Trends from Customer-centric Visionaries

On May 9-10, 2007, we held our semi-annual get together of “Patty’s Visionaries”—a handpicked group of customer-centric executives in a cross-section of industries, each of whom has impressed me with his/her accomplishments in designing their businesses from the outside in. This two-day meeting is always a treat for me. It’s relaxed, casual, reflective, and gives us all good insights into what’s up with customers, business, and technology and how we’re doing in harnessing technology to deliver a great customer experience and to grow our businesses. Everyone came away with actionable insights—several of which have already been put into practice!

Eight Key Patterns and Themes

Here are eight topics that rose to top of mind for me after swimming in this rich conversational soup. I suspect each Visionary may have had a slightly different set, based on his or her own context. Here are the themes that are still reverberating with me a week later:

1. Outcome-based ecosystems

2. Customer communities

3. The primacy of search

4. The disappearing home page

5. Cloning capabilities across channels

6. The opportunities and dangers of serving baby boomers

7. Online gaming, virtual worlds and kids’ innovative behaviors

8. Driving organizational change thru operational customer metrics

Customer-Centric Visionaries Design Customer-Outcome-Based Businesses and Ecosystems

We spent a fair amount of time talking about our customers’ real goals, e.g., retire comfortably, be physically fit and healthy, find the best car for my current situation, have a great family vacation, design a successful product and gain marketshare, have everything I need to run my small business, etc. As one Visionary explained, “the most successful businesses are the ones whose purpose is to meet customers’ goals.”

The more clarity everyone in the organization has around customers’ end-goals, the easier it is to get all the stakeholders pulling together. Whether the goal is to prevent people from becoming diabetic, to increase kids’ proficiency in engineering and science, or to make it easy for them never to run out of ink toner for their printers, everyone in the company can understand how success is measured and how their job supports the customers’ goals.

The most interesting aspect of the “design our business around our customers’ goals” theme was that, in each case, the resulting organizational structure becomes a vibrant ecosystem of partners and suppliers all aligned around the same outcomes. This approach to business design is already redefining entire industries.

Customer Communities Are Strategic

One of the topics that we had all agreed we wanted to drill into at this meeting was how to create and nurture vibrant online customer communities. I was happy to find and recruit (with our community guru, Matthew Lees’s, help) some true "best practitioners" and veterans in leading and managing online communities. In each case, these executives have full time responsibility for their online communities. It's clear that evolving, growing, nurturing, and policing a customer community is both a full time, and a strategically important, job. Our customer community leaders report into the top of their businesses. They are key members of the strategy team.

These community leaders (and the customers they represent) push the envelope in a number of areas. Community members question the company's policies and business models. Online customer communities present unique challenges to the firm's legal team. Customers' opinions may be challenging or offensive to advertisers and sponsors. Customers' ideas may fall on deaf ears among the members of the R&D team. In a mature, vibrant online community, customers embody and drive the brand experience. Customers amplify the firm’s marketing outreach. Customer-created content and ratings quickly become an invaluable business asset. Customer-answered questions and tips form the backbone of the company’s self-service strategy.

Marketing Is Dead; Long-Live Search

Our Visionaries quickly agreed that "marketing" is "dead," and that most of their online efforts revolve around search. While many firms find TV advertising effective to promote their brands and to promote new products and categories, they don’t find much value in traditional "marketing campaigns," with the exception of print catalogs and newspaper circulars to drive traffic online or to the store. Direct marketing campaigns—elaborate programs designed to launch, promote, and drive purchasing behavior for a specific offer—are out. Push is out. Pull is in. Customer pull "customers" explicitly looking for something—is enabled by search and navigation.

So all of our Visionaries have made significant investments in the skills and technologies required to continuously optimize the ability for customers to find what they're seeking, both through search engine optimization and, even more, through improved site search and navigation.

Our search maven, Sue Aldrich, led a lively discussion and show-and-tell. We learned that many Visionaries are doing a great job with vertical search—search that is optimized for their particular product categories. Many are using federated search: bringing in relevant content and information from third-party sources. And all are focused on adding customer tagging to their own carefully crafted taxonomies.

The Case of the Disappearing Home Page

One of the most interesting “Aha’s!” that occurred to all of us as we compared notes was that, due to customers’ search behavior, our Web site home pages are much less relevant today than ever before. Yet most of us lavish incredible time, resources, and attention on our home pages. Home pages are a corporate battlefront. Every product line and department fights for its square inch of home page real estate. Yet, as we discussed the actual behavior of prospects and customers using our Web sites to get things done, we all admitted that the vast majority of Web traffic is coming from search and linking directly to topic-specific pages. The home page is becoming increasingly irrelevant.

Ad Blockers Create Holes in Our Web Sites. Another related epiphany struck us as we compared notes on the upswing in the use of ad-blocking software and browsers. In many cases, as much as 10 percent of customers are using browsers, like the latest version of Firefox, with ad blocking enabled. What that means is that if you have a Web site that includes lots of ads—either sponsors’ ads or house ads—the appearance of your site is compromised with a bunch of blank holes.

Personal aside: This discussion took me back to the late 1970’s when Professor Ron Baecker at the
University of Toronto designed an automated newspaper page layout program that he dubbed “Newshole.” His interactive graphics program would select and flow newspaper stories to fill in the “newshole” that is left after the newspaper’s ad department sells and places the ads for each edition of the paper. Now, what we’re dealing with is the logical extension. If customers opt out of advertising, all we have left is the newshole!

The increased adoption of ad-blocking software by customers is not only challenging companies’ revenue assumptions, it’s also impacting the quality of the customer experience they deliver. Soon, we’ll need to design sites that look really good without ads. Or maybe we can substitute artwork for the ads, or customer-generated content. I was tickled to read an article about an enterprising artist who is teaming up with Web ad-blocking software firms to substitute artwork for ads.

Cloning Capabilities: Services, Gadgets, User Ratings, and Reviews

At the same time that home pages are becoming irrelevant and advertising is being blocked by customers, we’re seeing an increase in the customer-spawned proliferation of gadgets and widgets. A number of Visionaries have created these Web gadgets or widgets in the past six months. Gadgets are interactive tools with rich user interfaces that are usually developed in Flash or Ajax. These Gadgets can be placed anywhere on the Web, on portal pages, on customers’ blogs, on users’ desktops—not just on your company’s Web site.

Typically, they include some functionality that customers would normally find on your Web site—a retirement calculator, a way to register for a course or an event, or a way to apply for a job or a loan. Usually, they communicate back to their “home server” via RSS, so they update themselves automatically as the relevant information changes (data, newsfeeds, weather, etc.).

A few Visionaries have been experimenting with posting these interactive gadgets in lieu of ads at sites that are frequented by their prospects. Others provide gadgets on their Web site or on their beta/lab Web sites. In either case, the gadget designers make it easy for customers to email these gadgets to one another and/or to copy and paste them onto their own blogs or Web sites or portal sites, or onto RSS aggregation pages, like Google iPages, NetVibes, or PageFlakes, or onto their Mac or PC desktops.

End-Users Can Create or Extend Gadgets and Spread Them Around. It’s important to realize that the creation of Gadgets or Widgets is no longer the purview of geeks. It’s actually pretty easy for non-technical users to roll their own simple gadgets from their favorite content and functionality. You can use any content or functionality that communicates using an RSS feed—photos, videos, text, calendars, data feeds, news feeds, weather feeds. Give it a try. Most people start by customizing or modifying others’ gadgets, like the ones you can find in collections on Google, Microsoft Live, Apple, Yahoo! NetVibes, PageFlakes or any similar sites.

To prove my point that non-techies can create gadgets, check out my Customers.com tab on NetVibes, and copy any or all of them to your own preferred Web location. My favorite is my Customer Experience Initiative To Do list! Let me know if you’d prefer to have me email it to you. You can create your own widgets or gadgets featuring your brand’s content and functionality. You should also expect your customers to roll their own, or to extend yours by adding their own functionality or content. (I can’t wait to see what people do to mine!) In short, snippets of rich internet functionality can be cloned and sent out to roam the Web. They are likely to show up on hundreds of locations—Web sites and blogs—thus expanding the reach of your brand.

Re-Using Customer-Created Content Across Sites and Across Channels. Another form of cloning or services re-use that a few Visionaries are doing or contemplating doing is to take customer-generated rankings and/or reviews and to use them in offline venues, such as stores, catalogs, or mobile phones. Another form of re-using customer-generated content that is already widely adopted among our community-savvy Visionaries is to take online discussions and sprinkle the relevant discussion threads throughout their Web sites and on to others’ sites.

For example, on any product-specific Web page, you’re increasingly likely to find customers’ discussions about that product, their own reviews and ratings, and their tips and advice to other customers. You no longer need to go to a separate “discussions” or “forums” tab. Customers can share their points of view and their tips everywhere they go.

The Perils of Baby Boomers

About half of my Visionaries are baby boomers. We were born during the Second World War. (The other half are younger). And many of our companies cater to baby boomers. That’s a blessing and a curse. As one Visionary said, “I know how to design for people like myself.” But, as many of us agreed, as the boomers retire, our businesses may be doomed. When you have a huge customer segment that all disappears at the same time, and you don’t have products, services, and brand experience that are designed around the needs of generation X, Y, and beyond, you have a major business strategy problem! This “curse of the boomers” is true not just for e-businesses, but for all businesses. We all need to learn how to design products and services for the younger set.

Learning from Virtual Worlds, Online Games, and Innovative Kids

We all agreed that we have a lot we can learn from our kids (and, in my case, grandkids). We spent some time comparing notes on our experiences and our kids’ experiences with virtual worlds, online games, and off-line coopetition (kids teaming together to compete and play games in both the real and virtual worlds). We marveled at the multi-tasking and parallel processing capabilities of our younger colleagues and offspring. We explored the ways that some Visionaries are setting up laboratories in virtual worlds in order to learn first hand about avatars, customer-created worlds, fashions, intellectual property, new services, and new (and old) behaviors.

One reassuring thread that permeated our discussions of both online games and online communities was the realization that most of the hard work of “getting it right” is based on a deep understanding of human social behavior. Social constructs don’t really change as people go virtual. But you do need to have very well-honed social skills to design and shape social communities and social networks.

Driving Organizational Change

As always, we spent a fair amount of time talking about how difficult it often is to get everyone in a large organization aligned around customers’ outcomes and moments of truth. At this meeting, several Visionaries were able to share impressive examples of organizational culture change. In each case, they had used a combination of customer-driven operational metrics and political savvy to get everyone happily aligned around monitoring and improving the things that matter most to customers.

Comments

[Patty Seybold]

Wow! Great insightful observations and questions, Jonathan....

I think that marketing CONSISTS of understanding customers' contexts and desired outcomes deeply...

I agree with you that sales is changing.. actually good sales has always been "consultative sales".. e.g. understanding the customers' context and understanding their outcomes, then positioning your products and services to be easy for customers to buy (including understanding how their buying/approval process works, whether that's consumer or business - e.g. you won't buy a car your kid doesn't want to be seen in!)..

[Jonathan Narducci]

Understanding customer outcomes and what a company has to do to make sure goals are met requires profound knowledge about how customers work, what they do that is successful, what they do that isn't and what problems they are blind to. Hard work to find out but if companies rely only on the "issues" or activites around their products and related services then they might miss why customers aren't meeting their goals, even with the company's extraordinary attention.

I agree, marketing is over as we know it. But marketing research, meaning, learning about customers, is not. Marketing takes on many different functions. This one, reasearch, in light of the customer powered economy, is more important than ever.

The other, related question, is "How will today's sales function change?" With customers "capable" of learning so much on their own, how will it affect the need for someone to tell me about someting they already know? Will sales be more of a product "design" function, helping the powerful customer's unique needs become real?

Any thoughts?