Image result for bot wikipedia

I wont be long-winded about this, I’ll discuss it via email with anyone who is interested, but I’ll break with my usual mode and come straight to the point.
A great many people who know little at all of machine learning  and even less about people and many more who are simply  oblivious to the potential consequences of their words are talking about the miraculous things we can expect from Machine learning.

What is ML in a nutshell?
Academics break ML into two modes:  Supervised and Unsupervised.
In the case of the former we give the machine a large corpora of content and ask it to decide what will happen next, or to find other similar instances. A translation service for example  begins this way and learns after a while to translate without help.
In the latter case, we give it a body of content and ask what it thinks of that.. Google search is an example of this approach and it simply makes sense of what it finds.

Often we give it a few hints like “Classify this for me and establish links” as in Google search. This would be a “Classification problem”. We might on the other hand ask it to read the racing papers and decide who will win the four o’clock today. This would be a “Regression problem” because we are asking it to look at the past and predict the future. Yes all of this is highly condensed as promised, if you are an expert you don’t need my explanations.
Understanding what the customer will want next year, predicting the weather, finding Oil under the sea, predicting tumours, the challenges are endless and the rewards enormous.

What is the loop of self-destruction?
The loop happens when, thanks to social media, a good, but no a sole example, the machine begins to make judgements that influence the data and then discover exactly what it predicted.

As with humans this will give it the machine equivalent of a big head and possibly some citations and will lead to even greater confidence and fewer checks and before anybody spots it, it I all too late.
If any Movie producers out there are stuck for an idea, I am available to help with the plot. Here is a simple example we are all aware of:
Joe Gel, and Josephine Lotion our dear friends, represents an enormous body of intelligent and informed people who spend most of their waking hours  checking back with their phones for reassurance. Joe searches Google for Tom Raspberry, his favourite politician and receives a huge list of pages. The ML in google notes his interests and begins sending him dozens of articles about Tom Raspberry, what he says and does and what people say about him. Unwittingly Our pal Joe has become astonished by the fact the whole world seems obsessed with Tom R and realises subconsciously how important to is be aware of Tom R. He begins to tweet and have the odd Facebook conversation about something he read. Immediately the ML in Facebook and the one in Twitter hone in his apparent obsession with Tom R and all begin to bombard him with content and introduce him to thousands of people with the same problem. Poor Joe.

Now our Machine does a Recce to see what are people talking about and it discovers that millions are talking and reading about Tom raspberry and concludes that tis is the way to keep the customer happy so it ups its game and heightens the emphasis. It also confidently announces that Tom R will undoubtedly be unstoppable in the forthcoming election.

Joe and Josephine realise the importance of not standing in the way of a social crowd and are not about t be shunned and subconsciously they begin to take more interest in the positive stories about Tom which now triggers the Machine to filter their feeds and search results and friend recommendations etc more toward the positive . You don’t need me to finish the plot. There is only one way this is going. Imagine if the secret services relied on this kind of information to brief their bosses. But they do, don’t they.

You may well think, as I do , that despite the  shear “wrongness” of rigging democracy, whether by design or accident, it matters little who is elected anyhow. In that case imagine the same scenario when the machine turns its hand to guiding change in a government department or a large business , or guiding product development or even finding the cure for cancer. If you would like to see many better examples with a strong scientific analysis, check out Weapons of Math destruction.

One wonderfully simple yet highly destructive outcome of ML that I have seen up close is the  call centre  automated system that recognises your telephone number, calculates your value as a customer and decides if you will be answered, how long you will have to wait and whether you get to speak to somebody skillful.  Just to update my card details for a £20 a month hosting service, I had 11 hours of my time wasted, had my service disrupted and was threatened by a bot with £150 fine to put the service back on.
I hate to disappoint you, but if you have ever had an IM conversation with a patient lady on the support portal “That was no lady” nor was it my wife, that was a distant cousin of Cortana.
If she did not know the answer, or more likely the question, you were never going to be served.
If you are wondering what might happen to your pension, your job and your home if these guys get involved in stock trading, well take a look here  According to a 2014 report, sixty to seventy per cent of price changes are driven not by new information from the real world but by “self-generated activities”.

It’s not all negative by any means. I actually do use ML to predict the winners of tomorrows racing with a consistent level of profit. When I get it wrong, usually after a late night of programming with insufficient testing, my winnings disappear very quickly into someone else’s pocket and I sit up and take notice.
I sincerely hope that someone starts sitting up and taking notice soon  of the impact of poorly programmed Bots that are already beginning to increase risk for the most powerful nations on earth.

What to watch out for when researching and testing journeys

Previously:

Why you need to pay attention to customer experience

What to watch out for when researching and testing journeys

 

1. Last Click  can be a costly mistake

The customer journey does not begin with the last click before they visited your ecommerce site. No assumption could be more damaging than this one.

Here’s an example of what happens before “LastClick” (Uses App to order)

 UJ1

You need to take off that blindfold and clean your glasses if you’ve been ignoring this part of the journey.
Once you have got ahead, next you will need to criss cross this journey with the interactions with your competitors if you want to stay ahead for any length of time.  And don’t forget all those potential customers who have been influenced by this on-line saga.

For an interesting interactive tool that can be filtered by industry classification to get a glimpse of how last click relates to the other channels and influencers, check out the ink below

http://www.thinkwithgoogle.com/tools/customer-journey-to-online-purchase.html

 

2. Its not what they say, or what they do, or even what they say compared to what they do, but it’s what they tell their friends that is interesting.

If you have spent any time working with professional market research you probably noticed that people tell you what think you want to hear, what they think makes them sound clever, or mostly what they believe the group will be impressed with.

It takes a great deal of skill to capture useful insight from market research and to make large investments on the basis of just a market research report, however good, is a fatally risky thing to do.
People invariably do entirely different things to what they expected they would do in a particular situation and even from what they planned to do.  It can be very difficult to explain why you did this, you can read the underlying Social Psychology theories and decide whether to believe them, or not, but it wont change the facts at all.
People are more driven by their acceptance in, or leadership of groups than any other thing and hence, once they announce to the group what they are going to do,  it is more likely that they will do it than not.  Hence the most valuable insight into what someone will do is what they are wittering about in social media.
Be warned of course, just like other forms of research, this is one more voice to add to the conversation, not the single source of truth.
Just in case you are thinking it, most people ask this , there is a big difference between what people say in idle chatter to their friends and what they tell you in focus groups. The latter is not populated with their peers and it ends when they leave.

 

3.    The journey does not end at purchase, or anywhere close to it.

If you have been following the series so far, you will remember that in paragraph 5 of the last section I presented some hypothesis about the power of referral from your customers.  This is a very valid argument indeed for being switched on to the journey after purchase. In many sectors of course ,there is an ongoing relationship with the brand.

First of all the product may be one that is repeatedly used over time, each repeated use will therefore be another interaction with the brand and the quality of that interaction does count. Additionally there will be the difficult period when customers are learning to use your product and later there may be issues that require active support.

If you take the view that once they have purchased and you have their cash, there is little motivation to spend more money on them, then you are greatly mistaken, because even if they never plan to make another purchase of your product, they will talk to everyone they know and their influence will cost you dearly. Put together enough of these negative voices and it will put you out of business.

A far more constructive way of thinking is to ask yourself what up-sells, or cross-sells you might be able to introduce as a result of providing high quality personal support. If you don’t have other products, this may be the catalyst you needed to re-think your brand and product strategy

4.  Pay special attention to understanding Critical touch points (Moments of truth)

A user journey can be and usually is very complex, even when we only represent the main points. Even this however, is a potentially misleading picture. Thee are always Moments Of Truth when you win or lose on the tiniest of margins and these are the ones you must identify and focus your closest attention on.

For example: When the customer finally returns to your store feeling really happy with her decision, clicks buy and you don’t have her size in stock. That’s not a good situation.

When she clicks buy and gets a spinning thingy that goes on and on. Not good.

When she buys and although being a regular customer she is asked to enter a lot of information yet again despite being on a sunny bench with her HTC One and her longest nail extensions. You are really pushing your luck here.

It’s not all about clicking buy, it could be when she decides to see what people are saying about you and the first thing she finds is a blog by an irate customer of yours that you didn’t even bother to respond to let alone apologise for. The writing is on the wall.

These moments of truth may differ for different customer segments and personas, so you really need to know this and it may even differ at different times of day or seasons or with different devices.
For cheap flights customers I would say that, certainly for me it is “Paying the bill”,” Leaving on time”, “Arriving on time”.  The other stuff in this case is far less important and if it can only be done at the cost of these three, I hope they just ignore it.

“Learn what the Moments of truth are for your customers and focus a lot of your attention on getting them right, it will make a huge impact on your top and bottom lines.”

ZMOT-GRAPHIC1

According to Google, there’s a Zero Moment of  Truth.

“that moment when you grab your laptop, mobile phone or some other wired device and start learning about a product or service you’re thinking about trying, or buying.”

When I talked previously about taking a hit to let customers realise how badly they want your product, this was ZMOT.
When Henry Ford gave them a smelly noisy Iron horse and changed their lives, that too was ZMOT.  For you and I, winning at ZMOT means deeply understanding our customers habits and preferences so that we can be there at the moment when the inspirtaion hits them and showing the the right messages to take them to the next level in the journey.

1MOT

In bricks and mortar terminology, this is nothing more or less than “First Impressions”.  Until Google gives you the time machine, you can’t go back and redo first impressions.
We spoke in the last instalment about how People see what they expect to see and feel what they expect to feel,  well this is ground zero. Here is where you set that expectation and it had better be good.

2MOT

This is when they open that box and your shiny product falls on their toe and puts them in hospital, or they struggle with one point white print instructions on grey papaer in broken Korean. You may well have thier money in the bank right now, but dont fool yourself about the importance of getting this right.

3MOT

Is the remebered sensations of using your product and how they compare to the expectation.  Wow that requires some thought.
Its not enough to have a great product, but it should be at least up to the expectation. Not only do they need to like the product, but they need to trust you to give them an even better one when your competitor moves the goal posts with a new offering, otherwise you’ll be saying an early farewell. Don’t forget that it is not just your product, but everything your business does in the public eye as well as how you answer your phones, or not and help them when they have a problem.

4MOT

This is when they talk about you to their friends and social media contacts. This is one you absolutely must win

Why you need to pay attention to customer experience

Why you need to pay attention to customer experience

Next        What to watch out for when researching and testing journeys

 

The chicken and egg question always fascinated me. When it comes to business models I find the same conundrum with customers and profits. Michael Porter once said that the purpose of a business is “to create value for customers”. Although we all assume it was inferred in there, he never bothered to mention profits.
The reality every business faces however it that creating value comes first and monetization follows.

1. Compare the debacle of the great Thatcherite privatisations to the often maligned success story of dot com.
In the UK we have a raft of privatised utilities who still have not “got it”, they still think in terms of Oligopoly, force, bullying, price rigging. They think and act like tax collectors. The total innovation from all of them over two decades could be written on the back of a credit card along with a full list of their happy loyal customers.
Amazon, ebay, Paypal, Google and many more have on the other hand built world beating businesses on the back of profitless customer satisfaction and only now are monetising these business models. They operate at P/Es up to 500 and have no shortage of investors.

The message is clear, the customer is king and until you can demonstrate value to them you don’t have a business model.
“ Sooner or later regardless how much cash you have stashed away, you will learn to create value for customers or fail.” We even see this law apply itself to dictatorships.

2. What is customer value and how can you create it?
The biggest possible blunder any business can make is to quantify customer value in terms of product features. I cringe when I see these neat spreadsheets listing product x competitior1, competitor2 etc and how well they score on each (in the marketing trainees opinion).
Customers buy an experience, even hard nosed corporate customers. That begins with the interaction with “People” in the supplier side, or “friendly” and human like ecommerce site and carries right through to anticipating delivery, opening the package, using it for the first time, bragging to friends, interacting with support and many more. Many of these are remarkably powerful influencers and even though supported at times by product features, most of the time they are a separate source of value, or indeed antagonism.
Next we return to the chicken and the egg.

3. Does customer experience exist without customer value and who foots the bill?
The problem here is thus: If you ask the customer how much extra they would pay for their phone to float up out of the box on a mechanism with a Jingle playing, be fully charged, sense the old phone and offer to copy the contacts and messages etc in a sweet voice, accept a voice answer. The customer might well offer a price that made this simply not feasible. However, when that same customer experiences it once, the likelihood is that she won’t want to be without it and when she hears her friends talking glowingly about it, it becomes a must-have at almost any price. Soon it is talked about and develops a cult status and then we have a brand value to take into account. That’s a whole new ball game.
I’m not suggesting we deliver high quality customer experience at all costs, I’m simply saying that you must understand the true value and what people do is far more revealing than what they say.

The point I’m making here is that sometimes you have to take a small hit to let customers realise what they value before it becomes indispensible to them. Henry Ford would have built a more comfortable horse carriage if he had asked the customer what to do. The distinction in marketing terms is between “True value” (product features) and perceived value ( How the customer sees it)
“There’s more than one way to ask the customer and more than one way to interpret the answer, if you listen with an open mind, sometimes you will be surprised pleasantly.”

4. We can’t have a discussion on customer experience without discussing the brand.
There are many definitions out there of a brand and I’ll leave that to those with little to do, for me the important point is that expectation which a customer carries as a result of the brand. That is what drives her through our door or to our site.
Let’s not gloss over the word “expectation”. Whether you are playing poker, editing movies, or doing magic tricks for your children, you will quickly realise that everyone, and that includes market researchers, sees what they expect to see, hears what they expect to hear and feels what they expect to feel. Most people could probably say yes to that statement glibly, but very few would appreciate the profound power of it.
In a previous blog I described the experiment when scientists used MRI brain scans to identify the increased satisfaction enjoyed by a coke drinker who had poured it from a branded can into a branded glass over that of another drinking it from a plain glass, all in stark contrast to the memorable testimonials of thousands who preferred Pepsi over coke when offered both in unmarked glasses and could only focus on taste.
Expectation is created in many ways, but primarily by the chatter of others and the perceived opinion of peers. That is the territory of Brand managers, Marketing people and Social Media experts.

The key Point here is that creating an expectation associated with your product is the most powerful way to create value for your customers and often the cheapest and mot certain way also.
“Innovation is critical, but don’t confine it to the engineers and inventors, the ultimate playing field is inside the customer’s head”

5. Customer Lifetime Value is not an old, or boring idea it has never been more relevant, or more critical.
One of the first things we tend to look at with a new product is a breakdown of the cost of product, cost of selling it and gross margin. The cost of selling a product usually surprises newcomers to the field.
In competitive markets with a lot of equal offerings a small price advantage can drive large sales increases so price is critical and it is driven primarily by cost. i.e you cant reduce price below a level that is profitable. In most markets price is sensitive and if it isn’t then investors are sensitive to margins, earnings and dividends. In all cases no business can indefinitely carry unnecessary cost and in a competitive market. Sooner or later the competition will do it and steal a march. Of course there are many pricing strategies and this is not a discussion on price
The money you spend on marketing and selling your product is critical to the success of your product, yet it comes under less scrutiny than any other budget apart from the CEOs expense account.
Let’s say you sell 1m units of a product at £100 retail. Your production cost is 20 and your marketing/selling costs are £30 operating costs are £40 and net profit is £10
That’s 100m t/o, 30m spent on selling 40m operating profit and 10m net profit

Suppose you convinced 1% of your customers to recommend the product to a friend
Now your t/o is 101m selling and operating costs stay the same and net profit is 11m.
That’s a ten percent increase in earnings- a darling of the markets if you can repeat it.

Let’s say that you have a Million customers, every customer has to be replaced after 4 years and they pay £1000 a year for your product. That’s t/o of £1b
To maintain that t/o you have find 250,000 new customers at a cost of £1000 each
That’s £250m a year in marketing/selling costs.
Now suppose you are so nice to these customers that they stay for 5 years instead of 4

Now your costs are reduced to £200m a saving of £50m
if your net profits were, for arguments sake, £100m on £1b now they would be increased to 150m a 50% increase in earnings. What would that do for your stock?

These are simplified figures used to demonstrate a point, so lets not get into a investment analysis discussion. The message is clear:
“Treating your customers well enough to retain them a little longer can deliver huge dividends while enlisting them onto your salesforce is the next killer app and make no mistake about it.”
That means paying attention to the user journey long after the “order to pay “ stream has completed.

Using information to support the entire customer journey

Previously

The customer journey  begins when she becomes aware of your existence and never ends, though it is at its most fruitful when she places an order and subsequent orders.

Previously we discussed the folly of looking at “Last Click” as the beginning of this purchase journey, the reality is that it began some time in the past when she stumbled on your business either through a friends, in a blog, or via a search or advertisement. In reality every purchase is generally precluded to a greater or lesser degree by a process of discovery, comparison, discussions, eavesdropping, information gathering, price comparison and leading finally to an order being placed.

Whether and when that order is placed will be contingent and whether she found sufficient information to support a decision, what information she found, what advice she got, what her peer group are doing whether she is in front of her favoured device for ordering, whether she has the cash available yet  and a probably many more issues. For example it matters little that she made her mind up on day one, if she wont have the cash until her salary clears in three weeks. It wont matter how good a deal you offer her if all her friends are advising against your product and so forth.

It is never possible to know all of these inputs and be aware of the state of play, but at least being aware of what it takes to sell an item is very important in determining what steps you take to improve that user journey in a way that is profitable. Below are some examples of information you may collect and use to improve the user experience and deliver revenue upside. This will of course vary from one situation to another.

  1. It begins with being found. You must know where the hungry crowd are going and make sure your food stand is right in their path. Being there when they are hungry is just as important as part of serving your customer as it is to your revenue targets. How to do this is a little off topic for today.
  2. Making sure that the gossip they hear and the advice they receive is unlikely to be negative is critically important. The means of promoting positive vibes in social media are well documented and to a lesser degree we know of business that can help deal with negative comment when it occurs.
  3.  Making the right first impression is critical. The expectation you set is a key metric against which your performance  will be measured.
  4. Becoming memorable and easy to find again is now a key goal. Any way of beginning a relationship that allows you to communicate further is great, getting the customer to download something that will act as a reminder for them is also very valuable. E.G. a useful app for their phone.
  5. Storing a cookie that helps you track their consequent visits and actions will make it much easer to judge their likely needs at any time.
  6. Running multivariate tests allows you to not just find out which inputs drive the most orders, which combinations pf inputs are most successful. This drives very accurate views of customer behavior and allows you to optimise everything.
  7. Once you understand the average customer journey you can provide content and services that help the customer at key junctures while updating your understanding of where they are at with their buying process.
  8. Understanding a little more about the type of product they shortlisted and what they rejected may also help you to understand their needs and preferences.
  9. Knowing the times of week, day, month, or year when they are most likely to make a purchase may help you in selecting an irresistible offer.
  10. Knowing which devices they use for purchase may help you to time your offer better

Here is a simplified example.

Background

My company sells widgets to consumers and the customers come form all walks of life. They purchase from the ecommerce channel. There is a lot of competition online  and customers tend to switch suppliers regularly as offers change. Price is important, but its not the whole picture.
We use advertising via keywords to drive customers to landing pages where they find information on exactly what they searched for. They can also follow links to the main site where they can  learn more

Mrs Jones

Our best customer is Mrs Jones. She uses search engines a lot but not just for finding products but also searching the news and gossip sites. She talks to a lot of people on forums and uses them extensively for advice before purchasing. Mrs Jones enjoys the purchasing process so she does not mind seeing plenty of offers, but she is rarely swayed from her initial choice. Often she decides what she wants and then goes looking for proof that she is right.

After she first selects a product, we know she is giving it strong consideration because she then visits our comparison charts and follows links to some of our competitors.

Our strategy

We think she trusts us because we are not hiding from our competitors and we give her honest comparison. We also help her out with the evidence she is looking for.

We have her email in an opted-in list and we know when to send her a little extra information if she goes quiet. We have a clickstream that identifies a quest (product she searched for) and the different types of investigation she did so far, so we can guess where she is in the purchasing journey.

Sometimes, when she goes quiet, it means she has bought elsewhere, but often she is just waiting to get paid or some other reason, so we keep in touch, but we are careful not to upset her. We rely on her to visit again and to recommend us. On average she makes five visit before purchase.

She is very influenced by social media so we spend a lot of effort on maintaining a good reputation.

Our content is tagged to match the different stages in the quest such as price comparison, features comparison, evidence gathering etc. These tags help us to develop the clickstream that places her on a purchase journey. Because she has purchased before, she is able to purchase with a single click.

Pre-visit

She visits an exhibition  where she sees our stand and meets a polite person who gives her a free pen.

She searches google for comments and finds a positive attitude towards us and our products

First visit

She spends some time reading the general information, downloads a calculator tool and leaves via our comparator to go to a competitor site.

 

Still collecting information

The following week our advertising network presents her a little reminder advert while she is on a competitor site and she returns to ours. This tells us she is still actively and seriously searching and we are high on her list

Decided now

She returns at the weekend and spends some time on the cost of ownership calculator using her tablet.

We know that she likes to purchase using her PC and she might still feel like this. We also believe that price is the only thing now influencing her.
We email her a very hot offer that needs a response before Tuesday and we give her a special hotline for telephone advice promising no switchboard and 12 hours a day of service.

Finally an order

She immediately calls our sales staff explaining a slight issue she has yet not resolved. The sales staff are able to put her mind at rest and she places a n order there and then. It is completed in seconds and she has an email confirmation

Delivery and service continues

Delivery occurs on Wednesday and our service staff phone her unexpectedly to talk her through getting started seeing that she expressed concerns. She expresses her delight with the service.

Recommendations

On  Thursday our sales staff call to make sure she is OK and ask her if she would be happy to recommend us on a social network, she agrees readily and goes public with her satisfaction. This has three important implications:
1. We are committed to keeping Mrs Jones happy.
2. Mrs Jones has publicly praised us and it would be extra hard for her to ever contradict this.  She will make allowances if ever called on to do so.
3. Others who see her comments will be encouraged to do business with us

We have not just sold a product, we have bought a supporter and gained valuable advertising of the best kind. If we worked out the Cost of Goods Sold on customers like Mrs Jones, it would be in low or even negative figures.

 

 

Are you wondering if a recommendation engine is the next big purchase for you?

Some retailers in particular have made a great deal of extra profit through offering clever recommendations to their customers so much so that the notion of the recommendation engine came of age in the last three or our years spurring a wave of new offerings form software vendors and plenty of noise in the blogosphere. Before you go running off to buy one or even nurturing plans t build one, you should give due consideration to exactly what you expect it to do for you and from there you will be better equipped to decide if it is the right thing and finally what type of engine you need and how to acquire or build the right thing.

Ins and outs of recommendations and personalization

Perhaps the oldest and best known recommendation engine is the one used by Amazon.com. This is sometimes claimed to be responsible for 35% of sales. If that’s the case then it’s not hard to see why there is a strong interest from the ecommerce community.  Every customer who selects s product then receives a number of recommendations to other products she may like . Since the customer s usually there to browse, she can live with the annoyance of being sold to and is statistically reasonably likely to find the suggested product worth looking at even if it were driven by a schoolboy randomizer function. A portion of that 35% would undoubtedly be equally achieved by a placebo tool and I would strongly recommend some experimentation before spending large sums.

The down side of recommendation engines can also be potentially substantial.  When Microsoft first experimented with personalization on their website they were a leader in innovation on the internet. I was a regular user at the time  and I remember being frustrated by my inability to find something that a colleague was recommending me to. The fact was that when I visited, my cookie told them I was of type A and these widgets were only of interest to type B. I t  took them about a year to realize their mistake and loosen off the personalization  rules.

In the past year I have had similar experiences with Google search. It is now so focused on commerce that it sends me results it believes I want to see rather than a list of cold hard facts that I want and need.  These are only the few occasions when I became aware of the filters. How much of my online activity is tailored  to a weird misconception of me created by a mad algorithm. Even I don’t have a great idea of what I’ll like tomorrow and that’s how I like it.
Do you want to risk excluding products from your customers because Mr customer looked at something last year that suggests he would not be interested in X. Imagine buying a Vegan book for your best friend and never again being offered a meat menu. Ugh!

 

Types of recommendation engine and what they can do

The Amazon, or Netflix type of engine with which we are all familiar is sometimes referred to as content based because it uses knowledge of your stock database (i.e. content) to decide what Ms H might like and make a recommendation.

The simple version is that:

Product (a) has been tagged to be about [1,2 and 3] Product (b) has been tagged to about [3,4 and 5] You looked at products A and B from a long list therefore there is a strong likelihood you will like other products about [3]  but possibly also about [1.2.4 and 5].
Of course the algorithms are somewhat more complex, but hopefully  you get the gist.

It can also mine the records of previous customers and genuinely say, people who selected product A also Bought product Y and Z. This will have a reasonable potential to be useful also to the customer.

Provided you are searching with intent, this type of implied logic can quickly build a useful picture of what to recommend. If you are just browsing then this interference could be just plain annoying.
The most reliable statistic however when it comes to shopping is that the more things a customer sees the more she is likely to spend, so even the mistakes are not that serious. Remember also that what works for books or movies may not work so well for other products or services.

The key to this type of engine is that it needs little knowledge of you the customer, it takes as inputs knowledge of the content and of what you searched for and how you reacted to the search results.
That is good behaviour, it has no preconceptions and it takes you at face value based on what you do.

Other engines receiving a lot of attention now are referred to as  collaborative filtering  engines.

These engines use vast amounts of data collected in various ways to form opinions about you and use those opinions to show what they think you will like. Some of the data in uses is controversial third party cookie data that is collected without your explicit permission.

Every action by a customer is a piece of information that potentially says something about that customer and the combination of these actions says a little more.

A simple method id to mine click streams and create segments based on identical click streams. Suppose that a high proportion of customers form segment B purchase product Y and your clickstream data puts you in segment B then guess which recommendation my engine will make.

Other information that may be collected and used against you is your interaction in social media. Who you are connected to says the type of people you like and a profile created from the commonest likes expressed by members of this group can be applied by default to you the moment you are seen to me a member of the group, any accuracy this profile has will then improve as a result of your on-going interactions with the engine via its recommendations plus any likes or other social sharing you, or your associates may express.

What is different about this method is that very little needs to be known about the content or stock in order to make predictions about the customers interests, it all comes from social an other interactions.

In theory at least, such an engine can recommend the white box to you with confidence, not knowing what it contains, simply because your colleagues whose tastes most resemble yours all bought the white box.

In reality a combination of the two methods works better because it uses some knowledge of the customer alongside some knowledge of the content to make a more intelligent match with a better likelihood of success. For the second method you do of course need to spend a considerable time collecting the useful data before you can make a start on creating recommendations, though many commentators grossly overestimate just how much data is required. Analysing 10m transactions (data points) wont necessarily give you a significantly better result than analysing 100,000 and certainly not sufficiently better to cover the extra cost.
A further problem with the big data approach is that data is time bound and therefore data form last year may or may not be valid this year. It may as easily be detracting form the result as adding to it.
A large amount of user data may well be relevant to a surprisingly small segment of heavy users whose needs are very different from most of the people you want to offer recommendations to.

People learn and change and the world changes. In 2014  attitudes are very different indeed to what they were on 2004 or even 2010. Most people I know have changed substantially in the past five years and a great deal of surfing is without doubt serendipitous. Google’s Z Moment of Truth is an interesting approach to discussing this subject.

Currently there are armies of start ups offering to find you the perfect restaurant, or movie or whatever and to my experience they are a long way from way form delivering on the promise even if I wanted to be told what to do.

My personal experimentation with Siri ended in abrupt divorce after just a few days and google’s sad attempts at knowing me have gone via the same route. The owner of  Ness claims as his mission to: “become that trusted source for people to find out the next thing they’ll like.”
Isn’t that what advertisers have been doing since the first  TV invaded the first living room?

There is no doubt that at a certain level for certain industries, recommendation engines can deliver substantial extra revenue and that is always a vote in favour, but the right one for the job is important.

For others a revenue upside sufficient to justify the cost can be achieved without causing damage to the user experience, but for some industries, some or maybe most recommendation engines will struggle to improve revenue an may well have serious detrimental effect of your user experience and therefore your brand

 

http://thebridger.co.uk/using-personalisation-cleverly-to-grow-your-customer-relationship-and-keep-your-sanity/

 

Stage gates are still imortant even in Agile product maanegement

When I was a developer in the late (90s, I had the benefit of having started my career in marketing and combined with an overdose of enthusiasm and self-confidence, I thought I knew better than anyone about how the product should be designed.

Not that many years later I was in charge of Product development and planning and with the benefit of some training and mentoring from some of the best, I was acutely aware of my frailty when it came to predicting the present, let alone the future for long enough to make a business case deliver and keep a whole building full of us in employment.

The fact of the matter is that because there is huge demand today does not mean there is means,  nor does it mean there will be demand, nor means next year. A market opportunity is a different can of works than a product opportunity and the first stage gate must at the very least ask the questions; Is there a strong possibility that this opportunity will deliver the benefit’s we need? Are we able to do it? Is it right for the brand or will it confuse our customers about who we are? what impact will it have on other products we have that may be rising stars or in the long tail generating strong revenue?

Of course you probably have a few more in mind, but those few alone are sufficient to point out that there is serious strategic thinking to be done before you scribble an elevator pitch on the wall of the developers den and go off to lunch.

As we progress through a software development project, we often come up with new problems we had not identified, or problems that are simply a whole lot bigger than expected. They may not always be technical, but could be regulatory changes  etc.

When these things happen and the likelihood of achieving an acceptable offering and still being able to return a profit is threatened, then there must be a stage gate process.

When the early launches are not achieving the type of results we anticipated and we don’t know why, there must surely be a strong argument for stepping back from it and taking an informed and sober view of the chances for success and the opportunity cost and potential reputation cost of a failure. Of course there is always an opportunity to handle these issues on the fly and do it fairly well, but there are times when a more sober and considered approach is a good idea.

 

 

 

Lernaean Hydra, your time is up.

Simple, but powerful tools to truly build a relationship with the customer, some obvious gaping opportunities to cut costs and some basic principals of architecture that even the bin man could understand in one lesson and yet are ignored by 99 percent of technical architects. If you are serious about competing in business, read this.

HYDRA
HYDRA

Lernaean Hydra (slain by Hercules ) was an ancient serpent-like beast, with reptilian traits (as its name evinces), that possessed many heads — the poets mention more heads than the vase-painters could paint, and for each head cut off it grew two more
Next time you are trying to stay awake through the IVR while being invited to search their website instead of calling the machine, or chatting to a script via “live” text, think of Lernaean Hydra.

Ever ordered something online from Acme Gadgets PLC and then tried taking it into their Acme store just down the road because it didn’t work or you needed help? Oh no you don’t, this is the wrong head, you need to call the IVR and report it to yet another head, then wait till yet another head sends out the courier to take it away and . . . familiar? I bet most readers could immediately think of several of their current suppliers who behave just like that. Could this be your business?
I recently completed some work for a well known utility and when their customer moved house she first received a “Sorry you are leaving us …” message, she then naturally panicked and spent an hour or two with the IVR to eventually speak to someone who passed her eventually to someone else to be told that all is well and she will have a supply at her new house after all. Maybe!. Experience suggests otherwise. Another week and she received the “Welcome as a new customer” letter. You may find this hard to believe, but during all this time, a Programme was running internally to reduce the size of the call centre by preventing people from calling it (Logical). The most successful trick was hiding the phone number up to 9 clicks deep.
Since then I encountered the same experience when I myself changed mobile packages with the same mobile network. It’s very easy as a business to drift into this situation, mainly because you can get away with it, i.e. the competition are just as bad. It doesn’t help that the systems you have available to run your business don’t talk to each other well and few architects have the knowledge, or the will to fix this problem even if somebody somewhere were to express the desire.

Now set that aside for a minute. Actions are pretty bad when they become mixed-up and after all everyone gets it wrong at times, but what about when actions are designed to be obtuse. Imagine a company that has set aside many millions of pounds for an advertising and marketing campaign whose goal is to “ convince the customer the we are their best friend and totally committed to giving them a great service”. Now imagine if the self same CEO told you he is “investing” in another programme to allow no more one-to-one contact with customers apart from the bereavement team. This would mean that instead of a wait between 35 and 85 minutes for any kind of assistance there would be no assistance for the majority of queries and issues other than searching an FAQ. Would that situation leave you with one or two questions?
I have just spoken to such a person, so this is not fiction, in fact it is the current trend in many industries. Imagine if a business like this were to ban Social Media engagement because they were worried that the customers would get talking about the lack of service. You guessed it. No doubt most readers have their own list of experiences with corporate schizophrenia.

Now perhaps you thought Lernaean Hydra with her many heads is a disturbing picture of a business that likes to believe it has a personality and a brand and is customer friendly, but the truth is far, far worse, because in reality our monsters not only have many heads but at least one derrière per head and out of these derrieres pours endless mountains of poo. It’s not pleasant and it doesn’t even grow the lawn, but some clever people are determined to gather all of it and analyse it to look for traces of information that might tell them more about their businesses. Well let me tell you up front that for the most part they will simply turn a lot of small poos into a “big poo”. If they ever did find the answers, here’s what it would say: “Your customers despise you, but they tolerate you because they know that the alternative is much the same.”

You buy something for 15 pence and sell it for a pound and only make 7 pence profit, the rest you waste on nonsense like this and your shareholders are also in despair. Your employees are autonomons who live out the bizarre role you gave them because they are very adaptable and resigned to the inevitable.
Any executive who wants to know about her business need only walk around for a few days without the mask and talk to the people on the job and dare I say it, talk to customers. These know all these answers, but nobody asks them.

For qualitative issues we used to use samples as big as 300 when I worked in research, but we all knew that equally useful results could be had with 20 or 30 and there are many who say a great deal fewer will give us reliable answers. In fact there are empirical studies to prove it. Do we need “big data”, no we certainly don’t. If there is anything we do need it is “small data”, or better still “smart data”.
What I am saying here is not that we don’t need the information, but simply that we don’t need a great stinking pile of data in order to get that information, nor do we need the cost associated with it. Maybe the health service could find cures by analysing past results etc, but that is something different from the little dashboards most of our clients and are capable of dealing with and imagining with when they are shelling out for humungous data servers.
Microsoft recently released a convincing paper demonstrating that few companies on earth have more data than can be analysed and presented on a bog standard database server. I agree.
Don’t get me wrong there is a role for big data, but not the one most people are determined to tackle with it.

When you exist in an environment where inexplicable behaviour can go un-challenged, the next step is for this behaviour to find its way into the planning process and even strategy, if not by design, then at least through tolerance. What this says about modern business is truly frightening and what it says about customers and their power to move markets is in many ways even more frightening. I happen to believe as did Milton Friedman, that only the power of truly free markets can guarantee individual freedoms long term, though unlike Friedman, I accept that sometimes freedom needs some minimal regulation. We could talk about free markets, or about corporate strategy, but that is for a different forum. I am just concerned with cutting through the nonsense and pointing out the glaringly obvious as a starting point on the road back to business sanity.

In the next instalment, I will be talking about good management practice leading to sensible, though sometimes revolutionary use of technology to support strategies that can drive any business into a clear lead in any sector you wish to name.
I believe we have a duty in business to use technology intelligently to serve our customers and drive returns to employees and shareholders and in the following instalment, I will show you a simple technique to make sure that you know how your technology decisions are impacting your customers so you can make better decisions.

In another instalment, I will talk about some obvious gaping opportunities to cut unnecessary costs and some basic principals of architecture that even the bin man could understand in one lesson and yet is ignored by 99 percent of technical architects

In further instalments I will talk about the cultural barriers (the stuff we don’t ever discuss around here) that stand in the way of making businesses work though technology and I will show you simple tools to help you discuss and master strategy and planning as a precursor to technology investments.

 

Good management strategy and practice supported by intelligent modern systems

Previously

Good management strategy and practice supported by intelligent modern systems

Lernaean Hydra, your time is up.

Give big data the heave-ho for now and get a birds-eye view of your business without a single nosql database.

Here’s how we approached the solution

Naturally I can’t publish the whole thing if only for sheer volume, let alone sensitivity of information from some of the underlying cases, but I will pick a few areas just to demonstrate the approach and hopefully let readers see how. At this stage we have a high level description of goals we need to achieve, but before we get to the point where we have plans with timescales, budgets, resources, success criteria and all the other important things, we need to know a little more about what is involved in each solution, whether we have the capability to do it successfully, what order they need to be done in and what impacts positive or negative each solution might have. We also need to produce business cases to establish that the investment in the solution is at a level that provides an acceptable return taking into account any risks and opportunity costs and finally we need to establish measurement means and metrics in order to track benefits. Before thinking about delivery of something like this you have to first analyse the receiving organisation and understand the dynamics into which you are introducing solutions. Everything that is wrong is as it is for a reason and sometimes that reason is a force that is still in place and waiting to thwart your best efforts. Using models can sometimes be overkill, especially when used by enthusiasts rather than pragmatists. In reality if box doesn’t need ticking don’t tick it, but the time it took to decide that was a very small amount of time well spent in the interest of thoroughness.   Already, the small section of this picture we picked upon has exhibited a complex web of problems that impact each other in many ways and we have as yet not even attempted to find solutions. The identification of solutions and selection of the best approach to each is the next important step. Once we have this in place we then need to start thinking about how these solutions will be delivered successfully within this specific organisation.   In order to demonstrate the method, lets take some examples that are not too complex or too simple. I will select thre problems to address but later I will focus on just one of these in order to keep this readable. 1. Poor packaging. 2.       Poor help and support.  3. Low skilled staff. Having again used the “ask why 5 times” approach we came to the conclusion that: 1). Staff were not trained because we had no written materials with which to train them. Even the offshore staff could be trained if we had the materials. The reason for no materials is that we bought the hardware in Asia and the little black and grey manuals in 6pt txt were unreadable and unfathomable, but we just accepted this as par for the course in our business. We accepted it because nobody had veer suggested any other potential solution and there was a assumption that had we ever considered doing it, it was probably very expensive. The main reason though was that we felt we had already paid for this and were not willing to do it again. On top of this, there was no role in the hierarchy with accountability for the customer experience. 2). Help and support was poor because support staff had no idea how to help them and were only there to listen and to deal with total failures demanding returns. 3). The packaging was poor because we accepted the Asian packaging aimed at a different market, language, culture and price-point and never took responsibility for this, nor did we ever appreciate the importance of packaging in the user experience.  Visit diagram 1 in the last episode for a reminder of the user journey A simple dependency chart revealed the order of attack and we had a plan.

dependency
Dependency chart

There are a few headings you need to use when considering an organisation in this context: Here is an example of a very simple and fairly abstract table used for this purpose.

Goals Create legible training and help material Design attractive packaging and instructions Train the support staff
Participants   New people need to be hired or reallocated for this New people need to be hired or reallocated for this The people who develop the material are ideally placed to train as well
Social structure This activity has never been built into the structure and currently there is neither budget nor accountability in place. The knowledge Is with suppliers and in another language. . This activity has never been built into the structure and currently there is neither budget nor accountability in place Purchasing are money focused not customer focused and they buy this stuff in Asia very cheaply. This activity has never been built into the structure and currently there is neither budget nor accountability in place Sales staff walk away when the deal is signed leaving nobody responsible. Customer service is seen as a cost base
Environment This stuff is purchased by “Commercial”. They are a law unto themselves and seem to have gained almost untouchable status. Ideally they should be considering this type of issue when selecting a supplier. Sales won’t touch this.  It needs a place of importance in the structure This stuff is purchased by “Commercial”. They are a law unto themselves and seem to have gained almost untouchable status. Ideally they should be considering this type of issue when selecting a supplier. Sales won’t touch this.  It needs a place of importance in the structure No consideration has ever been given to training Recently we outsourced most of it and this has made matters even worse. Nobody seems to have much contact with the offshore call centres and it is a very hot potato just now
Processes The process currently involves receiving batches, spot checking goods and then checking them into the stock control system. QC happens again just before dispatch but it is poor and often there is an acceptance that support will have to carry the can. Sales have sold and dispatch have dispatched. The process currently involves receiving batches, spot checking goods and then checking them into the stock control system. QC has no interest in packaging they only consider the hardware items Nobody questions the quality of packaging, support or other peripherals. People ask the guy next door when stuck and they tell customers to read the manual, or they are if in doubt, to  send it back

Before you can attempt to drive these changes through, you need to understand the way decisions get made in this organisation. Remember we are not doing this with the intention of changing or fixing any of these behaviours, our only goal is to make the most of what we have in order to deliver our changes. There are three fundamental lenses we use to look at decision making in organisations, and in the interest of remaining jargon-free, lets call them Rational, Political and Garbage can. There is usually an element of all three but generally there is a strong leaning in certain functions such as in this case programme management. In this organisation it looked something like this: There are a few headings you need to use when considering an organisation in this context: Here is an example of a very simple and fairly abstract table used for this purpose.

Goals Create legible training and help material Design attractive packaging and instructions Train the support staff
Participants   New people need to be hired or reallocated for this New people need to be hired or reallocated for this The people who develop the material are ideally placed to train as well
Social structure This activity has never been built into the structure and currently there is neither budget nor accountability in place. The knowledge Is with suppliers and in another language. . This activity has never been built into the structure and currently there is neither budget nor accountability in place Purchasing are money focused not customer focused and they buy this stuff in Asia very cheaply. This activity has never been built into the structure and currently there is neither budget nor accountability in place Sales staff walk away when the deal is signed leaving nobody responsible. Customer service is seen as a cost base
Environment This stuff is purchased by “Commercial”. They are a law unto themselves and seem to have gained almost untouchable status. Ideally they should be considering this type of issue when selecting a supplier. Sales won’t touch this.  It needs a place of importance in the structure This stuff is purchased by “Commercial”. They are a law unto themselves and seem to have gained almost untouchable status. Ideally they should be considering this type of issue when selecting a supplier. Sales won’t touch this.  It needs a place of importance in the structure No consideration has ever been given to training Recently we outsourced most of it and this has made matters even worse. Nobody seems to have much contact with the offshore call centres and it is a very hot potato just now
Processes The process currently involves receiving batches, spot checking goods and then checking them into the stock control system. QC happens again just before dispatch but it is poor and often there is an acceptance that support will have to carry the can. Sales have sold and dispatch have dispatched. The process currently involves receiving batches, spot checking goods and then checking them into the stock control system. QC has no interest in packaging they only consider the hardware items Nobody questions the quality of packaging, support or other peripherals. People ask the guy next door when stuck and they tell customers to read the manual, or they are if in doubt, to  send it back
Programmes Commercial Sales Operations
Rational behaviour   Logic and rules above all else, including sometimes common sense Programmes insist on business cases and examine the rationale when a project or programme is ready to begin All decisions are made on a cost basis and calculated don to small fractions of percents Most decision are driven by pound and pence targets Ops is mostly rational and processes are driven largely by systems
Political behaviour   Worrying about impacts on self ahead of all other concerns There is a Program Office that insists on following certain procedures and everyone in this is very careful to be seen to follow he rules regardless of the outcomes of their chosen behaviour. There is some political thinking in terms of correct behaviour when dealing with vendors but apart from this it is not a prevalent force. If anything the odd corner is cut when maybe it should not. Lip service is paid to the rules but they are broken as and when it can be done without too much risk. The outcome is everything even at the expense of negative impacts The rules are more important than the outcomes in Ops, nobody gets sacked for following the rules
Garbage can   Jostling to get own pet projects ahead regardless of what is  best for the business Deciding which project gets started and funded is almost entirely about jostling for space and funds with others. When it is politically favourable then old campaigners will quickly suggest their solutions to the problem of the day ad grab some budget. For all the process, it is mostly organised anarchy No real evidence of this behaviour mode This months target is more important than anything including the long term good of the business Little evidence of this behaviour

Who are the key stakeholders and what is their interest? Now lets diagram the key stakeholders who can impact delivery of our project.

stakeholder proximity chart
stakeholder proximity chart

Above you see a representation of the various groups involved and the distance apart represents their level of interest and involvement.  The ones outlined in Orange are the ones directly impacting the customer experience though as you can see some could scarcely be more remote and detached from it. Others such as finance and Purchasing are key drivers if not always actors in the state of customer experience, though mostly unaware and disinterested. Clearly there is work to be done to rally these stakeholders sufficiently to deliver a result.       Here is another view from a communications viewpoint communications matrix

  1. Clearly we need to convince finance to release some capital. Finance are mostly outcome driven, though they also like to stick to process so  until we present a strong business case correctly presented, we will not achieve much.
  2. We need Operations and Customer services both to adapt new ways and this will stir up certain rivalries that need to be handled by HR.
  3. We need HR onside for process changes, but also because we are recommending a Head of Customer Focus to champion the customer experience and have jurisdiction across channels and across departments form the proposition right through marketing and sales and support and who above all else, will be accountable for customer experience. We need a well defined and supported plan with clear structures and accountabilities for any changes and enlist HR in refining this, debugging it and implementing it. We can then get their moral support.

 

  1. We need Purchasing to get much more involved with the customer experience aspect so they understand the total cost, not just the hardware when making their decisions and we need to communicate better with external and offshore customer service people. This will be a substantial change for purchasing and will need to be carefully planned with HR to ensure there is sufficient incentive. .

Finally we will need to take a closer look at the technical situation to see what is possible and how big a job any changes might be.   The technical solution was twofold.

  1. We needed to purchase a  Knowledge Management System to keep track of the training materials and make it available to the website, the trainers and the customer service staff as well as to the SME and author teams who would keep it up to date.  There are many good COTS versions available and this is a straightforward technical solution.
  2. We needed an ESB solution to hold a single copy of each piece of critical information in SAP so that we could access it quickly in high volume and without putting any strain on the SAP installation. This we would need no scaling of SAP and no high cost integrations for each new web page or system. A standard ESB would provide simple APIs, web services and publish subscribe PUBSUB approaches for our dev teams.

Before   before integration architecture or as-is     After Integration target architecture   The programme plan     Let’s now create a first draft of the programme for this one chosen problem of high customer support  costs and low customer satisfaction. Do remember that we are not trying to document an entire programme in a blog and there will be major omissions, but do feel free to bring this up in the comments section. Below are the key headings

  1. The vision and benefits. Important changes in any organisation or even in an individual rely on beginning with a clear vision of the future and why you want to get there. This vision should motivate you along the way and provide guidance in times of ambiguity. The benefits should form a solid business case and stand up to close scrutiny.
  2. The journey Every vision entails a journey and it is made up of a beginning, a middle and an end. The middle will develop fully later when we get into project planning, but for now the” where we are”, “where we want to be” and a high level understanding of “how we will get there” is what is needed to get off the ground. The important thing about the middle is that we include the business and IT changes required to drive benefits along with technology.
  3. Knowing when we have arrived. Benefits measurement strategy and progress monitoring are both part of this.

We must have a measurable outcome to focus on even if the measurement metrics seem vague to some, we also need a way of knowing how we are doing while still on the journey to the first deliverable. Remember that there are usually deliverables in the sense of process, or technology to come first and quickly followed by business change and benefits realisation. Before the process or technology changes are made there is no opportunity usually to begin on delivering and measuring benefits. I am not about to blog an entire Programme plan so I will leave you t imagne the remainder.

Give big data the heave-ho for now and get a birds-eye view of your business without a single nosql database.  

Previuosly

Good management strategy and practice supported by intelligent modern systems

Lernaean Hydra, your time is up.

Two question must be answered up front :
1. What value does your business delivers best?

2. What do your customers think of it?

Let me explain. One enduring rule of business is “find a hungry mob and feed them” and the other one is “stick to what you do best”.  You’ve probably spotted the potential for a mismatch here. I am assuming that when you find that hungry mob you are very good at feeding them. We are just talking about things like menu, ambiance, pricing and how you operate in the kitchen and waiting departments here. We are also very aware that value is in the eye of the beholder, that is why we are asking the second question.  The answers to these questions are deeper than you may have thought and understanding the cause and effect relationships within the business requires an organised approach, yet you’ll be surprised how simple it can all be made.

 

Lets begin with; what value do you deliver and where it comes from.

Perhaps you believe you know the answer to this; We provide widgets

For the sake of argument: You are a Gas supplier and you are relatively successful but you have known for some time that you are at risk from bigger chains and you need to differentiate and to up your game. Your profit margins are less than they might be.

Lets take the Porter view. ( “Competitive Advantage” Michael Porter ) First we break the activities of the business into Primary and secondary activities. Primary activities are engaged in providing value to the customer e.g.  Receiving and distributing internally -> Making stuff-> Delivering -> marketing and sales -> After Sales Service. This is the coal face. Each step, even Marketing and sales adds some value for the customer and your business is able to capture this in profit after paying for the cost of delivering it.

Secondary activities are engaged in helping run the business, e.g. HR, IT, Finance, etc. Trimming and improving secondary services can improve bottom line, but it will have minimal impact on the core of a business according to the theory, but when you are able to see the direct links between supporting services and the value or lack of it that you deliver to the customer and your costs incurred, then you may look at some of these secondary activities in a new light.

Furthermore, it is clear that since Porter’s book “IT has moved to straddle the two categories and then onwards to dominate the Primary classification for an increasing number of businesses. (Successful ones)

 

Porters strategy firm “Monitor” went out of business in 2012 unable to pay it’s debts. To quote Steve Denning in Forbes it was “killed by the dominant force: the customer“ The model below is focused primarily on the customer.

1. Each primary step in the customer journey needs to be understood in terms of the actual activities that deliver value for the customer and in this way you will be able to quickly see what adds value and what is letting you and your customer down. Value for a customer is seen in terms of what the customer is doing and what that customer is thinking, feeling and experiencing while in the process.  Remember, that experience is very important or even crucial part of the value proposition with both positive and negative propensity.
2.  It can be remarkably enlightening to see the customer journey alongside of the disconnected systems, functions, departments and cultures within your business.

3. No solutions of any value can be outlined until the true impacts and interrelations of actions are understood

 

Below is a combination of examples from actual projects I completed in various sectors, but I have changed some of the details and left out a lot to hide the client identity, only including enough data to demonstrate the principal.

For arguments sake let’s assume the client was a Telco and the product area was domestic mobile phone packages in the UK with the usual blends of calls, texts, internet and hardware. In the background to this small piece of customer focused work, there was a backroom battleground involving the shut down of call centres resulting in the resignation of a C level executive, firing of a senior manager and outsourcing of remaining call centres to India in an attempt to reduce the cost of customer service. There was a hot potato being bounced back and forth and where it fell it was felt.

 

For the sake of argument let’s say the customer lifetime was 4 years and the cost of customer acquisition was £240.00. Average revenue per customer was £600 a year. Immediately you can see that customer acquisition cost 10% of revenue.
-Each year a customer remains the annual profit margin on that customer increases.
-Another way to look at this is: every time a customer needs help and ca’nt get it there is a 25% chance they will leave and the cost of replacing her will be £240.

That means £240 * 25% = £60.00 down the pan for each frustrated customer.

Bear in mind now that reducing costs in order to declare increased earnings was the main goal of the business at this point in time. Perhaps you already see an anomaly here?
Some research done with a small number of focus groups and some with customer services people

demonstrated very clearly that:

a) Customers shopped around as their current contract came to an end and were mainly driven by the best handset they could get and often focused on the current most popular handset.

b) Many customers were on mailing lists of competitors who knew when the contract would end and mailed them with offers ahead of this date. Good offers.

c) Customers who had received unexpectedly large bills recently (last three months) were much more likely to leave, they hated surprises even more than they disliked the nuisance of changing supplier.

I proceeded to map some of this information in context as per example below.

Customer Stage  Forward planning Researching online and stores Purchasing Organising for receipt of product Getting familiar Dealing with issues Renewing Changing package Leaving
Doing Talking to friends/ keeping abreast Browsing shop windows/ websites Looking for best deal, least hassle, warm feeling Waiting for delivery Struggling to learn new interface and get all songs and contacts across Getting help with complexsettings Responding to offer of a replacement handset Calling to get help changing Demanding a PUK code
Thinking I always like to have a phone I can be proud of in my peer group I wonder if I could be doing better I don’t want to find next week that my friends are paying less or getting more I hope everything arrives as planned so I am home to receive it I must get used to the core stuff quickly so I don’t get in trouble. Well soon find out if that annoying advert was a lie, I bet they cant be bothered to answer the phone even -I should be shopping around but the others are probably just as bad and anyhow -I don’t have time right now,I cant wait to get out
Feeling I need to always  carry the right status symbols Insecure Nervous and unsure, in need of reassurance excited I love opening an attractive package that’s presented well Disappointed with the level of support, but not really surprised.I’m frustrated with the difficulty of finding what I need on this website.I don’t have time for this.Angry about a huge bill with no explanation and confusing bill – Resigned to being let down, or- Determined to leave at any costFeeling of power and sometimes an appetitive for revenge Confused, by packages, apprehensive
Experience Mildly amusing 

 

Interesting but sometimes overwhelming A nerve wrecking experience for most Positive Frustrating for some, annoying for many,Very negative if no help can be had Generally a negative experience, sometimes very negative Positive mostly especially when they are a new customer having just left another supplier balanced Positive and expecting better things with new supplier
Business function and location Web services- LondonRetail-  North East Web services- LondonRetail- North EastDirect marketing- London Local ShopOnline 

 

Payment provider

Courier -LondonDispatch -North east 

Shop- Local

Manual – ChinaOnline support – Outsourced India  Manual – ChinaCall centre –IndiaShop- Local Call centre-LondonShop- local Call centre-LondonShop- local Call centre –Indiaand 

Call centre-

London

 

 

Systems eCommerceERP(Two separate systems) eCommerceERPCRM

 

Web stats

 

(Little or no integration between these three.

We don’t know if it is the same customer!)

eCommerceERPCloud service

(Payment system is totally external and data cant be accessed)

Cloud courier apiERP{(No integration available, ERP nows nothing about courier progress) (Little or no communication happens here.
Call centre handles own training from the manual.All a bit up n the air.)
Inbound CRM is separate to central CRM and there is no knowledge of these inbound calls in other parts of the business for the most part The local call centre is trained to retain customers when a call is sent to them. Their conversations go in the CRM and others are aware of it The local call centre is trained to retain customers when a call is sent to them. Their conversations go in the CRM and others are aware of it Calls are transferred to retention team who try to bribe them. No analysis of this ever happens afterwards

Table 1

 

 

We decided that we needed more detail in some key areas to support our goals and help us solve issues we had identified through the web stats, the CRM and the eCommerce data.

First we looked more closely at the purchasing cycle and here is a representation of what we found.
Purchasing

 

  1. We have different personas who differ somewhat in their behaviour, but a safe catch all is to say that our customers never stop shopping around for alternatives. Within hours of getting the product they are telling friends and getting comparisons.
    Often they find that they could have done better elsewhere, sometimes via our own channels. When this occurs there is major loss of trust by an existing customer, but when others do it, it drives potential customers to us.
  2. The desire to change product, upgrade, or move may also begin when a new must-have feature hits the market and the customer’s friends are getting it. This can sometimes happen within days.
  3. Loyalty to the actual product brand is strong but loyalty to our brand is weak, we have no kudos like a product maker has. They can have the next version of their favourite cult phone, but still find a new provider.
  4. It was difficult to find any real logic behind most purchases, fundamentally the customer fell in love with a handset and then needed evidence to justify this purchase and the price they would pay. The fear was hidden costs, surprise bills, or looking foolish when their friends got a better value deal.
  5. The channels were confusing them, they saw deals online, but when they went to our shop, either it was not there, or it cost more, or sometimes less. They couldn’t understand this. Once we were losing heavily to an online competitor who undercut us by just £1 a month, wile we had a better deal hidden away in many of our shops. Nobody could explain that.

 

Here is the journey simplified

 

  1. In contract but keeping abreast of new stuff and new deals
  2. Close to time for a new deal and really researching online and asking friends and social media connections ( 20% will call or to cancel )
  3. Nearing decision time, has a strong preference that she can’t really afford and a second preference and shopping around for the best possible deal
  4. Decision time and now in a blind panic. What if it is cheaper next week?, Should I go for the cheaper of the two or indulge myself?
  5. Trying to place the order and the quirky ecommerce system keeps complaining and asking her to re-enter stuff. (38% leave at this point according to our records –in fact we know the precise page and we have found out why)
  6. Order placed and still wondering if she should cancel before it arrives (Another 12% will cancel)
  7. Package arrives and enjoying the quality of the packaging and the beauty of the new phone. Upset by the dreadful manual and having to learn a whole new set of menus etc. ( 30% end up calling in for support and waiting up to 15 minutes before spending a further 40 minutes on the phone)
  8. Nervously transferring data and hoping not to lose anything ( Only 5% now lose data and support can usually help them)
  9. Ok happy customer. Along the way we lost 70% of those who started and made ourselves very unpopular with about 20% of the remainder i.e. 6% overall.

 

Causes of Churn

In simple terms, although there are several problems identified, we found three causes of people calling in to end a contract.
i. The 6% we annoyed by giving a poor experience when they received the last product.

ii. Receiving unexpectedly high bills that left them suddenly short of cash at the end of the month. This caused particular and lasting annoyance, especially when the bill was incomprehensible.

iii. The 18% who called customer services and had very poor experiences ranging from incompetency, to occasional lack of sympathy to confusing IVR and unacceptable delay times.

In addition, although we couldn’t quantify the affect, we found those who had bad experiences talked about it publicly in social media while the others were silent and the overall appearance was of a lot of unhappy customers. This was very imbalanced and clearly damaging.

To keep this simple and get the most holistic view, we used two problem solving techniques to get to the bottom of things and prioritise our actions.

 

Problems  don’t happen in isolation, nor do solutions act in isolation, therefore a holistic view is a critical starting point. Below, I recount two simple techniques I frequently use when solving systemic problems like those we discussed last week <<Click here to open last weeks instalment in a new window>>

 

We identified problems and sub problems:
The technique is simple; ask why and to the answer ask why again. Do this five times before you accept the explanation. At this point you will have a new insight and abetter understanding
Propositions struggling to compete and losing grounds.

 

Caused by:

Positioning on price point + struggling to compete on cost

High cost per customer = low margins

i.e. We could accept low service, or we could lose in the battle on price

margins

We drew an affinity diagram to track the interconnections between these problems and sub problems.

Pretty early on it became evident that the quality of the customer experience was core to the customer churn which in turn had impacts not just on customer numbers, but subsequently on our ability to offer a competitively priced proposition. A classic vicious circle.

diagram1

Diagram 1

 

To focus on the key aspects and explore the causal route a little more we took the key causes out of the affinity diagram and used them to build a cause and effect illustration.

As you will probably notice this helps remove some of the noise and focus in on more critical factors.

The relative  importance of the various factors was tested with high level business cases that demonstrated in very clear terms what the financial implications of each issue and potential negative impacts where relevant.

 

The result looked like this;

diagram2

 

 

Diagram 2

 

The figures demonstrated clearly that improving the product and delivery especially at Moments of truth and   becoming customer focused would reduce the traffic to the call centre sufficiently to counter balance the cost of a decent service and still improve the margins enough to give us the option of being more competitive.

Problem 1  High costs
What our research also told us was that with an improved service and happier customers we would be under far less pressure to compete with the cheapest competitors,

Problem two dwindling sales

 

The second primary cause of High customer acquisition costs and dwindling sales was weak marketing

Our research into the causes of weak marketing highlighted a systems issue. In simple language, marketers had insufficient access to key customer data and live systems like ecommerce and “myaccount” lacked the information needed to offer the right help to customers at the time they needed it i.e. when they were on our site seeking it.

 

The underlying causes was totally technical. The entire business had been migrated to run on SAP at a cost of obscene numbers of millions and reputations were at stake so no hint of deference could be entertained. Frankly it didn’t work and this was mainly down to being implemented without full understanding of the business need.

Within a year of implementation it became clear that accessing SAP to get basic information about a customer for another system such as an eCommerce site cost an unbelievable 1million plus per interface.
Not only that, but the levels of traffic to SAP from a busy eCommerce site would have driven a further investment in licenses and hosting beyond most people’s imaginations.

On top of this round trips to SAP in its current implementation was slow even when available.

We could have a website and customer services with no customer knowledge or fork out millions on upgrading an already obscenely expensive piece of technology.

We needed a way access key  data that was in SAP about our customers in high volume and with very fast trip time in order to answer questions on the customer service desk and to serve intelligent web pages on our sites

Technology for people- why a Bridger?

Technology for people- why a Bridger?

 

The problem

Technologists, vendors and technical architects alike invent clever technology, but they build it to their view of the world and expect people to adapt to processes and methods that are often unruly and throw out the baby with the bathwater.
Project managers will deliver a pizza, or new gold mine to the same rules and Quality people will ask you what you want, get a signature and give you exactly that for better, or for worse.


The result

This failing causes products to stay on the shelf and systems to fail altogether, or deliver dismal benefits. Using the same approach and people to tackle the problem usually exacerbates it.

 

The solution

A Bridger approaches the people dimension along with the benefits and works back to the solution so that it is designed, or configured to deliver a specific outcome and bearing in mind the critical human elements for success.

 

The outcomes:

n     Systems that meet the need exactly

n     Products that are cherished

n     Customers that become your unpaid sales force