Hurricane Irene - Lessons for Business

Hurricane Irene is moving through eastern Canada and out to sea just as fast as the storm moved into North Carolina, New Jersey and New England, leaving behind a mess to clean up. Over 20 people died in only the third hurricane to make landfall in New Jersey in the past 200 years. There was an estimated $7 billion in damages; however, it could have been much worse. As bad as it was, some of the predictions and fears for destruction in highly populated areas were not realized. This photo is of flooding in New Jersey.

What lessons should business take from this? Our view is that predictive metrics played a key role in reducing the deaths, injuries and destruction. The forecasting of the Hurricane Center was very accurate and timely. People had warning. Flights were cancelled. Airports were closed. Transportation systems were shut down. Every attempt was made to save life, property and infrastructure. People throughout the region were asked to evacuate low lying areas, for example. Public officials were able to predict where flooding was likely and thereby prevent loss of life. Damage occurred, to be sure, but the precautions reduced the impact of Irene significantly.

What we have advocated for businesses is to have internal predictive metrics that can predict behaviors and outcomes with customers. One prime example from our presentations and book is the idea that if popcorn is less than 10 minutes old in a movie theater, it will taste fresh and the customers will like it. That metric was derived through research and used to predict how customers would react to the popcorn based upon how old it was. We are not comparing the impact of Irene to popcorn, but the idea is that predictive metrics can save disasters and minimize negative impacts for businesses.

Developing predictive internal metrics for businesses is both an art and a science, just as it is for hurricanes, but it can be done. Our book outlines the basics of approaching this problem. For every issue that is important to your customer (like the freshness of the popcorn in a movie theater), there should be at least one internal predictive metric (such as a kitchen timer that is set for 10 minutes near the popcorn popper in the movie theater) that can warn the business when things are going awry, so you can take action (throw the old popcorn away and pop another batch), hopefully before your customers notice a problem. To see a couple of videos about this process, click here for Part 1 and here for Part 2.

Are you prepared for disaster? If a Hurricane Irene type of event were to approach your business, what precautions would predict that you have minimized potential damage to you and to your customers? What internal predictive metrics would you monitor? What actions would you take?

As we also discuss in the book, the House of Quality and other techniques can be used to not only find and document those predictive metrics, but also to decide which ones to act upon and how. We will leave that discussion for a future blog entry.

Does Higher Customer Satisfaction Always Mean More Sales?

In brief, the answer is “No!” – You must do more than merely drive customer satisfaction scores up. As an illustration, consider the Cadillac Brougham of the 1980s. The design of this automobile had virtually no changes from 1978 through 1992. During most of those years, I was working at Cadillac. The result? The people who loved that car kept buying it, through several lifetimes of automobiles (typically 2 to 5 years of ownership). They tended to be very loyal. During that ten-year plus span of time, the average Cadillac buyer aged almost ten years as well. Customer satisfaction was going up for this car. Those who lived long enough bought several and loved each one. However, sales went down!

We were experiencing a diminishing, perhaps dying (literally) market of customers who loved our product. Thus, despite the notion that satisfying customers leads to increased sales, it is not merely the driving up of the scores that delivers sales. You must also have exciting products that attract and please new customers as well. By the time the Brougham was significantly altered, many of the original target market had died. It had been 14 years. Even though these buyers loved that car, we needed to attract a new audience to maintain or increase sales.

Thus, increasing customer satisfaction scores is not enough. Remember, these scores come after the fact, sometimes one or more years after purchase. They can testify to the initial purchase process and design, as well as customer service. However, what you want is increasing scores AND increasing sales. This necessarily means product enhancements and service enhancements to attract and satisfy new customers, with new “pains.”

Have you experienced the phenomenon of increased customer satisfaction and decreasing sales?

Pain Killer Marketing: Egypt, the Battleship Maine and Market Research -...

Pain Killer Marketing: Egypt, the Battleship Maine and Market Research -...: "The Battleship Maine was sunk in Havana harbor 113 years ago today, sparking the US public to get behind the Spanish-American war. Was US pu..."

Egypt, the Battleship Maine and Market Research - A Question of Ethics?

The Battleship Maine was sunk in Havana harbor 113 years ago today, sparking the US public to get behind the Spanish-American war. Was US public opinion galvanized by the "yellow press" over an accident in a coal bin?

We all watched in wonder as the events in Egypt unfolded in recent weeks. What was remarkable for a lot of reasons was the power of social networking. The deaths and beatings of individuals became symbolic of the experience of the population, they took on much greater meaning than merely individual incidents.

Social networking is obviously extremely powerful. However, what is the power of market research done on the social networks? Target marketing for advertisements and new contacts has been prevalent for some time, but are there any ethical concerns? Can we adequately measure emotions and their representativeness or strengh through this medium? Can we manipulate it to our will?

I believe this Dilbert illustrates one of my concerns well: should research be done because it can be done, or are there other issues at stake? Is there a moral high ground in this discussion?

I couldn't help but wonder, as the events in Egypt unfolded, what if someone were to gain enough information about each of us through our computers (websites visited, items purchased, videos searched for or watched on YouTube) to be able to activate our "hot buttons" to their own ends? What information should be sacred, if any? How would we choose to protect it?

Does entering the "world wide web" abdicate personal privacy through the act of accessing the web itself? Some might say, "Yes. Having access guarantees access by others to you."

There are laws and practices in place in market research for "informed consent" and similar ethical standards that apply to performing research activities with humans. Does the same logic apply to what you can do with data they provide by accessing websites or social networking sites?

What about the images they see or access on the screen? We have all received emails and images that were later shown to be incorrect or false by Snopes.com and similar services. The only way to prevent history from repeating itself is to study history, to learn and listen to the past. "Remember the Maine" was the cry in the US in 1898. The sinking of the Battleship Maine (and the 266 American sailors lost) in Havana served as the catalyst for the Spanish-American War. It was later shown that it was somewhat dubious that the Spanish had anything to do with the sinking, but that was 13 years after the war. I am somewhat sensitive on this issue as I lost a great great uncle on board the Maine. Was he killed in an accident (likely) or an act of war?

So, what are we to do to avoid being misled or abused by researchers or marketers? To be sure, the Egyptians had many reasons to reject their leadership. The millions of Egyptians who accessed the information about demonstrations on Facebook felt empowered to act. What if they had been researched and empowered in a different way? What would be ethical to find out about them, if you wanted to do so? What should we be allowed to access as researchers and what should be protected? How would we guarantee protection?

The ART of CONVERSATION

The Art of Conversation

As a marketer and market researcher, I often wonder about the effectiveness of various communications techniques. Obviously, the marketing and advertising world is going through very rapid changes these days. Many of us are struggling with measuring the effectiveness of social media advertising, finding the correct messaging for online media and similar issues. My training was "in the good old days" of telephone, mail and face-to-face customer contact. Are any of those techniques as effective today as they once were?

My specialty is "Voice of the Customer" techniques and executive interviews. I often ask myself, what happened to the art of conversation? Very little emphasis is given to this topic in major universities these days (I teach at a couple of local universities in San Diego). Is this a lost art? Does anyone care? I think not.

One of the highly-touted benefits of Blogging and online conversations is the interactive nature of the discussion. There is an ebb and flow, point and counterpoint. However, I lot of what I see and read seems impersonal, sometimes aggressive and downright nasty. Does the level of animosity expressed online translate into interpersonal conversations face-to-face? Sometimes I think the anonymity of "talking" online creates distance that enables people to express some thoughts much stronger than they might in person.

So, what about the Art of Conversation? There was a television commercial for an airline a few years ago that said the message of this piece well. The brokerage was losing clients. The CEO called all his executives into the board room and talked about losing a client that had been a client and friend for over 20 years. He said he was not going to call the client, but get on a plane a visit them, face-to-face. He handed out plane tickets to everyone else in the room and asked them to visit lost clients. Basically, their job was to listen...and learn! They were to be humble, to appear humble in their dress and body language. They were not to be "experts," but to listen to what the customers had to say about their dreams and how their expectations had not been met by the firm. I loved that commercial! Have we been teaching our market researchers how to listen well, with their whole bodies? Do marketers and ad men use customer language in their messaging, as if they were speaking to customers face-to-face?

Perhaps I am a bit old fashioned, but I strongly believe that face-to-face conversations will always have a valued place in the marketing world, despite the world of social media. What do you think?