Businesses That Excel at Customer Experience Mgmt Lead in Profitability

27 07 2007

Research conducted by Peer Insight, LLC show that businesses who focus on designing systems to create and maintain a compelling customer experience also deliver better profits than businesses who focus on operational excellence.

Looking at the chart above:

Customer experience (cX) leaders are companies that deliver value through the experiences they create around their products and services (e.g. Starbucks)

Operational Excellence (Op-X) leaders excel at the efficient and productive delivery of their product or service (e.g. Wal-Mart)

When you compare the financial growth of cX leaders with the S&P 500, the results are show that a hypothetical $1K investment in a customer experience portfolio would outperform the S&P 500 by a 10 to 1 margin from 2000 through 2005.

Peer Insight studied 104 distinct service innovation projects. They found that the use of Customer Experience Design was a key differentiator between success and mediocrity.

Their study entitled “Seizing the White Space: Innovative Service Concepts in the US,” presents 12 case studies of companies who have successfully developed new service concepts and service businesses (one features NineSigma an open business model service we featured in an earlier post).

Using the “ten types of innovation model” developed by the Doblin Group (see below), Peer Insight contrasted each of these companies approach to innovating their customer experience.

The most successful companies included these approaches to designing compelling customer experiences (bold highlights provide links to previous posts on this subject):


Minnesota Public Radio Proves Open Innovation Journalism Works

26 07 2007

Their most famous product may be the Prairie Home Companion with Garrison Keillor, but in the future we may come to know Minnesota Public Radio (MPR) as the innovators that launched “Public Insight Journalism.”

MPR, like others from earlier posts such as Gannett and the BBC, are developing new ways to design, produce and distribute news with the active participation of their news consumers.

Why are these news organizations inviting their customers to participate? MPR believes it solves an old problem of capacity and sourcing:

Our journalists are always trying to find the best sources and the best information to tell their stories. But there are few of us, and so many people who have good information and insight that they have acquired through their jobs, hobbies, contacts, friendships or life experiences.

Until recently, we have lacked the ability to ask many people to share what they know with us on any given story. Now, e-mail and the Internet have enabled us to quickly and efficiently communicate with hundreds, even thousands of people, within minutes. Those same technologies also enable us to keep track of information in a central database that we can build into a powerful storehouse of intelligence.

To date thousands of listeners have signed up to participate to help make the MPR news product better. Unlike the Wired/Assignment Zero magazine attempt to co-create news with its readers which was not as successful, MPR has a clear process for engagement throughout the news development process to ensure quality and accuracy that marries the best traditions of professional journalism with the real-time access to expertise and knowledge of their audience.

  • They use the knowledge, observations and expertise people provide to inform their news coverage.
  • A newsroom analyst will take the information, connect it with other relevant intelligence and pass it on to the appropriate reporters and editors. They do not share any personal information received outside of the MPR newsroom and never quote anyone on the air or online without first getting their permission.
  • Reporters and editors decide what information they deem relevant or important. If the information you provide interests them, they will follow up with an e-mail or a phone call.

MPR, BBC, and Gannett are demonstrating the potential of open innovation and the importance of adapting old production models to permit more creative self-expression for the consumer and the news organization while delivering product quality of the highest caliber.  It is also a customer intimacy strategy that keeps the consumer actively engaged in the product they consume.

You can read more about MPR, public insight journalism and their network here.

Further Evidence Wikis and Blogs More Productive Than Email

25 07 2007

Social Computing News reports how another company (this time Motorola) is increasing productivity and communication by relying less on email and more on a variety of networking tools like wikis and blogs.

“Intranet 2.0” came onto the radar when Motorola’s VP of IT strategy told VisiCalc inventor Dan Bricklin in an interview that Motorola, #49 on the Fortune 500, has almost 2,000 internal wikis, and 2,700 blogs used by 60,000 of their 68,000 employees daily.

Of the 60,000 people, 4-5,000 contribute content everyday.  Efficiency and productivity cited as reasons for deployment.

Gannett’s Content Co-Creation Experiment Seems to Work

24 07 2007

Last Spring we featured Gannett’s new strategy for news production that invites the news consumer to become part of the news gathering and dissemination.

You can read the earlier post that covers the whole strategy here.

In the August issue of Wired magazine (page 86), you’ll learn that the model combining content co-creation strategies and hyper-local advertising looks to be a winner.

More Evidence Shows Community Drives Product Sales

23 07 2007

In my stack of old newspaper clippings, I ran across a 2006 Forrester Research survey that further demonstrates the power of online community to boost customer interaction and purchasing.

Customer created reviews are becoming significant tools in a marketer’s arsenal. Among North American adults and youth (ages 13-21), Forrester found dramatic customer participation among the following sources of online content for adults and youths:

  • Customer product ratings and reviews (71% adult/81% youth)
  • For sale listings with seller ratings (69%/77%)
  • Online classified ads (57%/66%)
  • Message board posts (57%/71%)
  • Weblogs (55%/67%)
  • Peer-generated and peer-edited reference information (49%/68%)
  • Peer-posted event listings (46%/71%)

Such activities not only enhanced sales by sites that offered them but also boosted their search rankings since the search engines can pick up the content of the reviews. Comparing results from other types of reviews from print or direct mail, online product reviews by customers were trusted more by consumers. TV reviews were only slightly more trusted.

A Jupiter Research study found that consumers are referring to online reviews twice as much as in their previous study.

HBR Launches Virtual Case Studies Around Reader Community

20 07 2007

Earlier this summer the Harvard Business Review launched a new feature online called a virtual case study that delves into issues of values in leadership. As you may know, HBR has offered a very popular management case study for many years which always presents a fictional management challenge and asks some expert business commentators to respond with what they might do as a counter to what happened to the protagonists in the case study.

Thanks to the Internet, HBR is taking this format further by giving readers in their community a chance to share their own views too.  And boy did they get an earful.  Over 200 readers responded.

Cultivating Community by Extending the Customer Experience

This approach offers a number of useful lessons:

  1. It builds value added experiences on an already popular feature making it even more valuable and potentially far more compelling for Word of Mouth Marketing.
  2. Creating community around the case study by inviting reader commentary gives the impression that reader comments and interaction are important to HBR, and in some ways, equal to the expert commentary of the past.
  3. It offers a chance for people to challenge themselves and gain from the opinions of others.
  4. Readers become  more accustom to  wanting to join in and stop lurking which can improve reader participation in other ways  on the site.
  5. HBR trusted their readers enough to give them the floor.  This is a critical first step in building community by overcoming the “not invented here” viewpoint.
  6. This cost very little for HBR to produce.

I am sure they plan further enhancements.  For instance why not create a prediction market where readers can “bet” using HBR virtual currency on what the expert panel determine the prevailing action should be.

Customer Complaints Increase in Production Value

20 07 2007

If you ever wonder how creative your customers or members might be, this example is a hilarious one. Letters of complaint pale in comparison. Reminds me of the frequently shared slide presentation of two consultants that got revenge on an unfriendly hotel chain who walked them and refused to find them an alternative place to stay.

So far this little gem has over 1.8 million views.