Archive for the ‘The Business Surgery’ Category

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Underestimating The Power Of A Disgruntled Customer

In this week’s Business Surgery, Julia Cupman highlights that customers in loyalty programs are not necessarily loyal. Although it is relatively easy to reward the advocates of a brand, the big challenge comes with addressing the detractors, especially before they can cause damage.

On a flight to Chicago last week, a colleague moaned to me, asking “Why do we always have to fly United?” Of course, there are lots of other airlines that will get us to Chicago and back, but United has certainly locked me in with its loyalty program, in that I’ll take almost any opportunity to add miles to my MileagePlus account.

While this might seem a contradiction, customers in loyalty programs are not necessarily loyal. True loyalty should reflect only customers who are strong advocates of a brand, which is certainly not the case for all loyalty card holders. In spite of my frequent flying with United and apparent loyalty to the airline, many of my colleagues and family know only too well about my negative views on United, especially during its merger with Continental. I – like millions of other customers – won’t forget the negative experiences for some time yet, irrespective of United having improved its customer service in the past few months.

When a company grows so large that customers are mere numbers in a database, it’s possible to lose sight of the importance each customer plays. Indeed, United flies over 140 million scheduled passengers a year, so why bother about a particular disgruntled customer?

Companies are, however, increasingly receiving a harsh wake-up call as the web has made it easy for negative word of mouth to spread like wildfire. Every day, 400 million Tweets, 534 million Facebook updates and 2 million blog posts are generated worldwide. This gives a dissatisfied customer every opportunity to communicate a negative experience to the masses – and frighteningly quickly.

Back in 2009, Canadian musician Dave Carroll trusted his $3,500 guitar with United baggage handlers, only to arrive in Chicago to find the instrument of his career smashed into smithereens. Furious at United’s denial of responsibility, Carroll created a song about his experience, singing that he “alerted three employees who showed complete indifference”. The song was uploaded onto the internet, received one million hits in just four days, and has been viewed more than 12 million times to date. Clearly the impact of one seemingly small negative customer experience should not be underestimated.

While companies must continue to acknowledge and reward the customers who are truly loyal, they should also make every effort to address the detractors out there who are spreading negative word of mouth. Interestingly, and as proven in market research, successful problem resolution is one of the biggest drivers of overall satisfaction and loyalty, but disgruntled customers require speedy treatment in order to prevent their dissatisfaction from going viral.

To learn about B2B International’s real time promoter and detractor alert service (a part of our customer satisfaction and loyalty research offering), please call to speak to one of our customer loyalty experts.

Posted in Customer Satisfaction, Customer Satisfaction Research, Customer Service, Julia Cupman, Loyalty, The Business Surgery, Uncategorized |
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A Problem Sourced Is A Problem Solved

In this week’s Business Surgery, Conor Wilcock takes a look at the phenomenon of crowdsourcing

In 2003, a quite delightful and intelligent chap named Henry Chesbrough – a professor of the Harvard Business School – coined the term “open innovation.” His argument was that companies should innovate by combining internal and external ideas; this would be effective because the lines between an organization and its environment were becoming more permeable. What he was referring in part to, was crowdsourcing. This is a process by which a company delegates a task (often involving idea creation and innovation) to an external group, rather than using internal resources, such as paid employees.

Almost a decade later, we are in a position where companies can truly reap the rewards of exposing their challenges to the masses. Prof. Chesbrough was onto something: technology just hadn’t caught up with him yet. Though the idea behind crowdsourcing has been utilized for decades and perhaps longer, its potential has grown exponentially due to the Internet and the social media revolution.

In what was perhaps a homage to his fellow Harvardian, Andrew McAfee of the Harvard Business Review has written an article on the subject of open innovation and crowdsourcing: “Let The Crowd Fix Your Product’s Bugs.”

McAfee’s thread of argument is that companies who use crowdsourcing competitions to solve problems reap much greater rewards than those who use internal R&D teams to face those challenges. Organizations, he notes, prevent successful innovation because of the false assumption that the greatest (and only) expertise regarding problem-solving for the company, is from within:

“Businesses certainly know where a lot of the relevant expertise is in any situation, but…they certainly don’t know where all of it is.”

In short, dealing with the elephant in the room isn’t quite enough anymore. Companies can enjoy much greater success when it comes to innovation, by leading the elephant outside the room and offering it to fresh pairs of eyes – and lots of them at that. External expertise might deliver something which outperforms an internal strategy or “solution”, simply because they have the organic viewpoint of the outsider. Maybe the problem sitting uncomfortably in the corner isn’t even an elephant, after all…

McAfee cites crowdsourcing companies such as Kaggle and Innocentive, which host innovation competitions. A company presents a challenge to a diverse group of people, each of whom develops a solution to the problem. A winner is chosen and offered a prize; it’s worth noting that though often significant, monetary incentives pale in comparison to internal R&D costs. More often than not, the external solution is considered to be more effective than the internal solution.

Of course, there are roadblocks associated with each one, mainly due to overcautious companies not willing to fully embrace the risks of crowdsourcing:

• Will the crowd care? If I have learned one thing as a market researcher (to my superiors reading this, rest assured that I have learned more than merely one thing), it is that people relish the opportunity to share with you their opinions. According to McAfee, the best crowdsourcing solutions are often borne from individuals who are “marginal to the domain of the challenge.” Put simply, people do care, and will care.

• Can we wait? Effective crowdsourcing takes time, as does internal decision making on innovation. There is a tendency, however, to assume that online crowdsourcing is a quick hit solution. Allocating sufficient time to a project will allow it the opportunity to nurture successfully.

• What do we need to tell them? In order to develop an innovative solution, members of the crowdsourcing community will likely need to be party to certain data and information, some of which might be deemed to be confidential. Companies must carefully determine the amount of information necessary for the project to succeed. Remember that crowdsourcing is rarely a comprehensive fix; R&D teams should work with external solutions to innovate.

Perhaps the biggest challenge is for a company to convince itself that crowdsourcing may well make a difference. It can look to successful case studies and feel confident in the knowledge that this is no longer on the periphery of business strategy: advocates of crowdsourcing include Intel, Microsoft, HP, The Economist, and the US Census Bureau.

Companies should also not be afraid to make mistakes regarding innovation. Crowdsourcing doesn’t work 100% of the time, and that’s ok. As a fairly well regarded gent by the name of Thomas Edison famously said:

“I have not failed. I’ve just found 10,000 ways that won’t work.”

Innovation can be a light bulb appearing above a thoughtful head (see what I did there?!), but it is more likely to be the result of collaboration, trial and error, and managed risk. One thing we know for sure is that innovation can be the lifeblood of a company. In a vain attempt to support my hypothesis by namedropping, I’ll leave you with American management expert, Gary Hamel, whose thoughts on innovation are thus:

“Somewhere out there is a bullet with your company’s name on it. You can’t dodge the bullet – you’re going to have to shoot first. You’re going to have to out-innovate the innovators.”

In the event of an innovation shootout, wouldn’t it be nice to have a crowd on your side?

Posted in Conor Wilcock, Innovation, The Business Surgery |
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A Lesson In Branding

In this week’s Business Surgery, Caroline Harrison comments on the recent news that Avis is shedding its well-known tagline after 50 years

Is there a marketing scholar or professional anywhere who isn’t familiar with the story of Avis’s “We try harder” tagline?

For anyone who isn’t, it’s an interesting little story about how Avis, then the second largest car rental company in the US, turned this position to its advantage (at the expense of its larger competitor, Hertz). What’s more, I think it’s a story that’s worth repeating (my thanks to the Avis Cyprus website for the following potted history):

• In 1962, after Avis spent thirteen years in the red, newly appointed president Robert C. Townsend recognized that Avis needed to refresh its image and hired the hot and creative advertising agency of Doyle Dane and Bernbach (DDB) to turn business around.
• Prior to DDB working with Avis, Bill Bernbach, co-founder of DDB, recommended to Avis management that they overhaul their customer service and upgrade their product before drafting a single ad. His reasoning, “It’s always a mistake to make good advertising for a bad product.”
• To create the initial ads 1963, DDB spent ninety days learning Avis’ business and spent many hours in meetings talking to Avis employees about the company.
• During those first meetings between DDB and Avis, a simple question was asked by DDB, “Why does anybody ever rent a car from you?” The reply is what made advertising history: “We try harder because we have to.”
• DDB’s top art director, Helmut Krone, already intended to center the campaign on the phrase: “Avis is only No. 2.” It was copywriter Paula Green who remembered what she learned during those first research meetings with Avis, and added the now-famous phrase: “We try harder.”
• In an attempt to convince potential customers that Avis simply tried harder than everybody else, the entire ad campaign was focused on frank and truthful statements about Avis’ business philosophy. To communicate this to the field, the entire management team at Avis traveled to every branch location across the country, spoke with every single employee and explained that the success of the campaign and of their business hinged upon providing superior customer service every chance they got.
• Each Avis employee also received a copy of new Avis ads in his or her pay envelope before each campaign would run.
• In just one year, the campaign literally changed the fortunes of the Company. Prior to the campaign, Avis had just $34 million in revenue and losses of $3.2 million. One year later, revenues had jumped to $38 million and for the first time in thirteen years, Avis turned a profit of $1.2 million.
• The biggest short-term success of the campaign was found in Avis’ market share, which grew from 11 percent in 1962 to an amazing 35 percent in 1966.
• Due to the success of the campaign, Avis’ advertising budget increased from $1.7 million in 1963 to $6.2 million four years later.

This story contains a host of valuable lessons for marketers, and so many of the actions taken 50 years ago should still be central to companies’ marketing today.

And so it was with some surprise – yes, even in an age when taglines and brand positioning typically come and go every few years – to learn this week that after 5 decades, Avis is shedding “we try harder” in favor of a new tagline: “It’s Your Space”. The new tagline, which is being rolled out alongside a new ad campaign, targets busy business travelers (the premise being that an Avis car offers a productive business environment for the businessman on the go, or simply the ideal place to recharge your batteries). The new campaign clearly positions the brand as the choice for corporate, rather than leisure travel.

So why the change? According to Avis CMO Jeannine Haas:

Consumer-centric brands must always evolve in order to keep pace with ever-changing customer needs and preferences…Avis is evolving as a premium brand to better meet those needs.

The new tagline, she said, is:

reflective of [Avis'] ongoing mission to be a customer-led, service-driven company, and presents the brand in terms of the customer experience and the advantages inherent in renting from Avis.

Personally, I think that for a company wishing to be both customer-led and service-driven, there’s probably no better mantra than ‘trying harder’. However, putting sentiments aside for one minute, it’s quite reassuring to note that Haas believes the previous longstanding motto isn’t quite extinct:

“We firmly believe that after nearly five decades, ‘We Try Harder’ is fully embedded in the Avis DNA, and defines the spirit our employees embody to deliver superior customer service.”

Proof, perhaps, should you need it, that a brand is not simply a logo or a tagline. It’s a philosophy that runs deep through the entire company, shapes every employee and their actions, and has a real significance to the organisation’s customers. A valuable lesson indeed.

To read a selection of our white papers on branding and branding research, please click here

Posted in Brand Strategy, Branding, Caroline Harrison, Case Studies, The Business Surgery |
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The Wisdom Of Crowds

In this week’s Business Surgery, Paul Hague offers an interesting slant on the quantity vs. quality debate.

An article caught my eye in the Financial Times recently (24th July 2012). It was by John Kay and called The Parable Of The Ox. It told the story of how, in 1906, the great statistician Francis Galton observed a competition to guess the weight of an ox at a country fair. Eight hundred people entered. Galton, being the kind of man he was, ran statistical tests on the numbers. He discovered that the average guess (1,197lb) was extremely close to the actual weight (1,198lb) of the ox. This story was told by James Surowiecki, in his entertaining book The Wisdom of Crowds.

This got me thinking. We all know that 1 million people can’t be wrong – or can they? It seems that in general they seldom are wrong. In the latest copy of the International Journal Of Market Research (volume 54, issue 4, 2012), Martin Boon of ICM Research wrote a paper called Predicting Elections in which he reported on the accuracy of response to a question which asked people what they thought would be the percentage share of the vote given to each party in the forthcoming general election. This was not a question about which way the respondents themselves would vote but a “wisdom of the crowd question” about how they thought others would vote. Without any prompting from the interviewer, a spontaneous prediction was extremely close to the actual result (within 2.2%). Just as people got the weight of the ox right, they correctly predicted the outcome of the general election.

So what does this mean for us in business to business research? It should mean that if we ask informed people what they think is the size of a market or what they believe to be suppliers’ market shares or something of that ilk, we ought to get a fair prediction of actuality. I suppose the emphasis must not be on the word wisdom but on the word “crowds”. In the parable of the ox story and in the ICM survey there were many hundreds of respondents. We need to ask enough people to be able to get a fair prediction. And this may be the problem in business to business markets – often there aren’t many people who have this sort of knowledge. Maybe in business to business markets what matters is not relying on the views of lots of people who have no idea but finding just one person who is in the know.

Posted in Market Size, Paul Hague, Quantitative Research, Statistics, The Business Surgery |
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A Strategy for Success

Emma Flood’s latest Business Surgery looks at differing strategies for success and how market research can play a part

I recently read an article on mckinseyquarterly.com which discussed the different strategies of two global companies. One of the companies followed the same investment pattern of allocating capital to each business unit every year, whilst the other evaluated the performance and potential of each business unit, and shared budgets accordingly…

Picture two global companies, each operating a range of different businesses. Company A allocates capital, talent, and research dollars consistently every year, making small changes but always following the same broad investment pattern. Company B continually evaluates the performance of business units, acquires and divests assets, and adjusts resource allocations based on each division’s relative market opportunities. Over time, which company will be worth more?

Although the author is discussing the strategy based on internal factors, the strategies of these two companies immediately took my mind to thinking about segmentation research, and the value this has in both assigning budgets and informing strategy. Segmentation research is all about maximising opportunities, through identifying and evaluating the segments of the market which offer the most potential (and the most profit) to the business. Although the McKinsey article focused on the internal aspects of the business (i.e. the SBUs), there are interesting parallels between the two companies mentioned, and that of our approach to segmentation…

…If you guessed company B, you’re right. In fact, our research suggests that after 15 years, it will be worth an average of 40 percent more than company A. We also found, though, that the vast majority of companies resemble company A. Therein lies a major disconnect between the aspirations of many corporate strategists to boldly jettison unattractive businesses or double down on exciting new opportunities, and the reality of how they invest capital, talent, and other scarce resources.

At B2B International, we consider another key value of segmentation research is to inform or create a strategy which differentiates your business in the eyes of customers; therefore giving your business a competitive advantage. When we think of using segmentation research to differentiate our business, we are striving towards a needs-based segmentation.

A segmentation could be based on firmographics (i.e. company size, geographic location, etc), behaviour (i.e. frequency of purchase, products/services purchased, channel), or the third (and most challenging) option, a needs-based segmentation. The needs-based segmentation understands the precise needs by customer group i.e. the need to choose suppliers that offer quality products, suppliers that are committed to the market, and suppliers that can be trusted, etc. Understanding the needs of the market, and segmenting by these, provides knowledge that only your business has access to and, as such, it is not as easily copied as firmographic- or behaviour-based segmentations. Using a needs-based segmentation can therefore provide a differential, and competitive advantage to your business.

Drawing on the point in the second excerpt above, that the vast majority of companies behave in the way that Company A behaves, it is easy to see why using a strategy based on evaluation, rather than tradition, allows the business to better invest its capital, and reaps the benefits of business growth and profit.

To read more about how B2B International can help your business using segmentation research, please visit: http://www.b2binternational.com/research-and-intelligence/segmentation/

Posted in Emma Flood, Segmentation, Strategic Marketing, The Business Surgery |
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