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Posts tagged with ‘Feedback’

Fake ROI and Customer Experience

Fake ROI and Customer ExperienceMany of us are familiar with a request to justify any project from the return on investment perspective. Corporate management’s fiduciary obligation is to control the use of financial resources for the best interest of the company’s stakeholders. I have no quarrel with this notion. I do have a quarrel with how it is frequently practiced.

There are two major points of contention:

  • The Practical definition of who are a company’s stakeholders – actions speak louder than words. Choices of internal funding, that favor short-term returns at the expense of long-term sustainability of business, indicate that the leadership does not consider employees and customers to be the stakeholders.
  • Departmental (silo) approach to ROI analysis – the reduction of a single department’s operational cost without evaluating the effect it may have on performance of other departments.

There are often inescapable Customer Experience consequences associated with efficiency initiatives that show fake ROI:

  • Replacement of inside sales force with automated phone bots may look like an excellent ROI initiative. However, every recorded call received by a potential or existing customer chips away of the brand value. What additional investment in marketing would it require to at least balance the negative effect?
  • Reduction of training budget for customer service representatives can jumpstart quarterly earnings and may inch up the share price for a week or two to please hedge fund managers. How will it affect customer churn rate, and what is the expense of replenishing the lost customers?
  • Implementation of community-driven customer support seems like a sure winner until its effect on conversion rate from free to paid subscription is examined. From that perspective, the increased cost of the company customer support looks like much better investment.
  • Streamlining cost of customer intelligence acquisition process is a no-brainer. Just lay off market researchers, delegate to product managers DIY survey process and offshore tabulation and interpretation of results. How would it affect your product success rate? What would just 5% drop do to the company’s bottom line?

The point I am trying to make is that  the silo approach to optimization of business processes often looks like “pound foolish, penny wise” tactics. Excessive focus on efficiency, i.e. cost reduction, may cause disproportional increase in expense of attracting and keeping customers, and that destroys an enterprise’s effectiveness.

 “The purpose of business is to create and keep a customer.”  Peter F. Drucker

Don’t waste money on analytics

Don't waste your money on Analytics

 

This post was originally published on http://www.cx-journey.com/.
 

Analysis is an instrument of learning, defined as “a process of acquiring modifications in existing knowledge, skills, habits, or tendencies.” There are substantial volumes of academic research produced over the years on a subject of relationship between learning and beliefs. You can search for them with the keywords “deep learning”, “deep belief networks”, etc. The gist of these academic inquiries points to an observation that deeply held beliefs impede learning process, and network (think groups or organizations) shared beliefs have tendency to suppress learning process aggressively.

As long as you and/or your executives are not ready to question your current beliefs, no amount of evidence will make you or them to act.

The power of analytics is in its ability to expose patterns of data that can help us to learn. When new knowledge is rejected/ignored by the organizational belief system, all the cost of learning is wasted. If you think the last sentence does not apply to you because your use “free” tools, think again. The time, effort and political capital you have to invest in use of “free” tools for learning can be substantial. The probability of acceptance by your “network” of new knowledge, discovered with use of “free” tools, is even lower.  That is because you bypassed an opportunity to socialize the idea that you may discover something your organization does not know yet, and to gain conceptual adoption of such result. Use of “free” tools rarely require any approval process within organization. Therefore nobody knows what you are doing, and as a result are not prepared to consider any findings, unless they support and re-enforce existing beliefs. Presenting new findings, that challenge status quo as a surprise, is very bad idea. The process of selection and acquisition of a tool prepares your audience to consider the findings, as participation exposes them to a potential value.

People and organizations are most likely to consider a challenge to their beliefs at the times of extreme “pain”. At such times the leaders open their minds and examine their beliefs to learn how they need to act to improve their lot. The rest are looking for excuses and complain about circumstances beyond their control. Here is an example describing such a moment at Best Buy in 2012:

The one critical thing we offer the world is choice,” said the Best Buy chief executive officer Brian Dunn in a BestBuy customers analysisMarch 2012 phone interview. He was trumpeting in particular his company’s role in guiding customers through the expanding smartphone universe.

“We provide the latest and greatest choice of all technology gear, from Apple products to Google products, and that brings more opportunity to help people put technology to use. That is a great place for us to be.” A week later, reality intruded. The consumer electronics retailer posted a $1.7 billion quarterly loss and announced it would close 50 stores nationwide. On Tuesday, Dunn resigned.

The belief of the Best Buy CEO (at the time) – “The only critical thing we offer the world is choice” was challenged by customer intelligence that exposed the evidence of “most critical” things from “the world” perspective are in-store service quality and products reliability. The evidence was ignored and a new CEO had to come in.

Here are a few suggestions on how to deal with this challenge:

If you focus on intelligence that can help to improve probability of enterprise to increase its market share, your challenge to status quo is more likely to be tolerated. Business executives are motivated by two desires:

  • increase in revenue or market share and
  • reduction of expense, i.e. increase of profit margin

and two fears:

  • Decrease in revenue or market share and
  • Decrease of profit margin.

Intelligence that improves probability of realizing their desires, and/or forewarn that they are on the path of realizing their fears, is aligned with their system of values and therefore deserves their attention.

New knowledge that does not conform our beliefs is a natural suspect.  We credit our beliefs with helping us to achieve our past successes, while new intelligence has no “resume”. Applying the new intelligence to historic data can overcome the trust challenge if that application successfully expose patterns that correlate with actual results in the past.

Finding the Fine Line: Customer engagement into a product development

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

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

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

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

The trust is the most critical condition for any partnership:

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

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

I don't always test the code

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

 

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.

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.

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.

 

Customer Satisfaction Is A Relative Term

Customer perceptions of products and services, or companies and brands, are measured using different scales and methodologies. Regardless of any ambiguity of definitions and sophistication of methodology, any scale you choose reflects a fundamental consideration: how does the product (service/brand/company) experience compare to customer expectations? The expectations are formed by a company’s marketing communications and advertising, other consumers’ word of mouth and (in this age of the Social Customer) pundits and existing customer reviews published online. There are many well documented ”purchasing journey” maps produced by respected researchers. Here is one example.

Most of the studies agree that the choice a customer makes is based on the expectation that the selected product will be more satisfying than most other products within the segment. Yet, many businesses measure the Customer Satisfaction of their offerings without comparing the results to their market averages. Considering that these sentiments are very dynamic, competitive comparisons make the process even more volatile and difficult to measure. However, the results are often well worth the effort, as they generate ideas for differentiation, marcom efforts optimization and operational improvements that could produce significant financial gains.

The example below shows Nokia Lumia products exceeding their customers’ expectations by a much wider margin than their top competitors and the smartphone segment average. If you are involved with Customer Experience Management, a deeper look into the reasons behind the trend may help to improve your customer journey.

CSAT is a Relative Term

The following example measures aggregated Customer Satisfaction with Small (Kitchen) Appliance Brands against average satisfaction level within that Category. It is based on content analysis of 65,379 customer reviews published online over one year period.

Kitchen App Brands CSI vs Average

Such measurements can be produced using most popular scales (such as NPS or CSAT), done for any market segment that has Social Customer engagement, and results can be aggregated by brand and/or distributed by a channel.

Valuable insights into channel performance

poor surveyKnowledge of customer satisfaction and experience delivered by a specific channel can be very illuminating from a brand manager’s perspective. It could be even more enlightening if customer satisfaction metrics also analyzed units sold by each channel and units returned. When these streams of data consistently correlate and/or trend together negatively, it is likely to indicate systemic channel performance problems.

From the channel perspective, customer satisfaction with specific brands – and even more importantly, with specific products – can help optimize shelf space for maximum profitability.

The detailed analysis of customer feedback (reviews) and customer support communications associated with a troubled channel or brand can provide root cause(s) and ideas for corrective actions.

Below is an example of a report on customer satisfaction with smartphones by channel/carrier. The information was mined from 142,369 online customer reviews published prior to March 30, 2013. AT&T customers who use Nokia smartphones reported customer satisfaction 21% above average across all major carriers* and all major brands.

Social Customer Satisfaction per Channel

* Sprint did not offer Nokia smartphones during the reported period.

Deeper analysis may reveal customer satisfaction by model, time period, customer gender, age group, other personal characteristic, or geographic region. Please contact us to discuss methodology for mining intelligence in your market segment.

Customer Engagement and Experience Influence Consumer Selections

This is our third annual analysis of customer perceptions of smartphones. This report is produced entirely by means of Social Media research. Customers became even more active in 2012, sharing their experiences with products they chose for the benefit of consumers who are shopping for smartphones.

The last year saw an increase in unsolicited Social Customer engagements with brands in this category of over 75% — from 29,971 in 2011 to 52,517 in 2012. The quarterly trends indicate that the rate of engagement is still accelerating. The following filters were applied to arrive to these numbers:

  • smartphone models that have at least 100 customer reviews published on multiple SM sites
  • content is unsolicited and volunteered by actual customers
  • content was published on or before 12/31/2012

We produce smartphone market reports to illustrate the power of our technology developed for DIY primary market research of Social Media and Social Enterprise. Our software mines opinions in customers Word of Mouth to measure their engagement with brands and difference between their expectations and their experience, then predicts their propensity for advocacy. For more information about methodology used to produce this information, please visit our methodology page and/or contact the writer.

Spotlight on Customer Engagement

Brand cannot flourish without advocacy of its customers and the advocacy is not likely without engagement.  We have noticed the correlation between number of reviews published online and a number of units shipped, and therefore found it important to use for further studies. There are plenty of smartphones launched every year, but only some engage customers sufficiently to inspire them to share their experience in numbers that are required for meaningful, statistically representative analysis. The consumer exposure (i.e., advertising spent) is one factor, but not the deciding one. An example, HTC 8X, is exposed a lot more via TV advertising than Nokia Lumia 920, but the latter is reviewed online almost twice as much so far.

Samsung is the King of Customer Engagement and it is not surprising that their sales numbers are also leading the rest of the brands. More intriguing is that HTC keeps holding to the second place, considering its well publicized problems.  However the Samsung is not the only net gainer – Nokia has also seen dramatic improvement in its Social Customer engagement.

Below is a chart of the trends in Social Customer Engagement with brands year over year. As the overall engagement grows fast, only Samsung and Nokia show substantial gains capturing attention of this critically important demographics. Brand Engagement Trends

The Samsung Galaxy S III was the most often reviewed smartphone in 2012 (5,048), which is remarkable considering its late shipping date.  It is not really a surprise considering its market penetration (it is available under the same name from every major US carrier), and advertizing spent. This strategy does promote powerful Word of Mouth, but this smartphone was also launched before most of the others on this list.The Apple iPhone 5 was second (3,185) and iPhone 4S third (3,096) in engaging with customers.

Customer Engagement with Platforms

It appears that Social Customers display more loyalty to the smartphone platforms than to the brands as they describe their previous experiences with different manufacturer models, but mostly the same operating systems. That is why we also looked at Customer Engagement by platform.

 Social Customer Engagement by Platform

Again, the domination of Android is to be expected even though it came down from the prior year. The dramatic drop in iOS Customer Engagement is very surprising (30% Y-O-Y), but there is enough evidence of the substantial number of iPhone customers who decided to experience Android (9%) or Windows (14%) platforms. It is always easier to show dramatic gain from a low base, but the growth of engagement with Windows customers is nothing less than remarkable at  1,032% Y-O-Y.

Social Customer Engagement trends by Platform

Spotlight on Advocacy

In the previous reports we measured Customer Satisfaction with smartphones, and then aggregated these numbers to the brand level. This year we introduced a capability to estimate (or predict) how the Social Customers would respond to the Net Promoter Score® question, if they were asked “On the scale of 0-10, how likely would you be to recommend this product to your friend or family?”. Since we work with unsolicited customer feedback, we have no ability to ask such a question. However, when customers are asked this question their typical response is to replay their experience with the product in their minds, then decide how to answer, based on those memories. These experiences are precisely the same “raw material” that is available in online customer reviews. Our software does the last piece of translating stories and experiences into a score. It is taking common language and translating it into a scale of how strongly the “author” feels about the subject – either positively or negatively.   The chart below shows aggregated NPS for each brand that is produced by calculating weighted scores of the individual smartphones that are associated with a brand.

It would not be surprising that these numbers may substantially differ from the results obtained by a survey if you consider that Social Customer enjoys anonymity that allows them to say how they really feel about their experience. The top Advocacy rating of 2012 is shared by 2 Windows smartphones – HTC Titan II (NPS=55) and Nokia Lumia 920 (NPS=55). Motorola Atrix 2 (NPS=49), Nokia Lumia 822 (NPS=47) and Samsung Galaxy Note (NPS=45) complete the top five smartphones. The basement is occupied by LG Cosmos 2 (NPS=-68), Motorola Droid 2 Global (NPS=-55) and LG Revolution (NPS=-44). These ratings are changing quite frequently. Our software recalculates every time new customers publish their experiences online. Free access to a real-time monitoring of a product category of your choice is available on trial basis.

Advocacy by Platform

Say what you want about a shortage of applications, Windows users just love their experiences with the platform. There is not a lot of them yet (4,152), but their numbers are growing fast (1.032% year-over-year) and they are very vocal. The quarterly growth trends were very consistent and apparently predictive of growing sales  (139% in Q3).

Three out of top five smartphones are powered by Windows.

We cannot provide trending information for NPS this year as this capability was launched only a few months ago.  However, we can look at Customer Satisfaction as a proxy, to see that it improved for all platforms excluding Blackberry.

The blog format does not allow enough space for detailed reports of each smartphone customer experience analysis, or their benchmarking and root cause analysis, but such information is available on request if desired. Below is an example (a screenshot) illustrating a format of Customer Experience dashboard.

 

In conclusion, this form of Social Media market research offers compounding benefits: faster time to insight translates into advantages in time to market. Lower research costs mean more resources that can be directed into improving the Customer Experience. All this translates into serious competitive advantage. In our experience, companies that leverage customer review data not only benefit from faster time to insight, but actually find the information more actionable.