Innovation Management Wisdom

Archive for October, 2008

One Customer’s Experience Management Audit of Apple

Last night, CNBC’s Jim Cramer said that Apple has become the bellwether stock that drove yesterday’s 900 point stock market rally.  If that’s true, then Apple’s preeminence as a stock worthy of investor attention emanates from its strong customer experience fundamentals.

I recently bought my first Mac. So, my customer experience management audit of Apple’s customer experience is based on the experience of one–me–and my pre-purchase research about how consumers rate various PC brands and Macs.

This isn’t our complete customer experience management audit. However, it illustrates the kind of evidence we present to management teams deciding where to invest to improve customer experiences.  Just like with stocks, a cogent presentation of the evidence can make your choices so much more obvious…

  • Computer users rate reliability, ease of use, compatability, speed and computing power among the most important infuences on their computer and software purchase decisions.
  • On these measures, Apple rates superior to most or all competitors.
  • Customer loyalty, satisfaction and likelihood to refer are higher for Apple users than for other providers. Apple users are raving fans.
  • PC users are defecting to Apple due to their frustrations with software bugs, vulnerability to viruses, incompatible software, system crashes and lost productivity. Consumers’ complaints about Microsoft’s Vista operating system have contributed to consumer resistance to upgrades under the Microsoft brand.
  • Apple store staff I interviewed confirm that roughly a third of new Apple computer buyers had never owned a Mac.
  • Apple stores provide local market presences, user-friendly product displays and highly trained staff.  Live, in-store training sessions are provide for a nominal fee. These bolster customers’ confidence that their transitions from PCs to Macs will be short and successful.
  • Apple store staff are well prepared to answer customers questions about transferring files and software compatibility. Staff positively differentiate Apple by describing how Apple designs their software and hardware to work together and why Apple’s software is less prone to bugs and hacks. Store staff introduced me to two ex-PC users in the store who testified to Apple’s superiority.
  • Apple’s product lines, including Macs, iPods and iPhones, are literally made for each other and are 100% compatible.
  • Post-purchase, the same Apple store staff who sold the Mac called to assure that I was satisfied with my purchase and to answer any questions.
  • Computing consumption, in the form of desktops, laptops, software, entertainment and other products will continue to grow globally. New market entrants in the U.S. are mainly younger users who favor Apple in disproportionately higher percentages than Apple’s current overall market share. This presages likely increases in sales and market share for Apple.

According to stock market expert, Jim Cramer, if you were determined to invest in technology stocks, Apple would have to be near the top of your list. Choosing where to invest in improving your company’s customer experience is similar to choosing stocks. It’s not a mysterious process. With a robust review of the evidence in a customer experience management audit, the choices become clear.

October 29th, 2008

Market Research Best Practices: Snake Oil?

Are best practices useful or merely pabulum?  This question comes up frequently at Whyze Group. We’ve have never used “best practices” in our literature.

We’ve even advised our clients to exercise skepticism when presented with anything labeled as “best practices”. What works well at one company is often counterproductive at another.

Today, I received an email from a prominent market research company promoting its intellectual capital through an email with this document attached, “Developing the High Peformance Market Research Function: Study Excerpt”.

The document provides no criteria against which the best practices were evaluated. The report is a derivative of research performed by the sponsor on behalf of its clients.

This begs the following question. Why would client firms knowingly hand over proprietary secrets (their best practices) for publication to the world?

Casting my skepticism aside, I opened the attachment and began to smile as I read the best practices cited in this report. Here’s one. “Benchmark partners were aligned in their aspirations to turn market data into intelligence that can grow the business.”

As I read other best practices, I began imagining myself in a Dilbert cartoon. Here’s another, paraphrased…when companies invest tens of thousands of dollars in focus groups someone from the company should attend them.

There are no market research practices in this report that deviate from those uttered decades ago or common sense. If there were genuinely valuable secrets, the sources of those secrets risked being sued for disclosing trade secrets.

Hence, are best practices–meaning, “the practices that the best 1% are using to outperform you”–really available?  Even if they were, would they apply to your organization? Of course, if your company’s capabilities and opportunities were identical to the company you’d be emulating, then they might.

As catalysts of strategic adaptation and innovation, we have a sacrosanct obligation to our colleagues, employees, our shareholders and our customers to get it right. This is our reason for being.

Getting it right starts with an honest heart, an open mind and critical thinking. If we’re really honest with ourselves, aren’t these the only starting points for figuring out what’s truly best?

October 16th, 2008

Gyrations in Financial Markets Provide Lessons for Innovators

Unprecedented daily swings in the DJIA are symptomatic of investors losing their gimbals. Negative swings in customer loyalty and profits are similarly indicative of management teams who have lost their bearing.

So here is a parting thought.

Are your company’s innovation efforts determine by what customers will reward…or by what company leaders will reward?  If you’re outperforming similar firms on customer loyalty then it’s both. If it’s only the latter, then you’re company performance looks like the chart for the DOW.

You’ll be interested to know that most companies’ approaches to innovation are dysfunctional.  As a result, 40% of Fortune 500 firms won’t be in the Fortune 500 in ten years.  We’ve consolidated the results of several studies about this.

<a href=”http://technorati.com/claim/hd2ey9i77z” rel=”me”>Technorati Profile</a>

October 16th, 2008

Qualitatively Unqualified Research

Background for this post consists of 18 years working with tens of clients and doing hundreds of qualitative interviews.  There are links below that will deepen readers’ understanding of qualitative research.  Additionally, many pages in this site place qualitative research in its proper context within the innovation process.

Anyone can moderate a qualitative research discussion.

When I sense that someone is entertaining this notion, a scene from “A Fish Called Wanda” flashes on the anterior wall of my cranium…

Kevin Kline: “Apes don’t read philosophy.”

Jamie Lee Curtis: “Yes, they do Otto, they just don’t understand it.”

An ape can lead a focus group. It’s just a conversation.  An ape can ask questions and get answers. And, that’s how high the bar is for some people who have seen focus groups and, thus, think they can lead them.

Each year, hundreds of focus groups and in-depth interviews are moderated by…we’ll call them dilettantes to be more polite.

But, they don’t know they’re dilettantes.  After all, they didn’t have to avoid losing a legal arguments or a patient. They only thing they had to avoid was inducing stoney silence among their research subjects.

A focus group costs $55 per minute. That includes facility rental, recruiting participants, moderation, analysis, report writing and M&Ms for everyone in the observation room.  But, the cost of poorly conducted interviews pale in comparison to opportunity costs of lost wisdom and business opportunities, which typically amount to millions over several years.

Yes, dilettantes will continue to ask, “What would make you buy?”, of their research subjects and they’ll continue to get answers.  But, for so many reasons that we don’t have time to address here, they’ll be useless and misleading answers.

So, the next time you hear someone suggest that they’ll do qualitative research interviews themselves, suggest that they take this not-so-tongue-in-cheek, “Qualitative Research Dilettante Self-Test”:

If they flunk the test and still insist on moderating, you’ve done all you can. They’re headed recklessly toward the fruit aisle…to the bananas I think.

Whyze Group moderates qualitative research interviews that derive strategic, business-building wisdom from participants and imparts it to managers.

October 13th, 2008

Customer Experience Lessons from Obama and McCain Campaigns

The process by which the American electorate chooses presidents is representative of how customers choose your products and services. They make decisions based on emotions, not necessarily a lengthy or even rational comparison of features.

The Obama and McCain campaigns provide lessons for organizations striving to deliver compelling customer experiences. Both campaigns are increasingly relying on sound bites and photo ops that stir emotion and influence a specific voter persona–those who are still undecided.

In the private and public sectors, emotions drive customer experiences and decisions. Presidential candidates use tracking polls to tell them what emotions they are are creating among voters. In response, politicians change their tactics daily.

While Obama’s platform includes tax reductions for 90% of households, the McCain campaign has repeatedly referred to Obama’s intent to raise taxes on the middle class. McCain’s sound bite is easier to understand and strikes a powerful chord with voters, even if it’s arguably untrue. The facts, however, carry less weight among undecided voters at this point in the election cycle.

Emotions rule, particularly among voters just getting to know the candidates. The persona of today’s undecideds is different from those who’ve been paying close attention for the last 18 months. The undecideds are probably far less engaged.

The process by which the American electorate chooses presidents is representative of how customers choose your products and services. They make decisions based on emotions, not necessarily a lengthy or even rational comparison of features. Emotions drive customer experiences. Each customer persona responds differently.

If you know what emotional hot buttons to push, how to push them and among whom, you’ll be well on your way to innovating customer experiences that grow grass roots support.

October 8th, 2008

Company Innovates Next Generation of Hand Tools

Managers at a leading hand tool manufacturer wanted to innovate the company’s next generation of hand tools. Previous research pointed toward the existence of diverging needs among professional builders and DIYs.  

There was little agreement among managers in marketing, product development, manufacturing and finance about which segment the company should focus on or kinds of product improvements that would increase sales and profits. Whyze Group facilitated the team through a customer experience management audit. The team identified several critical gaps in their knowledge, which Whyze Group filled. 

Over the next six months, Whyze Group worked with managers to prioritize segments, develop ideas, refine prototypes and prepare for production and rollout.  We conducted customer interviews that identified innovative product features that built on buyers’ mental models about usability, durability and safety.  

Whyze Group helped the team find the optimal combination of new product features with a customer experience survey that included discrete choice analysis. While finding the most desirable product features was a goal, we also wanted to minimize cannibalization of our client’s existing products. Working closely with our client, we found a new product configuration that increased buyer preference for our client’s product portfolio by 22%.  

October 7th, 2008

Insurer Shifts its Mindset to Win Back Independent Brokers

A top-ten insurer wanted to improve its relationships with independent insurance brokers, the channel through which the company generated most of its sales. An experience management audit revealed that brokers had grown increasingly frustrated with the company.The company’s broker satisfaction studies showed declining ratings across the board. Some brokers had stopped selling some of the company’s products. Most company leaders guessed that high pricing and poor customer service contributed to broker sentiment.

For years, the only feedback that most managers viewed as credible was a closed-end broker satisfaction survey.  This provided no opportunity for managers to act on issues outside of those addressed in the survey.

We’ve seen organizations get tunnel vision from focusing too much on survey results before. The company’s numbers-driven culture served it well in pricing products and handling claims, but not in managing broker relationships. 

We scheduled a discovery session with the management team. We knew that when we aired our observations about the company’s focus on the broker survey, it would create a fleeting, valuable opening for managers to question the status quo. And, they did.

Several managers seized the opportunity to publicly criticize the broker survey process.  They said it didn’t address several recent breakdowns in the company’s broker relationship management process.  This got the attention of the rest of the team.  It also created a new openness among team members to learn what was really going on with brokers.

Whyze Group conducted one-on-one interviews with brokers in every region.  It turned out that brokers regarded the company’s underwriting and customer service operations highly.  Pricing was an issue among a small minority.

The real problem was brokers’ growing mistrust of the company. Brokers were increasingly suspicious that their hard-won books of business would be decimated when the company unilaterally withdrew products from some markets.  This had been happening with increasing frequency over the previous three years.

Some brokers simply stopped investing altogether in selling our client’s products.  They increasingly turned to selling products from competing insurers whom they regarded as more committed.

Adding to the mistrust, retiring brokers’ books of business were sloppily transferred to the brokers who bought them.  Sometime, multiple brokers divided these books.  There was little transparency in this process and perceptions of unfairness and favoritism prevailed.

Whyze Group facilitated the management team through design sessions aimed at increasing the transparency, accuracy and timeliness of these transfers.  The team also reconsidered making its contracts more favorable for brokers in light of the company’s desire to maintain flexibility in moving in and out of markets.  These and other broker experience innovations are being implemented with the support of the CEO and executive committee. 

October 7th, 2008

Food Processing Company Innovates Industrial Accounts Management Processes

Managers at this billion-dollar proteins processing company hired us to help them deepen relationships with supply chain partners like Campbell’s Soup. The company wanted to explore alternative account relationships that would add value to partners. In addition, the company wanted to understand the implications of migrating from the existing account team structures.

Whyze Group interviewed key company executives, reviewed internal documents and mapped the company’s national accounts relationship process. Whyze Group conducted detailed industry analysis and supply chain research.  In addition, we interviewed key managers of Malcolm Baldrige National Quality Award Winners, such as Solectron and Fedex, which successfully addressed similar partnering challenges.

One of the most productive shifts Whyze Group accomplished was reorienting managers from a supply chain view to a demand chain view. Our client’s downstream partners were closer to consumers. Downstream partners experienced pressures that shifted in response to consumers’ eating habits and budgets.

Whyze Group presented the executive team with three models for building deeper, more profitable relationships with its demand chain partners.  All three models were conceived with the intent to enhance our client’s ability to sense shifts in consumer demand, contribute insight to industrial partners and respond proactively to joint opportunities. 

Working together, we drew the implications on account team organization, skills, timing, activities and performance metrics. These partnering models have become foundations of the company’s partner strategy.  They’ve enabled our clients to build and strengthen relationships with national account partners.

October 7th, 2008

Maintenance and Repair Parts Wholesaler Innovates Small Business Customer Experience

This billion-dollar distributor of maintenance and repair supplies wanted to find ways to deepen its relationships with small businesses.A customer experience management audit revealed that the company relied heavily on research with large business customers to guide improvements in the customer experience.  Small business customers, however, were becoming far less loyal.

Whyze Group led in-store cue scans and focus groups with small business customers. These showed that small businesses have buyer personas and needs that are different from large customers. 

Small business customers’ usage of phone, internet and store locations correlated with these personas.  This helped the company to anticipate the expectations of small business customers depending on which channel the customer used. 

Whyze Group identified opportunities in sales, customer communications, products and pricing to deliver improved customer experiences to each small business persona. This became the foundation for redrafting customer communications and customer relationship management processes in ways that resonated with small business customers. 

We prioritized these opportunities to improve small business customer experiences in light of changes in the size and composition of the small business market.  Our analysis showed that the size and makeup of the small business market was likely quite different than the management team had believed.  We worked with managers to prioritize opportunities in accordance with assuring mutual benefits to customers and company.

October 7th, 2008

Paint Manufacturer Learns that Customer Experiences Start with the Can (not What’s in It)

A manufacturer of exterior coatings wanted to find ways to initiate superior customer experiences among shoppers browsing for deck stains.Managers wanted to know what consumers currently experience when they shop for deck stains. 

A customer experience management audit revealed that the company had done little consumer research before. The company had only recently hired a marketing staff. Cryptic product names reflected chemical properties that were meaningless to us and, we presumed, other non-chemists.  We suspected that homeowners needed more user-friendly information before they’d even consider buying this brand.

Whyze Group moderated interviews with do-it-yourselfers who own patio decks and other exterior wood products. Through this exploration, we identified six expectations and 14 different concerns among prospective users of deck stain products. 

With Whyze Group’s help, managers identified 12 measures it could take to communicate more effectively and initiative positive experiences with shoppers in store aisles.

October 7th, 2008

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