How are you listening to your clients?

 

Photo byAgentAkit

The reading material for our Marketing Class this week included an article titled: “The customer doesn’t know best; you do“. As this is something I mentioned in my blog a number of times before, I must admit I was intrigued. And I wasn’t a disappointed.

The first point of the article deals mainly with customers’ perception around prices:

Customers always want lower prices, but marketers should rarely listen. And our tough times don’t warrant exceptions

The writer, Anne-Marie Fink, gives a number of examples where price reductions caused a decline in sales due to branding issues. The interesting examples are those in which surveys said that customers will be willing to pay a certain amount for a product but actually paid a lot more in the stores. This did not come as a total surprise to me. Surveys are problematic. But more than that, asking people to give an estimation of value is problematic. A survey takes a certain point in time and asks the surveyed to appreciate how much he will be willing to pay in the unknown future.  As Dan Gilbert points out in his fascinating TED talk, human beings are really bad at doing this, because value is situation dependent. Perception of value of a certain product changes according the circumstances – mode, what other products I am buying at that moment, was is my total sum of expenditure and more. These things are more important than what a person says he will do in some anonymous survey.

Another great example in the article relates to another point I discussed here: competitive advantage. Fink describes fast food restaurants’ attempts to introduce health food into their menus because this is what customer said they wanted. Almost all of these attempts (usually adding some kind of veggie burgers or grilled products) failed even though in the surveys customers explicitly said they would like to see healthier menus. Why?  Because you don’t go to a fast food restaurant to eat a healthy meal.  These chains lost sight of what their competitive advantage was. Off what they were offering and insisted on listening to the customer instead on focusing on themselves and their advantages.

All of this does not mean the surveys are useless or that we should ignore what customers are saying. I think it is more important to understand how we are listening to our customers and what kind of questions we are asking. In the case of consumer behaviour and price sensitiveness, the best prediction is probably the wallet and we should listen to it very carefully and adapt our “market research” to it.

So, how are you listening to your clients?

Elad

Framing and Semantics

One of the concepts I lay out in my E-book, “Playing It to Excellence and Happiness in Real Life – Five Concepts I Learned by Playing Basketball, Working and just Living” is: communicate. I try to explain that people who communicate on a regular basis have a better chance for reaching happiness and excellence. I do that by talking about a number of important characteristics of communications. One of those characteristics is semantics. In a lot of situations, even thought you thought you were saying something, people hear what they want to hear. And it is usually not what you wanted to say. This I why you should be very aware of the way you phrase yourself. The upside of this is that if you phrase yourself well and carefully plan the framing of your communications it will help you to reach almost any listener.

In the last few days I have been reading Nobel Prize winner Daniel Kahneman‘s book (with co-authors) called “Rationality, Fairness, Happiness”. This book is actually a selection of writings by Kahneman and others regarding different concepts of behavioral economics.

What you discover when you read this book is that humans operate in a very weird way and are prone to different effects and biases. On of the more famous is the “framing effect“, which in a nutshell says that the way a question or statement is framed or phrased, by it self, can alter the result of human behavior and choice.

The book actually shows a lot of examples where people responded differently to the same situation because of different framing. One very simple example is a research regarding the language doctors use with patients. If a doctor says to the family of a patient that there is a ten percent chance that the patient will die after a certain treatment the family will react one way while if he says that the treatment has ninety percent survival rates, the family will react differently, although the meaning is just the same. The chances that they will put the patient through the treatment changes depending on the way the doctor presents it to them.

When you think about this regarding communication in general and semantics in particular, you understand that we don’t always give the appropriate emphasis to semantics and phrasing. That is too bad, because they have a lot of uses. What we need to understand is where to use them and how.

One example is in sales. In the book, they explain how people were more prone to buying insurance depending on the way it is displayed. When you build a sales pitch or brochure, do you think about it using the framing effect? Another aspect is the way discounts or sales are presented and the effect they have on the person’s decision making process. Do your sales take that into consideration? As it is getting harder and harder to get the clients’ attention, isn’t it important to invest time and thought in how we frame what we try to get his attention with?

A second example is surveys. The book shows many examples where different answers were given only because a question was split into two questions or the order of the questions had an impact of the answers. Now, surveys might not be perfect because of the framing effect. But they are still a very important and widely used tool. The question is, when you form a survey of your own, or order one from a company, do you ask why the questions were put the way their were or why is that the order of the questions, do you demand that the survey will not use framing effect in order to make sure that it doesn’t give you the results you want but the real results?

The problem is most of us don’t have the appropriate training to use this kind of thinking. But we can teach ourselves and demand those who supply services to us (like in the case of surveys) to use it. I think that people who will master these concepts and use them in business and personal context will have great advantages. We have a lot to learn.

Elad

Understanding the customer

A few days ago, Guy Kawasaki of “How to Change the World” blog, interviewed, Dave Wanetick, the managing director of IncreMental Advantage. The headline of the interview was “The Art of the Customer Surveys“. In a nutshell, Wanetick claims that most costumer surveys are actually useless because physiological and practical reasons influence the outcome of the surveys and make them obsolete. Actually Wanetick argues that the most efficient survey should consist of one question:

According to Dave, some of the most revealing customer surveys can be quite simple. Dave cites Fred Reichheld’s idea that one can distill customer satisfaction surveys down to one question:

“Would you recommend our service to your friends and colleagues?”

This is a powerful question because it gauges whether or not customers like your product enough to put their own reputations on the line with their friends and colleagues.

I must admit that a lot of what I read in the interview made sense to me. It is true, some people don’t like filling out surveys. There is ample importance to the framing effect in surveys. Hassling customers might irritate them. But do all these facts lead to the conclusion the there surveys are ineffective and should not be used?

Every novice business man knows that adapting the product or service to the client is very important. Some writers like Peter Drucker and Craig Stull, Phil Myers, David Meerman Scott, talk about the importance of understanding the “non-clients” and thier needs. So how are business supposed to do that without surveys? I was not convinced that you can understand everything you need about the client (or non-client) by just one question.

I know that I get a lot of surveys. Some I disregard. But some I fill out. When I do, I try to be as honest as possible. If I fill that the survey might be of relevance to me, I really try to give them my honest opinion. Maybe they will improve because of me – would that be great for me? I know that one time I filled a survey for one of the MBA Schools and actually won an I-Pod for doing it. I answered that survey honestly and it made me happy to be rewarded for it.

How many surveys did you fill out? Did you take it seriously? I guess that most of you will answer that they did. I think most people will.

So, what is the conclusion? I think surveys are a tools. When using a survey, you should know its limitations. You should know that it might help you reach a decision and that it isn’t a tool that makes the decision for you. You should be aware of the technique’s problems and be true with yourself by using it so it will produce accurate results and not the results you want it to produce. You should honor your customers, especially the ones that comply and fill it out.

Most of the tools we use to evaluate process of humans are flawed in some way. Tests like SAT or GMAT, are not always accurate. When I try to evaluate an instructor giving a class, my evaluation will be a little different from my colleague’s evaluation, even if we took the same training. It does not mean we have to stop using it or that the evaluation does not hold insights. It just means we should not fall in love with the tool and use it wisely.

Elad