Outside Innovation

Amazon and Dell Top UK Online Retail Customer Experience

Blast Radius, a UK customer experience consultancy, has conducted and publicized a customer experience audit of the top 28 (by traffic) online British retailers. What I like about their customer experience evaluation is that it includes the entire customer experience, not just the buying experience--but the entire end-to-end experience.

We used to run similar customer experience tests for online retailers in the U.S., until the results began to get fairly equal.

Here are the top 10:
The top ten:

1. Amazon UK
2. Dell EMEA
3. Apple Computer UK
4. Next
5. Comet
6. Tesco/QVC UK [tied]
7. Currys/Littlewoods [tied]
8. Asos
9. John Lewis
10. Hewlett-Packard/Marks and Spencer [tied]

You can download the entire Blast Radius Report on UK Online Shopping 2006.

Do Customer Communities Increase Revenues by Active Customers?

Thanks to Paul Sweeney  for his link to Customer Communities do Pay Off! and this great blog--Emergence Marketing spearheaded by Francois Gossieaux .  This post cites a report on a research study in the December 2006 issue of the Harvard Business Review, Do Customer Communities Pay Off?  (Requires a subscription or pay to view) by Rene Algesheimer and Paul M. Dholakia.

Here's Francois's commentary which caught my eye:

"The numbers are quite interesting. The experiment involved 140,120 eBay customers who had bought or sold on eBay but who had not participated in the eBay customer communities before. 79.242 were invited to join the online customer community, while the remaining 60,878 were used as a control group. Of the people who were asked to join the community, 3,299 became active participants and 11,242 became lurkers. Over the course of a year they compared the behavior of the active participants and lurkers to that of the control group and found that:

• Lurkers and active participants won up to 25% more auctions


• Lurkers and participants paid prices that were as much as 24% higher


• Lurkers and participants spent up to 54% more money in total


• Active participants listed up to 4 times as many items


• Active participants earned up up 6 times as much monthly sales revenue


• For first time sellers who were lurkers and participants, 10 times as many of them started selling on eBay after joining the community

All in all the activities of the lurkers and participants resulted in 56% more sales during the year of the study - bringing in millions of additional dollars into eBay's bottom line."

THINK CUSTOMER EMPOWERMENT; NOT CUSTOMER SERVICE

Has your company moved from enabling customer self service to empowering customers? Notice these customer empowerment trends. How many of them are in play in your organization?

1. We are investing in providing better self-service tools:

• across the customer's lifecycle (plan, explore, learn, evaluate, decide, buy, learn, use, improve, enhance, replenish/renew/update, or replace)
• across interaction channels/touchpoints (Web, email, phone, PDA, point of sale)   
• across direct and indirect sales, distribution, fulfillment and service personnel, and ecosystem partners

Nice Review in the Economist!

This week The Economist ran a nice mention of Outside Innovation along with three other books on Innovation and Entrepreneurship in a piece entitled "No Fear of Flying" . The three other featured books include: Mavericks at Work by William Taylor and Polly LaBarre, which I recommend highly,  Joe Wilson and The Creation of Xerox by Charles Ellis, and Carl Schramm's The Entrepreneurial Imperative.

The Economist said:

"Patricia Seybold focuses on the potential for using customers more in the innovation process. In “Outside Innovation”, she does a decent job of justifying her Martin Lukes-esque subtitle, “How Your Customers Will Co-Design Your Company's Future”. Her case studies cover a number of web-based companies and are written up with even more breathless enthusiasm than those of Mr Taylor and Ms LaBarre. These examples will be especially useful to anyone looking to innovate on the internet, particularly if open-source software is involved.

Ms Seybold reckons that most companies make two common mistakes about their customers. First, they think that customers can't envision what they don't know about—so innovation has to be driven by a company's in-house visionaries. Second, they believe that they already do a good job of listening to their customers. Citing companies ranging from Lego, which got customers to design its bestselling Mindstorms robot products, to “boutique streetwear retailer” Karmaloop, whose trendsetting customers are its sales force, she argues that companies urgently need to identify their most important customers and engage deeply with them about what they want."

 

WEB 2.0, SOCIAL NETWORKING, AND CUSTOMERS IN CONTROL

Last week, we hosted our semi-annual Visionaries meeting for our lead users in the “Let Our Customers Re-Design Our Businesses” camp. Unfortunately, our timing isn’t so hot. O’Reilly’s Web 2.0 Summit was also last week. They have more technorati. We have customer-centric business leaders who are recruiting customers to help shift their corporate cultures to become customer-adaptive. The Web 2.0 Summit is on the West Coast. We’re meeting in Boston. But we’re both talking about many of the same things: customer-created content, customers taking control, customer communities, customers designing, sharing, and voting on each others’ creations, customers acting as promoters and marketers, customers acting as problem solvers and guides, and customers creating folksonomies.

For our customer-centric visionary business executives, Web 2.0 enablement is both a boon and a curse.

ISSUES THAT CUSTOMER-CENTRIC EXECS ARE FACING AS CUSTOMERS TAKE CONTROL

For many of our corporate visionaries--representing both large and small companies--our conversation last week puzzled over several key issues:

1. If customers want to strut their stuff, help each other and solve each others’ problems, how tightly should those customer communities be integrated into our more carefully structured customer support knowledgebases and resolution flows? Does it make a difference if we’re charging for support? Will customers pay for support if some of it is provided by other customers?
2. If customers promote our brand and contribute to our marketing and create our collateral, how do we ensure that they capture the essence of our brand image and don’t dilute it or take it in the “wrong” direction?
3. If customers are creating their own solutions and accomplishing their own results using our resources and tools, how much of their accomplishments are they willing and even eager to share? If we let them see how they’re doing compared to others, is that welcome or invasive?

MICROSOFT (ORACLE) AND LINUX

We rarely write about Microsoft any more. Compared to Google, Microsoft has less and less effect on the business strategies of our corporate clients. Yet in the past two weeks, there has been a major sea change afoot that warrants commentary. Microsoft has apparently stopped seeing Linux as the enemy and realized that it’s time to co-opt Linux.

Linux is winning on the server. There’s no question about the fact that customers large and small want to mix and match Linux and MS boxes. Trying to fight against that customer tide wasn’t working. So Microsoft made peace with Novell (along with an infusion of $442 million) and is now promoting SUSE Linux and MS/Linux interoperability. Add to that news the fact that Oracle is now offering cut-rate prices for support of Red Hat’s Linux, and you have a major seismic shift afoot.

The Linux community is worried about fragmentation of Linux--two many variants promoted by too many strong parties. I don’t think these latest industry machinations are about fragmentation. I think they’re more about capitulation. Linux on the server is big business. It’s a business that Intel, Dell, HP, IBM, and Sun still hold dear. It’s a business that Microsoft can’t afford to lose to Oracle, Linux, Google, et al.

A PEEK INTO THE FUTURE OF COMPUTING

What “Grand Challenge Problems” Will We Be Able to Solve with the Next-Gen Computing Platforms?

Our lead users work on really hard and interesting problems. At our Pioneers meeting in early October, Tom Morgan gave us a glimpse into the project he has been involved with--helping with the design of the Cyclops/C64 computer chips in a research project that is a collaboration between IBM Research, The University of Delaware, and the Institute for Mathematics and Advanced Super Computing, at Polytechnic University, Brooklyn, New York.

Tom is currently working there on his doctorate in mathematics. The IBM architect is Monty Denneau. For those of you who have followed trends in scientific computing, the Cyclops architecture is an alternative approach to the one being taken in the more highly publicized “blue gene” project. In a paper entitled, “Evaluation of a Multithreaded Architecture for Cellular Computing,”

CAN YOUR PRODUCTS “PHONE HOME”?

Busy business people are opting out of email lists at a frightening clip! Overwhelmed by the volume of non-vital email flooding their inboxes, many customers have pruned their opt-in email relationships to the bare minimum. This presents a daunting challenge to email marketers.

Let Your PRODUCTS Do Your Direct Marketing. There is a bright side, however. E-enabled products--from ink jet printers to automotive diagnostic tools to chemical analysis systems to computer servers--are increasingly “phoning home” to get updates, add-ons, and renewals. So, if your customers won’t let you market to them, their products may!