Want Magic? Spill the Secrets of Your Black Box

With the rise of cloud computing, it’s easy to get the impression customers don’t care how a particular process or product works—that they only care about results. And the process of hiding—black boxing—the inner components of a product or service, definitely makes sense when competitors are snooping for clues. However, in the name of transparency, giving customers a “window view” of your daily processes might just be the key differentiator you’ve been seeking.

Watch Apple CEO Steve Jobs give a keynote presentation and you’ll probably come away with the belief there’s more power in “magic” and “mystique” than exposing the inner workings of a particular product or service. However, in some instances you can also create “magic” by showing customers the value creation process.

Take BMW for example. An article in the Financial Times titled; “Benefits of a Showroom Bypass” cites how BMW is now offering buyers a way to circumvent the dealer showroom and custom build a car of their very own.

Customers can customize their own automobile from paint and interior colors to installation of custom features such as grills and moon-roofs. But the real magic begins when BMW films the entire production process of a customer’s specific car – all the way down to showing the Vehicle Identification Number (VIN) – and then ships the DVD to the buyer.  Imagine receiving a DVD in the mail showing how your specific car was built –now that’s magic!

If customers are not appreciative of the value your company delivers, perhaps a new strategy of additional transparency can win them over.  Some examples to increase transparency include:

  • Show customers your ingredients, components, processes, configurations etc. “Behind the scenes” tours anyone?
  • Help customers analyze trade-offs similar to what Progressive Insurance does by showing competitor rates
  • Give them more references – i.e. 90% of your customer base, not just the 2-3 customers who love your product/service

To be sure, too much transparency may disclosure your “secret sauce” to competitors. But where possible, “throw back the hood” of how your product or service is created or delivered. It may just end up telling a more magical and differentiated story than your competitors!

Question:

  • What’s the right level of transparency to engage customers, while still maintaining a bit of mystique in how your product/service is built and/or delivered?

Customer Experience: Healthcare by Design

Image credit: Jim Roof Design

As health care insurance premiums rise year over year and out-of-pocket expenses rise in tandem, patients are beginning to realize that they no longer must accept 1960s-style doctor offices and plastic plants in the hospital lobby. In fact, in response to consumer-driven trends, some health providers are feverishly updating their office decor. Yet, these improvements cost extra dollars that some hospitals and doctors say they cannot afford. Are improvements to the overall patient experience worth the investment?

A hulking magnetic resonance imaging (MRI) machine sits in front of a painted backdrop of a country hillside, a bubbling brook, birds alive with song, and willow branches gently hovering above the water. Looking at the image behind the MRI machine, do you feel more or less anxious regarding your exam?

That’s a question that hospital administrators are asking themselves as they look to design principles to help re-engineer the customer (patient) experience.

Though shabby carpets, medical charts, and plain stark white walls remain the mainstay of hospital and doctor office waiting rooms, some medical practitioners are starting to realize that better design can reduce anxiety, increase patient satisfaction, and even lead to better health outcomes.

An article from Atlantic MagazineThe Art of Healing” cites how hospitals, doctor offices and clinics are taking cues from cutting edge retailers like Starbucks and Best Buy to redesign the patient experience. Author Virginia Postrel writes that since MRI and CT scans usually frighten patients, research shows that “simple elements like nature photos can ease their stress.” In support of this point, Ms. Postrel mentions, “Other studies with subjects ranging from the severely burned to cancer patients … have found that looking at nature images significantly reduces anxiety and increases pain tolerance.”

And it’s not just the sprinkling of nature images throughout the health care provider that’s working. Architectural configuration is also coming into play where designers are ensuring that patient recovery rooms get a good dose of sunlight and hospital rooms have access to windows with a clear view of blue skies and trees. One study cited by  Postrel found that patients with a view of nature had shorter hospital stays and required less “high-powered medication.”

The renewed focus on patient experience by some healthcare providers is long overdue, but not completely altruistic.

While the Atlantic article notes that it is certainly more costly to incorporate good design principles into the healthcare setting (sometimes an additional 10-15% expenditure), doctors and hospital administrators are realizing that patients have much more choice on where to spend their health care dollars. Indeed, such trends as more private pay patients, adoption of consumer-driven health plans, and websites ranking hospital care are pushing health care providers to up the ante in providing a better patient experience.

Ultimately, despite a renewed emphasis on designing a better health care experience, most patients would choose the best doctor in a substandard environment over a competent doctor in aesthetically pleasing surroundings. However, as consumers arm themselves with newly available information on satisfaction ratings of doctors and hospitals, error rates, and even outcomes, consumers will drive the health care system to improve not only the quality of care, but also the overall customer experience.

Questions:

1) Should your health care provider look more like a day spa?
2) Suppose you had an elective surgery where a significant portion was private pay, would you be willing to spend 10-15% more for a better patient experience?
3) Has your hospital or health care provider taken into account better design principles? Have these improvements made a difference in your perception of the provider?
4) Will the passage of the Health Care and Education Reconciliation Act of 2010 accelerate or impede health care aesthetics re-design?

Making Your “Marketing Marriage” Work!

candy heartWith daily pressures for instant results, deadlines and executive demands for a six- to nine-month return on investment, most marketing executives are challenged to think strategically. A key question confronting marketers is, “Should marketing and the marketing budget be managed for the long-term or the short term?” Your answer probably depends on whether you view marketing as a wedding or a marriage.

In my experience, marketing is most effective when it is treated more like a marriage than a wedding. Conceptually, here are a few things that make a marriage work:

• Committed to the long haul (hopefully)!
• Focused on planning for the future (allocating resources to fund different priorities)
• Allows for conflict and cooperation (give and take—working towards a win/win situation)
• Constant communication is the norm

Driving the analogy home, marketing is more effective when, like a marriage, it is focused on:

• Building stronger, and long term relationships (with customers, internal customers, partners, sales teams etc…)
• Constant communication (with the parties above)
• Driving a deeper understanding (in this case, of customers and competitors)
• Seeking to influence the “bigger picture”–not boxed into the “day-to-day” minutiae
• A continual process—a journey of improvement, as opposed to marching towards various destinations

I had a wedding many moons ago and it was fun, but anyone who is married knows—the hard work begins after the wedding. Does the same thing hold true for strategic marketing?

Are some marketers avoiding the “hard work”—the process, the long term focus, the constant communication, the deeper understanding, the bigger picture etc because it’s easier and more fun just to open up an excel spreadsheet and move dollar amounts around to the different columns?

When presented with a budget of say, $500K, I’ve seen many marketers quickly approach it this way: A dash of industry associations, a pinch of direct marketing, maybe a tradeshow or two? How about a couple of display ads in the national IT publication?

Where’s the groundwork? The plan to meet business goals? The multi-year plan to expand to new markets? The portfolio review? And how much investment is it going to take to get there?

I propose that marketing should n more like a marriage than a series of weddings. Not to say execution of events and marketing deliverables isn’t important, but marketing should seek to influence the direction of the business, not just plan for the latest display advertising campaign.

Is marketing in your organization, more like a marriage or a series of one-off weddings?

Should marketing be treated more like a marriage? I’d love to hear your opinions…

Craigslist: One Place CRM Isn’t Welcome

craigslistWith no recommendation engine, graphical improvements, or image search, Craigslist is a website stuck in the past. And while business best practices often include heavy investment in sales, marketing, and customer service, Craigslist eschews these functions–yet continues to grow its revenues. What makes Craigslist a “classifieds killer” and how is it able grow its business with little attention to the customer experience?

Craigslist seems to defy the odds. As an online classifieds website, it doesn’t accept payment for most advertising (with the exception of some job posts, and apartment listings in large cities). And recently the site begrudgingly charged for listings in categories frequented by prostitution services–and only then in order to assist law enforcement. Yet estimated revenues for the website top out at $100 million per year!

How can a company that cares little about maximizing profit, stay in business much less be termed wildly successful? A Wired magazine article, “The Tragedy of Craigslist” (September 2009), may provide some answers.

Gary Wolf, author of the article, noticed that Craigslist founder Craig Newmark and CEO Jim Buckmaster break just about every rule in business.

First, customer service is almost nonexistent. While founder Craig Newmark makes a diligent effort to respond to customer service requests and complaints about spam, there are many queries that never receive a response. Also, if you happen to do something on Craigslist that the community considers a “no-no,” such as starting too many conversations in user forums, your posts might be met with a haiku similar to:

Frogs croak and gulls cry
Silently a river floods
A red leaf floats by

Moreover, users complain that posts sometimes don’t show up, or are deleted by Craigslist staff without notification. And if your posts are too often “flagged” for inappropriateness by the Craigslist user community, you may find yourself completely locked out of future listings.

The Wired article notes that Craigslist has no marketing staff or sales teams. Business development is unnecessary because at Craigslist, postings are–for the most part–no cost.

And that’s exactly how Craig Newmark would have it. Newmark believes that the best way to run a business is to provide customers a basic foundation/infrastructure to interact and transact and then step aside.

Could Craigslist improve its user interface, design a recommendation engine, or allow third-party advertising on the site? Sure, but so far Newmark and Buckmaster have shown little interest in innovation. And with 47 million unique users every month, Craigslist figures, Why tinker with success?

Newmark has long believed that Craigslist is a community service, much to the dismay of its for profit competitors–those dying periodicals formerly known as daily newspapers. In fact, according to the article, revenue from newspaper classifieds is off nearly 50 percent in the past decade.

It’s hard enough to compete in today’s challenging economic environment, much less compete with free, as newspapers such as The New York Times, or San Francisco Chronicle have discovered.

However, where there is indifference and customer dissatisfaction, perhaps there’s also opportunity for competition. And while market momentum is currently with Craigslist, technological innovation coupled with a focus on customer value may leave a crack in the door–and a fighting chance for someone to dethrone the giant.

Consumer Choice: Less is More

choiceMany marketers believe that innovation and competitive differentiation arise from giving customers more choices and options. But through the strategy of “offering more choice”, marketers may actually end up increasing complexity, costs and causing customers “mental fatigue.” Is there a better way to win over customers?

A typical big box retailer carries 50,000+ stock keeping units (SKUs). Retirement plans carry hundreds if not thousands of investment options. A website designer offers customers 216 color palette options for a home-page.

With customers drowning in “choice” some companies are finding it easier to meet customer needs by simplifying—portfolios, products and services.

Case in point, the Wall Street Journal published an article, “Ford Eyes More Cuts as Recovery Advances”, detailing some of the decisions that Ford Motor Company has made reduce the “mind-boggling level of vehicle customization, which jacked up costs.”

For example, Allan Mulally, CEO of Ford joked that until recently, the Lincoln Navigator offered 128 options on its console alone. “You know what 128-factorial is — it’s a lot of combinations,” he said. The article points out the real answer: 3.85620482 x 10 to the 215th power.

Ford is finding cost savings and efficiencies in getting back to basics, streamlining operations, and reducing the complexities of the products they offer customers.

Indeed too many choices can cause our customers to experience anxiety and mental exhaustion.

According to the April 2007 issue of Journal of Personality and Social Psychology, people have difficulty staying focused enough to complete projects when presented with too many choices.

Researchers conducted seven experiments involving 328 participants and 58 consumers at a shopping mall.

One group of participants was asked to consider a multitude of options (which products to buy, what classes and coursework to take etc) and then actually make decisions. The other group was allowed to consider options but wasn’t instructed to actually make a choice.

Both groups were then asked to do various tasks. The group involved in decision making (choosing from the options) had difficulty staying “on task and maintaining behaviors aimed at reaching a goal.”

According to the research, mental fatigue results from not merely considering a set of options, but in actually prioritizing and choosing among the options.

Intrinsically this makes sense. Suppose you asked me to list, off the top of my head, ten cars that I’d like to purchase assuming I had the means to do so. Not only could I come up with ten, I bet I could rattle off twenty!

However, suppose you said to me, “Now of those ten cars, I’m going to give you one, so you need to choose.”

Suddenly I really have to think. What brand, what options do I want in the car, seat color, interior color, leather or cloth, V6 or V4, two or four door etc? My brain really has to start working!

Kathleen D. Vohls, the study’s lead author concluded that making choices depletes a precious resource in the human mind and causes mental exhaustion. “There is a significant shift in the mental programming that is made at the time of choosing,” she says. “Simply the act of choosing can cause mental fatigue.”

So it’s not just the pondering of choices, it’s the actual prioritizing and choosing that mentally wears us down.

We live in an era of plenty. Starbucks, for example, says they have 87,000 different ways to get you a drink.

As marketers, we need to help our companies focus and prioritize on the things that matter most to our customers.

Since marketing is responsible for the “voice of the customer”, we must help steer R&D, product management, finance, operations and other corporate functions towards adding (or subtracting) features/functionality from our products and services that will actually make a competitive difference.

Sometimes, less is more —especially when it comes to “choice”.

Why Capacity Management Matters to Business Executives

bucketIn a challenging global slowdown, the world seems awash in capacity. Scans of major business publications show airlines reducing flights, companies furloughing or firing employees, and manufacturers closing plants. If you agree that it appears there is more unused capacity than demand, why should capacity management matter?

It would seem in the “Great Recession,” capacity planning and management should be a minimal consideration. In fact, capacity utilization for many industries is at an all time low.

For example, from January 2008 to January 2009, according to the Financial Times, the demand for automobiles in the United States fell from 15.9 million to 9.6 million per year. And Wall Street Journal reports Federal Reserve Chairman Ben Bernanke told the House Budget Committee recently, “The slack in resource utilization remains sizable”.

As companies attempt to cope with a “new normal,” painful restructuring processes have included reducing “capacity” in human resources, plants and equipment, information technology, number of brands, distribution channels, and even debt covenants. All this restructuring is intended to pare down capabilities to what is perceived as a new reality in market conditions.

Indeed, observing macro-economic conditions, it’s tempting to write off “growth.” However, “growth” is far from dead.

Take for example, the exponential growth trends of Facebook and Twitter. In January 2009, Facebook touted its 150 millionth user, and in May 2009 surpassed 225 million users! One site projects Facebook to have 300 million users by the end of the year. Twitter’s growth has also been phenomenal—audiences grew 40% in just 30 days (March-April 2009).

In fact, “growth” exists (often exponentially) in areas such as data volumes, populations, energy usage, Moore’s Law, GDPs of select countries (India, China etc), education expenditures, and unfortunately—state and national debts!

Growth also can be found in micro-segments and categories such as increases in market share of private label brands vs. national brands on grocery store shelves, or Apple’s share of the smartphone market. Once our eyes are opened to growth trends, it’s quite easy to see signs of expansion everywhere!

The ability to meet the needs of your customers now and in the future is a critical function of any business. That’s what capacity management is all about. Spikes in demand could mean that your company is leaving money on the table and/or failing to meet customer needs. Need proof? For customer reaction, simply perform a web search on keywords “Twitter down time” or “Twitter outage” and you’ll gain evidence of how important capacity management really is.

Indeed, capacity management isn’t a one-time, annual event. It should be a continual process of making sure your business can scale up or down to meet customer needs. With a thumb on the pulse of demand, marketers have a responsibility to help establish a well documented capacity plan and process that considers future business requests.

Sound like simple, common sense, right? Properly predicting demand is anything but easy. Considerations must include a clean and accurate set of historical data, an analytical infrastructure to compute and analyze data, an understanding of the current state of the business and its capabilities, future growth projections based on applicable trends, and then a gap analysis of what it would take to scale based on various “what-if” scenarios.

Capacity management is all about reducing surprises. Take a good, hard look at your business. What’s growing? Something surely is.

What marketing campaigns are you preparing? What happens—for goodness sake—if they’re too successful and demand exceeds available supply? McDonald’s in India had to scale back marketing campaigns for Chicken McNuggets because they couldn’t keep up with demand. Good marketing is making promises your company CAN deliver.

Can you accurately predict if and when you’ll run out of resources to meet customer needs? Can you afford not to properly manage “capacity”?

Questions:

• There appears to be a glut of capacity worldwide (i.e. shipping, telecommunications, manufacturing etc.). Should marketers be concerned with the concept of capacity management?
• What are the ramifications of getting capacity management wrong?
• Businesses are adding flexibility to meet spikes in demand through vehicles like cloud computing, temporary labor and outsourcing. Can you think of others?
• Suppose “capacity management” is built into the function of an annual strategic planning exercise. What might be a pitfall of this approach?

Data Visualization – One City at a Time

crowds in RomeEver wondered what the “rhythm” of your city looks like? In cities like Rome and New York, aggregated real-time data from mobile providers is helping government officials monitor traffic flows, efficiently utilize transportation networks, and even plan for large-scale events helping to improve overall “citizen satisfaction.” Is real-time data visualization coming to a city near you?

The proliferation of mobile and GPS technologies (sometimes in the same handset), are making it possible for city planners, government officials, and even businesses to gain a pulse of the daily movements of entire populations.

An article in the Wall Street Journal, “Cellphone Data Track Our Migration Patterns”, June 10, 2008, mentions how mobile providers are allowing access of anonymized and aggregated location data to social scientists, physicists and urban planners.

The article notes, “More than 3.3 billion wireless-phone subscribers world-wide have, in effect, voluntarily adopted devices that record their daily movements in the same way satellite sensors monitor migrating birds, whales, bears and other wildlife.”

Indeed, network physicist Albert-Laszlo Barabasi says that since practically everyone has a mobile phone, “Everything we do leaves an electronic fingerprint somewhere.”

While the concept of tracking human movement raises the eyebrows of many privacy advocates, the benefits to exploratory analysis of GPS and mobile data—according to the article—are myriad including, “aid(ing) emergency relief efforts in natural disasters, as well as improving urban planning, public transportation and traffic control.”

The Wall Street Journal article also mentions another case study where MIT and Telecom Italia have teamed through Project “Real Time Rome” to help its citizens and officials make better decisions regarding resource utilization.

Overlaying telecommunications data and Google Earth allows Project “Real Time Rome” to dynamically reveal “the rhythm of the city” through six visualizations:

Pulse – helps determine commuting patterns and patterns of use for transportation networks
Connectivity—ensures public transportation is located near populations
Flow—helps answer the question, “Where is traffic moving or flowing to?”
Icons— helps answer the question, “Which landmarks in Rome attract more people”?
Visitors—discovers where tourists congregate
Gathering—during special events (i.e. Madonna concert), helps determine how people occupy and move through different parts of Rome

Sophisticated analytical applications and data warehousing technologies are helping “bring data to life” for governments, citizens and businesses. I’ve also thought of some other ways this mobile/GPS data could create advantages:

• Businesses could examine historical patterns of people movement to decide where to open their next store/branch
• Real estate agents (commercial and residential) could use the data to determine migration patterns over time
• Businesses could examine the data to determine staffing and inventory levels by day or even hour based on historical traffic patterns in their vicinity
• Variable pricing could be enacted for access to roads or public transportation based on peak-demand usage (ex: toll roads into a city could charge more for drivers during peak hours much like London is doing)
• Chambers of commerce and city officials could use the data to steer promotions/traffic towards a new downtown renovation, places of interest, less frequently visited tourist attractions.
• Special events—mid-city concerts for example—can be modeled based on historical data of traffic, pedestrian flow etc, to ensure future events are more accessible

Through the use of powerful data-visualization applications, government agencies, businesses and citizens are able to explore data to uncover mathematical patterns and connections to help improve the lives of everyone concerned.

So, the next time you visit a major city, hit all the tourist attractions in a timely fashion, avoid the crowds and notice that trains, buses, and taxis run on time and are conveniently located, remember it’s probably not an accident. Good service rarely is.

What are your thoughts?