Three Lessons Learned: Big Retailers Play with Big Data and Narrowly Avoid Getting Bit

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Customer experience pioneer and retail giant, Nordstrom, recently found itself in hot water over customer privacy. They’d been operating a pilot program in the Dallas-Fort Worth area for a special technology that tracks shopper’s in-store foot traffic via cell phone signals.  

The appeal is obvious, and significant; Nordstorm isn’t alone in this test.  But in an ever-more transparent world, the risks can be significant as well. Once you know the facts, any outcry over this issue seems overblown. But it still offers a few lessons for others who may want to experiment.

Google Analytics for Physical Retail

The technology that Nordstrom was piloting is from a firm called Euclid Analytics. Think of it as a Google Analytics for physical retail locations; now that almost all cell phones have wi-fi, the periodic pulses of data used to find available wireless networks can act as a sort of beacon.

Euclid uses these pulses to reconstruct shopper locations and foot traffic patterns; when someone moves closer to one access point and farther from others, the change in signal strength can be used to approximate the device’s location.

To be clear, retailers can’t personally identify any individual (and attempts to do so violate Euclid’s terms of service). But some critics bristle at the idea anyway, and when it comes to customer experience perception IS reality.

Is Anonymous Tracking an Invasion of Privacy?

There’s a major disconnect between marketers and consumers on this issue. On one hand, you have Nordstrom’s spokesperson stating, “This is literally measuring a signal. You are not connected to the signal.” But many consumers feel incredibly creeped out by this kind of data collection. One said, “Now that I know they're tracking me, I'm a little less likely to shop in their store.”

The irony of this situation is that Euclid Analytics provides significantly more consumer privacy protection than ubiquitous technologies ranging from in-store cameras and data mining over purchase histories, to “liking” a brand on Facebook.

But none of that matters unless you properly communicate to your customers, and that’s where this pilot project started to come off the rails.

Three Lessons Learned: What Nordstrom Did Right (and Wrong)

Thinkers throughout history - from Spiderman to Voltaire - have taught us: “With great power comes great responsibility.” And while Big Data gives companies of all kinds the power to serve customers better than ever, most simply use it to serve themselves – almost guaranteeing a backlash at some point.

When it comes to leveraging the disruptive force of Pervasive Memory and the power of Big Data to further your agenda, here are three take-aways that can help you balance privacy and customer experience, and hopefully avoid a Big Data bite. 

• Use Data to Better Serve, Not Just to Better Sell to, Your Customers: Last year I wrote about a radical idea: using customer data to actually benefit your customers. That means using data to do things like simplify touchpoints, improve customer experience, and improve processes. These things bring your customers closer to you. Using data simply to up sell, cross sell, or advertise—effective as it may be—often erodes your customer relationships instead.  Nordstrom could have leveraged this initiative to create new, helpful services that make their customers lives easier. They didn't.

• Be Careful How You Communicate; Transparency is Key: With Big Data initiatives (as with almost anything that touches customers), the best practice is to effectively communicate what you’re doing and why you’re doing it. Unfortunately, Nordstrom’s communications were limited to signs that explained what they were doing in techno-jargon that customers would find hard to understand (if they even saw or bothered to read the sign). Companies often make this mistake in an attempt to avoid attention. But guess what? They often get more attention as a result.

• Starting Small Can Avoid Big Problems: There’s a reason this story hasn’t turned into a huge social media and PR nightmare. Nordstrom intelligently rolled this out in a limited test. I don’t know if Nordstrom intended to use the pilot to gauge customer reaction, but it obviously provided key insights. No company can reliably predict customer reaction to new ideas, and focus groups aren’t always a reliable way to test new concepts like this. A focused pilot like this can tell you exactly how customers will respond to an initiative, without exposing you to risk across your entire customer base. Good move.

Nordstrom has a long track record of delivering great customer experience, and they’re a model company for many others. What happened wasn’t in any way a failing of their customers or a betrayal of values, and other from a vocal minority I don't think it was viewed as such by their legions of loyal customers.  

The fact is, figuring out how to leverage the benefits and balance the risks of disruptive, digitally-driven innovation is still new territory that’s being explored. And when a recognized customer-experience leader such as Nordstrom comes this close to getting bit, it’s important for everyone to recognize that even well-meaning pioneers need to watch their step.

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Do Happier Employees Really Mean Happier Customers?

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Conventional wisdom says not just “yeah” but “hell, yeah.” That said, an issue with the “conventional wisdom” is that people rarely question it. And since this is a question I was asked earlier this week – and my response predictably slotted into the “hell yeah” quadrant – I thought it only fair to dig a little deeper. 

Do happier employees really mean happier customers? Without giving too much away, the results of my exploration will almost certainly surprise you. Not because happy employees don’t mean happier customers (in general they do). But because of the potentially worrisome connections between employee performance and happiness, and customer engagement. 

No Shocker: High Employee Engagement Yields Good Business Results. (But…)

Earlier this month, RagingWire – a data center firm that boasts the highest customer loyalty scores in their industry – published an excellent blog post about employee engagement and customer experience. They feel these scores wouldn’t be possible without a real dedication to employee experience, which they’ve encapsulated into 10 handy tips (see them at right). It’s hard not to agree. After all, it seems logical that companies with a commitment to employee satisfaction, development, and well-being would have at least some market advantage.

But these aren’t exactly new ideas. Gallup, for example, has been promoting the 12 Elements of Great Managing - which are all about inspiring top performance in employees - since at least the ‘90s.  And their latest Q12™ research quantifies the (significant) gap between companies at the top and bottom quartiles of employee engagement. In it, they found that organizations in the top quartile had:

• 22% higher profitability,
• 21% higher productivity,
• 10% higher customer metrics,
• 37% less absenteeism, and
• Up to 65% less turnover.

No brainer, right? Faced with numbers like these, what company wouldn’t think that employee engagement should be a top priority? What we want to know, though, is if happier employees mean happier customers.

Since the top employee-engagement groups beat the bottom by only 10% in customer metrics, it seems the answer is a resounding “maybe.” What gives?

The Fly in the Ointment: Are Your Lowest-Performance Employees Also Your Happiest and Most Engaged?

The title of RagingWire’s blog post “Would Your Employees Recommend You?” reminded me of a recent Harvard Business Review post, titled Your Least Engaged Employees Might Be Your Top Performers. In it, the author quotes from recent research from Leadership IQ which states that in 42% of companies studied, low-engagement employees outperform high-engagement employees. You may have to read that line twice. I did.

Yet reading the research, a crystal-clear picture of these high-engagement, low-performance employees emerges. They are happy and engaged, in part because they actually aren’t held that accountable and/or don't have to work as hard as high performers. Expectations are lower, and their jobs are easier. As a result, they’re even more motivated to “deliver 100 percent at work” than high- and middle-performers. 

These higher-performance, lower-engagement employees care a great deal about their work, have loads of intrinsic motivation, and lots of talent – but often don’t feel empowered, encouraged, or recognized.  

Bottom Line? Happier Employees Do Mean Happier Customers. But if They Aren’t Held Accountable, Your Business Will Suffer.

Between the Gallup and Leadership IQ research, it’s easy to think these two pieces of research conflict. I’d suggest the answers are a bit more nuanced, and point in a direction that may help explain why customer metrics track less with employee engagement.

While higher-engagement/lower-performance employee want nothing more than to please your customers, they may not be as willing (or as able) to make the difficult choices sometimes required to satisfy customers and meet business objectives. 

Which brings us back to the question at hand, and the “dangers” of conventional wisdom. Because while happy employees do help deliver happier customers, high-performing employees can help to deliver happier customers and business results.  

The trifecta is this: happy, high-performing employees, happy customers and stunning business results. If you're like the most successful firms I’ve worked with, getting there means aligning your reward systems with your customers wants and needs – and ensuring that your desired outcomes are clearly defined, and that everyone is held accountable for their results.

Get that in place, and it gets easier to imagine all your employees contributing to customer happiness – boosting customer metrics, while driving profitability and productivity along the way.

Which, when it comes to customer loyalty, might help you go from reading about companies like RagingWire to becoming a company like RagingWire.

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The Secrets To Amazon’s Wall St.-Defying Customer Experience Strategy

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Earlier this month, Amazon CEO Jeff Bezos delivered his annual letter to shareholders. And what a letter it was. 

One Business Insider article said the letter “should inspire every company in America.” And that’s no exaggeration. When an incredibly successful, Fortune 100 company says customer relationships matter more than short-term profits, it should inspire us.

But Amazon’s letter has more to offer than feel-good ideology—it’s really a blueprint for customer experience improvement. (Don’t worry–it’s also a recipe for market domination and massive value creation). Simply put, it boils down to two directives: to proactively deliver great customer experiences, and to put your customer’s bottom-line ahead of your own.

Leveraging Digital Innovation To Deliver Customer Delight
My job as a consultant is to help companies improve customer experience–increasingly, that means leveraging digital innovation and technology to do it. As a result, I’m thrilled with Amazon’s letter. Why? Because Jeff Bezos delivered example after example of how Amazon exhibits customer centricity by building and using “sense-and-respond” capabilities to monitor customer experiences and proactively correct problems.

These technology-enabled capabilities are among the most important investments a company can make in customer experience improvement. Why? Because you gain an incredible advantage when you can recognize–in these examples–that an individual customer interaction has gone awry (sense), then offer a resolution to the customer and correct the source of the problem (respond). It sounds like these customer experience strategies came right out of my book. Amazon “gets it” in ways that few others do.

Of course, the benefits of sense-and-respond capabilities aren’t limited to the ability to spot the small, unreported dissatisfiers in customer experience that can erode loyalty and retention—though that’s an area Amazon has quite successfully leveraged them. Just a few of the ways they’re delivering customer delight through sense-and-respond techniques include:

• monitoring performance on Amazon Video On-Demand and automatically issuing refunds for poor streaming quality;
• creating an automated preorder price matching system, so customers don’t have to periodically check for price changes; and
• building a “Trusted Advisor” tool for Amazon Web Services (AWS), its cloud-computing platform that watches customer configurations and makes recommendations that could improve cost, performance, or security.

Caring About Your Customers’ Bottom Line–And Yours
The fact is, most customers wouldn’t expect Amazon to pay attention to issues at this micro level. Heck, only a tiny fraction would probably ever notice an unmatched preorder price or suboptimal AWS configuration. But credit Amazon for seeing an opportunity to strengthen customer relationships by surpassing expectations–and successfully using technology to do so. In Bezos’ own words, “Doing [these things] proactively is more expensive for us, but it also surprises, delights, and earns trust.”

At a time when most big companies are trying to get more and more money from each customer on any given service, Amazon is basically saying, “No, you keep it. Really. We insist.” And it goes far beyond automated refunds. The idea of aligning the company’s financial interests with its customers’ is baked into its services and products.

Simply put, Amazon is offering more and more services, and doing so better and more cost effectively than many of its competitors. Using AWS initiatives such as Trusted Advisor as an example, the kind of experiences Amazon is delivering–and the higher level of expectations it is creating–will afford it a strong, differentiated position even when the red-hot Web services market is totally commoditized.

Other examples abound–from its philosophy for Kindle (“Sell premium hardware at roughly breakeven prices” and “make money when people use [their] devices–not when people buy [them]”) to Amazon Prime Instant Video, which keeps getting better and better–and doing so at a fraction of the cost of (once again) market darling Netflix.

That’s because Bezos and Amazon really understand the long-term benefits of customer experience. As a result, it wouldn’t be difficult to write a series of articles based on this shareholder letter. Instead, I’ll strongly encourage you to read it for yourself.

Read all of them, even, starting from 1997. From sense-and-respond capabilities in action to other innovative customer experience ideas, there aren’t many better examples of how far you can get with proactive, principled, and uncompromising customer centricity.

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How One Growing Company Impressed 559,861 People Last Weekend

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If you aren’t a gamer, then there’s a good chance you’ve never heard of Razer. Until last weekend, the company was mostly known for making high-performance peripherals for playing video games (i.e., fancy mice and keyboards with a price tag to match).

Now, though, it might be the gutsiest, most customer-centric company you’ll read about all year. Here’s what happened.

Last week, reports spread about a coupon code for Razer’s U.K. site that gave customers 90 percent off of their orders. Unfortunately, this wasn’t an authorized promotion. It turns out that one of the company's partners added the coupon code for testing purposes, but never deleted or deactivated it. Thousands of orders were placed before Razer could shut it down.

The company had a variety of options. It could have canceled the orders, apologized, and offered a smaller discount as a goodwill gesture. Heck, it could have canceled the orders and offered nothing besides an explanation. I think customers would’ve accepted either outcome.

Instead, despite all of these logical alternatives, Razer (amazingly) decided to honor the 90 percent discount.

Min-Liang Tan, Razer’s CEO, announced on Facebook that everyone who made a purchase using the coupon code would get their orders filled (with slight restrictions around timing and volume orders).

It’s no surprise that this turned into a hot story. Several major tech outlets covered it, including Mashable, Engadget, and Gamespot. But the story really found its legs in the social sphere. A post on Reddit about the coupon gaffe garnered more than 23,000 votes and 550,000 views.

What Does “Doing Right By Your Customers” Mean To Your Firm?
What’s fascinating about Razer’s reaction to this situation is that it forces us to really look at what it means to do right by your customers. After all, many customers said things like, “I figured this was too good to be true, but...” So, really, Razer could have taken any number of lesser measures and still have done right by its customers.

Instead, what Razer did was set the bar higher. It has shown a way to think about customer centricity that’s actually pretty easy to apply in day-to-day operations: Customer-centric companies treat their customers better than their customers would expect to be treated.

It’s beautifully simple. Do more than what your customers would consider fair. If you’re deciding between two options, pick the one that’s better for your customers, not just acceptable to them.

For Razer, this was a big loss in one category that unexpectedly turned into a big gain in another. For the rest of us, it’s a great example of customer centricity and of the positive power that it, and social influence, can have on our businesses.

Social Doesn’t Always Hurt You In A Crisis
In "Smart Customers, Stupid Companies," Bruce Kasanoff and I wrote about the disruptive force of social influence, among others. Social media is what drives this force, essentially putting others (often many, many others) between you and your customers.

In the book, we talk about the fact that social media gives customers real power to “review and analyze the quality of your products, the degree to which your firm is trustworthy, and the degree to which you perform as promised.”

But this doesn’t happen just independently anymore. It happens collectively, with your company’s actions being “tested, examined, discussed, and shared by other people” in any number of channels.

And it played out exactly that way in Razer’s case, with lengthy discussions happening across the Internet. But, instead of getting torn to shreds by social like many companies do, Razer’s customer-centricity meant it benefitted enormously from the power of social influence.

Unleashing A Frenzy Of Loyalty
By now, we’ve all witnessed a major social media event create a sort of mob mentality. And it happened here, too. What’s different in this case is that the mob unleashed a frenzy of loyalty. Some highlights from the discussion on Facebook and other sites include:

• Countless mentions of how mega-corporations like Electronic Arts and Activision aren’t and would never be so customer-friendly. Takeaway: Another company doing right can focus “the mob” on those that don’t.
• Tons of kudos and pronouncements of loyalty, such as, “I’m a customer for life now.” Takeaway: Customers really do notice when you do the right thing.
• Several people voluntarily canceled their discounted orders and repurchased at full price. Takeaway: While rare, customers will voluntarily puta respected company’s interests ahead of their own.
• And then there were the people who didn’t know about the code previously, but made a full-price purchase as a show of support.Takeaway: Customers want to do the right thing, too—and many will, given the chance.

This story leaves me thinking hard about what it would take to unleash a frenzy of mob-driven loyalty on some of our clients’ firms. I suspect it’ll mean getting a little more customer-centric than some of them might be comfortable with.

Do You Have What it Takes to Embrace ‘Radical Customer Centricity’?
The truth is, it doesn't get much more innovative than this: Customer-centric companies treat their customers better than their customers would expect to be treated. It’s the Golden Rule in action. By treating customers better than they expect, companies tend to find that their customers do right by them in return.

Let’s call Razer’s approach “radical customer centricity.” Embrace it, if you dare—the benefits may be far greater than you can possibly predict.

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What Wearable Computers Mean For The Digital Customer Experience

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For gadget geeks and futurists, 2013 looks like one heck of a year—the dawn of wearable computers.

In fact, between speculation about the Apple iWatch and the Q4 launch of Google Glass, it seems we’re only months away. I’m 80 percent excited, 15 percent skeptical, and 5 percent creeped out by the idea of glasses that record video.

Nevertheless, it’s time to think about what all of this means. Connected technology is about to be freed from pockets and purses. And that change comes with a slew of interactive possibilities. But companies are going to have to relearn, again, what they know about customer and user experience to succeed in this world.

‘Back Up A Second--Wearable What?’
Computers. Tiny computers and sensors that you wear under, over, or that are even part of your clothes. From a watch that connects to your mobile phone to a pair of glasses with voice-activated commands and a digital display, wearable computers take the amazing things that your phone, tablet, computer, and camera do and make them instantly accessible.

These aren’t entirely new ideas. In the ’80s and ’90s, Casio pioneered an early smartwatch. Those bulky calculator watches you saw from time to time were part of the “Databank” line that also managed contacts, calendars, and more. Seiko had a line of data watches that could connect to your desktop computer nearly 20 years ago. And Recon Instruments has been making smart ski goggles since 2008.

What’s different now is even broader acceptance by millions of smart customers around the world with a huge appetite for right-here, right-now access to information and data, driven in no small part by the $25 billion app economy.

Designing Digital Experiences For Wearable Devices
No matter how “cool” a new technology is, customers want you to remove complexity from their lives, not add to it. Sadly, few companies seem to understand this. If they did, then they’d look at the experience through the eyes of their customers.

When it comes to wearable devices, not looking at the experience from the outside-in would be a mistake. A big one. To prove the point, let’s look at two dominant patterns of mobile interaction and see what happens when they’re copied to wearable devices:

1. Push Notifications: Push has arguably been the biggest driver of engagement and stickiness in mobile apps. It was transformational. But will pairing push notifications with wearable devices net similar results? Probably not.

Imagine a sudden jolt on your wrist or a flash of text in your peripheral vision. Oops! Push notifications on wearable devices has the potential to be incredibly disruptive (in a bad way). So what’s going to be the new engagement driver in this space? You can be the one who decides.

2. Multitouch: This example is a little more obvious, but even more important. If you have a watch attached to your wrist, then you won’t be using two hands to interact with it. If the screen has one-fifth the surface area of an iPhone, then you won’t have much room to swipe, pinch, etc. For obvious reasons, the touch interface on Google Glass will be nothing like a typical mobile device.

If all of this sounds more like user experience (UX) than customer experience (CX), then you’re right. But customers don’t make that distinction. To them, it’s all customer experience. So if you want to compete in this arena, then you have to really understand what your customers want and need to accomplish—not just what they canaccomplish.

Applying The Forces Of Disruptive Innovation To Wearable Computers
In Smart Customers, Stupid Companies, we wrote a lot about the four forces of disruptive innovation that we believe will have the greatest impact on the relationships between customers and the companies that wish to serve them.

These forces include social influence, pervasive memory, digital sensors, and the physical Web. And I’m not sure there’s a scenario where these converge more than wearable computers. Consider these examples:

• Social Influence: Google Glass is an inherently social product. It lets you share first-person experiences in the most organic way ever. You can broadcast exactly what you see with nothing to filter or encumber it. Is there a more impactful way for someone to share your company’s customer experience?

• Pervasive Memory: Big data has always had big potential for improving customer experience (history recall, better customization, etc.). Wearable devices provide a platform for delivering memory-enhanced experiences, whether it’s directly to customers or by enriching your employees’ customer interactions with real-time data that doesn’t require looking at a computer screen.

• Digital Sensors: Digital sensors are one of the more established factors in the wearable space. Heart-rate monitors have transmitted data to watches for ages. More recently, Nike and Adidas have made major advances in sensors that guide and improve athletic training for their customers. This is just the beginning, though.

• Physical Web: Wearable devices, especially glasses, will be a huge breakthrough for augmented reality. Imagine your customers walkiing through a retail store and seeing reviews or specs on a product just by looking at a bar code. They could get a pop-up map guiding them to a specific part of the store. You could even use a timely, in-context promotion to help close a sale.

Yes, this all sounds a little bit like science fiction. But don’t forget—none us had any idea we couldn’t live without a smartphone until we had one.

What’s going to happen when our clothes get smart, too?

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Did Poor Customer Experience Get Ron Johnson Fired?

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Last week, SEC filings revealed that Ron Johnson, chief executive officer of JC Penney, saw his 2012 compensation fall 97 percent—from $53.3 million in 2011 to $1.89 million last year. This set off another media frenzy focused on the struggling retailer’s poor performance and probably hastened Ron Johnson’s firing as head of JC Penney. How did Johnson get so off course? Look no further than poor customer experience.

Johnson, former Apple retail chief and the person credited with forever changing the way computers are sold, was brought in with much hype and a great deal of hope.  I’m guessing they thought, “If he can innovate so successfully in computers, just imagine what he can do in a traditional retail business!” But he was anything but successful, with the retailer posting an operating loss of more than $1 billion in 2012. So what went wrong? And how can JC Penney turn it around now?

We’ll never have the complete answers to those questions, of course. But it seems that for all of Johnson’s willingness to reinvent the JC Penney customer experience, he didn’t focus nearly enough on that first part—the customer.

No doubt, Johnson got parts of the transformation right. He oversaw well-received updates to the JCP logo and physical layout of the stores. He also introduced the “store-within-a-store” concept. Innovation was certainly needed at JC Penney, and they got it.

The question is, were these the right things to do for JC Penney’s customers? Or for Apple’s?

What Customer Was JC Penney Trying To Serve? (Did They Know?)
For the many, many JC Penney customers who’ve taken their business to Macy’s (whose profits were up 38 percent in Q1 2012), Johnson missed the customer experience mark by a mile. Apparently, these customers really looked forward to the 590 or so promotions that JC Penney ran in 2011 and only bought when they thought they were getting a deal.

These customers may even have liked the old logo and fondly reminisced about the way the stores used to be laid out. Who knows? Obviously not Johnson because it appears he didn’t understand his customers’ wants and needs, or their expectations of the brand—the answers to which are the foundation of all customer experience improvements. 

Maybe he didn’t want the old “JCPenney” shopper and was focused on the possibilities of new “JCP” shoppers—you know, the ones who mill about in Apple stores by the hundreds and spend lots of money on hip, digital devices that make their lives easier.

I don’t think so. Because, according to my wife, he has missed the mark on that one too.

The High Cost Of A Cross-Channel Customer Experience Gone Wrong
A few weeks ago, my wife received a JC Penney catalog in the mail. In the past, she hasn’t been a JC Penney shopper (especially since the nearest store is 60 minutes roundtrip and a $6 bridge toll). But the catalog was well-designed and had a good message, so this one didn’t end up in recycling like all the others. Chalk it up to the “new JCP.”

Thumbing through, she was impressed with a couple of dresses she thought stylish, nicely presented, and (most important—she’s keen on getting value, and proud of it) well-priced. She even turned down some pages to show our teenage daughter.

But then, instead of tucking the catalog in her purse and heading to the not-so-close JC Penney store, she did what virtually all catalog shoppers do these days: She went online.

Pretty quickly, she noticed that the catalog wasn’t integrated with the Web site.  With no obvious coding or digital marker, she turned to site search and started typing in names. No results. By color, category, dress size, and designer, she searched in vain. Finally, frustrated with what she saw as JC Penney wasting her time, she tossed the catalog into the recycling bin with the others.

Like so many companies trying to improve customer experience, JC Penney did all the right things to earn a second chance—then completely blew it. And, typically, that chance is the only one you get. (Good luck getting someone to read another JC Penney catalog in our house.) So let this be a lesson: When it comes to improving customer experience, half measures are often whole failures.

JCPenney’s Troubles From The Johnson Experiment Aren’t Over Yet
Today, customers of all types—business, retail, luxury, high-end, or bargain hunters—have pretty high expectations when it comes to interacting with the companies that wish to serve them.

They (“we,” actually, since everyone reading this article falls into this category) are digitally enabled, smart customers. That means we don’t just expect—we demand—that cross-channel, cross-platform experiences and interactions are seamless, error-free, and consistent.

You’d think a member of the Digerati such as Johnson would have understood this. And perhaps he did, but, lacking the hands-on eye for detail of his former boss, he missed the fact that his print catalogs and online channel weren’t integrated.

Regardless, for JC Penney to recover under their new CEO (who actually is their old CEO), it needs to get back to basics. This means starting with a crystal-clear understanding of its target customers’ expectations for the brand and ensuring that it consistently delivers on those expectations at every touchpoint, across every channel.

Good luck, Mr. Ullman. You’re going to need it.

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Ask, Listen, and Act: New Rules for Actionable Voice-of-the-Customer Research

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From dorm room start-ups to the Fortune 500, there’s a common thread among the most successful businesses: give your customers what they want, when and how they want it. In the era of smart customers, understanding what this means–and providing customers the experiences they demand–is more important than ever.

How do companies identify customer wants and needs? Simple; they listen to their customers. In the “old days” this meant gaining insight through casual conversations or anecdotal information from the field. Today, customer listening is more structured, with most companies of size having some sort of customer feedback mechanism or formalized Voice-of-the-Customer (VoC) programs in place.

The goal of listening to your customers is to give them what they want. But research data alone won’t get you there.

Moving beyond data to genuine customer insights.

To succeed, your customer listening program must do more than simply ask for customer opinions. It should consider the range of research disciplines that combine asking and listening to get at the customer insights that can drive business, brand, and customer experience improvements.

Today, there’s a full range of tools and methodologies that any company, regardless of size, can effectively employ. Both qualitative and quantitative, they include ways to ask and listen to your customers, and the market.

Traditional customer research is controlled by the company, and based on “asking” customers, prospects, and employees what they think. These conversations ask the questions you want in an environment you control, soliciting opinions and gathering data around their relationships with, and perspectives of, your organization.

More recent research tools are based on “listening” to the customer-controlled conversations taking place across the web and even within your company. Ranging from social media monitoring to interpretation of customer emails and call-center recordings, the ability to find, gather, and analyze unsolicited data can provide insights into your customers and the market that more traditional research can’t easily surface.

Both methods have their place. Recognizing the complexity of most customer experiences and today’s ever more transparent market, a combination of asking and listening is needed to get at genuine customer insights. It’ll help ensure you’re getting the right information from your customers, employees, and prospects, and that you’re doing so with the right combination of research methodologies, across all aspects of the customer experience.  

The most important VoC research outcome of all: The ability to act.

Amazingly, we’ve seen that among those firms that do gather customer data, maybe a quarter of them actually use this feedback to inform experience design or decision making. Acting means analyzing the data you collect in ways that provide actionable insights, not just a series of numbers on an internal scorecard. It means you actually use the information you gather in your decision making process.  It also means sharing the results widely across your company, so that employees can see for themselves what customers are saying.

The fact is, many companies spend lots of money on customer research without a clear understanding of how the information they gather is going to drive a return on the research dollars invested. Insights often take too long to gather, cost too much, and end up sitting in a report or siloed in a department (often marketing). It’s a waste.

It’s true that VoC programs often require significant resources. But they don’t always have to. Regardless of investment level, the right programs will deliver insights that chart a path to an improved customer experience in addition to measurable increases in wallet and market share, acquisition, and retention.  After all, ROI is key on such initiatives; without acting on your insights, it’s impossible to post the results that drive it.

So ask your customers what they think. Listen to what they have to say. And take action on what you learn. Then do so continuously, so you can see the results of your actions over time.

Your customers will thank you–and so will your bottom line. 

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Five Ways to Earn Customer Trust

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It’s difficult enough that companies are losing influence with their digitally-enabled smart customers. Even worse, they’re losing their customers’ trust. And it’s not surprising. The fact is, many organizations are undeserving of customer trust.

Companies ravenously gather customer information, and use this data not to serve them, but to bludgeon customers with product and service offers they don’t want or need. Or, these same companies forget or ignore everything their customers said or did—right when their customers most need them to remember, like on a service or warranty call.

As customers, it often feels like companies don’t have our best interests at heart.  How could any customer trust a firm that doesn’t? You certainly wouldn't. Why would your customers behave any differently?

So if your firm is operating at a trust deficit (or if you suspect it might be), here are five things you can start doing now that will help you earn it…

1. Win/Win Instead of “We Win”: The best relationships are symbiotic—each party provides value to the other, and receives value in return. For example, companies can utilize technology to personalize and customize services at little cost, creating scalable, replicable “win/win” relationships with customers, giving them *just* what they want, and earning a healthy profit in the process.
2. Embrace Transparency: The concept of transparency terrifies most executives.  But it’s here already, and there’s nothing any firm can do to stop it. With a web connection and little more, even the most important supply chains, partnerships, pricing, and even customer data is out there for the viewing. So are your words and deeds—for everyone to see. Since you can’t hide anything, the best policy is to ensure you have nothing to hide.
3. Listen: Increasingly, those brands leading their markets recognize the competitive and financial rewards of asking customers what they think—and taking the radical step of listening to them, understanding their wants and needs and actually utilizing this feedback to better serve them. 
4. Be Respectful: It seems pretty simple, yet it’s stunning how many companies don’t respect their customers. On hold, a voice says “Thank you for waiting.  Your time is valuable to us,” then you are forced to wait 10 to 20 minutes for service. Or they impose huge fees based on “the fine print.” The list goes on. If customers don’t get the respect they deserve from you, they’ll get it elsewhere.
5. Don’t Make Promises You Can’t Keep: Dispensing with the obvious (don’t promise it by Friday if you know it’ll be next Thursday), you need to recognize that customer’s expectations of what it’s like to interact with your firm–usually driven by things your firm has said–are a promise, too. If your customers’ experiences don’t match those expectations, you lose trust (and customers).

Historically, business has seldom had to revolve around the truth. That’s changing, because it’s no longer possible to hide the truth for any length of time. You should expect that all your statements and actions will be examined, tested, discussed, and shared by and among other people—many of whom aren’t even customers.

Leveraging the power of social influence, the hyper-connected, insatiably curious market will come looking. They’ll review and analyze the quality of your products, the degree to which they believe your firm is trustworthy, whether you (or your products) perform as promised, and if you did what you said you were going to do.

And if you’re found wanting, then too bad. Because your competition is only a click, call, or street away.

If you really want to keep your customers—and win more, in the crucible of a transparent, hyperactive marketspace—then it’s time to seriously think about what it means to be trustworthy, and start aligning your deeds and your words with your customers’ best interests. Because trust is the foundation and mortar that builds (and sells) a brand.

Ultimately, truth—in deeds and words—is what drives trust.  And not only can this truth set your company free, it can be used to build trust as well. Between your people, the market and your customers, driving the kinds of value that only engaged, loyal customers can provide.

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Are Your Customers Getting The Love They Deserve?

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If you’re like most customers, sick and tired of waiting on hold (“thank you for holding... we’re sorry for the inconvenience...  we exist to serve you...”) and repeating the most basic information (your name, account numbers, passwords, and more, every time you transact on the web, over the phone, and in-person)–you are desperate for basic intelligence if not a little human attention. Some respect would be nice too. And yes, maybe, just a little love.

Frankly, customers just don’t get enough love from most of the companies that wish to serve them.  It’s kind of funny.  Or would be if it wasn’t so counterintuitive. Let’s consider the customer relationship lifecycle in the context of an interpersonal relationship. (Hint: that’s what it is, so pay attention.)  At first, the relationship is rosy.  Big promises, great packaging, nice salespeople, and “service guarantees.” On the road to selection and purchase, every company trots out its best marketing tools and sales expertise in an effort to get the customer.

The irony is that in many cases, all this great stuff gets tossed once the relationship has been consummated; most companies focus more on acquisition than retention. Compare the rise of marketing budgets (acquisition) with the allocation of comparatively small budgets for improving customer experience (retention), in spite of the recognized connection between better customer experiences and higher revenues. 

So, how do customers feel?

The thing is, once a customer has experienced a certain level of service–and made a purchase decision based on this experience–their natural expectation is that that level of service will continue to be met.

In our personal lives, we understand we cannot realistically expect close friendships, family relationships, or a marriage to survive and thrive if we do not continue to put effort into maintaining them. Why should a company’s relationships with its customers be any different?  Unsurprisingly, any company that doesn’t pay at least as much attention to keeping their customers as getting them is vulnerable to those customers walking away.

Certainly many companies already realize this. When it comes to delivering an exceptional customer experience, retailers such as Marshall’s, Target, and Amazon are among the Top 5 on Forrester's 2013 Customer Experience Index Rankings.

But thousands of other companies are vulnerable because the state of their relationships with their customers is so poor. For many of these companies, their products and services tend to be impersonal. Responsiveness is uneven at best, miserable at worst. The experience across departments or channels can be so different from one to the other that the relationship with the company feels broken, if not downright schizophrenic.

In the era of the smart customer, it takes less time than ever for frustration, annoyance, and anger to build.  Across the board, customers are tired of being misled, or even lied to, and being treated as numbers rather than living, breathing human beings.

They’re not going to take it anymore. And guess what? They don’t have to. Your competitors are a click or a call away, and no matter what industry you’re in, it’s easier than ever for your customers to switch.

So how do you identify–and fix –any customer relationship issues? It’s simple. Just remember, it’s not about you. It’s about how your customers believe you treat them.

Want show your customers some love? Look in the mirror…

As with any relationship you wish to improve, the place to start is by looking at yourself. I suggest that you hold up an unrelenting mirror to the way your firm touches individual customers.  Put yourself in their shoes.  Are you fulfilling your promises to them? Does the experience of interacting with your company make their lives easier and more enjoyable? Or is it difficult and no fun at all for them to get to the information they need? 

If you’re honest with yourself about what you see, this mirror has the ability to force process, organizational, and cultural changes within your company.  In the age of smart, digitally empowered customers, fixing customer experience also falls into the realm of “enlightened self-interest.”

And you should improve it now, before that same lens through which your customers see you reveals your flaws to the rest of the world.

Because once the force of social influence helps everyone hear how you’ve scorned your current customers, you’ll have a much harder time getting new ones–regardless of how many marketing dollars you throw at creating new relationships.  After all, it’s much more profitable (and way easier) to drive loyalty among the customers you have, than scrambling to replace those you’ve lost.

As they say - now painfully immortalized in the words of 80’s glam-rock bank Cinderella – You Don’t Know What You Got (Till Its Gone).  

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Redefining Customer Experience: CRM, VRM and “Disruptive Technologies.”
Did You Know You’re Competing With Apple?

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Customer Loyalty Ain’t What It Used to Be.

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How loyal are you to the brands you use? Whether as a businessperson or consumer, I’ll bet there isn’t a company you wouldn't consider switching from if you could find a better product or service elsewhere. In part, this is because our collective tolerance for mistakes has decreased, while at the same time our expectations for service, selection, price, access, quality, and more have radically increased.

As a result, customer loyalty as it existed even ten years ago is largely gone. The majority of customers rarely stay loyal to any one company anymore, regardless of the circumstances.

For example, we conducted a customer experience assessment for a mid-size regional bank, known for—and proud of—its stellar customer service and respected brand. Their loyalty scores and core customer experience metrics are among the best for banks in their market. So imagine how they felt when we discovered each of their customers had relationships with an average of 2.9 other banks—and that they were considered the “primary bank” by less than 60 percent of their customers.  

Last time they checked, which was several years ago, they were the only bank for the vast majority of their customers. What gives?  Unsurprisingly, it turns out that an awesome cross-platform digital experience is really important. Customers aren’t looking for “trusted advisors” as much as they are error-free, brain-dead-simple transactions and account management tools.

In a trend we see play out with some regularity, customers’ needs have dramatically changed in recent years, and many are getting what they need elsewhere.  And why not? Alternates are easy to switch to and even easier to find and assess.

Barriers to access have fallen in most every industry, including many that have historically considered themselves immune. Here in the San Francisco Bay Area, you can sign up to buy green power from an upstart called Marin Clean Energy, which delivers “green” electricity at a lower cost through the dominant regional utility’s (PG&E) power lines—its direct competitor.

My point is this: No matter what industry you’re in, you can count on it being easier than ever for your customers to switch. Traditional definitions of loyalty are quickly becoming irrelevant. Blind brand loyalty and trust are things of the past, and “trapped” customers (of utilities, cable providers, health insurers, etc.) won’t be trapped much longer.

That’s why you need to prove yourself worthy of customer loyalty—over and over, again and again.  And you do so by anticipating customer needs, giving them exactly what they want, when and how they want it—while at the same time consistently delivering a superior customer experience across every channel, interaction, and touchpoint.

Getting this right means your customers will be more willing to consider your new product and service offerings (or more of those you already have), and they may even go so far as to recommend your brand. And while this sounds an awful lot like loyalty, they’ll continue to do so…until the moment something better or easier to use comes along, and/or you fail to deliver on the experiences they expect and demand.

The truth is, it's a qualified, fairly unforgiving loyalty. 

The good news is the roadmap to gaining it is crystal clear: Consistently meet or exceed expectations by delivering awesome experiences and give them the products and services customers want and need. How hard is that? Well, it does presuppose you know what these wants, needs, and expectations are. And, of course, you do. Right?

Put another way, your customers may still love you—but they are far from monogamous. Maybe it’s not the relationship you wish you had…but it’s not so bad, once you get used to it. You’ll see. Because you’ll have no choice. 

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