5 Key Questions to Get New Business Ideas Off the Ground


frame We all have great ideas, or work with people who do. How many of them actually go anywhere? Brainstorming is fun, coming up with new ideas is exciting. But to turn that fun and excitement into tangible products or business you need to answer some key questions to frame your idea and give it some structure or foundation to help it get off the ground.

I’ve had the privilege to work with some people who are exceptionally bright, visionary, idea-generation machines.  For some people this is a hobby.  My colleagues tell me I’m good at providing structure to their ideas, so here are the questions I ask, and help them answer:

  1. What problem are you solving, or what possibility are you offering?
  2. Why should your customers care? Why should you care?
  3. What makes you unique, different, or memorable?
  4. What skills, people, or services are you missing that prevent you from presenting a complete offering?
  5. What is your business model? How do you make money?

Answering these questions will tell you if have, or don’t have, a viable business concept worth further exploration.  All five questions should be answered from the “customers” perspecitve and the need that is being filled.  Remember if your business doesn’t have customers, then you don’t have a business, you just have a hobby.

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What’s the cost of NOT listening to customers?


monkey A company goes through a change at the top.  The new CEO comes from a financial background.  The new CEO institutes cost-cutting measures (after all, it’s what they know).  One item cut, all the customer feedback mechanisms – that means print surveys, point-of-sales surveys, and online feedback.  The company saves some money on cutting those items, but at what expense?

Is it a real loss after all?

I’m sure most readers will say that if they stop listening to customers then how will they know what customers want, or what customers think about their products and services, and what behaviors customers are exhibiting?  All valid points and probably true.  But the company could use other measures to track customer behavior such as revenue, purchases by segment, calls to customer support, and sales staff feedback.

What is the hidden price paid?

Think about the message the CEO is sending to the staff.  “We used to gather feedback, now we don’t, so maybe we don’t really care about our customers?”  It just seems natural to most employees to listen to customers.  For those not on the front-lines how else will they know that state of customer relationships?  For those on the front-lines how will they know if their experience is consistent with other front-line employees?  I have seen employee morale at companies like this really take a hit.  This change in policy, and how the void will be filled needs a good explanation from the new CEO to keep everyone on-board.

I’m all for cost-cutting measures if they make sense.  A real business leader needs to be able to balance cost-cutting with customer-caring.  I’ve yet to see a business only cut it’s way to growth…

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Why Customer Feedback Fails


With it so easy to collect customer feedback these days you’d think most companies would have an excellent “read” on their customers.  Unfortunately, that doesn’t seem to be the case (in my consulting practice).  While the increase in customer contact points (a.ka. listening posts) such as blogs, social media sites, online communities, and word-of-mouth have increased the quantity of customer feedback, many companies struggle with what to do with all this feedback.

We can understand part of the problem by looking at the results from a study investigating company usage of customer feedback by Respond (now part of CDC), which showed that:

  • 95% of companies collect feedback
  • 45% alert their staff
  • 35% use insights gained from the feedback
  • 10% deploy a change or improve processes
  • 5% tell customers they used their feedback

So what we have is a lot of activity (collecting feedback) but very little in the way of outputs (changes or improvements).  It is disappointing to see how few companies actually tell customers they used their feedback.  Maybe that is because they did so little with it.

So why so few outputs from customer feedback?

There are several reasons, and unfortunately none of them are as easy to solve as it was to collect the feedback in the first place.  Some reasons that come to mind are:

  1. The feedback mechanisms are poorly designed at the outset and deliver very little in the way of actionable insights.  Referred to as drowning in data, but starving for information.  Often times multiple tools that collect data at different customer touch points are inconsistent in their language rendering the data confusing.  Useless information is collected that only adds complexity to the interpretation of the data.
  2. There is no process outlining what to do with the data once it is collected.  There is no clear owner of the data, there is no accountability to make improvements based upon the feedback, and there is no mechanism to track improvements.
  3. Probably the most important, is the company itself does not have a culture of valuing customer feedback. I once had a CEO tell me that if a customer contacts him directly that his processes have failed!  He did not want to talk to customers directly, and as a result he now had a significant customer relationship problem on his hands.  Part of a healthy customer-centric culture is having clearly understood mechanisms for integrating customer feedback into employee compensation programs.

None of these are easy fixes, but if you truly are a customer-centric company you need to put customer feedback at the heart of your business.  To make sure it all works, keep it simple, make it all consistent, and make it part of your culture.  To accomplish all that you need to do your best to be able to correlate changes in customer feedback (leading indicator) to changes in the way you measure your business (lagging indicator).  If you don’t, make sure there are plenty of flotation devices around so you don’t drown in your data.

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What Divorce and Customer Loss Have In Common


Stop Believing What Your Customers Tell You

A recent article on Marketing Sherpa demonstrated the difference between what companies (vendors) believe are the reasons customers leave, and the real reasons customers leave.  While companies cite pricing as the top reason, customers say they really leave because of customer service.

Why the Difference?

The article sights two great reasons for this difference.  First, since it’s usually sales reps that report the loss, it’s easier to report price as the issue since it’s beyond their control.  Second, it’s easier for customers to claim price as the issue as it’s harder to dispute and doesn’t cast blame on sales.

Divorce and Customer Loss

I can’t find the exact study, but when asked why a couple is divorcing, an often cited reason is financial stress.  When researchers dove deeper with the individuals to get to the real reason for the divorce it’s usually not financial.  It’s just that it’s easier to say that, it’s less embarrassing than stating infidelity or abuse as the reason.  Same thing is happening here.  It’s just easier to use price as the excuse.

It’s hard for a customer to tell you straight-up that it is poor service that pushed them to leave.  It’s hard because that kind of information may lead to confrontation, defensiveness, or hurt feelings with the sales rep.  These are all experiences the customer doesn’t want to pile on top of their existing frustration with your company.

More Proof

As a customer researcher, I am often able to show companies that their beliefs around customer loss are just not real.  By conducting customer satisfaction interviews in the B2B space I have often showed clients that service and support were significant issues for clients. It can come as a shock since the company previously believed they had no problem with their sales and support staff.

In working with credit unions and member (customer) loss, you will find that many members will cite “moved out of area” as a primary reason for leaving the credit union.  Now I know the housing crunch is brutal, but there really are not that many people moving out of the service area of the credit union.  It’s just easier to give that reason when you are face-to-face with the teller when you go in to close your account.

Good News, Bad News

As the article states, the good news is that customers are less likely to leave because of price.  Also, excellent customer service can lead to stronger customer loyalty and a price premium for your company.  The bad news – if you don’t really know what your customers think of your customer service you may be headed for a trial separation or a divorce…

How to Get Rave Reviews on Your Customer Reviews


It’s no surprise that a customer will eagerly look for a review or a recommendation prior to making a purchase.  It’s not a surprise either that the Internet has made that so easy.  Nielsen tells us that consumer recommendations are the most credible form of advertising.  78% of us trust consumer recommendations above any other form of advertising.  What I find more interesting is that only 61% of us trust consumer opinions posted online – a 17% difference.

Why the difference you ask?  Even if you didn’t ask, here is my take:

“It comes down to trust, and the most trusted source for information about a company and it’s products for consumers comes from someone like themselves. (AdAge)”

So the key to getting rave reviews on your customer reviews rests in your ability to provide customers the ability to determine how much the review writer is like themselves.  So some do’s and don’ts:

Don’t:

  • Have your marketing people write your reviews, or put up a “sponsored” review that reads like a marketing message.  Consumers can see through that “overly glowing” review and will not trust other positive reviews on your site, or any other messaging for that matter.
  • Remove negative reviews from your website.  Consumers understand that not all reviews will be positive.  Have no negative reviews can often raise warning flags.  Let customers see the nature and content of the negative reviews.  Give your customers credit for their ability to discern what is fair.
  • Don’t reply to negative reviews with excuses.  Instead, reply by acknowledging the customers complaint and respond with a fair solution.

Do:

  • Summarize the scoring of your reviews and let customers see the distribution of reviews.  Let them see if all reviews were 5’s and 4’s or if they were all 5’s and 1’s.  These two views of customers reviews for video game consoles tell different stories.  The one for the Wii has a much higher percentage of 5’s and 4’s and a lower percentage of 1’s than the one for the Xbox.

  • Let reviewers tell customers a little about themselves so the customer can know how much the reviewer is “like themselves.”  Your products/services can’t be all things to all people.  The review format from Sierra Trading Post does a nice job of letting a customer know more about the reviewer by asking them to describe themselves and their “gear” style.

  • Let customers vote on reviewers content, as well a flag potentially problematic reviews for things such as profanity, spam, duplication, content problems, etc.
  • Use customer reviews to improve your product/services, and let customers know it was their reviews that helped.

Remember to focus on building trust, demonstrating transparency, and being an advocacte for your customers (doing what’s best for your customers) and you’ll be well on your way to getting 5 stars for your reviews.

Giving Senior Executives More Insight from NPS


blue_bulb1.jpg  The Net Promoter website describes the Net Promoter Score (NPS) as providing “the single most reliable indicator of a company’s ability to grow.”  There has been an on-going debate about how true this statement is and the real value of NPS, particularly for senior executives.  To better understand some of what the debate is about, check out this post at Marketing ROI and the posted comments.

I have been using NPS with clients for a couple of years now, and I’m not convinced yet that it is the best indicator of a company’s ability to grow.  The real work is figuring out what drives the likelihood to recommend for each business, and then measuring the actual recommendation behavior and corresponding purchase behavior of customers.  That is more than a blog post, so on to what you can do right now to get more value out of your NPS work…

As a quick review, NPS is calculated by first asking the following question with a 0 to 10 point answer scale:

“How likely is it that you would recommend (Company X) to a friend or colleague?”

Then you take the percentage of customers who are promoters (10’s & 9’s) and subtract the percentage who are detractors (6’s – 0’s):

% of Promoters – % of Detractors = Net Promoter Score (NPS)

To get additional customer insight, I also pair it with the following question:

“What was the most important factor that influenced your score above?”

What I like to present to senior executives is a summary of the answers to this question from the detractors.  Yes, they also get to see the comments from promoters, but they are already aware of this perspective.  There is often more value found in reading the detractors’ comments.  This tells executives what customers don’t like about their business or products and services.  This feedback contains the real voice of the customer, and often they are pretty blunt comments.  We all like to know what we do well, and we need to keep doing those things; but real insight, and real growth often comes from improving what is really wrong with a business.

Who Really Shapes Company Reputations?


all_for_one.jpg  According to a recent study by Deloitte not only is there a significant amount of information on the web to aid purchasing decisions, but these reviews also shape company reputations.  Well, that’s really no big surprise to readers of this blog.  According to the survey:

62% of consumers read consumer-written product reviews on the Internet. Of these, 82% say their purchase decisions are influenced by these reviews, either influencing them to buy a different product than the one they were initially considering or confirming the original purchase intention.  In addition 69% of consumers who read reviews share them with friends, family or colleagues, thus amplifying their impact beyond online.

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What I did find interesting is this quote from Deloitte’s Pat Conroy in their press release:

“This increasing market transparency can adversely impact the margins, market share and brand equity of consumer products companies,” said Pat Conroy, vice chairman and US consumer products group leader at Deloitte & Touche USA LLP.  “In the past, clever marketers and advertisers shaped brands, but now consumers are increasingly empowered, everyone has a voice, and information and opinions are instantly dispersed. Consumer product companies need to determine how best to capitalize on this new landscape. Clearly, there will be consequences for those who don’t.”

Is it really ‘increasing market transparency’ that is adversely impacting the margins, or is it a lousy product or a lousy customer experience?  Marketing transparency has always been there, it just happens much faster these days as the result of all the online tools that speed up and increase access to word-of-mouth.  Companies are now faced with developing better products and better experiences because “the word” can get out there faster and be “heard” by more consumers than ever before.  Marketers need to understand that shaping brands is now a “partnership” with current customers where their voice should be heard, because potential customers are certainly listening.

This reminds me of the quote by Morris Hite in 1988:

“Nothing will put a bad product out of business faster than a good advertising campaign.”

So maybe know we need to change that quote: “Nothing will put a bad product out of business faster than honest word-of-mouth.”  So companies take note  – do your customer research, create relevant products and great customer experiences, and welcome this market transparency.  It could be the best marketing campaign you ever created.