The web and consumption in emerging markets

With the ongoing worldwide recession many companies have put their hopes in emerging markets but for some the results have not lived up to their expectations, are taking much longer than thought or seem imperilled. The view from the web can help us put things in perspective and find specific opportunities for the right product mix and distribution channels.

Will China’s consumption take off? Will Brazil shrug off its recession? How can we grow more in Mexico? These are pressing matters for companies that have invested in emerging countries and now depend on them for their results. Seen from the perspective of the connected consumer we can see several opportunities:

What’s our customer’s experience as a consumer?

Closed, State led, corporatist economies left behind consumers, who made do with what was available locally, whether it was good or bad. The moment the economy opens and / or consumers are exposed to other possibilities thanks to the web, they leave old, stale brands behind to embrace what’s better or simply different.

The opportunity for multinational brands is to earn customers’ trust by offering choices which are clearly better than what they are used to, which represent the state of the art they can aspire to, or the best at their budget. This is a serious advantage when the competition is used to being a monopoly that treats its customers as barely tolerated pests.

[boxright]In some cases consumers would prefer national brands for patriotic reasons, in others anything foreign is automatically considered better, and brands will need to navigate these cultural peculiarities with care. For instance while many Mexicans would prefer to buy a national product they also traditionally thought of “made in the US” as synonymous with “better”, not because US products were the very best but because national products were so very bad; with the opening of the economy in the 1990s Mexican consumers have learned that the very best might come from other countries and that there are also bad US products, while many national brands were bought or disappeared altogether. The opportunity lies in earning our customer’s trust, and while some segments will buy national or foreign products regardless of their actual quality, the vast majority appreciates what’s done well.[/boxright]

The risk for multinationals is to repeat the same patterns as the local competition and become part of the oligopoly. We might be the biggest ice cream producer or the biggest eyeglasses manufacturer in the country, with healthy economies of scale and stupendous control of our supply chain, but it doesn’t mean our consumer appreciates o even understands our product – which means an opening for other brands.

How can the web help?

  1. We can draw up a comparison with our competitors along our customer’s journey in terms of satisfying her needs, beginning with the basics of safety, hygiene, identity, and establish which specific value drivers our brand can own.
  2. We need to take stock of our customer’s online journey, how it is exposing her to new products, prices and other consumers’ experience, as her purchase decision is increasingly being taken before she even steps into our traditional channels. We need to establish how much traditional marketing and distribution channels contribute to the sales funnel and trim them accordingly.
  3. We need to use the web to be part of our customer’s conversation.

What’s our customer’s probable evolution as a consumer?

All economies have undergone an evolution in terms of consumption, and we can apply this experience to new markets. Customers have gone from conspicuous consumption (Bling! Cheap clothes!) to utilitarianism (Why do I have so many pants?), from conformity with what’s available locally to higher expectations (Customized fit, lower prices, durability, worker’s conditions), from mere transactions to participation (I would buy these pants again if they were available in grey).

The opportunity is to segment our customers according to their expectations, depending on this experience with consumption, their disposable income and aspirations, and adapt our value for each of these segments. A good example is how Audi and other car manufacturers have adapted their models to have more rear seat space in China, but there are many more opportunities beyond luxury.

We can then anticipate our customer’s probable evolution to adapt when some segments outgrow their original expectations, others are saturated or suffer external shocks (such as China’s fight on corruption and its effects on luxury goods used as gifts).

How can the web help?

  1. We now have a medium through which our customers can tell us directly what they are looking for, what they are and are not finding, how much they are prepared to pay for it. This is an invaluable tool for our segmentation and product mix as we can take the guessing out of the equation.
  2. The web can also help us deliver much of this value, from recommendations based on up to date profiles, previous purchases and what others are buying, to group purchases, to the pre purchase of special runs.

Analytics and the web: trust vs coupons.

Summary: Business Analytics represents a set of tools which has evolved from Data Warehousing  and Business Intelligence to Big Data, with some proposing Analytics 3.0 as the next big thing. Understanding its evolution from the perspective of the customer centric web can help us see its real value and limitations, and where we should be investing.

How can we control our business better? How can we plan for it, particularly when it’s a large enterprise with many products and thousands of customers? This question is behind the evolution not just of Business Analytics but also of many advances in IT; we can summarize its development in the following table.

Analytics 1.0. Analytics 2.0. Analytics 2.1.
NameData Warehousing, Business Intelligence. Big Data Information rich offerings.
What it does.Gather and analyze operations data: point of sale, inventory, customer contact.Vast data sets, much more powerful number crunching.Use Big Data to improve operations and transactions.
Who uses it.Most big companies.A few big companiesVery few companies.
Weak points.Stuck at reporting, seeing past trends, not actual analysis. Expensive and difficult to use for small and medium sized businesses.An end in itself? Correlations, not causality.Follows data, not actual customers.

CogAnalytics 1.0 had to innovate to gather all the information from operations, with the help from mainframes and later PCs; going from paper to computers meant a huge advantage in reducing costs, improving efficiency and controlling companies; as Davenport recalls, the most important task was always asking the right questions, to establish which information we needed to be gathering and analyzing, since these were such arduous, time and resource consuming tasks.

Most large companies use these tools in some way, although Business Intelligence has really mostly meant reporting about past operations, which is very useful but a long way from actual predictions. This sort of data gathering, reporting and analysis is still beyond the means of most small and medium sized businesses.

Analytics 2.0 means Big Data: suddenly we have tons of information available, and not just from inside the company; we could have the information for weather patterns, pay days and shopper visits to our stores; and we have the means to gather and process all that information, going from single local servers to many on the cloud, with innovations like in memory processing. Some companies such as Google, UPS and the port of Hamburg have thrived by using Big Data

Analytics 2.1, which Davenport sees as 3.0, is about the use of Big Data and the change it requires from companies to include useful information into their products. It’s useful as it completes the information loop, but it’s more of a 2.1 change because we are still talking about what companies do with all this information with respect to their internal operations and in some select cases about their products, which can result in a huge competitive advantage like for Google and Amazon, and does require changes in the organization; but there is a bigger and altogether different phenomenon going on, and that is how information access is changing our own customers.

On the web our customers are discovering many more aspects related to our products, and they are finding about them from other consumers. In many instances the purchase decision is taking place without any intervention from brands or retailers: our customers find which products best serve their needs among themselves and only contact us at the moment of purchase. Their experience is taking a whole new life after the sale, as they exchange impressions and experiences, which affect our future sales.

Telescope

In the “old” 1.0, 2.0, 2.1 mentality we can track customers just like we can track our products and operations, with tons of information and processing power, to then seek to improve the efficiency of our transactions; and this is very useful and profitable, but it doesn’t deal with our customers’ new expectations. And those expectations aren’t only about our products but also about ourselves.

A useful real life example example is the poor girl who found herself looking for certain products which taken together denoted an upcoming baby: the data collected allowed Target to send her pregnancy related coupons, which had an adverse effect on her as (a) it angered her parents, which she hadn’t informed, (b) probably made her feel uneasy about being spied on, and (c) probably put her (and others who read the story) off shopping at Target: great use of statistics, complete marketing fail.

What makes the failure even worse is that our customer is more than willing to tell us what she’s looking for, if we only know how to listen and help her find what’s best for her, which goes way beyond price cuts, coupons and promotions; in fact she’s more than willing to help our other customers find what’s best for them. Making customers feel like they’re spied on and used is exactly the opposite of what’s required, which is to earn their trust, make them feel safe and valued. We need to take into account our customer’s expanded experience and our own place in it.

The wording in the NY Times magazine story is telling: Target was fishing for times when customers were “vulnerable to intervention by marketers”  and wondered “How do you take advantage of someone’s habits without letting them know you’re studying their lives?”. If it isn’t already clear, customers don’t want to feel vulnerable or that they are being taken advantage of.

We don’t need “data scientists”, we need to know who our customers are, what they are looking for, why, how our product responds to their needs, how they find it, what they do with it; in other words we need to go back to the basics of marketing, now on the web. Business analytics and big data can indeed help, but they are only ingredients in the long term relationship we need to build with our customers.

Analytics 1.0. Analytics 2.0. Analytics 3.0.
Name.Data Warehousing, Business Intelligence. Use Big Data Our customer's use of data.
What it does.Gather and analyze operations data.Vast data sets, much more powerful number crunching.Understand how our customer uses data.
What we can use it for.Manage operations better.Incorporate useful info into our products.Respond to our customer's new expectations.

We can take these steps to respond to our customer’s new expectations:

  1. Establish a centralized way of learning about our customers, including all touch points from analytics and Big Data. This is also the first step for other projects such as CRM, customer satisfaction and the web.
  2. Establish how our customer’s expectations are changing, and how we need to respond.
  3. Establish who we want to be for our customers on the web, not just what info we can gain from them.

 

Customer satisfaction and the web

Summary: Customer satisfaction is a central pursuit for any company, and yet we have few clear tools to manage it. In this article we look at the usual suspects through the perspective of our web empowered customers. While these tools do help we urgently need to expand their scope, cut through the consultant speak and look for specific opportunities.

Customer satisfaction has been rightly established as a necessary competitive advantage to help us retain customers and has been helped by concepts like customer satisfaction surveys, net promoter score and customer effort, which we can summarize in the following table:

General idea.Customer satisfaction.Customer recommendations.Solve specific customer service problems.
Fancy name.Csat.Net Promoter Score.Customer effort.
What it does.Post sales customer survey.Substract customer "promoters" from "detractors"Focus on solving post sales problems efficiently.
Benefit.Gives us a service benchmark against which to improve.Only requires one or two questions.Lets us focus on improving specific problems.
Problem.Questions may not cover what customer really cares about, answers might be biased.Needs to be complemented with more questions, doesn't tell us where to improve.Applies only to customers who have contacted customer service, not the entire universe of clients.

When we talk about customer satisfaction we usually mean surveys we ask customers to fill after a sale, which we can then aggregate and follow through time to see how we’re doing; the problem is the surveys themselves can be a nuisance for customers (for instance if they’re long); they could be giving answers devoid of meaning to get away as quickly as they can; the questions can be interpreted differently from what we meant (the customer might not have the heart to give the overall experience a bad mark for fear of harming sales staff, or on the contrary might give them poor marks for something that is beyond their control); or the questions might not make sense to them:

  • Customer rates his overall satisfaction 8 out of 10.
  • Next question in the survey: Why did you not rate us 10 / excellent?
  • Customer thinks to himself: “Because perfection is only the purview of the gods, so no one ever gets a 10”. We could normalize but then other customers might be willing to give it a 10.

The first lesson is that we need to adapt our customer satisfaction questions, how and when they are asked as they are themselves part of our customer’s experience: do they feel that we really care or that we are going through the motions? Does it capture the aspects they care for? Is it an additional hassle to respond?

CustomerFrom our customers’ perspective their experience has expanded thanks to the web, so it refers to aspects beyond the scope of the traditional satisfaction survey and the control of our sales staff. Our customers now find answers to their questions through other consumers on the web, while ignoring our advertising and marginally remembering periodic sales and promotions. ConsumersWhen asking a question (does the color wear off quickly?) they get answers from their peers, which are not necessarily right but point to a much bigger experience through which our customer is discovering our product’s attributes, quality and value. As I have argued before, it is in our own interest not just to respond to our customer, but to lead them through this wider and deeper experience, so they can achieve an overall better result and a productive and even fun experience at every step of the way.

The second lesson is that we need to respond to these new expectations through the web, become another trusted peer in our customers’ network, and help our sales staff be in sync. With this expanded definition of our customers’ experience we then need to adapt our notion of their satisfaction.

TugThe Net Promoter Score (NPS) introduces the concept of a much shorter survey, usually consisting of one of two questions, such as “would you recommend us?”, which seek to summarize our customer’s overall experience; it has the advantage of addressing some of the concerns with longer surveys. We can then choose to focus on our “promoters” and / or “detractors”, which seems to play well with our customer’s interaction with our product through the web, particularly the idea of our brand’s fans.

The first problem with NPS is that it doesn’t tell us where to improve, which leads us to ask more questions, which in turn takes away its advantage over normal surveys.

The second problem is that while it sounds nice to focus on our “promoters”, “detractors” are a lot more vociferous on the web, so unless we have a plan to deal with them we might find ourselves putting out many, many fires.

The third problem is that satisfied customers are not necessarily promoters, much less fans of our brand. Brands with real fans (as opposed to fake Facebook like “fans”) took years to cultivate them, and that relationship might not be as profitable as we would like it to be: while Apple is a prime example of hard core fans for their Mac PCs, their numbers were so low compared to other brands that the company almost died several times, and resurrection only came thanks to a much wider audience through iPods, iPhones and iPads, people who generally are fans of the brand if not quite as rabid as the Mac crowd.

The third lesson is that while a simple, easy to grasp indicator such as NPS can help us see which way the wind is blowing, it doesn’t tell us where to invest, and may even derail our efforts.

Customer Effort introduces an interesting concept with respect to Customer Service: instead of trying to exceed our customers’ expectations we should deal with the specific issues they struggle with and spend more effort trying to solve, quickly and efficiently. This has the advantage of letting us know where to invest to improve customer satisfaction.

The problem with the Customer Effort approach is that its power as predictor of customer loyalty only applies to post sales Customer Service, not to the customer’s entire experience: as a general rule we do want to exceed our customers’ expectations when they are looking for our product, which is a different mindset from solving post purchase problems efficiently: meeting or exceeding those expectations might indeed preclude problems from occurring in the first place.

The fourth lesson is that if we expand the concept of customer effort to the entire customer experience as seen through the web we might find something even more useful: how much effort does our customer have to spend to find out which options are best for him? What works best for his budget? Which product attributes are more important? It’s not so much a series of problems as a series of opportunities to improve our customer’s overall result, his experience at every step of the way, and his satisfaction; this would have the added advantage of letting us know precisely where to invest.

To improve our customers’ satisfaction and hence attract and retain more of them we need to understand that their expectations are changing as their experience is now wider and deeper thanks to the web; that is to say, thanks to their interaction with other consumers, through which they are discovering our product’s attributes and what is best for them; and it is through the web itself that we need to engage our customers to improve their satisfaction. The web can help us complement our sales staff’s efforts and help them be in sync with our customer’s new expectations.

So I’ve been put in charge of our web projects… Where do I begin?

Two people questions 1One day the boss decides that someone should be in charge of “our web site”, “our Facebook page” or whatever it is that our company has been using… Usually when a refresh is required and no one quite knows who is in charge… And you are the one chosen by the gods. Congratulations, this is a great opportunity, and I will try to give you some ideas.

The good news is this position can be a learning experience, a good stepping stone for your career and even a lot of fun. Beyond being the “it” guy or gal at your company, at the center of all things new and cool, you will also have the opportunity to generate actual value for your company, by making your customer’s lives easier, more interesting and more productive.

The bad new is there is a confusion between web media and its actual use. In the mind of your boss you will be in charge of “being on the web”, coordinating with existing marketing campaigns and presenting reports on the number of visitors and “Likes”. None of that will actually generate any value for your company, and while your boss means well, you will need to change this perception so everyone is on the same frequency and has the right expectations for the web and for you. In the end your boss is thinking of results, sales, costs, profits, growth, and you will need to make the connection with the web; fear not, you won’t be doing this on your own.

The first thing you need to ask for is a job description; If the job description doesn’t exist your HR department may need to ask a specialist to generate one, but you need to be aware that not all descriptions are equally useful, and some may put you on the wrong track.

The right job description for a Web Coordinator (or whatever it’s called at your company) will first establish two high level goals, which are “How the web affects our business” and “How we can use the web to improve our business”; together they can be heartily accepted by your boss and define a Web Medium Strategy. At the heart of these goals is knowing our business and our customers, and is not something that can be expected immediately of someone new to the position. Knowledge of our customer already exists somewhere in your company, and your first task may be to find a way to collect it, usually from stakeholders; the second part of the equation is for you to express to these stakeholders how the web is affecting their customers and how we can use the web to help their results.

A second level goal derived from this is a Content Strategy defined by specific projects, their goals, and scope. My way of generating a content strategy is through the customer’s experience with our product, unearthing specific opportunities to improve it.

A third level goal is to manage projects and in particular to understand the resources involved in each project, from Information Architecture, to Usability, to Development and Design. The Web Coordinator doesn’t need to be a specialist in these areas but needs to understand them well enough to know which ones are more important for each project and what to ask of each web specialist. There are many courses and books available to understand each area, but your boss needs to understand they will require a specific investment, mostly in time.

The wrong job description will make your life a lot harder because it falls back on a default that isn’t working, which will have you running after specialists who in the end can only generate empty media like web sites and social pages devoid of any interest for your customers and thus of results for your company. You can find a way of rating your website here.

The wrong assumption here is that we will be generating web forms like web sites, or social pages, or pretty design, or fancy technology, to which we can later bolt on some content or functionality; what we need is to be generating whatever it is that helps our customers and our business, which defines our content, which we can then deliver in whichever form our customer is using or is likely to find most useful: a very clear case of function first, form second.

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Whom should we hire to do our web site?

Wrench and screwdriverThe very first question should be: what do you want your website to do? What should you be using the web in general for? The problem with not having these questions solved first is that you’ll find yourself with a default answer provided by web vendors: you’ll want a pretty site, will say the designer; you’ll want a cool platform, will say the developer; you’ll want to be popular on social media, will say the twitter user; you’ll want the magic of SEO will say the SEO expert… But none of these are directly related to your business goals. How can you tell? Because your website will be empty of content, won’t address anyone and thus won’t be found by anyone, or it will have generic content of little value for your customers, which may even hinder your long term relationship with them.

A second related question is that not all web functions can be outsourced. If you think of your web presence as a tool to help in the delivery of your brand’s promise, this is something that can only be accomplished inside your company, as no one outside will know your customers better.

So who should you hire first? Whoever knows your customer best, whoever has a stake in sales to customers and your customer’s experience… In other words, probably you or some of your colleagues… Who already work with you. Once you’ve established what the web can do for you, you can then ask specific tasks of web specialists, and they’ll thank you for being more specific.

How do we rate our current website?

IMG_20140310_114530037The web and our business:

  • Is our web site relevant in our customer’s quest?
  • Does our web site have a positive impact on sales? Do we have business metrics for our web site or are we relying on generic traffic?
  • Does our web site help our customers appreciate our product’s attributes and quality?
  • Can our customers find the info they are looking for quickly?
  • Can our customers act on the info they find on our site? For instance they may follow up by looking for a nearby store, see if it has the product in inventory, look for an important parameter they had not thought about before.
  • Is the web helping specific strategic initiatives?

Our web site as part of our overall web presence:

  • Which media and touch points do our customers use in their quest related to our product?
  • Which media is more useful or would be more useful in their quest, how does our web site rank among the other web options?
  • Are we investing in what offers a better return or in what’s available by default?

The web as a process:

  • Do we have control over digital assets, like the domain, hosting, FTP?
  • Is all our content regularly backed up and available?
  • Is our content easy to update?
  • Is there a specific process to generate, edit and sign off on content?
  • Who’s in charge of our web projects? Who are the stakeholders?
  • How do we measure the web team’s success?
  • What are the web team’s functions?

 

Who should be in charge of our web projects?

Staff

Ultimately the web can be profitably used to attract clients, help them solve their needs through our products and services, and make their overall experience with our product more productive and pleasant. This can also be seen as delivering on our brand’s promise, and catching up to our customer’s expectations which are being changed by the web itself. This gives us some idea of who should be in charge of our web projects.

Since the web can be used to reach more clients and expand their experience around our product, a logical choice would be whoever is charge of new business development: depending on your organization this could be your CEO or your brand or product managers. The relationship is even stronger when our use of the web has implications for adapting or improving our product itself. For instance a coffee brand may use the web to help its customers express how they prefer their drink, which may be different from the custom in the brand’s country of origin. In this case the person in charge needs to balance the opportunity to serve a new market with the risk of diluting the original brand.

Web projects can also be seen as the natural purview of Marketing, since we are talking about the brand and fulfilling its promise. There is a specific danger as the marketing department can easily fall on its default use of other media but now on the web, with the resulting campaigns generating advertising that is irrelevant or annoying to our customers. The biggest cost of traditional advertising on the web is that we are missing out on the stream of queries from our customers, eroding their trust in us and putting our long term relationship with them in jeopardy.

Given that the web has an effect on many business areas the CEO may need to be the team leader. Taking into account the amount of work CEOs already have to cope with, they may need to delegate this task but remain the ultimate stakeholder. The easiest way to begin is to define the stakeholders, and from this an executive team.

From the impact of the web on our business we can also see who should not be in charge: our web projects are clearly not design projects, so the arts department or an external designer with no knowledge of our customers and our business cannot generate the goals and the specific web solutions. Once we have a web medium strategy, a content strategy that responds to specific opportunities, then we will certainly require functions such as information architecture and usability testing that will help us give form to specific web projects – and even this is far removed from “web decoration”.

The same logic applies to our IT department or external developers: some technology will be required but technology by itself with no content is of no value to us. Our IT department’s contribution could be invaluable once we define the goals of our projects and a content strategy, as they could help us choose the best web technology, manage suppliers and have better control of our digital assets.

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We’re a small company, what can we do on the web?

Small boat

As a small business you may feel that you should be on the web but that it may be too costly or complex; while there is certainly an investment that needs to be undertaken the good news is that it may be well within your means once you realize the resources required; it is also something you need to be doing for the health of your business.

Investment in what? Ultimately the web can be used as a marketing tool to attract more clients and retain them better, which may be exactly what your company needs to survive and grow in times of a seemingly perpetual recession.

  • If your local or regional customers cannot afford your products, you may be able to attract national or international customers.
  • You may find that your expert knowledge of clients, their needs, and your products is something that cannot be matched by bigger competitors even if they have a cost advantage, as customers fail to find the exact solution they are looking for with them, which you may be able to offer.
  • You could have specific skills which may seem very normal to you but may be uncommon and scarce, and which the customer is looking for.

Marketing? But we barely have money for the usual things available for small businesses, like leaflets and directories, if at all in times of a recession, how can we afford web marketing?

You can probably afford marketing on the web because most of the work hinges on the knowledge of your customers, which only you have; the web is only a set of tools which helps you do more with this knowledge. The need for an investment remains, but most of it will be your own time, which is usually the one resource small business have some flexibility with.

I would suggest that beyond working more hours, which is the usual reaction of a small business manager, you should allocate a specific amount of time, say one or two hours a day, and establish that as part of your marketing budget (so the price of your salary for one hour, times the number of hours per month): don’t let this work go outside your budget or go unappreciated, this isn’t a hobby but part of the business.

The decisions you need to take are:

  • Establish a need for marketing in general, to attract more clients. Most small businesses rely on location, word of mouth, fliers, while traditional advertising is outside of their reach. The good news is that web marketing can be more efficient than any of these.
  • Establish how the web in particular can help you (a web medium strategy): audience, specific opportunities and goals.
  • Establish web solutions for each opportunity, which defines a content strategy. You will be generating this content.
  • Establish the additional resources required: functionality, technology, interface design… This may sound daunting but if you think of the quickest, cheapest, most efficient way to get your content across to your audience, there are many resources available for free or at a price within your budget. The better defined a project, the easiest and cheapest it will be for a developer to help you.

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