I recently read an interesting book, Smart Customers Stupid Companies by Michael Hinshaw and Bruce Kasanoff
Consumers and businesses alike research, connect, and purchase online and over their phones. As Hinshaw and Kasanoff write, “[w]ith these tools come radically higher customer expectations. Higher expectations of experience. Greater demands for personalization and customization. Lower tolerance for mistakes, for running through inane hoops, or for interactions that require mindless repetition.”
What are smart customers?
Customers these days have immediate access to almost all information, with Google, Wikipedia, Angie’s List, etc., literally in the palm of their hands. Customers can outwit salespeople, easily spot misstatements by customer service reps, and have near-instant access to the accumulated knowledge of human civilization. The trend is continuing to accelerate; with each new generation of devices people have access to more information.
Customers are also getting less patient, and younger customers never had much patience to begin with. Anyone 20 or younger has never known a world without the Web. The oldest of this generation are now adults, soon to graduate from college and start households of their own.
How can your company be smart?
With customers having so much power, to succeed businesses must match this power. As brand loyalty continues to erode, staying ahead of these changing customer expectations means that everywhere a company interacts with or “touches” a customer, those interactions need to be smarter, faster, and better. Smarter interactions turn complaints into upsells, reveal customer needs, drive loyalty, create new revenue streams, and power innovation. There are several ways companies can become smarter:
- One area where companies need to be smarter than before is customer service. Customers now expect to have their questions answered whenever they have them. They are not happy when told your customer service is 10-4, Monday to Friday. Since people are using the products or playing the games at other hours, they expect help when they actually have the issue. Successful companies will embrace that these sort of time-based restrictions are going to disappear for companies that successfully embrace the changed notion of customer service and customer experience. Customers expect to do anything they want, from anywhere and at any time.
- Another area you must meet your customers’ capabilities is choice. People have hundreds of product options at their fingertips. You can order one of 1,000 wireless routers on Amazon, for example. You then must give your customers the ability to sort through these options. Once a customer has identified one, or maybe even one hundred, possibilities, the next step is to differentiate it from other options.
- The next opportunity for companies is to make life easier for its customers. The way to do this is to provide sophisticated technologies to remove—not add—complexity from their lives. Individuals will use digital devices to identify and differentiate any one thing in the universe from everything else. Understanding how individuals (and everything else) differ from each other will help your company develop profitable new services. The more powerful a product is, the more intuitive it should be to use.
- Hinshaw and Kasanoff point to Pervasive Memory, the data generated by the trillions of interactions and transactions made through digital devices, as another way to generate smart customer interaction. Digital Sensors expand exponentially the scope of actions, events, and behaviors firms can sense and respond.
- In this new age, your customers define customer experience. Customer experience is based on how your customers perceive your organization and how well you meet their needs when they interact with, hear about, and do business with your company. You can improve this experience with the pursuit and creation of smart, interconnected touchpoints as a core foundation of any customer experience improvement initiative.
The two most important ways to match your customers’ intelligence
While the above suggestions are useful, there were two areas in particular that the book touched in that I think are most important to succeeding with todays smart customers. They are moving from dumb to smart CRM and going from basic segmentation to smart segmentation.
Smart CRM is critical to achieving a great customer experience. CRM does not really track relationships or experiences, it tracks transactions. As a result, CRM does not take into account the customers’ views of the company, and does not capture how these interactions make customers feel, much less what they want or need. They also know that the technology and the data exist to treat them intelligently. As Hinshaw and Kasanoff write, “when companies don’t do this, there are three obvious explanations: The company just doesn’t care, They hold their customers in contempt, or they’re just stupid. “
Segmentation has always been critical to marketing, but with today’s tools and customer expectations, basic segmentation is no longer acceptable. Bucketing users or players into a few categories and then treating everyone within the category is no longer acceptable. Just because someone comes into your store does not mean that the person who primarily shops for groceries and spends $1,000/week should be treated the same as the person who shops for garden supplies and spends $100/week. If the latter gets coupons for diet soda, they will realize you are a dumb company and go to one more sophisticated.
Segmentation is the engine for driving smarter customer experiences. Just as importantly, defining your customers by value and needs on a segment-by-segment basis provides a highly efficient lens through which to make your touchpoints smarter.
Segment customers by needs, and your company will have an easier time setting priorities and making investment decisions. Once you start delivering personalization, you create immense opportunities to make loyalty more convenient than disloyalty. You can store customer preferences, and act on them. You can save the customer time, money, and effort – especially by eliminating repetitive tasks. You can provide auto-replenishment of needed supplies. You can monitor products remotely, and service them before they break instead of afterwards.
As Hinshaw and Kasanoff write, “all your customers are not the same. Starting with specific, needs-based segments, you must get even more detailed about the capabilities, products, and services your company must offer each segment.“
Key takeaways
- Customers have immediate access to almost all information in the palm of their hands, and expect companies they work with to be equally intelligent.
- Smart CRM is a key to having your customer act smart, communicating with your customer with messages that are relevant to them individually.
- Smart segmentation is the other key to dealing with smart customers. By putting them in small, relevant groups and understanding each group’s specific needs, you can give each customer the experience they expect.
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