The challenge in large organizations is that through an ever increasing division of work, less and less employees actually interact with customers. In small companies with only few employees, chances are high that every employee has to deal with customer every now and then. Think about an organization with tens of thousands of employees and the share of employees that actually interacts with customers significantly decreases.

As a consequence large organizations lose their customer-focus and struggle to improve their understanding of customer needs and requirements. The “silver bullet” is to get closer to the customer by spending time on the “front-line” and interact with customers. But how much time should employees spend on the front-line? And even more important, how much time should the CEO of an organization spend with customers?

John A. Quelch, professor of business administration at Harvard Business School, recently asked this question and he states that it is important for CEOs to find a balance between time spent on the outside versus time spent on the inside, but there are situations when time is spent better on the inside than on the outside.

In a service business like Tesco’s, the health of the brand depends heavily on the quality of the millions of daily transactions between shoppers and staff. Motivating the front-line personnel is critical. But in the pharmaceutical business, the key to success is not customer intimacy but product innovation; the CEO will need to spend time with his chief scientists, medical opinion leaders, government regulators, and CEOs of the companies distributing pharmaceuticals, but not so much time with end consumers. And, if cost minimization is the focus of the business strategy, it’s not necessary for the CEO to spend time learning how different clients would prefer customized solutions.

If you still need to get closer to customers but need to limit the time spent with customers, Prof. Quelch identified three strategies that can help to overcome this problem. I am not happy with two of these since they reflect the solution to all customer and marketing oriented problems – growing the right (customer oriented) talent and investing in uncovering customer insights. Nevertheless one strategy was something unconventional: the definition of customer health lead indicators.

First, the CEO should spearhead the identification of three or four customer health metrics that are leading indicators of sales or profit performance. These metrics should not be off-the-shelf standbys such as customer satisfaction (which, in any case, is a lagging indicator): they must be specific to the strategy of the business. Company scores on these metrics may be benchmarked against direct competitors and/or outstanding companies in other industries.

The question what could be a useful leading indicator of customer health is difficult and cannot be answered in general for all industries. Lead Generation and associated costs is a high-potential area but too many factors affect this to give a one-for-all answer. Deloitte published an article about Leading Indicators and they have identified a set of indicators for different sizes of organizations.

The research has uncovered that [the 56 high-growth companies in this study] overwhelmingly use “leading indicators”, or metrics that act as predictors of future success. They use them to monitor their progress towards goals. They use them to shape short-term strategy and adjust longer-term objectives. They use them to achieve balance between productivity and growth. The research has extracted some notable insights. For example, the vast majority of leading indicators are industry specific. Additionally, customer-specific leading indicators are important for all companies, across all industries, and across all size segments. As confirmed in most discussions, these indicators are often the toughest to create and maintain.

This study gives an overview about a set of leading indicators, a few of them might be transferable to your company or department. One should remember that simply spending “more“ time with customers and measuring “lagging indicators” of customer health is not enough for a successful customer-oriented organization.

Read more about “How Much Time Should CEOs Devote to Customers?” from Prof. Quelch.

Read more about “Leading Indicators – Gain the foresight you need about tomorrow to better run your business today” from Deloitte.

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The convergence of different devices is an ongoing trend and some companies predict that by 2010, 500 million mobile phones capable of navigation will be sold annually. With this in mind one should think that location-based services will be "the next big thing".

Even though I am confident that there will certainly be significant growth in some areas (i.e. vehicle tracking, in-car traffic information) I doubt that someday everyone will be using Google’s "Search nearby" feature to find the next ATM, restaurant or supermarket.

Even though mobility and travel has increased tremendously, the majority of people still roam in just a few locations and in general they do not move far from home. Vacations and business travel are exceptions – the percentage of time individuals spend in locations they don’t know is very small.

The New York Times reports on a study that shows that humans are creatures of habit and never go to far from home.

New research that makes creative use of sensitive location-tracking data from 100,000 cellphones in Europe suggests that most people can be found in one of just a few locations at any time, and that they do not generally go far from home.

“Individuals display significant regularity, because they return to a few highly frequented locations, such as home or work,” the researchers found.

That might seem like science and mountains of data being marshaled to prove the obvious. But the researchers say their work, which also shows that people exhibit similar patterns whether they travel long distances or short ones, could open new frontiers in fields like disease tracking and urban planning.

As I said before, I strongly believe that there will be a market for location based services. Nevertheless I think one has to shift focus from the technical possibilities that GPS-enabled, connected mobile devices potentially offer. The key is to understand the potential users of these location-based services in order to be able to find the next "location-based killer app".

Read the full article in the New York Times here.

 

Photo courtesy of cmbjn843

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One of the key success factors for designing new services is not just the world’s best brainstorming technique but even more important are deep consumer insights that look beyond the obvious. Using the right set of methods for market research the task to uncover consumer needs, motivations and behavior becomes very doable. With this knowledge it is usually pretty straightforward to identify new opportunities for service improvement. The Nordic Consumer Policy Research Conference is one stage where consumer insights are presented and – contrary to common practice – the complete proceedings can be downloaded for free on their website at http://www.consumer2007.info/

The consumer insights are structured into the following sections:

1. Ageing
2. Children
3. Competition
4. Culture
5. Technology
6. Finance
7. Design
8. Family
9. Food
10. Housing
11. Inequality
12. Politics
13. Sustainability
14. Innovation

Here are the summaries of a few selected papers that are currently of special interest to me, be sure to have a look since there are a lot more online.

Enjoyment and Concern. The Importance of Food and Eating for Ageing Consumers (Link to PDF)

Sweden, as well as most Western European countries, faces an ever-growing older population. The overall aim of the project has been to contribute to an increased in-depth, knowledge and understanding of consumers’ over 55 years of age, their views, preferences and expectations for food and food consumption. In three separate studies, each lasting a year and each applying qualitative, ethnographic methods, three groups of consumers +55 of special interest have been studied: city centre dwellers (n=29), new Swedes in the city suburb (n=24), and inhabitants in a rural area (n=28). The results demonstrate the importance of food and food consumption in the respondents’ lives. Even so consumers +55 cannot be considered as one group but several. Different values and habits in relation to food have been shaped by a complex interrelation of experiences during earlier periods of their lives and their present situation: social, economical and physical. Healthy food – gourmet food; food as a necessity – food as pleasure; food as a mediator of change – food as a tool for holding on to traditions are only a few of the images resulting from the project.

Broadband Internet Access – Product or Service? (Link to PDF)

There is a mismatch between product providers’ market strategies and consumers’ demands and concerns related to broadband in Norway. Providers of broadband internet access focus heavily on price and technical descriptions, like bandwidth, in their market communication, while consumers have great expectations to time efficiency and content availability. One might suggest that they view the purchase differently, where the consumer consider broadband internet access to be foremost a “service” as opposed to the provider who consider

it a “commodity". This discrepancy causes frustration – probably on both parties. This paper focuses on the consumer side of this issue, and argues that the mismatch can be fruitfully understood in light of two factors: competence and time. Required technological competence can be seen as an important factor related to the domestication of broadband internet access, and as time is scarce in modern households it is subordinated to the moral economy of the households (hence the focus on functionality).

Women dining alone in restaurant rooms (Link to PDF)

The purpose of this project was to discuss women’s single dining by investigating the reception of a woman arriving alone in the evening and ordering a dinner including glasses of wine in upper class restaurants. Methods used: Visits to ten different restaurants in a large city in Sweden. Field observations were done and interviews, i.e. colloquies, were held with both women and men who had experience of single dining in restaurants. The results show, that there is neither any hindrance for a woman to enter an upper class restaurant and dine alone; nor were there any special treatments offered. The colloquies were interesting, women talked with fear of single dining in restaurants, they talked about being exposed and placed in public view as a body of womankind. She and her sisters may need some other kind of concept to feel relaxed when visiting restaurants. What can be done to offer comfort? How can she become a satisfied customer? A new group of customers, women in urban society, needs a new consumer policy, which makes them feel comfortable when dining in modern restaurants.

Read these and other research findings at www.consumer2007.info

Photo courtesy of *Your Guide

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IDEO, the world’s most famous design and innovation consultancy, has recently launched a new website for their latest project “EyesOpen”. IDEO’s “method” for designing innovative products and services is built on gaining insight and inspiration rather than improving brainstorming capabilities (see a speech by Tim Brown, CEO of IDEO, on this topic). EyesOpen is the virtual platform to share these inspirations moderated by IDEO but welcoming submissions from everyone.

IDEO believes that forward-thinking design and innovation comes from a combination of insight and inspiration, and that the greatest ideas mean very little if you can’t experience them firsthand. EyesOpen guides and tours are ongoing projects that aim to draw inspiration from culture and communities and the experiences they create, while the EyesOpen website seeks to explore emergent ideas by tying them to concrete experience.

IDEO is on the “crowdsourcing” bandwagon by inviting everyone to submit their stories and observations on certain topics.

This site is a forum for doing just that—sharing fresh experiences that are happening now, in the moment—as well as an opportunity to learn from others. It is a cross between cool hunting and cool thinking. And you are invited to join in on the fun. An eclectic combination of IDEO hosts, guest hosts, and creative and curious folks like yourselves provide the content.

The topic of next month is about aging and everyone is invited to participate:

What will happen to urban spaces, services, healthcare, exercising, nursing homes—and to society in general when 20% of the population is over 65? Will society be transformed for the better or will intergenerational conflicts mushroom? Will boomers move back to cities or stay in the suburbs? Will they retire like their parents or reinvent the notion itself?

Visit IDEO EyesOpen.

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David Armano at Logic+Emotion posted a great visual explaining the different roles consumers can play in a social media landscape. (Here is the post).

People can be user, consumer, customer, producer, participants and community member. But at the centre is that understanding that we are human beings. David asks

So the geeks build the platforms and networks. The users use them. The users become participants. Participants form the networks and communities and participation in communities sucks up our time and attention.

Then where does that leave marketing?

Marketing comes in when the geeks build the platforms and networks: but not for themselves, but for someone else. When you build a platform that is not for “yourself”, it is necessary to understand your potential user, so that they can use it and become participants. One big question remains: How can I understand my customers so that I can build platforms that makes “users us them”?

One example: How would you build a social network for physicians? Either you are lucky and find a physician who is geek AND who needs a social networking platform or you need the “right” marketing people that help you understand your future users. Because questionnaires won’t do the job.

Read the full posts here.

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