Customer Reviews – Trust, but Verify

Customer Reviews-Trust, But VerifyDuring the last two decades customer reviews and ratings became an ubiquitous part of e-commerce. Over 88% of consumers gratefully use them to select goods and services, whether they purchase them online or off. There are numerous studies that tie in availability of customer reviews to increases in sales, occupancy rates and other business benefits. Nevertheless, there are some people who question the authenticity or usefulness of customer reviews and ratings at large. There are certainly examples of attempts to manipulate consumers with fake reviews or inflated scores, but overall the usefulness of publicly available product/service reputation information is undeniable.

While there is a law to protect consumers from predatory marketing practices, it is important for consumers to learn how to assess the meaningfulness of information they use for purchasing selections. I would like to illustrate this point with personal experiences I had during my recent travel to Italy.

After researching the reputation of multiple airlines, that fly between San Francisco and Italian destinations, I booked the flight with Turkish Airlines. The company seem to combine high levels of satisfaction (according to online customer reviews) and very attractive rates.

Turkish Air sNPSWhile in air service and schedule reliability where quite good, the experience of a layover in Istanbul was a complete buzz killer. The airline did not live up to their online reputation by failing to assist us in any way. Upon return, I took a closer look at the online reviews and noticed that nearly 92% of them was published by passengers who traveled within very close distance and did not experience layovers. In retrospect their experiences were not all that relevant in supporting my selection. Iberia, that has similar reputation scores and not prohibitively more expensive, would have been a better choice as much higher percentage of their reviews were published by the inter-continental travelers.

Since I could not get any promised assistance from Turkish Airlines, I used Bookings.com to find the hotel with the airport shuttle service. I booked the site’s highest ranked hotel since my phone’s screen was too small for reading multiple reviews. Upon arrival to the Istanbul’s airport I discovered that the Coresh Suites Hotel shuttle service did not exist, the taxi costs equaled our room rate, the hotel could not possibly be reviewed as high as Bookings.com ratings implied. The bed was tiny and uncomfortable, and the bathroom was not clean. Overall, it was a miserable experience.

A day later I received an email from Bookings.com with request to review my experience. Looking at their request form I understood what caused discrepancy between the hotel high score rating and my actual experience – Bookings.com asks guests to rate a limited number of customer experience attributes, and then algorithmically generates an overall score that they call a customer review. In my opinion such an approach makes their “customer reviews” too easily manipulable and not trustworthy. Therefore from now on I will book my hotels from TripAdvisor.com.

The customer reviews work well when consumers can read actual descriptions of customer experiences and apply them to their own expectations of experience. The details of the described experience, the language and phraseology help consumers to recognize authenticity and ascertain meaningfulness of the content to their own situation. The statistical averages offer very little utility and the algorithmically produced ones are almost as good as “faked”, regardless of the intent.

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Poll Timing Dilemma

Poll Timing DilemmaThe other day I booked a flight on a popular website. As soon as the ticket order transaction was completed, I received a nicely designed request to share my experience with the agency. That request immediately made me feel uneasy because my flight is still a month away. The fact that the booking agency thinks that their job is done, makes me wonder who “owns” the delivery of the actual experience I have paid for? This example of premature polling is not an isolated case or rare occasion. Many of you can probably recall survey requests made before the product, you have ordered, was actually delivered. A poll of my personal contacts reveals that each and every one of them had multiple instances of such requests.

On one hand, a company may initiate the surveys prematurely because they experience low response rate and want to engage their customers as soon as possible, before they forgot who delivered the initial (or intermediate) part of their experience. That is a real concern.

On the other hand, premature customer satisfaction polling is a clear indication that the polling company either does not understand or does not care about the actual experience of their customers.  Neither is reassuring to the customers. Neither motivates them to engage and respond. Therefore, an unintended consequence of the premature poll is the very low customer engagement rate that motivated the company to initiate the premature poll in the first place.

So, what is the right time to ask customers about their perception of the experience you deliver? I don’t think there is a “one size fits all” answer to this question, but ultimately there is no single “right” time to ask for it.

Holistic customer experience is a perception customers develop over multiple steps they travel from the time they realize their need to the time this need is satisfied (hopefully). If you have done customer experience mapping, the times of asking your customers about their experience are closely correlate to the milestones of the map. Your CX map may likely include multiple “partners” within and outside of your organization. Therefore, taking and recording customer satisfaction “temperature” may need to be viewed as a lengthy process, rather than an event of sending an email.

If your primary goal for asking customer’s opinion is to cover your proverbial ass, why would the customers be motivated to engage? If the process designed and communicated clearly as probing of ALL steps along the customer journey for the purpose of assuring consistent and frictionless experience, the customers are more likely to participate. Remember – “Help me to help you”?

Lastly, resist the immediate urge to start looking for a survey technology provider. Nobody needs technology to do a right thing. Technology can help us to do things fast and cheap, whether anybody benefits from it or not. Find the right process first, test it with “free” tools and calendar notes on the small subset of customers, then compare results against the engagement rate of the control group. When the engagement rate increase is acceptable, it’s time to bring a technology partner.

I do understand that the engagement rate is not the end goal, but it does closely correlates with extreme customer satisfaction or extreme customer disappointment. In either case the specific information provided by highly engaged customers will help your company to rite “the ship” or widen the gap between you and your competitors.

 

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How Singularity Kills Customer Experience Management

CurlyCulturally we are conditioned to look for a SINGLE reason, element or root cause to solve any problem. Remember Curly’s “One Thing” in the City Slickers movie? Well, this concept of singularity does not work in customer experience management by definition because of the complexity of customers perceptions’ “management”. Yes, how do you manage someone else’s perceptions? I have addressed this question before, but the answers did not offer a single step path to CX heaven. The answers call for a review of the existing business processes and practices, and that costs money.  Money to pay for analysis and improvement of these processes, money to pay for technology to automate these improvements, money for change and adoption management, etc. These is the money that would surely increase quarterly earnings per share and management bonuses, but instead will possibly increase “what and when”?

US Nobel-laureate economist Herbert Simon, in his 1982 book “Models Of Bounded Rationality” introduced the term satisficing:

“Examining alternatives until a practical (most obvious, attainable, and reasonable) solution with adequate level of acceptability is found, and stopping the search there instead of looking for the best-possible (optimum) solution.”

Satisficing is a valuable survival skill for decision making practitioners, who deal with endless uncertainties, but a liability for strategy/vision developers who are suppose to navigate the course to the best future destinations. That explains why visionary leaders have a better grasp of customer experience concepts than functional managers and corporate executives, who came from their ranks.

Until the advent of Customer Experience rising to prominence, corporate management was very busy minimizing the cost of everything associated with customer support and services, which is a part of the domain. For years they enjoyed the blissful illusion that the technology investments, they have made, allowed them to increase profitability without reduction in customer satisfaction. Is it really that surprising the same technology vendors re-name their products to pitch “new” solutions to the same buyers? The pitch may have changed, but the singular focus on cost reduction did not. And that will turn CEM into another fad like it did turn CRM into more efficient, i.e. inexpensive way to provide sales management reporting and low cost customer support infrastructure.

We preach that long-term growth cannot continue without an adequate improvement of customer experience, but a short-term reality check shows our managers that customers, both consumers and business, are still focused on the price more than the experience. There is strong evidence of trends that make our case more persuasive, but we need to spend less time on playing with “tools” and work more on re-framing the concept of customer experience management as an engine of growth, before it becomes a domain of corporate IT.

 

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Voice of Customers Challenge to Product Managers

VoC challenge to PMFor years I have been puzzled by the fierce resistance of product managers to integrate customers feedback into the products’ design and marketing process. Surely, many use elaborate survey and market focus group studies to validate and refine an original concept, but the use of the feedback to form an original concept is widely sneered upon as a fool’s errand.

Many practitioners are convinced that customers do not know what they want, until they experience a remarkable product they cannot live without. While there is some truth in the belief that customers cannot articulate their latent needs, it doesn’t mean they have nothing to contribute to the process of conceptual design. Product managers, who rely on their own vision, like to quote Henry Ford “If I’d asked my customers what they wanted, they’d have said a faster horse” without realizing that he never uttered those words. Meanwhile the dependence on Divine Intervention, i.e. visions of product managers, results in very high product failure rates and is a luxury fewer companies are willing to gamble on.

There are two basic reasons why customer feedback as source of inspiration is commonly rejected:

  1. Marketing Research proved to be very ineffective in the past in identifying truly original product opportunities. For many product marketers it offered a convenient excuse to throw the proverbial baby out with the bath water. However, the few who have learned that “The job, not the customer, is the fundamental unit of analysis for a marketer who hopes to develop products that customers will buy” – Clayton Christensen, experienced consistent improvement in bringing successful products to markets. In other words, research into the experiences of customers, who use currently existing products, will discover original product opportunities – not the research into product’s features and functions, customer personas and market sizing. The core question is why did customers buy it in the first place, i.e. what do they hope to achieve by using it?

 

  1. The traditional approach to the management of customer feedback is an analysis of what customers say, or how they feel, about your product and/or products offered by your competitors. However, analysis is only the first step of gaining an insight.

 

The terms “Voice of Customer” or “Customer Feedback” in this context do not include structured data compiled from closed ended survey questions. The response to such a question cannot help to discover a latent need, it can only validate one that was previously discovered. This discovery can only be done by a synthesis of previously analyzed open form feedback, such as unstructured commentary or review. As customers share their experience of currently available products, they often use different words and expressions to describe common frustrations or delights. It is not a trivial task to understand the specifics of their frustrations and to interpret this understanding into new product requirements, i.e. synthesis.

 

There are many tools available today to collect, aggregate and analyze customer feedback. The science of this process is well defined and commonly utilized. There are some capable technologies available for detailed analysis of unstructured feedback, even though they are not yet as easily productized and applied. However, the art of synthesis and translation is the domain of creative product practitioners that rely on data instead of vision.

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Which is a better investment – Customer Experience or Brand Management?

Which is a better investment
The advancement of social media during the last ten years gave rise to the power of social customers. That power precipitated fundamental shifts to the marketing paradigm which was developed over 3 decades prior. Surprisingly, only relatively few companies noted the avalanche of research into the financial implications of these shifts and made appropriate changes, while most still debate the impact of customer experience on enterprise valuations.

I documented before the multiple correlations between successful customer experience investments and creation of wealth. Now, new research published in the Harvard Business Review examines trends of brand and customer value components as percentages of overall enterprise valuation. The authors analyzed over 6,000 M&A (Mergers and Acquisitions) activities worldwide between 2003 and 2013 to reveal the dollar valuations of all assets at the time of the acquisitions. During this period, that coincides with the explosion of social customers influence, the market valuation of “brand” assets declined almost 50% while the valuation of “customer” base increased 100%.

What is better investment

The public transparency of customer experience a company delivers became very common during this period. Consumers and business buyers prefer to use such information to make purchase decisions and that erodes the power of brands.

In the past a brand was recognized by a company as the more valuable asset because they served as a proxy for the quality of products or services sold under that brand. In the vast “ocean” of uncertainties of choice (“Life is like a box of chocolates. You never know what you get”), a brand served as a life raft. The loyalty to a brand reduced uncertainties of the market place.

Today, consumers have unlimited access to better tools for reducing shopping uncertainties – the past experiences of socially connected customers.

Companies that understand this shift in marketing paradigm choose to reduce the investment in trademarks and trade names, banners and domains to focus on delivery of superior customer experience instead.

Delivery of Superior Customer Experience (SCE) means delivery of experience that is rated consistently higher than the experience delivered by your direct competitors from the customers point of view (“outside in” perspective). The only meaningful and authentic rating is done by the customers publically and “in the wild”, i.e. not solicited or influenced by a company or its agents.

Such a shift in marketing investment strategy results in a reduction of customers churn, an increase in margin and a lower cost of customer acquisition, i.e. an increase of CUSTOMER VALUE component of the overall enterprise valuation.

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