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New Paths to Customer Insight
Company executives have gathered customer intelligence from multiple sources for ages: demographic data, survey feedback, and the like have long been mainstays for marketers. But today it is becoming increasingly important to not only look at that data holistically, but also to look further for that insight. Blogs, online communities, contact center interactions, and more reveal information on customers' feelings -- good and bad -- about your products, service, customer experience, staff, and brand image. Mining those channels is a start, but are not enough.
Companies need to combine that information with insight into market trends to predict what customers will need or want in a year, or even five years, from now to stay a step ahead of their competition. In "The Evolution of Customer Intelligence: What's the Missing Link?" in today's issue of Return on Customer, we discuss how companies like Peet's Coffee, Samsung, and Nokia are doing this -- and we cite a study that points up the urgency for companies to extend their customer insight strategies.
This topic also came up earlier this week at Oracle's Open World customer conference. During his keynote, Cisco president and CEO John Chambers said that the ability to catch market transitions three to five years before they're obvious is imperative, because if you wait until they're happening you're too late. Chambers predicted what he feels are the next wave of market transitions to watch for. Among them, he cited the growing power of the human network, customer experience (including users defining that experience), collaboration, and the blurring of content/device boundaries.
How do you see customer intelligence evolving?
Blogs are a new and generally untapped pathway to customer insights. Several companies, including mine, have developed tools for analyzing and extracting insights from the blogs. For many traditional marketers this may seem an unscientific pathway, but believe me the generated data is amazing.
Adding on to what Evan has written about "customer silos" in big organizations, i must say i cannot agree more. Its hard to delight customers if the whole customer journey is owned by different parts of the organization.
Do we tell our potential customers where to go to find out more about our products, or do we assume they know where to go?
When the potential customer decides to start a relationship with us, do we make it easy for them? Or do we just sit at our mighty chair and let our customers experience the often inconsistent and sometimes frustrating experiences?
When the potential finally becomes our customer, do we know them enough to give them the kind of service they want? Does it then become easier to do more business with us?
These are all fundamental questions that everyone faces in a big organization? However, given the structure of most organizations, its hard to tackle the challenges of these questions.
Like most have said, product and services in most industries have become commodities, factors such as pricing & convenience are still very important, but how then do we differentiate from the rest? The first step is to make it easier for customers to do business with us...
One of the things I learned a few years back as a caregiver to my (now departed) grandfather was that the speed of change is more significant than the change itself. He was born when the automobile and electricity were just being introduced. Trying to explain to him that I could fire up my wireless laptop to research and order anything was mind boggling.
Most businesses assume that some degree of change will take place in their segment - but only those who take predictive risks to stay with or ahead of the speed of that change will succeed. Apple has taken risks from Day 1. HP/Compaq and even Dell are trying to (appear to) keep up.
I previewed a vendor's online mailing list database yesterday and noticed that there were a multitude of filters addressing predictive and inferential behavior. Those psychographics are more valuable than past patterns for the marketing of many products and services.
This issue can’t even be properly addressed in a dissertation. The problem is systemic.
Many analyses today focus on gathering data without customer involvement or even authorization. Some include so-called loyalty programs aimed only at increasing customer’s switching costs and therefore manipulate the customer and are considered spider-fly programs. Most companies have simply not started to even think about developing methods for co-developing value with the customer. The adage, “You don’t know what you don’t know” is prevalent in the corporate world. The root cause is that companies do not truly value customers as assets to nurture but only profit objects to be exploited.
As they say, “The head leads the way.” Think Enron, Anderson, Worldcom etc. Too many companies focus on short-term bad profit that extracts value from the customer instead of long-term good profit which delivers value to the customer. Notice how the customer interface with companies has changed over the last 15 years? If companies truly valued customers over profits (by reducing internal costs) do you think that IVR systems would be the norm or when you did get in contact with someone at an outsourced call center they had no access to information nor were they empowered to supply a solution. Not to mention you couldn’t understand them.
As far as customer intelligence, it is my belief that those companies left standing will understand how important transparency within the entire organization at the moment-of-truth interaction point is with the customer. This also includes an innate understanding of the causal links between service quality, value, satisfaction and customer behavioral intentions such as loyalty (positive word-of-mouth and repurchase intentions). Too many organizations focus on satisfaction and use it as a shield of achievement. Bunk! Satisfaction is a transactional construct and not the most important metric since the vast majority of satisfied customers will switch for a perceived “better deal.” Loyalty is the metric of focus but many companies are not loyal to their customers and therefore do not deserve loyalty. Loyalty is not enough though. To truly get the pulse of emerging strategies a mixed-methods approach must be implemented with a heavy emphasis on the qualitative aspects and face-to-face interactions with customers. This is built on a proactive relationship involving trust. How many customers really trust their vendors? Thank you Mr. Porter of the positioning school of strategy for the Five-Forces model that focuses on the industry and not the customer and treats customers as something to be managed like suppliers. Who cares about the industry? What if all the CEOs and companies were lining up to jump off the bridge or at least exit with golden parachutes (the norm troday). Focus on your own customers. The future becomes more in focus when the shackles of the past are eliminated and most organizations, like people are adverse to change.
All levels of management must have the commitment and skills to break from the past comfortable tangible product paradigm where the focus is on product quality where quality is based on specifications and removing variability from the system to an intangible service paradigm where only the customer determines service quality and all other assessments are irrelevant. In the service paradigm flexibility fluidly interacts with core processes to accommodate emerging strategies from the external customer environment. In fact, the customer environment should no longer be thought of as being external to the internal organization environment but transparent therefore reducing transaction costs as defined by Ronald Coase? Management must also be able to get the right people on board by understanding the difference between employees with affect, continuance or normative commitment. Which one is appropriate for each organizational process? Which one should be interacting with customers?
As one research showed, in the three years preceding 2005, nearly 40 percent of the top 2,500 global CEOs were let go. The primary reason was an inability to execute. Why? They did not understand the reality of how their organizations functioned, how the market actually performed or how their customer’ needs can change almost daily. How many CEOs can tell you the most important service quality attributes of their customers segmented by demographics? How many CEOs know what a NPS is? What is theirs? What is their defection rate? Why is it what it is? How many approaches are their in their corporate listening system? Much more importantly, how many know the rate of new prospective customers that don’t become customers and why? How many customers did the CEO talk with this month? Have they taken calls at a call center? Do they not have the answers to these questions because they only measure what comes through the cash register and hits the financials? CEOs that cannot answer these questions or do not have a corporate sponsored program in place to get them are doomed to be fired like the other CEOs or, worse yet, drag their companies below the sustainable advantage line (blue oceans) into the commodity dog-eat-dog (red oceans) environment where a short-lived cost leadership position is the only viable strategy. Today you can’t be content waiting for the early adopters to fail. You have to build sustainable strategies intertwined with a strategic intent that is focused on the customer (employees and investors are customers too). Not everyone can be a Ritz Carlton but they can be the Ritz in their specific context. This is not rocket science stuff but it will require a dismantling of the corporate structure. Those that cannot or will not accept and internalize the concept that the customer as the actual provider of their paycheck will not survive. The bottom of every paycheck should say, “This check is provided by your customers.”
Companies that survive will have developed communications channels that let them know in an iterative fashion what their customers are feeling and will have established accountability for the customer experience. It’s not all about the numbers, it’s about the relationship. Tall order you say? Impossible? What is the alternative in this ever-changing global market?
It can be done.
John G
In response to ‘The Evolution of Customer Intelligence’, I see generally see one major organizational issue in working with Fortune 1000 companies that prevents a more comprehensive, holistic understanding of the customer: silos.
Many corporations continue to operate as business unit or functional group silos with little cross-functional co-operation or sharing of customer insights. In some organizations we have worked with, the philosophy is that ‘everyone owns the customer experience’. While admirable in spirit, in reality it means that no single part of the organization is fully accountable for understanding customer behavior and figuring out ways to influence that behavior in the future.
The irony is that smaller companies (e.g. fewer than 20 employees) very often have a much better grasp of exactly what their customers need and expect, because they are inherently more customer-centric by virtue of size. There isn’t the bureaucracy, the politics, the segregation of each functional task from the overall product or service experience, and other ‘stifling’ factors that exist in the larger companies. However, the smaller companies unfortunately also often lack the budget that their larger brethren have to effectively capitalize on all the insights they generate.
Ask any customer and they will tell you that a company has all the information they need to fully meet the customer’s expectations. It’s the companies that need to get their act together, organizing themselves around the customer first, and not their product or service.