A recent post on TechCrunch about TaskRabbit’s roll-out of a new market structure, largely seen as a failed roll-out, offers many lessons for all types of companies. TaskRabbit rolled out a very different version of its market place last July and faced what many called a “revolt” and “rabbit revolution.” Outside of the business reasons for the change and whether it was a net positive for the company (still debatable), there are many lessons from the experience for any company.
Do not surprise your customers
TaskRabbit’s change to a new platform caught many of its customers by surprise, leading to immediate protests. TaskRabbit had tested its new platform in the United Kingdom (where it previously did not have a presence) and saw substantial improvement in its metrics. Based on these results, it decided to replace its platform in the U.S. with the new model. As TechCruch wrote, “as soon as the launch actually went live, the protests and confusion started to pour in.” The company underestimated just how strong the bidding and auction model was ingrained in its brand identity here in the U.S., and how that resonated emotionally with users. Continue reading “How to avoid a product change or new feature debacle”
I recently read an interesting book, Smart Customers Stupid Companies by Michael Hinshaw and Bruce Kasanoff, that made an excellent case on why you should make your CRM (customer retention management) systems more sophisticated. The underlying idea is that customers, players, users, etc., are very connected, they regularly use mobile devices and tablets, have easy access to a computers and thus can find almost any data quickly (ever hear of Google?). As customers have and take advantage of instant access to information, they thus expect the companies they deal with to be equally sophisticated.
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. Continue reading “Use smart CRM to avoid being dumb”
I recently read how Papa John’s deliver a great customer experience and realized it was also applicable to tech and game companies.
Query your customers
Papa John’s is highly successful in the very competitive pizza segment by constantly asking its customers how they can improve. Throughout the organization, the team is empowered to be “adaptive, and quick on [their] feet if [they] see or hear suggestions that will improve the experience.”
This attitude manifested itself in the evolution of Papa John’s’ mobile strategy. It learned that its customers equated a good experience with a good digital/mobile experience. Papa John’s then invested in creating a seamless online/mobile ordering application.
The result was a mobile app that was among the highest scoring among restaurants in the mobile experience scorecard. The translation of customer asks to a top quality application shows the opportunity of customer voice driven innovation.
Improve your LTV
By constantly pursuing customer engagement through voice of the customer feedback, Papa John’s also enjoys high customer satisfaction and surprising brand loyalty, which translates into better retention and less churn.
What it means
The Papa John’s example shows the value of listening to your customer. If you understand your customers’ needs, you can then improve and innovate to meet those needs.
- The best way to deliver a strong customer experience is by asking your customers what they want.
- Innovate and improve based on what your customers are asking for.
- By seeking customer engagement by listening to your customers, you will have higher loyalty and thus increase your customer lifetime value (LTV).
An incident over the holidays highlighted the downside when traditional retailers pursue a “clicks-and-mortar” strategy. Rather than being a box every retailer should check, traditional retailers, particularly successful ones, need to look at the risks as well as the opportunities and build a strategy that takes these into account.
About two weeks before Christmas, my wife ordered a video game online from Walmart.com (the world’s largest retailer) for pick up at the store. She received no indication the order was in but assumed it was on the way. Three days before Christmas, after still not receiving confirmation that the product arrived at the retail location, she called Walmart customer service. At this point, she learned the order was cancelled because “the product was damaged.” As this was the gift our son wanted most and was tough to find, she scrambled and eventually got it from Amazon using next-day delivery. After this incident, she vowed not only to stop shopping at Walmart.com, but also to stop going to the retail location (and convincing our son not to shop there).
To me, the key takeaway is that Walmart, incredibly successful with physical retail, is actually losing customers due to its online integration (which is actually better than many other traditional retailers). Thus, rather than increase the lifetime value of a customer (my wife) by adding an online component, they have significantly reduced her lifetime value. Continue reading “The risk of Clicks-and-Mortar”
I recently had a conversation with a gaming industry CEO whom I deeply respect that reinforced a MIT Sloan Management Review article, “Embrace Your Ignorance” by Michael Schrage, about how the savviest leaders promote and embrace ignorance. The thesis for both Schrage and the CEO was that you cannot accurately predict what your customers will want, like or need. Thus, you need to embrace this ignorance and run experiments to get the data.
Moneyball and The Innovator’s Dilemma
I have seen many companies where the leadership “felt” they understood the customer and would develop new products for these customers. It leads to project green light meetings very similar to the draft room in Moneyball, where people argue based on their experience which initiatives have the most potential. It is also one of the biggest contributors to the huge number of failed projects, particularly in the gaming space where we typically see more than 8 out of 10 new games fail.
This issue is actually often a bigger problem with executives who have had past successes. Even if they knew their existing or past customers very well, they do not necessarily know what a broader or new market wants. Even their existing data can skew innovation effort, which is the core point of the Innovator’s Dilemma: Companies that have been leap-frogged often create innovations for existing markets rather than new markets.
You already are ignorant—accept it
In Schrage’s article, he discusses how Microsoft’s Ronny Kohavi (a pioneer in online experimentation) challenges tech-savvy audiences when he speaks. Kohavi shows screenshots of actual A/B tests that Microsoft has run for website design. He then asks his audience to predict the outcome of the tests. Although the audience is sophisticated, they almost always fragment with different opinions. Kohavi then advises, “stop debating…it’s easier to get data.” Continue reading “Ignorance is a competitive advantage”
Since Thomas Davenport wrote Competing on Analytics in 2007, the use of analytics has evolved from a niche contributor to the central role of successful companies decision making, product development, marketing and other core functions. A great white paper published by Tableau highlights what it considers the top 10 trends for business intelligence. Of these ten trends, there are five that I agree will impact significantly companies this year.
Analytics emerge across the organization
Analytics will no longer be a domain dominated by analysts and data scientists; instead everyone in the organization will be using analytics daily for their decision making. Easier-to-use technologies that provide browser-based or mobile analytics let people answer ad-hoc business questions. Companies that recognize this as a strategic advantage will begin to support managers and front-line personnel with data, tools and training to help them do their jobs more effectively.
There has been a huge amount of innovation across the data space, resulting in mixed environments for everything from data storage to analytics to business applications. Although there will not be one system or application for all of your needs, the different analytic systems will be more integrated and easier to use, making them more accessible across your company. You will laugh at the multiple logins and clunky processes you had to use during analytics 1.0. Continue reading “Analytics in 2015”
Last year (and I have been waiting to say that), I wrote about the power of recombinations and how it is a driving force for entrepreneurs in creating billion dollar businesses. I recently was reading about WeWork and its $1.5 billion valuation (which should rise to $6 billion this year) and realized it is an ideal example of the power of recombination (or some would say 1.5 billion examples).
Recombination is a phrase I picked up from Erik Brynjolfsson and Andrew McAfee’s book The Second Machine Age. To recap, recombinations are taking different technological improvements and combining them to create disruptive products. An example they use is Waze, the smartphone app that provides optimal driving directions. Waze is a recombination of a location sensor, data transmission device (that is, a phone), GPS system, and social network. The team at Waze invented none of these technologies; they just put them together in a new way. None of these elements was particularly novel, but their combination was revolutionary.
WeWork is a provider of shared office space for entrepreneurs that, as mentioned above, was valued at $1.5 billion last year when it raised $150 million from investors including Benchmark Capital. WeWork has 31 locations where it provides business services and office space to 15,023 companies. Given that many of us would like to start $1 billion companies, WeWork provides a great example of how recombination can be used to create billions of dollars of value. Continue reading “WeWork, 1.5 billion examples of the power of recombination”
I read an interesting piece in the Harvard Business Review, “The Danger of Touting a Product as The Best” by Jingjing Ma and Neal Roese, on why touting your game or product as the best can backfire. Ma and Roese show that positioning your product as the best in comparative ads actually activates a maximizing mindset with customers, where people regard anything less than perfect as a waste of money. While there are some people who are always maximizers (that is, they consider anything not perfect a waste), with most people this attitude is not fixed.
In Ma and Roese’s research, you can induce the maximizing mind-set with situations that encourage customers to make comparisons or to look for the very best product. Once this is activated, the customer may face post-purchase regret and be more likely to switch to another product after a minor disappointment. This phenomenon is particularly powerful in the free-to-play game space, as losing users early has a very powerful impact on lifetime value.
There are several approaches growth and marketing experts can use to mitigate this situation:
- Think twice before running comparative ads.
- Limit assertions of optimal features.
- Do not claim overall to be best, even if you are very good.
- Telling customers your product is the best can backfire because it sets unreasonable expectations.
- You should consider carefully whether it is beneficial to run comparative ads against your competitors
- Limit your assertions of optimal features.
While almost everyone now accepts the value of analytics and metrics-driven decision making, one area where it is often neglected is in implementing innovation. Even data driven companies are hampered in implementing innovation because their data is backward looking. In the absence of sufficient data to inform decisions about proposed innovations, managers often rely on their experience, intuition and conventional wisdom, and none of these is necessarily relevant. Although many of my readers are from the mobile game space, where much is tested, even in the game space pure innovation often is not. An article in the Harvard Business Review, “Increase your chances of success with innovation test-drives” by Stefan Thomke and Jim Manzi, does a great job of showing how to test these hypotheses.
Most companies do not conduct rigorous tests of their risky overhauls because they are reluctant to fund proper business experiments and have considerable difficulty executing them. Although the concept of experimentation is straightforward, there are many organizational, cultural and technical challenges to implementing experiments. While running an A/B test on a website is simple, many business need to deal with complex distribution systems, sales territories, bank branches, etc. Business experimentation in such environments suffers from many analytic complexities, most importantly that sample sizes are often too small to be significant (e.g., only a few stores). Continue reading “Testing innovation opportunities”
As more companies use virtual events as part of their growth and engagement mix, it is increasingly important to be able to evaluate the effectiveness of the event. I have used virtual events multiple times and it is an element of our growth mix.
Simply having the event is not a success; you need to measure and evaluate it. Has the event been worth the time and resources devoted to it and should you replicate the event? How can you optimize future events so they have a bigger impact on your business? I read a recent article on MarketingProfs that offers some great advice on what you should track on your next virtual event.
Unlike physical events, with virtual events you can measure much of the attendees’ behavior. You can see which content they interact with and how they engage with other attendees and speakers.
By tracking attendee engagement, you see what worked and what did not, as well as seeing which potential customers you are most likely to convert. In a physical event, you assume the people playing on their phones are the least engaged. In a virtual event, you can see if they are progressing their slides with the presentation, asking questions, whether they clicked on links you provided etc. Continue reading “Evaluating your virtual event”