May 20, 2013

Location Revisited: Marketing’s cornerstone takes on a new paradigm

foursquare_map

Location, location, location.

The concept immediately brings back to mind college marketing classes and textbooks; clear lessons from industrial age distribution models. The focus has slowly faded away, however, over the past couple of decades with the invention and growth of a digitally connected, flat economy in which we can buy anything… from anyone… from anywhere.

Except… for most of us, where we are is actually a huge driver of what we do. Mitch Lieberman, has recently been placing more emphasis on context. For a few years now, I’ve heard and seen statements floating by my activity streams like “Content is king, but context is queen”. Robert Scoble and Shel Israel are in the process of writing about the “Age of Context”.

They’ve all picked up on the fact that we’re moving from an era of BIG, CRUDE, AND MANUAL TO SMALL, MEASURED, AND AUTOMATIC.

All of us, in our personal and professional lives, are desiring requiring more relevance, more alignment, and more accurate filters to help us navigate the bombardment of information we encounter in our daily lives.

Relevance. Context. All of a sudden, location matters again. Though, it’s contribution to customer behavior is manifesting itself in a different manner.

Even with the dramatic rise of e-commerce, most consumers still purchase from brick and mortar stores. According to a 2012 study:

Though consumers are using their mobile devices more than ever to find deals and research products, they still love their brick-and-mortar stores, a new study shows. Despite the proliferation of devices, shopping applications and growing consumer comfort with the mobile channel, the vast majority (90 percent) of both online and offline shoppers involve a store visit in many of their purchases.

Until recently, e-commerce and brick and mortar business models have been largely detached. Even for many major retailers, stock, pricing, returns were not connected. That era is giving way to a connected experience where consumers interact with brands across channels (brick and mortar, 3rd party retail, e-commerce, social), with the increased expectation of a unified experience across them all.

If I’m at the beach, please don’t send me an offer about printer cartridges. If I’m out to dinner, an offer about a local gelateria is much more likely to get opened than an email about gardening services.

A growing sea of online technology companies allow our location patterns and habits to be tracked (and hopefully used for mutually beneficial purposes).

Companies like Facebook, Foursquare, and Yelp allow users to check in, sharing with their network where they are. At the same time, they’re also sharing their information with a growing cadre of location based advertisers. By knowing which areas consumers frequent, more relevant ads can arguably be served. In addition to understanding the sum total of checkins and locations, patterns can be detected, and psychographic, sociographic, and demographic profiles can arguably be constructed to recommend offers that are relevant based on previous behavior.

foursquare_map

Some consumers can’t be bothered with checking in, however. It takes time, effort, and giving away information to “big brother in the sky” isn’t all that appealing to most people, especially when there’s limited value in return.

Other emerging startups like PlaceMe, Banjo, Sonar, Friday, and Highlight automatically tracks your whereabouts and the whereabouts of others near you, offering serendipitous and/or more targeted “people discovery” opportunities.

But, without opting in or participating in any of the above, those little smartphones in our pockets are already tracking and providing plenty of information to the mobile platform vendors and application providers.

This controversial 2010 Wall Street Journal article highlighting an interview with Google’s Eric Schmidt provides clues related to role location plays in the future of context, commerce, and marketing.

“I actually think most people don’t want Google to answer their questions,” he elaborates. “They want Google to tell them what they should be doing next.”

Let’s say you’re walking down the street. Because of the info Google has collected about you, “we know roughly who you are, roughly what you care about, roughly who your friends are.” Google also knows, to within a foot, where you are. Mr. Schmidt leaves it to a listener to imagine the possibilities: If you need milk and there’s a place nearby to get milk, Google will remind you to get milk. It will tell you a store ahead has a collection of horse-racing posters, that a 19th-century murder you’ve been reading about took place on the next block.

Merging location data with transaction data

Until now, the emerging benefit and value of location data has struggled to find it’s legs in a meaningful way. However, when I was offered a discount on a purchase from American Express last year if I connected my AMEX account to my foursquare account, I immediately saw the benefit for AMEX. They already know what I spend money on. If they also know where I go, they can find all sorts of things out about me.

  • What % of my spending do I put on my AMEX card?
  • By merging transaction, demographic, and geogrpahic behavior patterns, they can begin to construct a psycho-graphic and/or deeper socio-graphic profile of me
  • By understanding who I am connected to and/or communicating with, they can potentially begin to understand purchasing behaviors within my network
  • Finally: the unknown. Like many emerging big data initiatives, finding unforeseen patterns in data models can provide new unforeseen opportunities.

Even without real time location data, merging data collected from the digital realm with other data sets presents new opportunities for contextual marketing. From AllThingsD:

Ticketmaster is doing all the normal stuff you’d expect to help users share with each other when they buy tickets to events. But it’s also the only partner that I saw mashing up multiple Open Graph applications.
If you listen to music on an Open Graph application like Spotify, Ticketmaster automatically detects (with your permission) and tells you when those artists are next playing in your town. Usually these apps depend on which artists you “Like” or explicitly follow. It seems smart to use real, dynamic listening data to figure this out.

VinTank is working on a technology that indexes preferences and buying behavior of premium wine lovers, sends alerts to wineries in Napa Valley when a potential fit for their products are nearby, allowing them to send a message or offer that should offer high appeal for that person.

However, Jack Dorsey’s Square, which is in the process of disrupting the world’s commerce payment systems, is approaching location based marketing from the opposite end of the spectrum, and thinks they’ll actually be able to make location more useful. While many first generation location apps vendors know where you are and perhaps what you’ve done, they typically don’t have any data on what you purchased. It’s the merging of location, transaction, and social data that some might describe as the next holy grail. Creating a recommendation engine based on financial transactions, and using location as a contextual filter for commercial transactions holds significant promise.

Deeper customer understanding at the center

At the center of customer focused innovation is understanding your customers better.Understanding where people go, and what they buy when they’re there will be a significant input for next generation commerce.

The data being collected by the payment gateways (Mastercard, Visa, American Express, Square, PayPal, GoPayment) is arguably more valuable than the transaction fees they are collecting. More intelligence is being built in to the purchase and sales cycles, respectively, and at the center of both sides are recommendation engines. Consumers are coming to expect Amazon.com-like suggestions that make their life easier and shorten the investment of discovery and analysis.

Understanding transactional and behavioral patterns and merging them together will arguably allow marketers to offer more precise offers and interactions based on a deeper understanding of their customer’s current context.

  • How is your organization leveraging location data?
  • What are the primary barriers you see?
  • How will privacy issues come in to play as technology advances?
This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet. I’ve been compensated to contribute to this program, but the opinions expressed in this post are my own and don’t necessarily represent IBM’s positions, strategies or opinions.



Is the customer always right?

If we truly believe in customer “relationships”, then the concept that the customer is always right is unfortunately flawed, because very few people are ALWAYS right. Customers can be irrational, selfish, irresponsible, and even unprofitable.

As in any relationship, sometimes there is mis-alignment of expectations and lack of a compelling value proposition for both sides. The opportunity for value exchange changes and evolves over time. The duty of an organization is to continually listen, show empathy, gain a deeper understanding of needs and jobs, and provide a product or service offering that provides significant value for their customers, or better yet, provide a platform for customers to co-create their own products and services, and support each other in their mutual journeys and jobs to be done.

To fail to recognize that some customers are simply unprofitable is to deny the truth. In some cases, it may make sense for the organization, in their best interest and in duty to their shareholders to first attempt to re-establish relational guidelines in order to achieve a better balance for both parties, or in some cases, even “fire customers”.

Understand that the context I am speaking of is one of an endless and tireless pursuit to create value, to delight customers, and to create a community of engaged, happy, and enthusiastic customers. The reality is that each of our respective organizations won’t be a fit for some customers.

In service to those who are engaged, it may make sense to re-allocate human capital away from those who are unprofitable for the organization towards better servicing those who are.

Before anyone screams at me about how customers are about more than profits for the organization, I agree. The challenge is that profits today are only measured in monetary currency. These current limitations ignore things like referral value, or recommendation value.

In short, it’s important to listen, serve, and respect customers. However, not all relationships are equal nor mutually beneficial.

What will CRM look like over the next 5 years? Software Advice Interview Highlights

Innovantage Logo

Ashley Verrill – a expert with CRM reviewer SoftwareAdvice.com – interviewed me recently for the second edition of CRM’s Next 5 in 5. This report was an update from predictions five of my industry cohorts made about technologies that will change CRM in the next five years. Special thanks to Ashley for the conversation and for providing the edited snapshot of our discussion below:

Ashley: You’ve talked a lot about how the importance of advancements relative to contextualizing CRM — such as Mobile, Big Data and Social – are a little over amplified (though still important). From your perspective, are there any products or services out there that have actually made real innovation and change to how we use CRM systems?

Brian: Digital networks have significantly transformed how we as people interact with other people, information, and increasingly devices and machines. More and more of our lives are moving into the digital realm. Where we are. What we are doing. Who we know. What we say or think or like. The technologies that capitalize on this increasing wealth of information are the ones that will endure past the hype. These innovators will advance our capabilities in three primary ways:

  • One, they will elevate our prospect and customer discovery capabilities via Linkedin, Twitter, GooglePlus and other niche social communities. These services listen for conversations from those that might be interested in your products or services.
  • Next, we should expect significant advancements around harnessing data for customer understanding and deeper segmentation. These products aggregate digital and social signals with profile information to provide an added layer of context and the opportunity for new market segments. I also know of a few organizations that are experimenting with using social influence to prioritize customer service response.
  • Finally, I see huge opportunity in the customer communities space. Companies like Lithium, BazaarVoice, Get Satisfaction, and Jive are a few enabling such brand-owned communities. Despite mixed fanfare, there are plenty of case studies proving return on investment through reduced customer service costs, increased word-of-mouth marketing, and invaluable insights from listening to thousands of interactions.

 

Ashley: In the past, you’ve talked about how these trends are bubbling up around the edges. What’s stopping them from becoming mainstream now?

Brian: Organizations and individuals are wrestling just to understand what’s happening, let alone adopt. We’ve never had access to so much data about everything – from weather patterns, to location data, to spending habits, to internet browsing behavior. The reality of it is that most of it is just noise and not useful to us. So, as quickly as we race to gather data, we realize it’s hard to filter, and it’s hard to aggregate into meaningful ways.

 

Ashley: So are saying it’s more of a cultural gap that technical?

Brian: There is a disconnect between the way organizations have worked for the last 80 or 100 years and what’s increasingly possible. In general, few organizations are built to identify, consider, plan, and take actions that fully leverage these new capabilities. They work under an industrial age model which requires relatively static models of research, investments, and feedback loops, a stark contrast to a real time, agile, flat organization model that is continually in a state of evolution. The retrenching and adoption often requires new management structures, new people, new mindsets. It’s disruptive and disruptive is not always convenient or beneficial.

In most situations, we’re talking about significant shifts in culture, management practices, processes. It will take some time.

 

Ashley: : You wrote an article about optimizing the full spectrum of customer interactions. Have you seen technologies yet that effectively enable this sort of communication optimization?

Brian: I’ve yet to see any technology that can do this the way it should be done. There are many that are seeking to build, but many from an analog / pre-digital revolution core. In addition, many organizations are just now still trying to merge interactions across channels.

Merging web with phone and email for many organizations is still quite a challenge, as it means combining data from five, ten, or even 25 customer databases. Most companies that I’ve seen make progress in this regard have a central hub that gathers all data into a unified profile and enables multi-channel communication from there.

 

Ashley: So are there any innovators in this space you see?

Brian: Look at what Google is doing with Google Now. They are merging experiences across screens and channels and venturing into the world of predictive analytics, surfacing information that you may not even be aware that you want.

Recently, information taken from my Google searches or web activity or my email threads are leading to contextual “cards” showing up on my Android phone. Anything with a digital footprint can be tracked. Remember, as more and more of our lives take place digitally, the potential to create compelling and unified omni-channel experiences becomes more pronounced.

 

Ashley: I wasn’t as convinced by this prediction in last year’s CRM’s 5 in 5, but Lauren wrote about Brent Leary’s opinions that CRM integration with television was on the horizon. Have you seen any advancements on this front?

Brian: There are a lot of studies coming out about dual screening or multi-screening. People are sharing, reading, researching, playing games while watching TV. That is a fact at this point and I believe the trend is here to stay. If you consider all that the web has been able to do with cookies and other tracking technology, the re-targeting ad market, google’s relevant search results, it’s not much of a stretch to imagine that same thing on another screen with media.

 

Ashley: What form do you see this interactivity taking in the next few years?

Brian: Over the next few years, I believe we’ll see more and more interactive integration with TV’s and the continued evolution of Smart TVs. Seeing what your neighborhood, city, friends are watching, optionally tracking their comments on the TV itself and/or your connected device is likely coming.

 

Ashley: Sounds like Spotify for television. How does this translate into a business opportunity?

Brian: Obviously when content producers and advertisers gain access to this data about what you are watching and sharing with friends, they can build and present more relevant content and offers. Think like Netflix and Amazon’s suggested titles or “what to watch next.” This will start with contextualized ads, then evolve to include product placement. I’d say it’s inevitable.

 

Ashley: Last year and again this year, we talked a lot about unified communications with Paul Greenberg. He believes Microsoft is really the only player that could make an effective move on this front by combining Skype, Sharepoint, Assure, and their other communication properties.

Do you agree with Paul that Microsoft is the only one that could potentially make this UC move, but won’t this year?

Brian: I’m not sure that I agree that Microsoft is in the lead here. Maybe in the context of today’s major CRM players, that is a true statement. But companies like Cisco and Avaya and other telecommunications are far ahead on some of those enterprise class technologies. Google is another one to watch out for. Gmail and Google Apps continues to grow, with GooglePlus and Hangouts. They are moving into that foray in a very interesting way with most people not aware of where this could go.

The others are just a couple of acquisitions away from making a play in the UC space, which I’ll likely write more about soon.

 

Ashley: Last year, we quoted Brian Solis talking about how gamification will move beyond marketing for loyalty. In the past year, I’ve seen a lot of development in gamification as far as using it with social enterprise apps to foster collaboration, which is something you’ve also talked about.

What specific technologies have made the most headway in gamifying the social business in the past year?

Brian: I think gamification is a widely misunderstood and misused term. At it’s core, it’s simply about incentivizing human behavior. Bunchball and Badgeville are clearly the two leaders in this emerging space, especially as it relates to incentivizing behaviors on internal social networking platforms. I do think that we’re in for a lot of trial and error here.

 

Ashley: Why do you say trial and error? What still needs to be figured out?

Brian: In my observation, it seems that we’re still a ways off from identifying and incentivizing real valuable digital actions. Most of the case studies that I’ve seen to date are simply incentivizing participation, which is a start, but not very meaningful in the long run. When you’re talking about human behavior, there are a lot of psychological and sociological factors at play. Most technologists and even managers likely don’t have the domain knowledge they need to leverage gamification techniques to the extent that they could.

As I laid out in the post you referred to, I believe there’s plenty of opportunity to begin to present the right challenges to the right people and incentivize them to take the proper actions.

 

Ashley: Finally, are there other innovations we haven’t talked about that you seeing changing CRM as we know it in the next five years?

Brian: I think we’ll see more automation in general. We’re seeing this become more mainstream from a marketing perspective. The ability to track behaviors and create a series of if/then trees that help to to move prospects along the customer journey will likely continue to play a more important role over the next few years. Extending the data set to multiple channels will lead to more discovery about customer behavior, and how to respond in a way that resonates.

At the same time, I expect we’ll likely see continued focus on understanding and improving the customer experience. In a world that quickly races towards commoditization, “experience” becomes more important for customer loyalty, retention, and mindshare.

 

Ashley: What about the “X” Factor. What’s still unknown that could inhibit any of these developments?

Brian: Security and privacy are big unknowns in all of these things that we’re talking about and may be the single biggest factor in changing the trajectory of how we as a society and as corporate citizens adopt and implement these new emerging technologies.

Everybody’s talking about Customer Experience. Customers still not getting what they need.

Performance_Gap

Lots of executives, marketers, customer service folks say they work for a customer focused organization. They say they care about the customer experience. According to a myriad of research reports, blogs, tweets, podcasts, and whitepapers, I see an increased focused on customer focus, customer experience, customer engagement, customer intimacy, etc. etc.

This is undoubtedly the right direction, and frankly the only direction for corporate survival and growth, in my opinion. A key and often underrepresented component of developing meaningful and profitable customer relationships is TRUST. I’ve written more about that here.

So how are we collectively doing being customer focused? Do “what we say” and “what we do” actually line up?

According to the latest edition of the Edelman Trust Barometer, the Top 5 Trust Building Attributes between companies and customers are:

1. Offers high quality products and services
2. Listens to customer needs and feedback
3. Treats employees well
4. Places customers ahead of profits
5. Takes responsible actions to address an issue or a crisis.

In the latest CEO Survey by PriceWaterhouseCoopers, 82% of the CEOs in the survey said they were going to spend time changing their customer strategies in 2013.

That’s good, because below is a chart from the Edelman Trust Barometer showing that the drivers of trust and the perceived performance of businesses to achieve that trust are miles apart.

Performance_Gap

Imagine that you walked into your individual performance review and you got 3s 4s, and 5s on a 10 point scale across the board. That’s essentially what we collectively just received from our customers.

Are you shocked? Surprised? Upset? Ready to take action? Perhaps you’re saying that “that doesn’t apply to us”.

Many of you are probably moving into action as you read this. “We’ve got to do better. We’ve got to ask our customers what we can do better!” Great. But before you build and send out that next customer survey, please consider reading the following from a recent article in the Harvard Business Review (emphasis added is mine):

The great majority of the decisions we make in our information-overloaded, distraction-heavy lives are made outside our conscious awareness, driven more by contexts than cognitions. As a result, asking someone to pinpoint what will influence them in the future is a bit like saying, “tell me how you will behave in the future when you are not thinking about what I have just asked you about?”

Behavioural scientists Wes Schultz and Robert Cialdini provide compelling evidence of why asking people to predict what will influence their future decisions and behaviors is so often ineffective. In one set of studies, they asked several hundred homeowners in California to predict which of four messages would be most successful at persuading them to take steps to conserve energy and reduce their overall consumption. The four messages were 1) conserving energy helps the environment; 2) conserving energy protects future societies; 3) conserving energy saves you money; 4) many of your neighbors are already conserving energy.

Those shown the message about what their neighbors were doing rated it as the least likely to influence their behaviours. Yet when meter readings were taken, the researchers discovered that this was the most effective message when it came to changing behavior even though this same message was rejected by most as having any sway. Even though most will deny its effect, our desire to keep up with the Joneses is both universal and automatic. For example, recent studies have shown that compared to the usual approach of threatening those who fail to pay their taxes on time with fines, it is far more effective to inform them that the majority of people in their neighborhood already have paid. By doing so, governments can realize many more millions in revenues.

Not only are we pretty poor at recognizing what will influence our future behavior, we’re not that great at recognizing what persuaded us after the event either. In one well-known study conducted at a busy New York City subway station, after counting the percentage of commuters who donated to a street musician as they walked past him, researchers made one small change to the situation: Immediately before an approaching commuter reached the musician, another person (who was in on the act) would drop a few coins into the musician’s hat. The result? An eight-fold increase in donations. When interviewed afterwards, those who donated universally failed to attribute their actions to the fact they had seen someone else give money first, preferring instead to provide alternate (and incorrect) justification for their actions. “I liked the song he was playing”; “I’m a generous person”; and “I felt sorry for the guy.”

Aside from showing the tremendous power of social proof, the above also provides a solid argument that understanding what will resonate most with a customer may often not be provided by the customer. There’s a great dialogue about this on Wim Rampen’s outstanding and thoughtful blog post titled “The Customer is Always Wrong”.

Cracking the code on your customer’s jobs to be done, their (intrinsic and extrinsic) motivations, their behaviors and habits have the potential to provide the real clues that we need to develop ongoing relationships of increasing value exchange.

So, how will we get better at serving our customers more effectively and building more trust?

The detailed answers to this are highly contextual and we don’t quite have time or room in today’s post. Many of us are indeed overwhelmed by the inertia of our own embedded behaviors, assumptions, and drivers, which by the way is one reason I would propose that we see such a significant disconnect in the chart above. But one often overlooked consideration I’d like to offer is to include the core motivators of all humans when considering what products and services to offer, and more importantly how we communicate with them.

Referencing the research done and presented by Australian psychologist, social researcher and novelist, Hugh Mackay, Naomi Simson offers the following as the core motivators for our (customer’s) decision making:

The desire to be taken seriously. We need to know we exist, that we’re valued, that we’re being listened to. This desire is why good listeners are so valued in the workplace. And why when you feel so bad when you realise someone is looking over your shoulder when you’re talking to them, rather than listening to what you have to say.

The desire for ‘my place’. We all need places that feel like ours, places that symbolise who we are. This is why, for some people, hot desks and open plan offices create a certain amount of disconnect and dissatisfaction at work.



The desire for something to believe in. We all desire a framework of values in our lives, values we can live by. If the organisation we work for has integrity, it can form an important part of our value set.

The desire to connect. Not only do we feel connected to people around us at work through everyday interactions, we also use work to connect deeper to ourselves. For some people their work is an expression of their self. 


The desire to feel useful. The one thing we least want to hear ourselves described as is ‘useless’. Wanting to be useful is fundamental to being part of society. This is the reason that people pull together in times of disaster to help complete strangers… to feel they are doing something useful.

The desire to belong. According to Hugh, we are both ‘herd animals’, and ‘tribal creatures’. We like to feel part of a group, as well as part of something bigger. The best workplace contains rich gratification through both a small herd (work group) and the sense of being a part of the company, the tribe.

The desire for control. Hugh believes this desire is the one most likely to get us into trouble. Humans are by nature uncontrollable. The only person we can control is ourselves.

Three Questions until next time

  • Are you REALLY investing in the customer experience, or does this just seem to be the next best wave to get what you want from customers?
  • How are you aligning your products, services, and customer communications with these core human motivators?
  • How are you weaving offerings and communication into the customer journey that help meet these desires?

What REALLY Matters Now? Beware of “Outlier Amplifiers”

WhichChoice

WhichChoice

Social Media, Big Data, Marketing Automation, and Mobile are the only things that matter now, and all the “cool kids” are heavily investing in gamification and customer experience initiatives.

Of course none of the above are true, but if we are to believe the media around us, you’d think that if you’re not doing all or most of the above, you’re going out of business next year.

It brings to mind the ridiculous valuations of the dot com bubble, or the real estate boom, or those that invested millions in CRM or ERP, only to see a negative return. Fueled by craze and hype, we see valuable resources misallocated, resulting in personal and organizational demise.

As I’ve traveled around the globe, I’ve realized that most people are relatively similar. They work. They eat. They play. They spend time with family and friends and they generally just want to be loved and respected. Whether we’re in Switzerland or Bolivia or Thailand, we all do and want similar things, although these often manifest themselves in slightly different ways. These differences are more pronounced on the edges and that’s where we seem to focus our attention. Everyone in California surfs. Everyone in Texas is a cowboy. Everyone in Manhattan works on Wall Street. We amplify differences because they are…interesting, and attempt to make sense of the world around us.

Highlighted in several past studies, the media effect amplifies the spread and perception of these differences, while influencing where many of us spend our attention.

Images, videos, infographics, blogs, and tweets spreading quickly via network messengers have the propensity to create their own reality as they spread. Many of these Ideaviruses are more potent than they’ve ever been, influencing their recipients in new and different ways that the average citizen can’t quite put their finger on yet.

For creators of ideas, digital content or products, the potential to leverage the effects of emerging digital networks holds tremendous promise. We’ve never experienced a world where billions of people can connect to billions of people instantly. Conversely, as a recipient, the amount of information racing through our streams can be daunting.

Business leaders have the unenviable position of trying separate the signals from the noise, which is increasingly easier said than done.

In an era where the impact and exposure to digital objects, ideas, and content can be exponentially amplified in near real time, how can we know which reverberations will continue to grow louder and more important, and which echoes will simply come and go as quickly as they came, replaced by the next reverberation of the times?

The irony and convincing truth is that some of the things bubbling up from the edges actually matter a lot. In fact, all of the things listed in the opening of this post ARE very important, which is why I spend so much time studying, sharing, and consulting in each of those domains. The people who recognize them first are usually able to capitalize on them the most. One could argue that the only places ripe for innovation in the coming era are indeed the edges, since we continue to normalize innovations with increasing efficiency.

A significant challenge, then, is not whether to recognize or not, or to adopt or not. Those options are too rudimentary and crude. The real issue is how much weight to apply to each of these new technologies and opportunities that present themselves. Not enough, and you will indeed likely fall behind. Overweight the shiny new objects and your core will suffer, and perhaps terminally. The answer to this, my friends, is highly contextual.

On one end of the continuum are the uber-pragmatists who ignore everything new, holding tightly to the traditional until overwhelmingly proven otherwise. On the other end are those who see promise in everything, chasing trends, and bouncing from one idea to another without ever focusing on what really matters. The herd of echo chamber enthusiasts bounce from idea to idea, trumpeting to each other and dancing to the beat of the next new thing.

As we strive for balance between focusing on what matters most while simultaneously keeping a keen eye fixed on emerging opportunities, here are some guidelines that might be helpful:

  • (1) Remind yourself that the fundamentals of business likely won’t change. It’s almost never “different this time”.
  • (2) If you don’t have a solid use case or two, the latest shiny gadget likely isn’t likely for you (at least not yet).
  • (3) Recognize that the “Outlier Amplifier” effect is alive and well. The fringes are repeatedly over-exaggerated to satisfy the media’s gluttonous quest for eyeballs (every company is a media company). In the race for attention, those seeking it will often exaggerate for effect. It’s also important to note that there are no qualifications required to setup a blog, twitter, or youtube account. :) Sift shrewdly.
  • (4) No one knows your business as well as you do. Seek to continually understand your prospects and customers better, and systematically build and align your capabilities to create and provide more value for them. This guiding principle will help stay focused on what matters most for you and your organization now and for the foreseeable future.

What else would you add to this list?

Rapid digital innovation fueling vast complexity and opportunity for customer experience executives

EmergingFrontiers

I was recently invited to keynote a series of executive events hosted by NICE Systems. For those unaware, NICE serves over 25,000 organizations in the enterprise and security sectors, representing a variety of sizes and industries in more than 150 countries, and including over 80 of the Fortune 100 companies.

At the start of each session, I encouraged contact center and customer experience executives from American Express, Disney, Coca-Cola, Staples, eBay, JP Morgan Chase, Citi, Discover, and several other organizations to commit with me to ask great questions together for the balance of the afternoon.

We are in an era where asking great questions, and collectively pursuing answers together is a necessity. The accelerating pace of technological innovation is disrupting every industry, every best practice, and democratizing opportunity across the globe. The concepts of the learning organization continue to gain traction and has fueled much of the Enterprise 2.0 / Social Business movement over the past decade.

I asked the respective audience(s) in Orlando, Austin, and Salt Lake City to consider the following:

From there, we discussed two major trends:

1. Greater Connectedness

Fundamentally, the reasons that humans connect haven’t changed in millennia. We still share our names, where we’re from, what we do, our interests, preferences, who we know, what we like to do. We form communities of interest, or passion, or purpose. What has changed is that for the first time in the history of the world, billions of people can connect with billions of people.

  • Connections between humans are becoming smarter and faster
  • Interactions are on a stage for the world to see and respond to
  • Digital interactions can now be analyzed for a deeper understanding of the impact of communications between neighbors, brands, enemies, peers, competitors, etc.

According to Peter Diamandis

Right now, a Maasai warrior(a semi-nomadic people from Kenya) on mobile phone has better mobile communications than President Reagan did 25 years ago; And if that same Maasai were on Google, he would have access to more information than President Clinton did just 15 years ago.

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2. The Digitization of Everything

More and more of our world is being absorbed into a digital format. What we do, where we go, what we learn, what we buy is moving rapidly into the digital realm. From the annihilation of music and print media industries to implanted chips in the military, to smart devices and cars, to “humans on a chip”, and tracking entire ecological systems at a micro or nano level.

What is the impact? Chris Anderson once said, “Every industry that becomes digital eventually becomes FREE”.

If every industry is indeed moving into the digital realm, is every industry indeed moving towards free? Perhaps the better question is “Are your products and services being rapidly commoditized?”

This week I just read how a company is India is working towards distributing a fully functioning tablet computer for $20.

Where Customer Experience Fits

The imaginary world discussed at the beginning of the presentation is the real world of the near future.

In an era where anyone has access to nearly everyone or anything from anywhere, how will you compete? How will you differentiate? How will you create value?

If this line of thinking isn’t on your radar, it should be. It’s critical.

In an era of rapid commoditization, the customer experience is one of the most difficult things to duplicate. Your customers really only want two things from you:

1. Help them accomplish what they’re trying to do, and/or
2. Help them to “feel good”

(I guess I could add a few more through a slightly different lens, like the “Six Things Customers Want”)

These both require an increasingly intimate knowledge of who your customers are, and what they’re trying to accomplish. While traditional products and services are indeed being commoditized, the ability to harness, capture, and utilize unprecedented access to information gives those who are able to identify customer behaviors, needs, preferences, jobs, decision drivers, creatively problem solve, and harness capabilities to create products and services that are simple to understand and consume will win.

Some of the emerging frontiers and opportunities are in the slide below.

In Summary

The two major trends highlighted above are converging to put pressure on nearly every institution, especially for-profit corporations. Customer experience is continuing to move towards the forefront of differentiation capabilities in an increasingly connected, fast paced, digital world. Ironically, the distribution of channels and interactions is simultaneously adding significant complexity to defining and understanding customer journeys, and the impact of a myriad of interactions across that journey.

I’ve included a copy of the entire deck below. I look forward to your thoughts and comments.

How Social Technologies Contribute to a Better Customer Experience

CustomerExperience_WatermarkConsulting

This post is on behalf of the CIO Collaboration Network and Avaya

During each interaction with a brand, organization, or institution, the person on the other end of the interaction has a perception of how things went. Over time, the accumulation of these touch points deepen the customer’s perception of the organization. These perceptions influence actions (to engage, to buy, to defect, to complain, to share the experience with others…). These actions and interactions establish the long term relational value between organizations and their customers.

For these reasons, a growing focus amongst companies of all sizes is being placed on enhancing customer experience. The argument is that in a world where the journey towards products and services commoditization is brief, one of the last remaining competitive advantages is the customer experience. It is the one thing that is nearly impossible to duplicate.

Customers have confirmed its importance in multiple surveys.

A recent study by RightNow concluded that 86% of consumers would pay more for a better customer experience, and 89% of consumers began doing business with a competitor following a poor customer experience.

Each year, Forrester Research compiles their Customer Experience Index, where consumers are asked about their preferences and experiences with brands. Companies are then ranked and categorized. Over the past several years, Customer Experience consulting firm, Watermark Consulting has been comparing the financial performance of the Leaders and Laggards from the Customer Experience Index. The results make a strong case that a better customer experience leads to better performance and profitability of organizations.

Customer Experience Leaders outperform by 22.5% while laggards underperform by 46.3%.

However, it’s important to remember that correlation is not always causation. It’s a data point, and a potentially valuable one.

Other research suggests that growing numbers of senior executives and boards are placing customer experience as a top strategic priority. According to surveys done by customer experience firm Beyond Philosophy:

  • 95% of senior business leaders say that the Customer Experience is the next competitive battle ground.
  • 85% of senior business leaders say that differentiating on traditional dimensions is no longer a sustainable competitive strategy.

Gartner, in its latest CIO survey, found that:

CIOs ranked customer relationship management (CRM) as their No. 8 technology priority for 2012, according to a global survey of CIOs by Gartner, Inc.’s Executive Programs. CRM moved up from the No. 18-ranked technology in 2011.

Additionally, Gartner’s 2012 CEO Survey found that CEOs cited CRM as their most important area of investment to improve their business over the next five years.

Customer Experience vendors are benefiting from the increased mandate to improve the customer experience. In a recent survey by the Temkin group, more than eight out of 10 vendors expect their 2012 revenues to outpace 2011 by at least 25% and one-fifth of the vendors expect an increase of more than 75%.

An Explosion of Channels, Interactions, and Touchpoints

Complicating matters of orchestrating improved customer experiences is the proliferation of channels and digital interactions. Not only do customers now interact with organizations on many more channels than they did a decade ago, they also interact with peers, industry analysts, mainstream media, and citizen journalists on multiple channels as well. Each of these interactions contribute to the perception of the company or brand in the mind of the customer.

Customers are increasingly expecting organizations to respond quickly on their preferred channel in alignment with their increasing expectations. At each stage of their journey, there is a certain set of expectations. Depending on the stage in the customer’s journey, expectations might include more information, a resolved customer service issue, a technical problem solved, a purchase transaction, and then everything that happens while the product or service is put to use.

At the simplest level, a study by Bain & Co., found that customers who engage with companies over social media spend 20% to 40% more money with those companies than other customers.

There’s more to social than just gathering likes and follows.

As the interactions between organizations and their customers become more fragmented and dynamic, Social and Collaborative technologies can play a key role in helping organizations differentiate themselves.

(1) Listen across a wide spectrum of digital channels –> Deeper customer insights – enhanced Voice of the Customer (VOC) feedback
(2) Offer a wide array of preferred channels for customers to choose from, including real time unified communications –> Customer preference wins
(3) Creating and cultivating customer communities to foster interaction, and engagement through depth of resources –> Customer self service, value co-creation, open innovation
(4) Cultivating internal collaboration facilitates more nimble and accurate customer responses. –> Speedy access to people and information who can serve customer needs best
(5) Analytics across digital channels provides clues for customer journeys and expectations at each stage –> Deeper customer understanding paves the way for better product and service design, better marketing messaging and segmentation, and the crafting of a better customer experience.

How are you using or planning to use social and collaborative technology to enhance your customers’ experience? Would love to feature your stories here.

This post is on behalf of the CIO Collaboration Network and Avaya

Global CEOs chart the course into unchartered waters for the Next Generation Enterprise

Outperformers Managing Change

Courtesy of Jay Cross http://www.flickr.com/photos/jaycross/6951344609/

The average time that a company spends in the S&P 500 is 15 years, continuously trending downward over the past 80 years. In fact, as recent as 10 years ago, the average lifespan was 25 years. Perhaps a decade from now, the average lifespan could be as short as 10 or maybe even 5 years. Change is swift. Cycle times are shortening. We are seeing this play out across industries and institutions.

These realities highlight an entirely new landscape which requires new methods of operation and engagement.

How are global CEO’s attempting to respond to this emerging reality?

In the recently published IBM Global Chief Executive Officer Study “Leading Through Connections”, some key insights emerged about where 1,700+ leaders from the worlds largest organizations intend to lead their organizations over the next few years.

Organizations of all sizes would benefit from taking note of these insights, primarily because the new era of connectedness enables any individual or organization in the global network to sense, analyze, and respond to create value, and exploit untapped opportunities.

Perhaps one of the most interesting findings of the study is that of all of the external forces that could impact their organization over the next 3 to 5 years, CEOs now see technology change as the most critical.

But the technology is simply an enabler and disruptor of the status quo. How CEOs envision leveraging and responding to emerging technology is where things get interesting.

Enabling and Extending Collaboration

In a fast moving world, fraught with uncertainty, four key traits stand out as critical for employee’s future success. Collaboration is the number-one trait CEOs are seeking in their employees, with 75 percent of CEOs calling it critical. People who are communicative, creative, and flexible will also find their skills in demand.

However placing these collaborative and creative folks into a rigid environment will likely lead to impeded growth and frustration. While hiring those with the key traits described above, CEO’s are simultaneously focused on building core organizational attributes. Placing a focus on ethics and values, and establishing a clear purpose and mission while evolving to a more collaborative environment are the primary hallmarks of the next generation enterprise, according to the survey.

The emphasis on openness and collaboration is even higher among outperforming organizations, and according to the study, they also have the change-management capabilities to make things happen.

Extending collaboration beyond traditional boundaries is a fast growing trend with more and more companies adopting the model that AG Lafley and Proctor & Gamble pioneered about a decade ago, leveraging the intelligence of a partnership community for innovation. Outperformers are more adept at leveraging the skllis and talents of folks outside of the organization. This is lending itself to the creation of new value chains, new revenue models, and in some cases, new industries.

Organizations that are building a collaborative culture internally and extending collaboration beyond organizational boundaries find themselves more nimble and able to change in a more dynamic world.

Increased Focus on the Customer

Throughout the report, there were several data points highlighting an even greater focus on understanding the customer.

When asked about key sources of sustained economic value, 66% of CEO’s highlighted customer relationships, finishing only to access to human capital.

When rating their own critical capabilities to lead their organization, guess what CEOs ranked as the most critical trait? “Customer Obsession”.

In addition, more than 7 out of 10 CEO’s are driving change within their respective organizations to “deepen the understanding of individual customer needs.

Big Data, Analytics, and Insights

I recently highlighted the importance of the data in this short little riff titled “What do you mean you don’t have the data?!?!?”

The data exhaust of digital interactions provides the framework to translate these growing mounds of raw data into meaningful insights, and ultimately translate those insights into action. This appears to be an increasingly important differentiator between organizations that thrive, and those that don’t. According to the data in the survey, insight driven organizations are about twice as competent than their underperforming peers at leveraging data.

Analytics investments are finding a sweet spot tying the increased focus on customers to the ability to harness insights from data. Smart organizations are doubling down on both trends as customer focused insights lead the way by a dramatic margin.

A recent study by McKinsey & Company had similar findings, heavily weighting the importance of customer insights.

Do CEO’s care about Social Media?

In what may have been the most surprising finding for me personally, when asked what they believe will be the top customer interaction methods within the next five years, CEO’s believe that social media will be second only to Face to Face. You’ll see in the chart below that digital interactions are the only customer interaction methods that are expected to grow. I wrote more about that topic here in a post titled “The Digitization of Human Interactions: From Long Tail to Mass Disruption”

Key challenges moving forward

Reality prevails. While frameworks, ideas, vision, and potential is being more widely grasped and understood, the task of redirecting generations of inertia and existing structures is more easily said than done. Below are some quoted sections from the report.

Globalization and increased connectedness have fundamentally changed how the world works. Like the rest of society, organizations are moving into an era of openness, characterized by individual empowerment, operational transparency and decentralized communications. For CEOs, it’s no longer a question of should the organization become more open and collaborative? But rather, it’s how do I run an open organization?

A few years into this journey, we’re collectively landing on similar whats. The most important question now is “How”?

As they do with most technology trends, CEOs are working to sift the social media hype from real opportunity. And skepticism is often intensified by fear. “We’re not yet comfortable that social media has matured to the point we’ll benefit more than we’ll suffer, explained an industrial products industry CEO from the United States. In a social media world, CEOs realize their brands are in the hands of customers and employees. Control is shifting from institutions to individuals.

When we can confidently prove that social has actually matured to the point where benefit clearly outweighs costs and/or risks, I believe progress will be achieved much faster. This is a great point. I know some of my readers have strong opinions on either side of this fence. I’d love to discuss this more in the comments below.

Believers are even unsure where to start. In the words of one Australian healthcare industry CEO, “Social media has grown faster than industry knowledge on how to use it.” And a life sciences industry CEO from Switzerland frankly admitted, “We are all scared to death about social media within our industry. We want to start with it. But we’re all just looking at each other, and nothing material is happening.”

This is consistent with my experience. How do we get from here to there with these resources, these systems, and these processes? The present and future states are still largely incongruent for many organizations.

The issue of change management takes a more primary role at this stage, not only to get from here to there, but actually in building a new and sustained core competency to constantly reinvent the organization in an environment that never stops changing, and likely will change at a more dramatic pace in the future.

In the IBM CEO study, 73% more outperformers demonstrated a successful track record of managing change.

This reality is also highlighted by the aforementioned McKinsey & Company research.

In summary, CEOs across the globe are both responding to and charting the course towards a more open and collaborative business environment.

The core competencies for individuals and organizations are the ability to sense, analyze, and respond in record time. Cultivating an open, dynamic and evolving culture, learning how to embrace change, an intense customer focus and a reliance on data driven insights are megathemes for the next several years. Survival of the fittest has never been more relevant.

This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet.

Toothpaste, toilet paper, white matter, and jam: Clues for better decision making

toothpaste

Several years ago, my wife and I ran out of toothpaste in a remote part of small Southeast Asian country. We spent half the day trying to find a place that carried a halfway recognizable form of packaged toothpaste. It was more of an adventure than you might imagine. We ultimately found one unopened Colgate toothpaste box covered in dust in a small bazaar kiosk. In that case, we were excited and thankful. It didn’t matter much that the box was a bit dusty, nor that it wasn’t our typical preferred choice of toothpaste.

I remember coming back to the United States several months later, and going shopping for toothpaste once again. I found myself paralyzed in the aisle as I tried to make sense of shelf space that looked similar to this:

Img Source http://throwyourselflikeseed.blogspot.com/

Too many choices

I remember hearing a story about an elderly woman in post communist USSR who stood crying in the aisle because she couldn’t choose the right kind of toilet paper. (Much of her previous life was spent often waiting in long lines for just one roll of the only toilet paper she had ever known). The sudden presentation of varying sizes, patterns, colors, and prices were overwhelming the underdeveloped analytical part of her brain.

In the era of Big Data, I believe that we all represent that woman to a certain extent. How many times, from a personal or corporate perspective, have you experienced some level of stress or anxiety because of the amount of information you have to sift through in order to make the right decision?

We’re increasingly overwhelmed. When we type something into Google, we don’t want 4,456,761 results.

When we are making purchasing decisions, Google found in 2011 that the average shopper uses 10.4 sources of information to make a purchasing decision (nearly double the number of sources they used in 2010).

To illustrate the point, Sheena Iyengar of Columbia University, who has dedicated much of her life to analyzing the concept of making choices, ran a study by placing a free tasting booth in a grocery store.

First they offered 6 different jams. 40% of the customers stopped to taste. 30% of those bought some.

A week later, they set up the same booth in the same store, but this time with 24 different jams. 60% of the customers stopped to taste. But only 3% bought some.

*** Having too many choices made them 10 times less likely to buy. ***

To complicate matters even further, we now can get this information from a variety of screens, and devices. A recent study of a small sample of 20 somethings found that they switched media screens 27 times in an hour!

How many choices do we want?

According to Iyengar, “when humans are given 10 or more choices, they make bad decisions”.

Perhaps that’s why marketers have been trying for so long to get on the first page of search engines. Jeff Bullas shared the following results from an AOL study on search.

The first ranking position in the search results receives 42.25% of all click-through traffic
The second position receives 11.94%
Third position on the first page obtains 8.47%
The fourth placed position on page one receives 6.05%
The others on the first page are under 5% of click through traffic
The first ten results (page one ) received 89.71% of all click-through traffic.

Writers, content producers, and other media have long known that “Top 10″ lists attract eyeballs and attention. People crave simplicity they can digest and manage from an authoritative source.

The typical American makes about 70 decisions per day. 50% of CEO decisions are made in 9 minutes or less, and less than 12% take more than an hour to make.

We collectively spend a alot of time not just trying to gather and analyze information to help inform the decisions we are making, but trying to absorb the information that comes at us unexpectedly, where we are not directing the stream of content.

But, this is taking its toll.

ForensicPsychology.net found that “heavy internet users are 2.5 times more likely to be depressed and that they also suffer from a reduction in white matter in their brains (goo that transmits signals around the cerebrum) in the emotion, memory, sensory, and speech centers by 20%”

Enabling better decision making

Big Data brings with it a whole set of opportunities, but also challenges. According to IBM, 90% of the data in human history was created in the last 2 years. According to McKinsey&Company, that pace will be accelerating at a pace of 40% per year.

Design and creativity take an increasingly important role in the process.

From the hyperlinked article above:

Advances in technology – faster, more powerful,less expensive – are concrete and visible. Design is subtle, more subjective, more open to human interpretation. But, as our increasingly advanced technologies enable us to build larger, more capable, more complex systems, the role of design becomes ever more important. It is the only way to ensure that our technologies will help us deal with our increasingly hectic lives.

The challenge then for marketers, product managers, salespeople, customer service, consultants, advisors, designers of products, services, and experiences, and anyone else who is initiating or sustaining progress is to take all of this data and information, and translate it into a digestible, understandable, and insightful menu of choices for their audience.

Regardless of your industry, your customers (along with your executives, your partners, and other stakeholders) will likely resonate with the following statement.

“Help me make sense of everything that is happening. Help me know what to pay attention to. Surface a narrowly defined selection of the things that most closely align with my needs, desires, and jobs to be done. Help me evaluate quickly pros and cons of each decision, and then help me make the best decision.”

Organizations of all sizes that are able to center their focus on answering that call from their customers will thrive.

So, then, let’s get to work. But I know..it’s much easier said than done.

This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet.

Exploring new frontiers of real time customer feedback

BrianVellmure_Tackle

This post is on behalf of the CIO Collaboration Network and Avaya

Growing up, I spent much of my time playing competitive team sports. I played soccer, basketball, and (American) football. In each case, almost immediately after some level of effort, I knew how I had done. I got immediate feedback from my coach(es), other players, and often from the crowd. I knew how much weight I had lifted, how fast I had run, if my shot had gone in or not. I could look at the scoreboard and see where things stood.


Brian Vellmure making a tackle against Colorado State 1994 Source: Associated Press

As I progressed in age and level of competition, we increasingly watched hours of recorded film to analyze steps, movements, body positioning, reaction time, and what actions had led to success or failure.

Daily, my teammates and I attempted to perfect our skills. We took the feedback we received and made adjustments; sometimes immediately, sometimes daily. Refining and honing our skills and performance, we attempted to perfect and ingrain habits of the things that worked, and tried to correct the mistakes that we were making.

John Hagel, John Seely Brown, and Lang Davison start off their book “The Power of Pull” with a story about how 5 surfer kids on Maui used passion, data, analysis, and peer feedback to continually improve the execution of their craft and rise to be considered amongst the best surfers in the world.

Playing with no feedback

While I can’t imagine the futility of playing without any of this feedback, simply doing the same things over and over, and never seeking to improve. it seems to happen all the time in the business world. Employees get a quarterly or annual review. Customers are sent an annual feedback survey that a small percentage of them fill out. Often times, this is a matter of administrative formality, than really useful for any party. Some have put all of their trust in “The Ultimate Question”. But are we really listening and learning to the extent that we could, or should? And, how often is any meaningful action taken based on this feedback?

Without feedback (or the capability to listen and adapt based on it), many organizations and the people within them simply continue on with the same course of action without really knowing how they’re doing, and how the marketplace is reacting or responding to their activities. The result is underperformance.

Shorter Cycle Times / Greater Feedback Mechanisms

In an era where cycle times are rapidly being shortened, and more of our activities are performed digitally, the potential to gather feedback and re-calibrate our responses in real time to align with customer expectations, assist with customer jobs to be done, and provide ever better customer experiences is steadily increasing. In addition to the tried and true feedback mechanisms of the past (focus groups, surveys, etc.) we are able to keep our pulse on our actions in real time. (The counter-argument that a lot of this data exhaust is simply noise is a post for another day)

The social web provides opportunities for real time analysis. Keynote speakers get immediate feedback on how their session went by looking at the stream. Television broadcasters get realtime engagement metrics based on streaming content. Airlines, retail stores, and financial institutions get real time unstructured feedback about their customers’ experience. Elected officials get immediate feedback on their speeches from their constituents.

Mobile feedback vendors are providing opportunities to capture customer experience insights within minutes of the brand experience. Response rates in some surveys have been unbelievably high (and arguably more accurate) by capturing feedback in the flow of the experience vs. several days or weeks later when customers are detached physically, mentally, and emotionally from their interaction.

Text Analytics allows companies to sort through vast amounts of unstructured feedback to surface patterns and themes captured in hundreds, or thousands, or even millions of conversations about your organization.

Speech analytics technology continues to advance into the mainstream and provides the ability to coach and prompt call center agents in real time, providing coaching based on tone and words that might indicate defection, loyalty, or propensity to have interest in a complimentary product or service.

And all of this customer feedback data can be processed and analyzed in a fraction of the time. Terabytes of data can be crunched in milliseconds. Data analysis that used to take weeks can now be done in just a couple of hours, or even minutes. This Japanese facial recognition company can actually scan 36 million faces in one second. (Never mind the privacy and big brother implications)

Answers are there. How are we leveraging them?

So with legions of people providing or potentially providing feedback about your product, service, industry, or need, are you listening? If you are listening, is your organization calibrated to take that feedback and incorporate it back into your product and service development efforts, your customer experience initiatives, your marketing messaging and sales strategy?

The concept of gathering and incorporating stakeholder feedback is nothing new. Technological advances are paving new ways, however, not only to gather, but also respond in real time. How is your organization leveraging the latest technological advances to listen, collaborate, and respond to your customers?

This post is on behalf of the CIO Collaboration Network and Avaya