Yelp just scares the crap out of me.  For those of you who are unfamiliar, Yelp is a service where you can rate anything from the local bicycle shop to your CPA.  From Zagat to Trip Advisor, satisfaction ratings on the internet are in vogue. On eBay, potential buyers have three criteria, item, price, and supplier rating.

Imagine the ramifications.  How long will it be before your product or service is rated on the Internet by consumers or professional buyers?  The trend speaks to a need to get ahead of the curve and acquire real time, unfiltered feedback from customers.

All clients tell me they listen to their customers but their approach varies dramatically. Many are reliant on salespeople to do the listening for them. During the downturn and a period of massive discounting, many salespeople have become more tactical and often lack the consultative selling skills required to diagnose and synthesize customer problems.  Having the salesperson as the sole lifeline to the customer is like having the fox in the hen house; it is not as if many salespeople will self report eroding customer relationships when they may be the cause or at least a contributor.

While much has been written about customer satisfaction, many of the most common approaches are impractical for the small and mid-market business.  Electronic surveys are impersonal and yield poor results.  Snail mail surveys (sometimes with a spif or prize) get poor response rates and feel so 90’s.

We often complete client satisfaction and perception audits for clients as a pre-curser for strategic planning.  By far, live phone surveys are the most effective method, as they provide instant, unfiltered feedback and the ability to ask follow-up questions that garner more specific commentary.

While live surveys are more expensive than the other types of survey tools, client satisfaction seems like an endeavor worthy of investment.  Ultimately, the real value of such surveys is the problems you discover and the responses to open ended questions which can be the source of innovation. We never advocate an “annual” survey because you could wait up to a year to uncover customer issues.

Of course client satisfaction is not the end game. It is customer loyalty that is nirvana and is much more difficult to measure. The book “The Ultimate Question” points out that there is one question that is the best predictor of loyalty and ultimately profitability. The question is “how likely are you to refer a friend or colleague” as referring a product or service meets a higher standard than just being satisfied with it.

Like many things, survey tools may be imperfect but querying customers on their attitudes about your company is always better than no feedback at all. “Hey, hey, hey, that’s what I say!”

Ten years ago organic foods represented 1.2% of foods sold in grocery stores. Organics were hot and going mainstream as soccer moms stuffed lunch boxes with the purist carrots and over-priced apple juice.  A decade later only 3.4% of grocery sales are organic, merely a blip on the radar. 

It is often difficult to predict if the latest and greatest is a fad or legitimate trend. Is the iPad merely an extension of the iPhone or is it a game changer? Certainly tech savvy early adopters are already scooping up the new device, but will the masses adapt to a new way of viewing media?

Our mantra in our firm, in my book and in this blog is that marketers must consider converging factors, and no more is that more true than in evaluating fads.  Within a complex socio-economic environment, changing quickly with the advent of technology, there can be immediate swings in demand of a given product or service.

The key to converging factors and understanding trends is the acquisition of current and relevant information.  The ability to understand trends, and convert the opportunities presented into competitive advantage is both art and part science.  Science is required in the accumulation of hard data, whether it be from public sources such as government statistics or through private sources such as market research or trade associations.

The art is focus on customer wants and needs in order to preempt the market with products, services or features that may not be offered or are framed differently. Often innovation is not presented in the formation of a new product but through the delivery system by which it is presented. The iPad, like the iPod before it is not delivering new media but is providing an improved gadget for accessing music, books and the Internet.

Often, the best way to define a new delivery system is to reverse engineer problems that customers have, and try to find new ways to solve them. This requires a significant intimacy where the vendor can gain a deep understanding of how the customer functions.

In the fashion industry, designers and buyers must accurately predict styles as far as a year in advance, and move quickly to capitalize on emerging styles. Whether your source of information tends to be closer to science or art, the successful marketer has their ear to the ground and is paying attention to all the inputs that determine fad or fashion.

As a champion of value creation, I wanted to vomit on Black Friday.  As abhorrent as the massive discounting was, it did serve as a reminder that customer expectations are always a moving target.  For retailers, the bar has been lowered to staying open all night and giving product away at cost.

 For those of us who seek value by providing better service, we must push the envelope with equal fervor. The service you provide is not defined by you or your competitors, but by Lexus, FedEx and Nordstrom. Customers have come to expect extraordinary service on their terms: quickly and efficiently.   Every interaction with a customer offers what one SAS executive refers to as a “moment of truth”. In a single transaction, an organization can have dozens of such moments with a customer.

 Every company should do a “touch point audit” at least a couple of times a year and assess every potential customer “touch”.  To complete such an audit, create a checklist of touch points such as web, email, phone system, reception, customer service,  invoices, packing slips, etc. that represent the opportunity to disappoint or delight your customers. We have all been to voice mail hell, had a customer service call mismanaged or used information on a website that was no longer valid.

 It is useful to have a 3^rd party conduct such audits. Another approach is to conduct customer interviews, peer to peer.  I once had a client send their CFO to meet with a client’s CFO only to find out that invoices were poorly labeled and confusing.  By making some minor adjustments to the design of the invoice, my client improved receivable cycle time with the client by 5 days.  The CFO may not seem like an important person in the value chain, but casting your net wide within clients is an important selling strategy, especially when every nickel is being scrutinized.  The point here is that today’s marketer must take the time to evaluate every conceivable moment of truth and design systems and processes that optimize (my favorite word) the customer experience.

 One source of innovation and strategic advantage is to take emerging technologies from other industries and apply them to your business.  In the 90’s, Dell was amongst the first companies to offer email confirmation and real time tracking of shipments.  As the technology spread, customers came to expect such a level of service for online shipments of everything from flowers to wine.  If you are not moving forward with richer customer experiences, service improvements and automation, you are likely falling behind.

I was once working a conference and had a chance to have lunch with Tom Kelley, the General Manager of IDEO, the nation’s premier design firm that developed the first Palm device, Apple mouse and hundreds of leading consumer products.  Tom was working with Disneyland at the time I met him, and he told me that his engagement centered on improving customer experiences because Disney had concluded that their customers were already spending all they could afford in the park.  Now that is brand power!

Kelley and his cohorts at IDEO are leaders within the field of ethnography, which could also be described as reverse engineering a product based on latent needs. Every company should have a methodology for probing deeply to gain insight on wants, needs and preferences. As Tom’s brother David puts it, “Fish don’t know when they are wet.”

 IDEO’s “Deep Dive” methodology has five steps:

On one project, IDEO researchers observed kids using toothbrushes, and came to realize that young children held their brushes in a fist, because their hands were too small to grasp the toothbrushes that were made for them.  They then created a fatter design for Oral B to meet this consumer need, one that wouldn’t have been communicated through any survey or focus group.

What Kelley refers to as “design thinking” has deep implications for marketers who are looking for features and benefits that create differentiation for their brand.  Even in smaller companies with limited budgets, scientific approaches can be applied to understanding customer’s latent needs.

Marketers should invest heavily in dissecting how clients use products and services and should be hungry for feedback. One excellent tool for gathering customer feedback is Customer Advisory Boards.

One way to convene a Customer Advisory Board is to have a panel at an offsite meeting. Usually a facilitator is used to ask probing questions of the panel. Such panels seem to generate some type of synergistic energy, where the ideas that are developed are greater than those that can be extracted from one to one conversation. Customer Advisory Boards are also self-fulfilling; by taking part in such conversations, customers are more likely to be early adopters of a program or product.

We have all fallen victim to bad service in auto repair shops, retail stores, and restaurants. And then there are doctor’s offices, the land of inaccurate billing, mis-information, apathy and indifference. We consumers may end up with the last laugh, even before the particulars of healthcare reform unfold.

On the website, healthgrade.com, consumers have the opportunity to rate their physicians and the service provided by their offices.  As Zagat is for restaurants, and TripAdvisor to Travel, Yelp is becoming a go to destination for ratings on everything from bicycle shops to CPA’s.

It is not that I am fascinated by Yelp as much as the concept of Yelp. Businesses from construction contractors to service businesses should be both excited and petrified of the repercussions of being rated online. Customer satisfaction ratings on the Internet can be the impetus to competitive advantage or become an onerous wave of customer discontent that is difficult to reverse.

Feedback directly collected by the provider can be a source for innovation, and marketing fodder.  It is critical that every company be proactive about formally gathering customer feedback. If you fail to control the message about your company on the Internet, someone else will control it for you. Organizations should gather customer feedback regularly in order to:

- Gauge the quality of their service level, in the eyes of the customer

- Understand how customers perceive them relative to competitors

- Monitor changes in the marketplace that may lead to continuous improvement/innovation

- Understand customers’ changing wants and needs

 Companies are well advised to assign a marketing professional (internal or outsourced) to monitor postings on the Internet, from both institutional sources and customers. To preserve the optimum positioning, they should actively combat irresponsible or inaccurate postings.  

 As blogs and various Internet sources replace traditional media, perceptions about a product and services can be formed in a matter of hours. It is incumbent upon the marketer to seek positive relationships with customers and shape their online messaging to their strategic advantage.

As we have found a comfort zone with $3.00 a gallon gasoline, one might wonder, are $40 per barrel oil prices sustainable?  We are ripe for further volatility in energy prices and huge price swings at the pump.  Consider the converging factors that drive the price of gasoline:

Energy prices are particularly critical because volatility can inflate many layers within the value chain and prices go up faster than they come down. All it will take is a regional conflict, hurricane or other unforeseen event to create a spasm in this market.  U.S. companies who operate fleets or are otherwise dependant on stable transportation or raw material costs are well advised to project a higher price for energy through 2010 and beyond.

The spasm of the global economy over the last year has completely recalibrated the customer- vendor relationship.   In order for suppliers to fend off commoditization in a difficult operating environment, sales professionals must be adept at renegotiating their relationship with customers.

Purchasing decisions have become more transparent, and in many cases, the primary buying contacts of the past have become irrelevant. The $100k decision that was made previously by a Director is now being made by a Vice President.  At a time when vendors face greater risks with customers, there are opportunities to deepen relationships and have more strategic conversations with decision makers.

In fact, offering up a senior level meeting to discuss providing more value or “reducing the total cost of ownership” is compelling for the customer, and opens doors for the supplier.   Such meetings often serve as a lever to identify latent customer needs that can be converted into improvements that create a more synergistic and sustainable business relationship. The downsizing of the workforce provides significant opportunity for vendors who can effectively replace internal functions that are being neglected, or outsourced.

Effective sales people who utilize consultative style selling techniques are adept at discovering customer needs that they cannot effectively articulate.  During the dot com bust, I held a senior position for a national gourmet food supplier.  One day I fielded a call from one of our Regional Managers who asked if I would take a senior level meeting with him at a major U.S. retailer for which our company had gained little traction. I agreed to fly to Minneapolis with him to try and reign in the elephant.

During the meeting, I asked the V.P. a series of fairly provocative questions such as “what are your corporate initiatives, how are you evaluated, etc.” They were not the type of questions that a supplier generally asks of a customer, and I remember the V.P. being amused and befuddled by some of the questions.  After about 45 minutes of discussion, I came to discover the real problem which was that the customer did not have the capacity (in the form of labor or expertise) to manage our category of products. I asked him “what if we could put someone in your office to manage the category for you?” I will never forget the customer’s response: “you mean you would do that for me?” We left the office with a multimillion dollar order at which time I had the Regional Manager buy me a really big steak. Consequently, we renegotiated our relationship and positioned ourselves to provide an innovative bundle of services in alignment with the client’s existing strategic initiatives.

In a world where headcount is being cut, vendors should not be thinking about how to cut prices, but how they can deliver more service.  The art of selling (and serving customers) is really about listening.  At a time when customer’s awareness of the value provided by supplier is heightened, there is a bounty of problems for vendors to solve.  Regardless of whether you are an insurance company or manufacturing widgets, senior managers need to be proactively meeting with decision makers to redefine their offer.

This is not a time to allow salespeople to own customer relationships exclusively. To do so emboldens them not to share critical customer insights that can reshape the service offering.  As business development slows, salespeople engage in more tactical thinking (such as cutting prices).  This market presents the opportunity to teach salespeople how to diagnose needs and to enable their organizations to provide more robust solutions.

After watching Lance Armstrong’s miraculous 3^rd place finish in the Tour de France, I read his book, “It’s Not About the Bike”, an inspirational read about his triumph over cancer.

I first became enthralled with him during a keynote I saw him give at a conference several years ago.  He told the story of his rise to prominence as the world’s premier cyclist.  Having had cancer spread throughout his body, he had brain surgery in an Indianapolis hospital where he had found one of the few doctors who thought he had a chance to live a productive life.

The day after the surgery, he was visited by his agent, one of his closest friends.  When the agent asked him how he was doing, Armstrong said he was incredible (I am paraphrasing).  The agent, befuddled by his state of mind fired back, “Lance, you almost died, how can you be so positive?”  “I am as low as you can go.  It can only get better from here.  I am going to reinvent myself,” said Armstrong.  And he did.  He went to the only race team that would have him and rebuilt the organization including the team, the equipment, the sponsors and training regimen from scratch.

The Tour de France (cycling 2200 miles through the Alps including several 7,000 foot mountains) is amongst the world’s most grueling sporting events.  Armstrong’s feat of winning seven Tour De France titles in a row may be the most incredible sports achievement of our lifetime. 

Many of us have our own mountains to climb, but we don’t have to wait until we hit rock bottom to do it.  We should be reinventing ourselves and our companies constantly.  Our clients expect it. Global hyper-competition requires it. To re-imagine your business requires the decline and focus of a world champion bike racer.  What will you reinvent today?