Wednesday, October 28, 2015

Customer Obedience and Autonomy

Discussions of marketing tend to gravitate toward the extremes: either the customers are mindless sheep who will do whatever they are told, or they are autonomous individuals who are immune to influence.   Stranger still, one often hears elements of both extremes in the very same argument, presentation, or proposal – which is a sign that the presenter hasn’t really thought through his case.

It’s usually the case that binary thinking is oversimplified, based on the fallacy of black-or-white with no consideration that there may be a continuum and that most individuals are situated somewhere between the extremes.

No customer is completely obedient: even a person who seems submissive and manipulable has at least a few areas of his life in which he maintains some degree of control.  He is agreeable and gullible to a point, but beyond that point can be pushed no further.  Neither is any customer completely autonomous: there are instances where an individual who insists on thinking and choosing for himself will defer to others, either when the decision is regarded as unimportant or he feels that he lacks the expertise to make a decision.

Marketers must carefully consider the degree of obedience/autonomy a customer will exercise in any buying decision: which things he will want to choose for himself, and which he will submit to accepting whatever is recommended.  While there is no position that is universal to all customers, there are some that are likely to be appropriate to the greater number of customers who are purchasing a specific product in a specific situation.

Healthcare provides a good example of this flexibility.   Most people (though certainly not all) recognize that they lack expertise – they do not know anatomy and medicine, and so will submit themselves entirely to the care of a physician and follow every order they are given.   But most people want to choose which physician treats them – it’s one of the major issues that has prevented socialized medicine in autonomous cultures.

Even the submissive customers are not completely submissive: a common complaint among medical practitioners is that customers do not comply with their orders – they refuse to break harmful habits, or to that medications and attend therapy as instructed.   While they are agreeable to the suggestion, their autonomy is shown in the lack of compliance in follow-through.

Other industries face the same issues: customers who seem agreeable to a point, but who then fail to obey.   The vendor, in their arrogance, expects a customer to be completely compliant and does not know what to do when the customer refuses to comply – except that they wish to avoid being blamed for the customer’s “failure” to mindlessly obey their directives.  In such instances, they have clearly mistaken the customers’ tendency to reclaim their autonomy.

On the other hand, even the autonomous customer is not completely autonomous: in general, people don’t invest much time in thinking through their purchases.    When an item is expensive, risky, or  important, people will invest time and thought into exploring or evaluating options – but when cost, risk, and importance is low, even highly autonomous individuals tend to follow suggestions rather than think for themselves.   In such instances, failure to provide guidance is failure to close the deal.

In all, this points to a need for further research – not in general, but in specific to the product, segment, and situation because generalizations do not hold in all instances.   To make sales and satisfy customers ultimately depends on coming to a proper conclusion as to the level of obedience and autonomy that can be reasonably expected of the majority of individuals in a given situation.   There simply are no easy and universal answers.

Friday, October 23, 2015

Lessons from the Hotel Industry

I watched a presentation from the hotel industry, in which the speaker mentioned some of the warning signs that indicate a property is going swiftly downhill:
  1. Employees no longer care about the customers.  When a customer identifies a problem, the employee refuses to acknowledge it or take any action outside of their routine duties to solve it.
  2. Maintenance is poor.   There is basic and obvious neglect in the physical environment: peeling wallpaper, a thick coat of dust, dirty or broken furniture.  All of these seem superficial, but are symptoms of a property that is neglecting the basics.
  3. Commitments are not made or honored.  The company’s basic promises to customers are not being kept.  Customers are stalled or brushed off in hopes they will go away and simply accept that their expectations will not be met.
  4.  Employees show no initiative and merely follow orders.   Rather than going above and beyond the call of duty to ensure customer satisfaction, employees take a not-my-job attitude and do nothing to address the problems they see. 
Each of these has parallels in online services across all industries:
  1. Customer feedback is ignored.   Comments or problem reports are not accepted, or if they are the customer receives a stock “thank you for your feedback” reply and nothing is actually done to address the issue.
  2. The site is broken or outdated.   While it would seem to be basic practice to avoid broken images and links, these sorts of blemishes still exist on many sites.  And while web sites don’t become threadbare, their design becomes outdated and behind the times.
  3. Service commitments are not honored.  The company’s operations are governed by strict policies and procedures.  The typical response to a customer request or problem report is an excuse without a remedy.
  4. Nothing beyond standard service is available under any circumstances.   A customer who has an unusual request will not be heard, or if he is heard he will be told why the request will not be honored.
In all, what this amounts to is a culture of excuses rather than a culture of service excellence: when a company is settled in its routines and its message to customers is “that’s the way it is” then its culture has become toxic and customers will abandon for a provider that seems more interested in serving their needs.

In a competitive industry, which is virtually every industry, customers do not need to tolerate poor service to get the core value.  There are other choices, and they will find them.

Monday, October 19, 2015

A Confederacy of Dunces

Between the third and fourth quarter of every year, I seem to get pulled into a lot of meetings where some executive has decided to assemble a think tank, planning committee, strategy group, or other impressively-named gaggle of people whom the organizer expects to do his thinking for him.  He has a desire to achieve something that can’t quite be called a “goal” because it is too nebulous and ill defined, so he brings together some people to turn it into some thing actionable.   And that is not necessarily a bad thing, but it seldom turns out well.

My sense is it’s largely because such groups attract people who want to be perceived as being thought leaders, but who don’t actually want to think or share their thoughts.   Being on a committee makes a person seem important, and all the more so if it has an impressive name.   So in any team/committee of twelve, about half the people are there just so they can put it on their annual review, but they contribute nothing at all to the discussion.  At best, they’re dead wood who remain completely silent – though they sometimes speak just so they can say they contributed something, and it’s usually something useless that detracts or at least distracts from the purpose of the group.

Others get involved to prevent progress from occurring.   They consider the group’s activities to be a threat to a status quo with which they are perfectly happy, and want to prevent the group from proposing any changes that will rock their pleasure-boat.   They bring a spirit of can’t-be-done, are quick to identify flaws without proposing solutions or alternate approaches, and it becomes clear that their participation is in the nature of a saboteur that simply wants to prevent the committee from working.  And since it’s much easier to destroy an idea than create one, must easier to feed doubt than grow enthusiasm, they often get their way.

Still others vaguely agree with the purpose, but they have a political agenda: they want to own what the committee creates.  While their contributions seem to be proposing alternate solutions, it becomes clear that every solution they propose merely increases their own power and authority by placing the control of the solution in their own department – whether or not it makes sense for the process to reside there.   This can be terribly distracting, because good solutions are scuttled in favor of less effective ones (which are not completely useless) that increase their political power - and because their interest is in having control rather than achieving results, it becomes obvious that the plan has little chance of success.

Similarly, there are those with alternate agendas that they have either failed to pursue or haven’t earnestly tried to pursue – but their agendas are similar enough to the objective of the group that they can divert the group’s discussions to their agenda.   What they are seeking is usually something worth doing, but it is not the purpose of the group and would be better handled by creating a separate work group to pursue so that these side-tracks do not become diversions from the main purpose of the group.

In all, a committee of twelve people usually has only three or four who are dedicated to the purpose and willing to contribute in a meaningful way.   And to make matters worse, the behavior of the non-contributors often alienates and demoralizes contributors to the point where they stop contributing, or find better things to do with their time.  I have noticed that it is difficult, to the point of being nearly impossible, to recruit smart and capable people to committees - their aftertastes of their past experience lingers on.

In the end, it’s my sense that these groups would be more productive if they were pruned down to those individuals who are earnest and capable.  A group of four intelligent and hard-working people can do more, and do better, than a committee of twenty people who lack those qualities.  But this never seems to be the case: a series of meetings is set up with the same group of people – the useless and the detractors are never cast out, the earnest ones leave in disgust, and new members who could be useful are never added.

But going back to the premise, groups like this are organized by executives who have only a passing fancy – they don’t monitor the group, don’t attend meetings, don’t provide clear guidance, and don’t keep the group focused and on track.   As in many things, reward comes from effort – and when the only “effort” is in suggesting a group should be convened to discuss an idea, the outcome is much discussion and no progress.

Value, Consistency, and the Value of Consistency

Brand is about consistency.   The value of a brand, from the very beginning, was that it indicated to customers what they could expect of a specific product from a specific vendor.   Later, when brand began to accrue other qualities, such as emotional benefits and the esteem of conspicuous consumption, customers were attracted to the brand because they expected those qualities to be delivered as well.

So the value of a traditional brand is that it delivers the same quality, experience after experience, year after year, decade after decade.   Brands that advertise they have been in business for a hundred years communicate a long history of consistent quality.  Consistency with expectations is critical.

Human beliefs are based on consistency.   When two things occur at the same time, we believe it to be coincidence and attach no special value to the correlation.  But when two things occur at the same time, over and over, we create an association and believe the two to be correlated.   It is not even necessary to understand the reason for the correlation: some of the most strongly held beliefs (superstition and religion) are based on situation where the correlation cannot be explained.

This is as true of brands as everyday experiences: a brand must be consistent to be meaningful.  There cannot be the sense that what the customer gets the next time will be different from what they got the last time.   Any change causes the customer to question the correlation, and to doubt that the brand has the qualities they expect - and for that doubt to become more generalized and existing beliefs to be questioned.  If the logo on the package is different, it is assumed that there must be other things that are different about the product it contains.

Whenever a brand changes, it takes some time to adjust: customers are displeased when anything is different, and need to be reassured that the qualities they value about the brand have remained the same.   Or when an unpopular brand changes to become more appealing, they must then convince customers who were disappointed in the past that things are now different and they should give the brand a second chance.

As an aside, correlations are subjective, so it is difficult to identify which qualities are important and which are not: companies assume they know why customers buy their brand and are indifferent to any other aspect, but are often quite surprised when a minor change that they assumed would be inconsequential results in an exodus of customers.   But the concept of a brand, or any object, is the sensory stimulation.   The customer cares not only about the taste of a food product, but it's scent and visual appearance as well - change any one thing, even an inessential quality, and customers cannot refrain from reconstructing their conception of the brand.

So in that sense, consistency itself is a value: knowing what to expect of a brand means that the customer doesn't have to reevaluate it each time they purchase.   This reduces the effort (cost) of buying, and ensures that the benefit-to-cost ratio remains favorable to the brand.   Any change casts doubt on their existing beliefs, causes them to have to re-think and re-evaluate, and provides an opportunity to change their conception of a brand, for better or for worse.

Tuesday, October 13, 2015

What Makes a Brand Vulnerable?

I read, with growing contempt, a passage about the reasons that customers abandon a brand to which they have been loyal for years in favor of an “upstart” brand.  It was an extremely superficial and narrow-minded swipe that largely seemed to exonerate the brand for the very behavior that caused customers to abandon it.

The rationale for “customer abandonment” was that customers had no loyalty, they were unwilling to pay a higher price, the were unwilling to undertake additional difficulty to obtain and service the product, they were unwilling to compromise on their needs and accept a product that was functionally inferior to what competitors were offering, or in some other way to sacrifice their own welfare to support a brand that failed to serve their needs.

For each point in the brief list of reasons, I couldn’t help wondering why a brand should expect customers to remain loyal to the brand’s interests while the brand pointedly ignores the customer’s interests. After all, the only reason a person purchases a product is because they have a need to fulfill – and the only reason they purchase a given brand is that it is better than all the other options.  When another firm offers a better proposal, customers take it – and I don’t believe that should be seen as a failing of a customer, but as a failing of the brand to serve the needs of the customer.

The foremost complaint, as might be expected, is cost: customers abandon a favored brand for a lower-cost alternative.   But that begs the question: why does their favored brand cost more?   Is it because the brand is exploitative and charges an unreasonable markup?  Is it because the brand is inefficient and must charge more to cover its higher costs?   Is it because the brand includes unwanted features and services?   All of this is possible – but when a competing brand is able to sustain a lower price and customers who try it do not return, it becomes not only possible, but probable, that their previously favored brand is doing something wrong.

Another leading complaint is customization: customers abandon a favored brand for one that better suits their individual needs. Again, it begs the question: why does their favored brand fail to suit their needs?   Is it because they believe customers will accept a less suitable product for a lower price?   Is it because they believe that customers don’t really want the features and qualities the competitor offers?   Is it because they are unwilling to change their own product or processes when the needs of the market have changed?   When customers abandon, these are all possible causes.

Five or six other qualities were listed (some of them were redundant, others seem entirely frivolous) – but in each case the question is essentially the same: the firm is not delivering a solution of acceptable quality for an acceptable price, and customers who begrudgingly accepted it for lack of a better alternative abandon when that better alternative appears in the market.

So while I didn’t take much from the article itself, I did come away with a reinforced belief that a firm exists to serve its customers, and in order to attract and retain customers, a firm must serve its customers better than its competitors.   Nothing else matters, and nothing else should matter.

To suggest that customers accept a compromise when a better alternative is available is not only unreasonable, but also quite irrational.   And to cling to the belief that the brand is doing everything right and that something is wrong with the customers who abandon it leads to a suicidal level of complacency.

Thursday, October 8, 2015

Conspicuous Consumption for Introverts

Consider conspicuous consumerism: consumers have perceptions of a brand and perceptions of the kind of person who uses a brand – and so when they choose to use a brand, they choose to associate themselves to the qualities of that brand.    We assume that a person who consumes luxury brands is successful and wealthy.  We assume that a person who consumes economy brands is smart and thrifty.   And so, when we choose a luxury or economy brand, we are making a choice about how we wish to be perceived by others.

This correlates to an extraverted personality type, whose beliefs about themselves are based on the opinions of others.   But I also have the sense that it indirectly correlates to the introverted personality type, whose self-image is based on their internal perceptions, because we internalize the qualities of brand as well.   When it is advertised that “choosy mothers” select a given brand of peanut butter, mothers are meant to feel that if they choose a different brand, that they are bad mothers to their children.

Brand is a cultural and socioeconomic signifier.  The consumption of a given brand leads to a sense of belonging to a social group of people who use the same brand, or distinction from those people who use other brands.   It can be seen even among young children that there is a desire to use specific brands to “fit in” with a desirable group and distinguish oneself from the members of an undesirable group.

But again, while this seems primarily an extraverted mindset it also resonates with the introvert: it is not that they wish other members of those groups to see them in a certain way, but that they consider themselves to be members of some groups and not others, and make their choices based on a judgment that is internal rather than external.

In the present time consumers have many more choices and far less time than ever before.  Even those inclined to consider purchases carefully cannot do so for every purchase.   And since we know that advertising is biased and even critics have their own agendas, we increasingly turn to other consumers as a guide – not their words, which are unreliable, but their actions:  we are attentive to what they do, what they buy, what we use, as their best and most genuine endorsement.

We are constantly bombarded by commercial messaging and exposed to thousands of brands a day, we are inundated and are no longer fully aware of all the information thrust upon us.   That we are unconscious of the way in which we are influenced by external factors does not mean that we are not.

We often make decisions and honestly believe we have acted on our own judgment, not recognizing the degree to which we have been influenced by other sources.  And of course there is rationalization: we act on impulse, emotions, and blind faith - then rationalize an irrational choice after the fact to assure ourselves we are in control, still making choices as an individual.

To some degree, “what do others think of this brand?” and “what will others think of me if I purchase this brand?” influence our buying decisions.   The more likely it is that we will be observed or judged for a purchase, the more that the opinion of others (or our expectations of what their opinion might be) influence a purchasing decision.

But again, for the introvert, “what will I think of myself if I purchase this brand?” remains a valid question and a significant influence of buying behavior.   While such a person cares nothing for the opinions of others, he cares a great deal about his opinion of himself, and is therefore subject to the same influences.