Customer Experience: Do You Really Know Your Audience?

by Eric Tsai

It’s no surprise that the increasingly social web have enabled customers to be heard while helping to improve the very products and services they’ve purchased.

As millions of people continue to search online for the product they need and the service they want, do you know how the recession has impacted your customer’s value perception?

How are you going to improve the customer experience to optimize your products and services?

Your customer may have already shifted their spending in favor of private label brands over name brands or reduce the quantity or frequency of buying altogether.

Perhaps the freemium business model has become the new standard to get your customer to try your product.

Whichever way you look at it, consumer’s perceptions of an interaction are influenced heavily from their purchasing experience, by how they research to who they trust.

To understand and improve customer experience, companies should first research their customer’s natural behaviors, and then seek opportunities to influence those behaviors through targeted strategies and niche offers.

According to a recent Nielsen analysis revealed generationally shopping habits that reflect diverse lifestyle preferences and economic habits.

Naturally, Boomers have the highest earning of any group, followed by Gen X, then Millennials and finally Greatest Gen.

What’s interesting is that according to the study, “Millennial and Gen X shoppers favor mass supercenters and mass merchandisers over more traditional formats like grocery or drug stores which remain a draw for the Greatest Generation and Boomers … Millennials today represent the largest population segment—over 76 million strong—just slightly larger in number than the Boomer segment. The two groups together represent half of the U.S. population.

From these data, marketers should apply behavioral economics to further understand the minds of their customers.

Once you understand the patterns contributing to buy and not buy, you can craft highly targeted campaigns and behavioral tracking techniques to connect with customers.

Couple that with direct customer research such as surveys or focus groups, you will end up with a customer segmentation metrics that can help you define how changes of an offer can influence the way people react to it.

However, it’s critical that a more systematic approach to behavior targeting is used when defining your customers.

This will help to make irrationality more predictable in an attempt to understand the behavioral economics of your customers.

Here are some questions you should consider to help you improve customer interaction:

  • Where does your customer go when searching for your products and services? Online communities, offline advertising, word-of-mouth, search engine, blogs etc.
  • How and where did they obtain the knowledge necessary to make a purchase?  Do they know how to find what they need?
  • When and how do customers gain access to your products and services?
  • What kind of lifestyle and overall financial situation are they in?
  • What does value mean to them? Where is the line drawn between getting a bargain vs being cheap?
  • Who and what influence their buying decision? And why?
  • What conversations are generated around the ‘benefits’ of your product and services?
  • What are some of the potential barrier to purchase? Lack of knowledge, confusion in the market, price points, product features etc.
  • Who are your competitors and how are they perceived in the customer’s eyes? What other options do they have if they don’t buy from you or your competitors?
  • In your vertical, does you customer look at brands first or price first? Is the service or support more important than the product itself?

You may consider paying for research from companies such as ComScore, Ipsos, Harris Interactive, TNS Group or Hitwise just to name a few.

If you’re not ready to pay for research, you can always conduct direct customer survey yourself or simply start gathering free data from sites like Consumer Reports, MarketingCharts, Pew Research Center or eMarkter on a regular basis.

Here is an example from the Compete Online Shopper Intelligence study that provides a high-level overview into the complete online shopping experience.

Often times, paid research firms will provide complete free report as well, you just have to keep an eye on it or subscribe to their newsletter.  Here is one focusing on eCommerce from ComScore: State of US Online Retail Economy in Q3 09


State of US Online Retail Economy in Q3 09

You can also search on sites like Docstoc, Scribd or SlideShare to find more supporting data.

Keep in mind most of the data on those sites may be dated but you can still use them to investigate current trends or form your own insights.

The take away: Because of the many factors contributing to consumer’s buying pattern and media habits; there is no silver bullet to improve customer experience.

Instead, the goal is to minimize wasteful spending while learning to invest in the drivers of customer satisfaction from desirable customer interaction. Do you know what makes your customer tick?

How Social Media is Transforming Business

by Eric Tsai

Lately I’ve been researching on how brands are using social media to improve their business.

While doing a bit of thinking on social branding, I recalled a conversation I had with a friend that just launched a web2.0 startup business.

The one advice I gave was to launch it as soon as possible without worrying too much on branding.

The idea is to deploy your initial idea and allow your users to tell you how to evolve the product.

That’s how majority of the new web startups utilize crowdsourcing with an emphasis on the power users then really listen to what they have to say.

The brand development aspect of a startup isn’t as important as the initial user experience.

It got me thinking about business models and how more and more companies are finding it necessary to transform their business model due to the economic crisis.

In addition, the shift in consumer behavior will cause brands to adjust to a fundamentally altered playing field.

In most cases brands will find it hard to transform themselves unless they’ve already got a flexible, dynamic long-term strategy that embraces change.

This means dismantling silo culture within the organization while fostering cross-functional collaboration to spark fresh thinking.

Brands that have this fluid approach are more likely to adapt to change through uncertainty.

Brand Fluidity Creates Advantage

In my previous article “The Emerging Trend of Hybrid Marketing Model,” I pointed out that hypercompetition is no longer allowing businesses to have a sustained competitive advantage, so the idea approach for brands is to have an agile business model.

This happens consistently in the tech industry where every 3-5 years technology evolves and often improves (1.0 to 2.0) leading to a need for adoption.

The key is to stay flexible and scalable because products, services, and business models will evolve over time as knowledge becomes ubiquitous which leads to the path of commoditization altogether.

Just look at the costs of electronics, web hosting, printing, or even internet bandwidth have dropped in price in the past 10 years. In fact, not only are they cheaper, you get more for less even with inflation.

By having an nimble business model, it’s possible to build brand momentum that has relevance in addressing consumer needs.

And relevance is a good predictor of short and long-term success.

However, more focus should be put on proven short-term tactics that aligns with long-term goals.

Short-Termism Is Not Sustainable

The eruption of social media has forced brands to incorporate this new tactical tool as part of the overall brand strategy playbook.

This is indicative of the validity from companies like Intel, IBM, eBay and Wall Street Journal that have moved quickly to publish social media guidelines for their employees.

In a structured brand ecosystem, social media is an unproven short-term scheme because it will continue to evolve as an ongoing, living tool that facilitates real time dynamic conversations.

I’m not denying the success that some brands are having in social media but in general most brands are still trying to figure out the arc of its trajectory in pursing the adequate usage of Twitter, Facebook, LinkedIn, and even blogs.

Brands that quickly jump on the bandwagon without defining the desire outcome are focusing on short-term solutions that are simply band-aids not cures.

Coupled with a lack of attention to the overall strategy, fundamentals, and conventional approaches to long-term value, it’s simply not a sustainable model.

What’s important is to create an unambiguous structure for brand fluidity while maintaining energy and involvement throughout the organization.

The transformation extends well beyond tactics. Brands must become more engaging by being more social, this means building meaningful relationships that resonates with their audience.

Social Media Accelerates Upstream Reciprocity

Every relationship has a purpose especially on the increasing social web. What social media demands is trust and authenticity.

I see it as doing what you promise and be consistent especially in transactional business. In a recent article “Altruism Repays the Best-Connected Individuals” from Technology Review published by MIT, stated that:

Unselfish behavior spreads through society in a way that most benefits the “hubs” in the network.

The article basically illustrated how being unselfish will benefit you at the end because those who have been helped will likely to go on to help others, then spreads through a group creating the upstream reciprocity phenomenon.

There is actually an entire study done with formulas to support the phenomenon and you can go read the “Upstream reciprocity and the evolution of gratitude” analysis from U.S. National Library of Medicine if you like.

reciprocity_stream
I found the information fascinating because it mimics the structure of a social network.

Apply this concept to social media and you’ll realize that you’re the red dot A and everyone else is dots B and C. Imagine altruism can be any form of your direct or indirect influence in social media.

It could be the content on your blog, tweets you’ve answered, or even products and services you’ve sold (ebooks, videos, webinars, web design, copywriting, consulting, etc).

The takeaway is social media accelerates both upstream and downstream reciprocity especially for reputable individuals.

In business, the act of unselfishness is another form of the Freemium business model. And this immediately hit home with me on how social media is transforming the way companies are doing business.

You can no longer neglect your reputation online because that’s where the conversation about you is taking place.

Social Transformation

Social media has evolved to be the hub for instant and viral reciprocation for any organization’s internal structure and external engagement.

The power of its reach and the openness of its platform commands the kind of transparency that challenges your core value proposition.

It really doesn’t depend on the wisdom of gurus or experts for its dynamism.

That’s the primary reason it will almost certainly withstand the “it’s a fed” challenge.

Social media is transforming businesses and it matters.

From Twitter to Facebook and every web2.0 tool in between, consumers are more and more concerned with the integrity and intent of the brands they interact with, while employees are less afraid to expose how companies work internally.

The challenge for marketers is not to merely appear engaged, but to actually be engaged – to live up to the promise and deliver.

I hope this is helpful in uncovering the implications of social media in business, it’s important to identify the fundamentals and rethink the overall picture.

I know I haven’t analyze any of the specific social media tools in detail, but you can simply conduct a Twitter or LinkedIn search to find every possible tactic and how-to’s out there by the so-called “experts.”

Why Business Models Evolve and How to Stay On Top

by Eric Tsai

A business model is the framework of how a business generates revenue and profits. While most proven business models can be profitable for a long time, it is just as important to realize that they evolve.  And when they do things could fall apart quickly.

If you’ve been keeping up with my Twitter tweets lately, you know I’ve been linking some statistics about how newspaper is going away and landline telephones are dying. Both are  examples of an older business model getting obsolete in favor of newer models.

Business models evolve for 3 reasons:

  1. Technology Disruptions – Technology changes consumer behaviors and the perception of value.  It is also the main driving force behind creating new technology.
  2. Commoditization – When a product or service lacks tangible value, it becomes a commodity that simply competes on price alone.  When a business model is commoditized, it will be forced to sell on quantity to scale the business.
  3. Competition – While competitiveness is good for most industries, excessive competition or lack of competition can result in a changing business model.

The perfect example for technology disruptions is the impact of internet on print media.  Instead of reading the newspaper, there is now a better way to get the same information faster, easier, and freely  You get the information you want on-demand and can share it with anyone while reducing paper usage.

The commoditization of cell phones is the end of landline telephones.  Today everyone I know carries a cell phone–even the elementary school kids.  I turned down an offer for a year free landline telephone service by my Internet provider Cox Cable simply because I see no value in having it unless they pay me.

Competition is the most obvious element of why business models evolve but it’s also a contributing factor to the first two elements.  Similar to the “the tortoise and the hare” story, the lack of competition can kill innovation if the market leader starts to relax and falls asleep on the competition.

A good example is the rapid adoption of Google Apps over Microsoft Office. For a long time Microsoft was at the top, in control and profitable…then came Google with its “freemium” business model, earning consumer trust and gaining user base faster than ever.  Once thought of as just a search engine company, Google is disrupting the space that Microsoft created, forcing it to lower its price, commoditizing its own product.

 

So How Do Businesses Stay on Top?

If your business doesn’t create the technology and you don’t have unlimited resources and capital, the best way is to focus on creating value for your business.

Here are some business drivers to consider:

  1. Focus on customer retention and satisfaction
  2. Build a recurring revenue stream
  3. Expand your offering and create value-added product or services
  4. Strengthen your brand and build equity in your business
  5. Build barriers to insulate competition and commoditization
  6. Execute on broader vision and take calculated risks
  7. Don’t rely on technology – become a platform company
  8. Network with strategic partners and empower your management

It takes a combination of all the above to stay near the top in a highly competitive landscape.  I will discuss them in details on later blog entries.

What are you doing to stay on top in this recession?