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.

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

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

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.

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.

Consumer tribes in this book are doing far more than consume. They do not consume things without changing them. They cannot consume a good without engaging in a dance with a service provider. Participatory culture is everywhere.

Cova further explains the different roles consumer tribes engage in. He distinguishes between tribes as entrepreneurs, tribes as double agents, tribes as plunderers and tribes as activators. The other chapters in the book dive into each of these roles in more detail.

Some of my favorite chapters are:

“Marketing the savage: appropriate tribal tropes” which discusses how surf culture has developed through various media and marketing influences. The consumer tribe of surfers is analyzed and its history and influences are explored.

Putting this another way, […] surfing affords a “primeval way of life….the complete antithesis of a too mechanized, too routinized, too tame civilization”. Furthermore surfing provides a kind of carnival space through which to seek out alternatives interpretations of modern culture.

“Sociality in motion: exploring logics of tribal consumption among cruisers” explores the underlying motivation of car enthusiasts who stylize and customize their cars and drive in convoys to participate in a community.

This being-as-a-group, or as they prefer “standing out from the crowd”, can be reaffirmed in their resistance or antipathy the logic of the market and their desire to inflect their own meanings from such commodities.

“Hunting for cool tribes” looks at the origin of the word cool (it is derived from the “jive” talk of black musicians after the First World War) and answers the question what is cool and what is not.

Cool is not something you can set out to acquire, it is something that is acknowledged in you by others.

“Factors contributing to club formation and continuum” suggests that marketplace collectivities such as fan clubs are possibly a consequence of consumers seeking sanctuary within their confines.

Research suggests that three phases associate with the formation and continuance of fan clubs, notably imprinting, incubation and intensification

Other chapters look at the power of Harry Potter fans when they influences the author’s original plans for the seven-book series, the increasing number of independent Star Trek episodes created by loyal fans, gothic entrepreneurs as well as the motivation and characteristics of being a Hummer driver. Here is one statement of one Hummer driver:

People actually try and cut us off on the freeway. We have been cussed at, yelled at, given the thumbs down for killing children (not sure what that was about). Six times in the last three months, people have tried to steal a parking spot from us when we were waiting first. This only makes me want to drive a Hummer more!

Conclusion:

The book provides valuable insights into different consumer tribes and consumer sub-cultures. Even though the tribes usually reflect a special customer segment understanding this group of consumers is of major importance for organizations because these consumer tribes inevitably turn in brand ambassadors – good or bad. It is written in an academic style (several chapters are based on publications in scientific journals), yet it is still easily readable and provides valuable references in case further information is needed for certain aspects.

The case studies presented in the different chapters are excellent examples that in order to understand consumers it is necessary to look beyond segmentation variables and traditional methods of market research and dive into consumer segments with qualitative, ethnographic methods to fully grasp consumer motivations and needs.

More information at Amazon.com.

The article still has a few interesting take aways:

This is the first rule of the cool: The quicker the chase, the quicker the flight. The act of discovering what’s cool is what causes cool to move on, which explains the triumphant circularity of coolhunting: because we have coolhunters like DeeDee and Baysie, cool changes more quickly, and because cool changes more quickly, we need coolhunters like DeeDee and Baysie.

The innovators do get their cool ideas from people other than their peers, but the fact is that they are the last people who can be convinced by a marketing campaign that a pair of suède shoes is cool. These are, after all, the people who spent hours sifting through thrift-store bins. And why did they do that? Because their definition of cool is doing something that nobody else is doing. A company can intervene in the cool cycle. It can put its shoes on really cool celebrities and on fashion runways and on MTV. It can accelerate the transition from the innovator to the early adopter and on to the early majority. But it can’t just manufacture cool out of thin air, and that’s the second rule of cool.

The key to coolhunting, then, is to look for cool people first and cool things later, and not the other way around. Since cool things are always changing, you can’t look for them, because the very fact they are cool means you have no idea what to look for. What you would be doing is thinking back on what was cool before and extrapolating, which is about as useful as presuming that because the Dow rose ten points yesterday it will rise another ten points today. Cool people, on the other hand, are a constant. [...] Their non-cool coolhunter just didn’t have that certain instinct, that sense that told him when it was O.K. to deviate from the manual. Because he wasn’t cool, he didn’t know cool, and that’s the essence of the third rule of cool: you have to be one to know one.

Read the full article.

Avenue A | Razorfish recently published the “2008 digital outlook report“. On 164 pages they present what happened in 2007 and what they think will happen in 2008 in the digital media landscape.

For many consumers, an engaging advertisement still powerfully influences their decisionmaking. But even more powerful, are the opinions they share with each other through trusted blogs and social networks. A mother in Topeka, Kansas, or a teen in a London flat can become trusted authorities, influencing more decisions than the best formulated professional branding campaign that an advertising agency can offer. Consumers are turning to a seemingly endless source of specialized media – so much so that commonly accepted best digital best practices have very short shelf lives. Yesterday’s solutions simply aren’t adequate to solve today’s problems. Is it any wonder that most businesses are coming to the hard realization that they aren’t organized effectively to respond to change?

Avenue A | Razorfish’s 2008 Digital Outlook Report examines where that digital spend is going. We provide direction on how marketers can align their organization to respond to the new digital environment, as well as a framework for effectively managing emerging channels and social media. And we give you some interesting new insights into consumer behavior.

The chapter “ten digital media issues to watch in 2008″ is especially interesting, so watch out for:

1. The move beyond media buying
2. The impact of a recession on online advertising
3. The redefinition of online media measurement
4. A limited increase in average CPMs
5. The fallacy of the “digital upfront”
6. The slowing of ad network acquisitions
7. A breakout year for mobile—but not for mobile advertising
8. Nokia’s emergence as a key player in the digital marketing industry
9. The continuing lack of video ad standards
10. The Internet’s impact on the 2008 presidential election

For me personally issue 8 “Nokia’s emergence as a key player in the digital marketing industry” provided new insights.

Nokia made two important moves in 2007 that will impact digital marketing in the coming year. It acquired both Enpocket, a leading mobile advertising and marketing services firm, and Navteq, a leader in navigation data and systems software. While there have been no formal announcements from Nokia about how its assets will fit together, it is clearly going to be a company to watch in the coming year. Nokia appears to be vying to expand its own business outside of consumer mobile devices and into the software and services that consumers are able to use on those devices.

Nokia now has assets that may accelerate the use of smart devices that use location-based services that know where we are. The potential benefit for marketers is the ability to deliver relevant, geographically contextual advertising opportunities to customers. Accomplishing this feat in the U.S. today, while not impossible, often involves orchestrating a small army of carriers, devices, marketing services providers, and agencies whose interests are not always aligned.

Download the full report.

Design is not serving the needs and dreams of people today. In comfortable American home, schools and workplaces, people are beginning to feel uneasy. It has become increasingly evident that they are no longer satisfied with simply being “consumers”. Everyday people want to be “creators” as well.

Stimulating peoples creativity and giving them tools will lead to a shift from consumption towards creation. This might sound vague but by observing the changing role of everyday people in design processes one realizes that many successful companies are already designing products and services that make their customers co-creator – YouTube is the most prominent example for user-generated content.

It is time to move away from the traditional design disciplines that are founded on the materiality of the artifact (graphic, product, space, software, architecture, etc.) and instead organize around human experience domains such as learning, creating, healing, living, working, playing, shopping, etc. People are people whether they are finding their way around a building, using a product, reading a package or using a software application. Design should be about making sure that our results advance people’s personal growth and support a harmonious relationship between people and their environments.

Nike is not “just” selling running shoes anymore. Nike is selling an experience that supports people in advancing their personal growth. The winners are companies that are able to identify the underlying desires of their customers and incorporate them into the design of their products and services.

Read the full article here.

There is a group of brand consultants and cultural anthropologists alike that believe now that it is not the actual research itself that is the problem. It is rather about how research is often misused, what type of design concepts and stimulus are tested, and how data is analyzed that is most often at fault. When used correctly, research shouldn’t stifle creativity but rather offer designers stronger inspiration and focus.

The authors further explain the advantages and challenges of modern market research methods (ethnography, focus groups, quantitative eye tracking, online testing) and deduce 6 golden rules for market research.

1. Focus on testing communication effectiveness vs. design appeal.
2. When testing, make allowances for familiarity.
3. Market research is an art, not a science.
4. Focus on what consumers like about the brand or product first.
5. More is definitely merrier. Do not test designs in isolation.
6. Never ask consumers how they would improve a design.

Read the full article.