customer reviews. Lack of authenticity in paid reviews is pretty easy to spot. However, the higher the number of reviews provided by customers about their experience with a product, the more difficult for “idiot” marketers to manipulate the product’s reputation. The list of headsets that met these criteria was quite surprising since only 30% of these best rated products were from the brands that are expected to dominate this market segment – like Plantronics and Motorola. A skeptic would point out that high customer reviews’ ratings do not guarantee high volume of sales, however we have studied in the past the correlations between the number of reviews and the number of products sold. They suggest very strongly that high product reputation score, coupled with high number of customer reviews,  is predictive of strong sell through numbers for the product.

Use of these correlations for quick calculation reveal that :

  • LG, not a well known brand in the headsets market, sold an estimated 39% of total units
  • The best known brands sold only 31% of total units
  • Brands, I have never heard before, sold 30% of total units.

Can you recall any advertising that mention Kinivo or SoundBot in any context? I cannot. And yet, each one of these “un-brands” managed to outsell a premium brand like Motorola at very similar price levels. Together they outsold the former king of the segment (in terms of units sold) – the mighty Plantronics – by 7%. The Google search by their names finds very simple websites that list their products and a few retailers where you can find them. I could not find any fancy designs and mission statements commonly associated with the big brands marcom either.

This is not a new phenomena and it is not limited to any specific market segment. The authors of the book “Absolute Value” gave a number of examples where experiential information, provided by a product’ customers, propelled totally unknown “brands” to very significant sales numbers at the expense of well known and respected brands. There are also quantitative studies that help to understand the dynamics of brand value debasement by publicly available customer feedback.

Brands are falling

Certainly not every market segment is equally affected by this erosion. Specific market segment intelligence studies can quickly assess whether your brand is under attack and what are the monetary implications. Ongoing monitoring of the competitive landscape is commonly done by many brand and product managers, but most efforts are focused on basic sentiment analysis of a brand’s mentions found in social media, which is rarely insightful or actionable.

A highly disciplined approach to the management of data, containing unsolicited customer feedback, is required to produce meaningful sets for analysis. Deep analysis of such data sets, when focused on customer experience as oppose to features and functions, can help to understand patterns and dynamics of consumer perceptions. Such knowledge is imperative for competing in today’s markets because nobody is safe anymore to hide behind mighty brands of the past.

The “Agile” Approach to Consumer Product Marketing

When process succedsThe term Agile is most familiar to people involved with software development, but the basic concepts can be applied to consumer products successfully as well. At least two of its core principals – use of iterations and collaborative involvement of product users (i.e. customers) – were effectively practiced years before the term was introduced and became commonly accepted.

Wide acceptance of Agile methodologies arguably resulted in dramatic increases in software project’s ROI caused by:

  • reduction in the number of abandoned projects
  • cost reduction for user training and documentation
  • increase in user adoption of the “final” product

In other words, the application of Agile methodologies reduces the uncertainties of delivering an expected outcome.

Development of software to simplify business user’s jobs, has at least one critical similarity to the development of many consumer products – customers cannot clearly articulate their requirements. Particularly, the latent ones. Of course there are tools to help you do this, Kano analysis, being one of the most popular. Unfortunately, not enough consumer product marketing professionals are known to use these tools. That manifests itself in a very high failure rate of bringing consumer products to market. The actual rates of consumer product failure are quoted anywhere from 30% to 80%. The numbers vary by industry and are controversial because they do not clearly articulate what “failure” means. I define a product “failure” when it did not deliver the originally forecasted revenue.

Accenture research estimates that the CE (consumer electronics) industry alone has spent $16.7 billion a year to “receive, assess, repair, re-box, restock and resell returned merchandise.” More than two thirds of these costs, or $11.2 billion, are characterized as No Trouble Found (NTF). In other words, the products did not meet the customer’s expectations. Personally, I find the term NTF very disturbing – $11 billion waste caused by poor market requirement definitions and misleading advertising, is indeed a big trouble. That number does not include the cost of the customers time wasted, hit to the brand reputation and environmental costs of transporting and stuffing landfills with failed products and packaging.

The cause of the CE product NTF fail is relatively easy to diagnose – too many products are conceived by engineers who value the “cool” factor the most, without any reference to actual customer needs. That approach worked well while the price and advertising were the most critical factors in customers  purchase decisions. The last few years have seen a dramatic increase in the importance of customer experience delivery as the most influential factor in selecting a product.  The revenue growth of the leaders (Apple and Samsung) are cooling down, while the rest of the CE companies are seeing a drop in revenue and profit contraction.

Meanwhile, there is some evidence that small “un-brand manufacturers” are doing well by practicing “Agile” – looking methods to capture market share from the established brands.

  1. They “collaborate” with the customers of their competitors by analyzing product reviews they published online. They learn what caused these products to fall short of their customers’ expectations and why they purchased these products on the first place;
  2. They design products based on the results of that “collaboration” and their interpretation of consumer needs.
  3. They manufacture small lots of products to test the accuracy of their interpretation, market reaction and analysis of the feedback before going to the next “iteration”;
  4. They form customers’ expectations by “communicating” the product properties with the language used by customers to describe their experience.

“Agile” product marketing is a better approach when scale of design and manufacturing does not work anymore. It is not “cool” that sells your products today, it’s the experience your company delivers to the people who buy them.

 

In Defense of Anecdotal Evidence

During the last two decades traditional retail business has experienced a disruption similar to an earthquake delivered by the proliferation of ecommerce. That earthquake caused tsunami-like floods of online customer reviews describing personal experiences with specific products. Those retailers, who embraced this wave of untamed customer feedback, surfed it to higher “visit to conversion rates”, growth and profitability.   The way I feel isToday millions of customers share their experiences online about a wide variety of products and services, both personal and business related. Based on multiple studies, the trust other consumers give to these reviews is increasing from year to year.   While the flood of experiential information provided by customers and its influence continues to grow, many marketing researchers still question its value to business. To be fair, there were some interesting studies conducted that found correlations between the quantitative aspect (star rating) of customer reviews and the restaurants’ revenue. However, qualitative research of the actual reviews is being sneered upon and labeled “anecdotal”.

“The expression anecdotal evidence refers to evidence from anecdotes. Because of the small sample, there is a larger chance that it may be unreliable due to cherry-picked or otherwise non-representative samples of typical cases. Anecdotal evidence is considered dubious support of a claim; it is accepted only in lieu of more solid evidence. This is true regardless of the veracity of individual claims.”  The underscore is mine.

Interestingly, the above quote comes from Wikipedia, that itself has been attacked by status quo defenders as “inaccurate”. Yet, this quote is the best definition I could find online, after checking more “official” sources like Oxford and Merriam-Webster.   Since Customer Experience is a perception, there is no more meaningful evidence to communicate it than an anecdote. Based on the definition, two primary reasons for not using it to form strategic decisions are the size and quality of the samples in terms of representation. When it comes to customer reviews, the available volume (sample size) often exceeds the size of samples collected by most quantitative marketing research projects. Mining of these anecdotes produces very meaningful insights with a real business return on investment that quantitative methods are not capable to discover. Such techniques allow:

  • discovery of patterns and trends within the multitude of “anecdotes”,
  • measurement of their relative importance to customers,
  • measurement of the sentiments associated with these patterns.

The cross-sectional representation of these findings may subsequently be validated via traditional quantitative methods.   The internet democratized many aspects in our lives and not everyone likes it. The selection of sampling strategies for research used to be the prerogative of professional researchers, who often act like high priests of the illusive cross-sectional representation probability standards. In reality, very few of them actually practice any probability sampling methods beyond relatively basic demographics. The proliferation of inexpensive online survey tools enable people, without special training, to conduct marketing research. Most marketing executives, the recipients of this research, have neither the background to venerate these methods nor have experienced a measurable advantage using them. On the other hand, customer reviews often can be subjected to sampling based on gender, geography, age, time published, etc. to improve probability of more full representation of the customer base.   Those who continue to belittle a value of untamed customer feedback to business will fall victim of their own elitism and become even less relevant than they are now. Change before you have to.

3 Steps for Improving the Value of Voice of Customers

Every company collects customer feedback in one form or another. It is the ability to HEAR what their customers SAY that separates successful companies from “also run”s. Below are 3 steps that can help your company to improve its hearing:

  1. VOC value 1Stop manipulating it

 

The availability of inexpensive survey tools, that allow you to produce and send your questions to thousands of email addresses, does not translate into valuable knowledge of how your customers experience doing business with your company. The type of questions you ask, inevitably influence the type of answers you receive. Implement ation of a shiny new “customer engagement” software, does not translate into meaningful insights for improving your products and services. People’s motivations for choosing to engage and conditions of their engagement, inevitably corrupt a value of their input.

“Just because something isn’t a lie does not mean that it isn’t deceptive.” Criss Jami

Just because you have no intent to manipulate Voice of Customer does not mean your efforts produce trustworthy results. Focus on listening to what customers have to say on their own accord and without any guidance.

“It’s not at all hard to understand a person; it’s only hard to listen without bias.” Criss Jami 

 

2.  Stop being an order taker

 

It became fashionable to quote Henry Ford and Steve Jobs in arguing that VoC is not a source of innovation. I am not sure there is an VOC valueargument to be made – if customers were able to produce Market Requirements Documents, who would need innovators? It only means that if you expect customer feedback to spell out MRD for you, perhaps innovation is not your calling. The VoC is one of the best sources for learning the problems customers trying to resolve by “hiring” products available to them. Understanding of their problems and empathy with their experience, inspire true innovators to “translate” customer feedback into breakthrough products and services.

“The aim of selling is to satisfy a customer need; the aim of marketing is to figure out his need.” P. Kotler

 

  1.  Stop using selective hearing

 

Just because you pretend that VoC is limited to the customers who answer your questions, Word of Mouth does not stop influencing the rise or fall of your product’s fortunes. You can hide your head in the sand, but that will likely accelerate the distraction of your brand reputation. According to Jeff Besos, who knows a thing or two about customer-centricity:

“If you make customers unhappy in the physical world, they might each tell six friends. If you make customers unhappy on the Internet, they can each tell 6,000.”

You are more likely to learn from Word of Mouth analysis what really is important to your customers and why they buy your product, than from their responses to your survey.

Social Media Research of Customer Experience is a Smart Marketing investment

Dudley squatListening to customers through social media channels, is a well established practice for support of  Customer Service and PR business processes. Marketing organizations are less known for their successful attempts to use social media to engage customers. Many of these attempts were widely publicized as clumsy, some even caused an adverse reaction. This underscores how far marketing has parted from its original purpose – ‘The management process responsible for identifying, anticipating and satisfying customer requirements profitably.’ From that perspective, Customer Experience Management discipline belongs under the Marketing umbrella. Brands, that enjoy well above average growth and profitability, understand that customers don’t buy products or services – they buy experiences.

Marketing investments in social media can produce much better returns when they are focused on customer experience research. Instead, marketers try to use this technology in advertising mode, like traditional media channels. Below are just a few reasons that make Social Media Research of customer experience a better investment than traditional marketing research:

  1. Survey participants’ opinions are less valuable than the opinions of online customer reviews. Only personnel that conduct surveys are impacted by the participants’ opinions. In contrast, a very large number of prospective customers are directly influenced by a product’s online reviews. Shoppers, who are aggressively searching for social media recommendations, would not make a purchasing decision without reading the stories of customer experiences. The content of these stories is inherently more valuable for product marketing than satisfaction scores.

 

  1. The volume of a product’s customer reviews, and other social media mentions, is often substantially larger than a sample size of even a professionally conducted survey. This translates into better Confidence Interval/Margin of Error rates.

 

  1. A survey will tell you that your customers are really satisfied with their purchase and would likely recommend your brand to their friends, family members or colleagues. Whether they will or will not do it is shrouded in mystery. In contrast, over 64% of online review writers, share their recommendations with members of their social circles via Twitter, Facebook or Instagram. Actions speak much louder than words. Particularly when it comes to predicting consumer behavior.

 

  1.  Social Media Research allows one to easily benchmark customer experience metrics against competitive products. Such intelligence is very valuable for product management and planning professionals who commonly straggle to predict future demand, looking at 3 months old and static numbers instead of up to date trends.

 

In the words of Brian Solis, the author of “WTF-What’s the Future of Business” – The future of branding is experience architecture.

Message to CX profession – Transparency begets trust

I get requests to complete surveys quite often. They come from my bank, after in branch transactions, websites I visited, customer service of my credit cards and cable providers. caged bird tweetsThey all want to know how I would score whatever is important to them, and leave a little space for my comments. Some of these surveys are just 2 or 3 questions long, but others expect me to answer pages of seemingly repetitive and circular questions.

I have never seen a survey request that explains coherently why my opinion is so important to them. In other words, they never indicate what is going to happen after I have completed the survey, carefully answered all the questions, and provided very detailed comments. Presumably, if the tabulated scores are high enough, whoever created or sponsored these surveys, will high five each other and cash their bonuses. But what about my needs? Would my contribution help anybody to make a better selection? How would I know if my responses contributed to a better product or service? Sometimes a company proudly advertises their customer satisfaction success, but I wonder if  their claims can be taken seriously because there is no way for a consumer to validate them. For these reasons I stopped answering survey requests a long time ago.

Amazon is considered by many, the poster child of customer centricity. I have done business with Amazon for over 10 years and made hundreds of various purchases over that time. I cannot recall a single survey request from them, ever. Could it be, customer-centric Amazon does not care about the customer experience they provide? I think they don’t survey their customers because they understand the power of authenticity that is growing fast with the advance of social consumer. Amazon understood that consumers will never trust a brand more then they trust each other. A long time ago, instead of collecting self-serving survey ratings, they decided to enable their customers to share their experiences with each other in an open forum. Yes, over the years there were incidents of manipulation attempts. Yes, the Liekert stars are not particularly informative. However, overall the customer reviews are extremely valuable to consumers who learned how use the reviews to reduce the uncertainty of their purchasing decisions.

“Amazon does not make money selling goods. Amazon makes money helping customers make good purchasing decisions.”

According to Keller Fay Group research, two primary reasons customers write reviews and publish them online are:

  1. (90%) Help other consumers to make the right choice for them – kind of: “pay it forward”
  2. (70%) Help brands to improve their performance. Consumers rely on the transparency of their input to motivate brands to act

I can only guess that since Amazon does not survey their customers, they probably use the content of reviews, posted on their properties, to measure the level of customer satisfaction of doing business with them. There are plenty of very informative references in many product reviews that indicate how customers regard their experience with Amazon. Explosive and continuous growth of this company is also a pretty good indicator of the consumers’ affinity.

So why do so many companies still shy away from exploring the content, provided by their customers without solicitation? The answers I’ve been given by Voice of Customer practitioners over the years have a common thread:

  • Lack of control over the process
  • Doubts in authenticity of reviews
  • Fear of negative sentiments

In other words, it seems these companies do not trust consumers, who provide their feedback transparently. Yet, these very companies expect consumers to trust them with their feedback without any transparency at all. How reasonable is such expectation?

Short update on the experience of smartphone customers

Some long time readers of our blog will remember extensive posts dedicated to market intelligence of customer experience with smartphones. Smartphone customers are one the most active social communities. That means they often share their rich and plentiful factual experiences with phones they buy, for the benefit of consumers at large. We, at Amplified Analytics, are very grateful to this and other active communities both as consumers and as opinion mining technologists. Their content contributions enabled us to train and optimize our software over the years. As our technology became more mature and stable, we shifted the subjects of our posts from what kind of social marketing intelligence can be mined to how such intelligence can be leveraged to achieve better business results. However, some of our readers keep asking for updates about the smartphone market changes, and this post is a very brief snapshot of flagship models experience only.

For this update we have mined reviews published by 12,062 customers and measured 40,249 distinct opinions about a variety of specific attributes of their experience. Reliability is the most “important” attribute of customer experience for smartphone users.

Smartphone CX-Reliability

 

According to these customers, Samsung Galaxy S5 is 20% more reliable than the average phone of this group. Nokia Lumia 1020 is the least reliable of this group. These numbers are the aggregate measurements from the time these phones became available to consumers.

Overall Usability is the second most important attribute of CX for these smartphone customers. Apple iPhone 5S is at the top of the “class”.

Smartphone CX Usability

 

 

 

 

 

 

 

 

 

 

 

 

Since I promised to keep it short, I will stop with the details here and offer a combined picture in the screen shot below.

Smartphone flagship MI update

Click  here to request access to this interactive dashboard, including insights into customer experience with these phones. If you are a consumer, interested in other models, please follow this link to the CX backed recommendation site. If you are a marketer, interested in customer experience market intelligence related to your products or brands, please request info about custom reports and pricing.

 

 

Why Brands Often Fail at the Zero Moment of Truth

Digital DarwinismGoogle introduced this term to describe the impact of online information, i.e. social media reputation, on the intent of a potential customer to engage with a brand. According to the research that influence, and consumer dependence on it,  are growing very fast from year to year. Consumers checked 10.4 sources of information to make a decision in 2011. This is a dramatic increase from the 5.3 sources

This more recent study found that positive consumer reviews increase both intent to purchase, and product value, by about 7%.  An online share (customer review, Facebook share or tweet) has a value of between $0.33 for a brand or store recommended by a stranger, and $1.33 for brands recommended by friends or family.

ZMOT Influence

Online content sharing and recommendations now hold more sway over consumers’ buying decisions than brand, or even price.

Given the importance of the Zero Moment of Truth:

  1. Why is it so difficult for consumers to find a reasonable number of customer reviews for a specific product? Attention spans are very short and if consumers can’t easily satisfy their thirst for information within seconds, the opportunity to impact their selection is gone.
  2. Why is there an information gap?  Consumers are looking for factual information, but marketers insist on engaging them with the company’s message (fluff). At the Zero Moment of Truth the fluff repels potential buyers.
  3. Why is it so difficult for marketers to understand the ZMOT is a by-product of a customer experience?  The recommendations, referrals and other forms of social proof cannot exist without delivery of superior customer experience. The kind of experience that inspire customers to share with others. The term UMOT = Ultimate Moment of Truth holds the key to success:

It’s what happens after the buyer experiences…

  • your business (including you and your staff),
  • your sales and after-sales processes,
  • your product or service,
  • your customer service and support,
  • your guarantee or warranty claims, etc.

Form ZMOT to UMOT

For decades marketers were in control of the customer journey because they could out-shout the voices of consumers with big advertising budgets. The advent of social media changed that by arming customers with a much larger “soap box” to share their stories, and advertising budgets don’t buy as much influence as they used to. Unless you think this is just a fad, it is the time to let consumers “teach”­  you what is important to them. Fortunately, they are willing to do so, and the marketers who have learned to subjugate their ego to the reality of the markets, consistently experience remarkable successes.

Those marketers, who keep treating consumers as “marks”, are not likely to survive the onslaught of Digital Darwinism.

 

 

Market Segmentation and the Myth of Demographics

Market SegmentationDo you really believe that all 24-36 year old men buy your product for the same reason? If you do, I have a slightly used bridge at a very attractive price for you.

Demographic segmentation strategy is based on the assumption that a specific group – based on age, gender, etc. – is the primary consumer of your product or service. Regardless of the validity of this assumption, it does not often provide insight on why this demographic segment selects the product in question or how they use it. For that reason segmenting a market by demographics has very limited utility. It has become so popular only because no better intelligence about customers was available at the time it was introduced.

Today, a much better approach to market segmentation is available. Grouping potential customers according to the expectations they would have from a proposed product is much more useful. This outside-in approach is similar to the “persona” concept often used by product managers, but uses actual market intelligence instead of imaginary characters.

The first step is identification of “the job-to-be-done” by the proposed product to be “hired” by the customers.

The second step is identification of the products/services the customers use today to do that “job”. This list will likely include products/services that you would not normally consider your competition, but customers may.

The third step is aggregation and analysis of a statistically representative set of “stories” describing the experience of customers who have used currently marketed products/services to do that job. I use the word “stories” deliberately to describe unsolicited and unstructured descriptions of the experiences in the customer’s own words. Any use of survey or focus group methods will “color” the output with a 3rd party bias. The best content is customer biased only.

The result will expose the attributes of the experience that are most important from the customers’ perspective. It will also provide an assessment of how well each attribute met the expectations of these customers. Focus on the attributes with low scores may provide important insight for designing a product that is very likely to take this market segment by storm.

Click here to request a copy of the Mining Social Media to Boost Segmentation paper published by QUIRK’S Marketing Research Review.

If demographic data is pertinent for your product, you can compile it’s distribution by an attribute to improve your chances for success even further. As the GPS
technology taught us: The multiplicity of signal sources results in better decision quality.

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.