Innovation Reactor

The Mad Men approach to customer research

In an episode of Mad Men, the Execs at Sterling Cooper Advertising round up a herd of eager secretaries to test out a new line of lipsticks for Belle Jolie, a cosmetics company. 

On the other side of the two-way mirror, the men enjoy the show as the girls apply different shades and answer questions. But the men gawk and joke at how the girls don’t know why they buy what they buy, and that research is a complete waste of time.

What’s surprising today is how many companies still use the same approach as advertising agencies from the 1960’s. Burning time and money on research designed for a different era.

If the Internet and social media have transformed the way that consumers shop, and technology is blurring the lines between online and offline commerce, isn’t it inevitable that our customer research techniques should change too? 

From my observation traditional research is stuck in the past and companies need to adopt new methods. Here's why:

Traditional research

• Focus groups, surveys and structured interviews
• Tries to uncover explicit customer needs
• Uses market segmentation based on demographics
• Takes place in controlled settings with expensive rooms, equipment and moderators
• Analyzes objective data
• Good for improving existing things
• Static and slow – one city or survey at a time

New research techniques

• Focused on individuals
• Uses observation and empathy
• Happens in natural contexts and through attentively viewing people’s behavior in their own environment
• Uses feelings, thoughts, attitudes, imagination and emotion to uncover latent needs
• Promotes dynamic conversations to generate interpretations and deeper meanings
• Fast, rapid, responsive, and low cost
• Inspires new ideas and opportunities 

Madison Ave in the 60’s is a far cry from the world we live in today. Nowadays understanding individual users through observation and empathy is critical to unlock new product ideas or to create effective marketing programs.  

 

Go to and communicate where customers live

When I develop integrated marketing communications I frequently dream of a world where millions of customers flock to my site, sign-up for my product, and keep on coming back for more. But then the Silicon Valley Tech Fairy (think Tinkerbell with iPads for wings) slaps me and I wake up. 

In reality the vast majority of customers will not come to your site. Why? Because they discover products when connecting with friends on Facebook, reading a blog, checking their newsfeed, cleaning up their inbox, going to and from work, watching a favorite TV show, viewing a video clip, flipping through a magazine, or doing a product search. But many marketers still place the bulk of their investment and emphasis on their own site. 

If customers are visiting other places already how can you use these to your advantage?

Good integrated marketing communications target major touch points or influence opportunities with customers. In other words you need to go and communicate where your customers are. 

To do this I suggest a multi-pronged approach to your marketing strategy, using three major channels, with each channel having a specific purpose to either (1) scale, (2) expand, or (3) penetrate, the market. 

1. Scale: Choose a high visibility channel that will allow you to scale and attract new customers rapidly from your core target segment.
2. Expand: Find a channel that enables you to reach an adjacent pool of new users.
3. Penetrate: Segment your existing customers and promote features, functionality or special offers to increase product usage.

When developing integrated marketing communications remember to design a plan that is focused on engaging customers at the places where they frequent most.

 

High-Velocity Product Testing

Innovators are always planting new product ideas. They start with a seed and try to grow it into a big, tall and beautiful tree. But often, instead of designing a strong trunk and branches first, they immediately start arranging the leaves.

Here’s a product development tip: build the trunk and branches first, then quickly let customers climb all over them.

The idea is to design and test the main parts of your product early-on and observe actual customer behavior, rather than just listening to what customers say or say they will do.

I’m a fan of high-velocity product testing. This means you get a prototype of the product or the experience into beta, get customer usage data on features or functionality, get information on customer experience pain-points, make adjustments, and then get the next version out fast.

Testing an actual product, with real users in their natural environment, is the foundation of developing something consumers will love. Because the real learning does not start in focus groups or through online surveys, but when you begin reviewing your first set of customer behavior data.

It’s amazing how many great ideas fall flat once they're in live testing, and how the unexpected things become winners. 

 

Three Habits of Highly Successful Product Managers

I recently attended a Customer-Focused Product Design workshop by Sara L. Beckman from University of California Berkeley, Haas School of Business. 

She proposed that product managers excel in three areas - Sensing, Seizing and Transforming - if they want to design innovative new products that customers will love.

Sensing: is all about understanding the strategic environment. What are the latest trends? Who is the competition? What are the user needs? 

Seizing: product managers must be great at taking advantage of opportunities in the market. These opportunities are discovered through detailed portfolio analysis and planning to understand how customers are using your product or substitute products today. Pricing and positioning at this stage is critical to help you win customers hearts and minds.

Transforming: successful managers lead cross-functional teams and use strategic business negotiation or influence to get the resources they need. They quickly design value propositions, get them out to market fast, and start learning in real-time from users.

The product managers job is also to link the technical side (writing product design documents and creating business cases) with marketing skills (creating marketing plans, developing promotions, expanding channels).

I regularly hear from product managers who say, “enough with the theoretical stuff, tell me what I have to do to be successful.” I think the ideas of Sensing, Seizing and Transforming should be considered along with a back-to-basics approach of focusing on, and designing for, the customer.

 

What makes a great brand?

There are five reasons why Apple, Coca Cola, Google, Nike, Cisco, and Mercedes Benz consistently rank amongst the Best Global Brands.

• They anticipate customer requirements and fulfill them 
• They have products that are simple and easy to understand
• They are supportive and treat people fairly, ethically, honestly and have transparent policies and terms 
• They are easily available to people when needed
• They help people achieve their dreams

And yet a poor experience with customer service or bad communications can leave people with negative feelings about a brand. So it's astonishing that many companies haven't figured this out yet.

Great brands have customer service policies to make life easy and provide help for customers when things go wrong. These brands are trustworthy and supportive because they make customers feel good and offer peace of mind after every interaction. Brands like Amazon and Disney know this and have instilled in their people a way of interacting that goes beyond advocacy. By crafting a culture around "helping others" and being "on the customers side" these brands have become synonymous with delivering a great experience.

The problem with marketing is it's all too easy for companies to slip back into blasting out emails and post packs – burning black holes in consumer mailboxes. But great brands develop more meaningful and contextual communications because they listen to customer needs. These communications are relevant, flexible, helpful, and there when customers most need them. Brands like Zappos have created values like “Build Open and Honest Relationships With Communication” to help guide their marketing strategy and ultimately build deeper connections with their customers.

The really good news is that if you focus on providing helpful customer service and meaningful communications your brand can be great too.

 

What is ideation?

What do Hollywood Director JJ Abrams, singer and songwriter Dave Stewart from the Eurythmics, Twitter CEO Evan Williams, and Melinda Gates – who oversees the worlds largest philanthropic organization – have in common? They all made the Fast Company Magazine, 100 Most Creative People in Business list. 

But what makes them so creative and innovative? What's behind the next Sci-Fi blockbuster, the words for a hit new song, a global social network, or improved heath and education in the developing world? The answer is simple – ideas.

The Most Creative People in Business have an abundant source of good ideas. The great thing is you can develop this capability too. 

If you want to out-innovate the competition you first need to out-think them. Ideation is the process of generating, exploring, and evaluating new ideas that can give your business a competitive advantage.

Just imagine ideation as a funnel. Insights, views, opinions, data, trends, and knowledge, are captured at the top. Then these elements are filtered in the middle to get the good stuff – new ideas – out the other side. 

There are four key steps in the ideation process:

1. Gather customer insights: Review customer research reports, analyze competitors, social trends, lifestyle patterns, and shopping habits. Search blogs, social networks, and customer service records. Conduct a number of contextual interviews (in-home, in-office, in-mall) with your target customers to understand their behavior in an everyday environment.
2. Find opportunity areas: Look for customer pain-points, problems, inefficient processes, or abnormal behavior. Give these areas names since these themes will serve as vehicles for exploring and developing new ideas. 
3. Brainstorm ideas: Create actionable design statements around your opportunity areas like "How might we improve our product delivery times?" or "What can improve our online user experience?" to provide stimulus and guidelines for brainstorming. Start generating lots of ideas, make sure these ideas are grounded by your customer insights and go for quantity.
4. Prioritize ideas: Develop some customer criteria like "Does this idea improve customers lives?"or "Is the idea different from what customers are using today?" and business criteria like "Does this idea build on the strengths of our core business model?" to help evaluate, rank and select the best ideas.

The 100 Most Creative People in Business have the knack of being able to repeat this process again and again to generate fresh ideas. However even the best can get lost and lose focus so here are a few things to watch out for:

• Ideation is not about defining solutions – ideation is about thinking and learning.
• Ideation is not about brilliant strategies – ideation is about exploration and direction setting.
• Ideation is not about creating advertising tag lines or flashy marketing – ideation is about understanding customer experiences.

 

Customer service: the DNA of great brands

Bad customer service makes you feel like Bill Murray in Groundhog Day.

 

You search a website for an elusive 800 number, like a quest for the Holy Grail. You call and get stuck in an automated voice system, press 9 to speak to an agent, only to be redirected to the main menu. You get through to a real person, then spend an eternity on hold as they check with their supervisor. You get transferred to another department. You repeat your story…again. You go round-and-round like Punxsutawney Phil on a treadmill.

 

Supportive customer service is more than a side note. In the BusinessWeek Customer Service Champs 2010 report, consumers frequently mentioned how American Express readily reversed questionable charges without hassle, how easy it was to return shoes to Zappos, that Enterprise Rent-A-Car would pick you up from home, or times when Nordstrom staff provided special attention. At these companies customer service is an inseparable part of the brands DNA.

 

What this research revealed that customer service experiences become etched on peoples' minds, and were big reasons why they kept on coming back.

 

For your customers, when it comes to making a purchase decision, customer service is the safety net – there to catch them if something goes wrong. It doesn’t matter if you have lower prices, are technically better, or provide a wider choice. For many people, if your customer service stinks, it feels like the opposite is true, and that is what they base their next buying decision on.

 

When designing products, customer service is an afterthought for many companies. But from my experience value propositions which include great service have higher sales and engagement levels. Potentially there are some higher costs involved upfront. However, keeping customers happy will ultimately create evangelists over the long run, who promote your product for free and thereby reduce future marketing costs.

 

Rule: Customer service is more than a minor benefit; it’s an integral part of your value proposition.

 

 

Outliers: on the edge of innovation

With a spiky pink mohawk she stands at 5ft 7". Wearing a short burberry skirt, army boots, and biker jacket; outfitted with the latest GPS system and night-vision lenses, she explores dramatic ruins of power stations, crumbling psychiatric hospitals, abandoned missile silos, and rusted subway systems. She ignores the no trespassing signs in other forbidden places. As an expert in the new extreme sport of urban exploration, she supplies maps and advice to a whole underground community of dedicated adventurers.

 

In the book Outliers, author Malcolm Gladwell writes about people with "expertise outside of the ordinary." While puzzling to the rest of us, he found these humans are not a one-off phenomena. Rather, expertise comes not only from talent, but also from practice, hard work, rehearsal, many hours of experience, and seizing opportunity.

 

Outliers can be thought of as extreme users. People ahead-of-the-curve who define trends, patterns and popular culture. When developing new products, they are vital for customer research, since they have a disproportionate influence on technology, fashion and social behavior.

 

Extreme users are found at opposite ends of the curve. On a bell curve it's the points located farthest from the middle. Here you'll find either lovers or haters of your products, or what the marketing gurus call "early adopters" or "brand rejectors" respectively.

 

But shouldn't we be talking to the mass market since this is where the money is? Well to understand a flock of sheep you want to talk to the shepherd.

 

Extreme users decode the world around them differently. They use technology in new ways and have different perspectives on reality. These people are often fanatical and go to greater lengths in habit, action or opinion, so acquire better knowledge about their areas of interest than most others. These consumers can articulate their needs more vividly, while the masses in the middle, with limited exposure to your products have trouble. By focusing customer research on extreme users you can then extract a richer source of information.

 

So next time you notice a guy with blond dreadlocks and ripped jeans, who's into freestyle motocross, kitesurfing, rock climbing, 2000ft cliff jumps into deep ravines, and body armor before breakfast, look past the painful scars. Because he's probably the perfect candidate for your research on high-definition cameras, outdoor apparel, social networking and emergency healthcare (of course).

 

"Winning" is the new way consumers achieve control

In the movie The Matrix, the computer hacker Neo learns about the true nature of his reality – that he is actually trapped in a complex computer simulation, used by artificial intelligence to control humans and harvest them as an energy source. 

 

But what’s a kung-fu fighting hacker, dressed in black leather, got to do with innovation? Well if you’re going to design a smash-hit product, then you need to understand the current reality surrounding your customers. 

 

Just like The Matrix, many consumers feel there is a system that's unbeatable and uncontrollable. Constantly bombarded each day with job losses, out-of-control healthcare costs, school closures, higher food prices, "innovative" bank fees, and environmental disasters, many people are looking for a sense of control. 

 

One aspect to wrest back control, in a system that makes control difficult for people, is the desire to “win” by making small gains. Deals, rewards, or other positive experiences satisfy these motivations. Look at the explosion of savings sites like Groupon, Dailydeals, Gilt, or RueLaLa. Discount stores like Dollar Tree in the U.S. or Lidl in Europe have experienced a boom in their businesses too. Then there are the multitude of cash-back programs, 2-4-1 coupons, free shipping offers, gift with purchase, or loyalty rewards schemes. 

 

Since it's difficult for many people to win in the overall game of life, they go for wins that are more tangible and understandable – the small everyday “wins.” 

 

For consumers, moments of winning and control are treasures and value propositions that incorporate small "wins" now have greater appeal. So when you design your next product, make sure it helps customers feel like they are keeping up, rather than being kept down. Because if you're not part of the solution, then you're part of the Matrix.

Human centered product design

The CEO puts on a white lab coat and funny glasses, announces "Innovation Week" at your company, then proclaims that "we should all be mad scientists." You sign up for the brainstorm in room B, get a handful of magic markers, a stack of colorful pads, then stare at a white board. 

 

Down the hall, tech geeks lock themselves in a room for a “Skunk Works” session - the innovation process made famous by Lockheed Martin - and after 12 hours of coding and coffee, they produce a couple of prototypes. Despite your best efforts, at the end of the week the intoxicating smell of marker fluid disappears, sticky notes vanish into the waste basket, and the skunk becomes road kill.

 

Some companies still don’t take innovation seriously. They tilt the telescope inward on their business or technology, to try to uncover new ideas and products. While I'm sure there are some very talented employees trying to find the next new-growth business, this internal perspective does not create a very predictable process.

 

Rather, innovation comes from understanding who your customers are and how they live their lives. This process starts by taking a human perspective first, to uncover insights on existing consumer behavior. Harvard Business School Professor Clay Christensen reminds us that people "have jobs that arise regularly and need to get done." By revealing the problems that customers face and the related functional, emotional, and social elements, you can start to create new ideas and build new products. In short, you can provide customers with real-world solutions. 

 

IDEO, the world-famous innovation and design firm, calls this Human-Centered Design. You start with people first - to define opportunity areas, find unique insights and create ideas - before using your organization and technology to bring products to life. With this approach, your CEO can save the costumes for Halloween!