Fruitful

Talking with Customers

Tom commented on my last post, "In most cases, customers have no idea how to articulate their "ideal world." Also, they may say they care about something, and do the opposite."

Evelyn picks up the idea today and quotes GotoMedia, "Ask, and people will guess at what they do. Watch them and you'll know."

All this discussion around my comment, "You simply need to talk to customers to learn what they really care about." OK, I admit that I was oversimplifying, and they both have a point.  However...

I see customer insight like a vast ocean; there are shallow parts and deep parts. Saying that "watching is better than talking" is like saying that only the deep part of the ocean is really the ocean. Instead of either/or, I see the benefit of both/and.

Talking to customers is a very basic starting point, and I'm always astonished  when I find that businesses have never tried it. They're sitting in their offices staring at a picture of the ocean on their screensavers, thinking they understand it. At least get your ass over to the water and dip in your toe.

i find that in the B2B space,  you'll often find that astonishingly simple discoveries emerge just by listening to customer frustrations.  You'll learn that you've been focusing on low price when they really just want better customer service. You'll learn that they don't respond to the feature of "one-stop-shop" but they do respond to the benefit of "taking responsibility." You'll learn that your big point of difference is really not relevant to customers. Etc etc etc. (Since most of my experience is B2B, that's the perspective from which I write.)

Yes, it's very productive to watch customers. Yes, it's great to delve into much deeper levels of insight. (For a very interesting approach to immersion into your customers' world, check out Radar Communications.) But it can also be productive to start with your ABCs and grab the obvious, low-hanging fruit.

Innovation

John Winsor wrote  over on BrandShift a couple weeks ago titled "Ignore the Consumer?". He quotes a recent Ad Age article:

Companies spend billions on market research to divine the needs and wants of consumers and businesses. Yet the new-product failure rate remains high. And we’re not coming up with better product concepts by listening to the voice of the customer. Why? Maybe the customer isn’t worth listening to.

John comments:

Innovation can spring from any part of the company-customer community, but ONLY if the support and encouragement for this environment exists at every level of the business.... When involving customers, be sure to think about inspiration and not reliance.

My personal philosophy on customer involvement is this: Find out what they want. Then figure out how to deliver it. Customers should be involved in "need identification"... or as John puts it, they should serve as the inspiration. But it's the company's job to figure out the best, most cost-effective solution to that need.

I was thinking about innovation this morning when making my breakfast burritos. I'd purchased Mission brand tortillas... ugh. I'll never buy them again. Not because the tortillas taste bad, but because they didn't put plastic sheets in between each tortilla so they wouldn't stick to each other. You can just picture the brand manager's scratching his or her head, trying to find out why they're losing market share... doing taste tests and evaluating product placement. And all the while, it's because of some silly little plastic sheets that make customers' lives easier.

Two insights from my Mission tortilla fiasco this morning:
- Brands that aren't in touch with their customers miss out on small but critical innovation opportunities.
- Brands that seek customer insight only along predetermined lines of thinking (like taste tests) can easily miss out on the real opportunities (like plastic sheets).

Have you connected with your customers lately? Have you allowed yourself to be surprised by a need you hadn't foreseen?

Ikea, Part 2: Course Correction

A few days ago I commented on a Guardian article about Ikea in which I focused on the strength of their vision. Today I wanted to revisit that article because it brings up an interesting issue: what is the right balance between following your vision and getting feedback from customers?

The Mållen clip doesn't look like much, and yet it represents, in microcosm, a vital Ikea strategy: the way the company decides what you need before you've even realised you might need it. The clip, Vinka explains, is for hanging up magazines in your bathroom: you attach a magazine to the metal clip, then hang the rubber ring over a towel hook. It had never occurred to you, presumably, that you might want to hang up magazines in your bathroom. But Ikea had already decided that you would. And the brilliant but scary part is this: once you've seen a row of magazines hanging up in one of Ikea's showroom bathrooms, each neatly suspended at 45 degrees from a Mållen clip, it takes a will of steel not to find the magazines in your own bathroom, now you come to think of it, almost offensively disorganised. And so you think about purchasing the Mållen clip. At which point another Ikea sales tactic kicks in: the clips only cost 90p for three - so cheap that it's hardly worth not buying them, just in case, especially if you've travelled a long way to get to the store.

You did not, in other words, come into the store with a need that you wanted to satisfy: you came in, and then you got both your need and the means of satisfying it handed to you simultaneously. You came looking for a sofa, say, but you came out with a sofa and a trolleyfull of impulse buys. Theodor Adorno, the eminent German social theorist, called this "retroactive need" - and it was, he argued, a key means by which capitalism perpetuated itself, while shoring up the illusion that what was being offered was individualised choice. Because it so often decides what you're going to need in advance, Ikea does much less market research than many companies, and some strange things have happened as a result. Shortly after the company opened its first north American outlet, in Vancouver in 1976, employees noticed that an inexplicably large number of vases were being sold - so many that they could barely keep up the supply. Eventually they deigned to ask their customers why; it turned out that they found Ikea's European-style glasses too small to drink from.

This brings up the concept of co-creating value with customers. There's a wonderful balance that can happen when a company has a brilliant vision, yet is no so arrogant to believe that they have nothing to learn from their customers. When companies take the time to understand their customers and get feedback, they have an opportunity to make course corrections... much like a rocketship headed to the moon must make minute course corrections to ensure that it reaches its target.

Microsoft is listening

Microsoft is starting to move beyond product-centricity and learn more about its customers. This article in inc.com describes the company's foray into the minds of small business owners:

Many companies talk about getting close to the customer, but Microsoft pushed this idea to the extreme when it hired Nelle Steele to show up at 5 in the morning at the Milwaukee home of Tim Tucker. The owner of Air Engineering Inc., a supplier of industrial air compressor parts, is Microsoft's model customer. Steele's mission was to observe Tucker at close range, arriving as soon as he stepped out of the shower, then shadowing him until his workday ended at 10:30 p.m. Steele, a cultural anthropology Ph.D. student on leave from the University of Wisconsin, is one of five anthropologist-ethnographers (and the only one focused on entrepreneurs) that Microsoft hired full-time to conduct a field study. Called "Dawn to Dusk," the study documents the work habits and thought processes of a species the software behemoth had never before tried to understand: owners and employees of small businesses.

In tailing her quarry, Steele discovered, to her surprise, that small companies kept vital information in disconnected places -- what she called "data silos" -- from scribbled notes on scraps of paper to files on a PC that could be accessed by only one employee. This made it harrowing to try to answer basic questions like, "How did we do in the Northeast last quarter?" "I saw the pain that data silos caused day to day," says Steele.

Her work is part of Microsoft's $2 billion research and development effort aimed at convincing these tribes of technological primitives to join the modern world. While most of that is earmarked to improve products, a lot of it is going to spreading the word. That's in addition to two recent acquisitions -- Great Plains and Navision business management software at another $2.4 billion -- to enhance its offerings for small business. Even for Microsoft, with $50 billion in cash in the bank, that's a major investment. Microsoft has started trying to care about these customers.

Stimuli and Inputs

At BusinessPundit, Rob bemoans the interference of the day-to-day work grind with creativity:

Over at FC Blog there has been a lot of discussion about ideas and how to generate them. I've been ruminating on some of the posts and I realized that I don't feel nearly as creative as I used to feel. I think my creativity has been killed by my daily grind. Almost everything I do right now is focused on the operational aspects of a new business. Since I started these long days focused on getting everything in place, I haven't had time to do the things I used to, and I think those things helped make me creative. So what I would like to add to the debate is this question: Are we uncreative because we simply don't have the time? Seriously, creativity takes work. It takes varying stimuli and inputs. I don't have those right now. My thinking has moved from dynamic and non-linear to linear and one-dimensional. I can tell. It really sucks, but I can't break it until I have time to stop this one-track thinking process I have of growing a new business. It's a catch-22, because I'd probably grow the business better if I used some creativity.

I've been thinking a lot about this topic, but more in context with what I can offer my clients. Here's a heads-up for my blog friends... I'm renaming my company and repositioning myself out of the branding game. Stay tuned; I'll hopefully have a new web site & corporate ID in a couple weeks to share with you. I decided it's time to follow my own advice! As many of you know, I've been struggling with the word 'brand' for a long time; there's too much confusion about what it means, and 'branding' is too crowded of a market. But more fundamentally, most execs don't think they have a branding problem. The issue they usually face is being too close to their own businesses... getting mired in operations and 'the way we've always done things.' They'd all like to be creative about where to take their businesses, but as Rob points out, that can be a real challenge.

I think the biggest stumbling block to creativity is not time per se, but finding the right "stimuli and inputs' that generate creative thought. If I can bring that to the table -- not a brand neatly wrapped, but completely new perspectives on their businesses from the eyes of customers, employees and the marketplace -- then I can work with my clients to co-create new directions and opportunities. The process might produce a brand strategy, a new way to go to market, a new product idea, a way to reduce churn, or simply a more effective sales presentation. This is what I truly have fun doing in my work; finding the 'ah hah!' that changes the way my clients see their businesses. More to come on this topic...

Smart Questions

Today's Reveries offers a terrific example of effective customer research:

"Medical equipment makers typically ask surgeons, 'How can we build a better stent?' and then get the answer, 'You should make it more flexible, easier to see and stronger.'" However, Dr. Hunter and his team asked a very different question, a question that led directly to a highly lucrative innovation. The question was: "What does the body do to these stents and why do they fail?"

That question yielded a very different response. The real problem with stents was not so much that they were inflexible, weak or hard to see, but that, over time, scar-tissue tended to grow over them, reblocking the artery and sometimes requiring "repeated angioplasty." For that problem, Dr. Hunter's team arrived at novel solution.

Dr. Hunter and company, following two years of tests, decided to experiment with coating stents with paclitaxel, a drug used to prevent the recurrence of tumors... After seven years of tests on animals, Dr. Hunter had a stent with just a three percent failure rate - versus 20 percent for uncoated stents. When its stents entered the U.S. market last month, "they reached $98 million in sales in their first 18 days."

Neuromarketing will never replace the value of knowing the right questions to ask in the first place.

Neuromarketing Continued

Rob and Jon are both surprised that I'm not a fan of neuromarketing. I read Kurzweil and sci-fi; I'm fascinated with nanotech and other future technologies... so how can I be negative about neuromarketing?

When people misuse low-tech options, it's quite probable that they'll misuse newer high-tech options. I'm not averse to new technology; I am averse to making it available to users who don't often understand the basic principles.

If I'm in a focus group and you offer me a choice between a snake, a roach and a June bug, I'm quite likely to pick the snake. Not because I'm a huge fan of snakes, mind you... I just think it's better than the alternatives.

That's what happens in focus groups, whether for an advertisement or a new product design. Few companies bother to actually initiate conversations with customers, build relationships with them, and involve them on the front end. Rather, they come up with some ideas while sitting around a conference table and decide to 'test' those ideas with customers. Hmm.

Now enter neuromarketing. Yep, it magically confirms that the snake "registers as a "strongly preferred choice"—the goal of every advertiser—the action switches to the right parietal cortex, above and slightly behind the right ear." And then the marketers wonder why the snake isn't flying off the shelves. Maybe it was the packaging? Or should we have made the font size bigger in the ad?

When businesses begin to learn the right process -- involving the customer in the initial creation -- then I have no problem using a new technique that is effective in context to that process. BTW, I'm not a fan of focus groups either, for all the reasons Zack mentions in his above-referenced post on neuromarketing. I find it most effective to talk one-on-one, or to get 2 or 3 people (max) in a room to have a real discussion. In the book "How Customers Think" mentions that 8 in-depth one-on-one interviews are the informational equivalent to 150 quantitative responses (my stats are probably off; I'm going from memory here.) When I was an account planner working on an apparel account, I went into people's homes and closets and learned first-hand what they wore and why. There are plenty of ways to understand your customer and learn -- before you test -- that a cat is preferable to a snake. Oh hey, how about starting a weblog and getting comments from customers? Now there's a novel idea!

Neuromarketing Not So Hot

Zack Lynch of Corante's Brain Waves talks about neuromarketing last week (old news, I know, but I'm now getting caught up on my blog reading):

Either corporate America doesn't believe the hype surrounding neuromarketing or their marketing departments don't understand what "neuromarketing" means. My bet it is more the latter than the former. Regardless of the reason, the lack of interest in neuromarketing caused the first neuromarketing conference to be cancelled this week...

If you really think about it, how many marketing or advertising executives do you know that have a background in neuroscience. As I've said before, as brain imaging advances, neuromarketing will become a significant growth sector in years to come as the trillion-per-year advertising and marketing industries leverage brain scanning technology to better understand how and why people react to different market campaigns.

I'm going to disagree with Zack and with Rob at BusinessPundit: I wouldn't have signed up for the conference because I think neuromarketing can be both pointless and dangerous.

Rob refers to the "Pepsi Challenge" given in an MRI scanner, and the results were no surprise: people liked the taste of Pepsi but bought Coke. Since the MRI scan didn't tell us anything we didn't already know, is it really worth the money? I'm not seeing the value here. We can look at revenue and market share data to tell us what consumers are purchasing. Chances are, listening to your customers will tip you off as to why they're purchasing one brand versus another.

Yes, it's interesting to see physiological responses to campaigns. Yes, it's probably more reliable than focus groups. But I think we're missing the boat here. First, campaign testing isn't that necessary if you've done your homework, understood your customers' needs, and crafted a great strategy on the front end. Second, this is reinforcing the fallacy that advertising is what sells product. If I'm Southwest Airlines or Krispy Kreme or Apple, why do I need neuromarketing to tell me that a TV spot A is more interesting than TV spot B when I have customer evangelists who are actively promoting my business for me? I'm not saying that advertising isn't important; there are plenty of case studies to demonstrate that advertising helps to build brands (especially in packaged goods). However, tactics like neuromarketing serve to reinforce the impression that 'if we can just get our ad campaign right, all our sales woes will be resolved'... as if advertising can somehow compensate for a lack of differentiation, perceived value, or customer experience. Advertising is not a cure-all. A great neuromarketing-validated campaign does not a strong brand make.

Domain of customer value

Chris Lawer blogs about the necessary mental shift from "company as value-chain component" to "company as player in customer-value network":

Quite often, the first question managers need to address is quite simply, what domain of customer value are we operating in?. This is then closely followed by the second question, how we can adapt to identify, design and deliver mutual value within the new individual-centric customer space?. Unfortunately, many organisations are so risk averse that they never even get to the second stage....

The first question is terrific and absolutely essential. In order to answer it, managers must understand what customers actually value. Most managers make assumptions about what customers value (and we all know what 'assume' means...)

I'll take my telecom client as an example. Management assumed that they were operating in the "saving money" domain of customer value. However, customer research revealed that they should be operating in the domain of "make me feel important." Now with a new tag line of "We hear you," the company is answering the second question and making operational shifts to deliver on this promise.

In what customer-value domain is your company playing? What changes must be made to better align your operations with that domain? What complementary companies are also in the same domain, and is there a way to partner with those companies to deliver even more value?