Why big data and analytics will not make you the next Apple

Are  ‘big data’ and ‘analytics’ the latest fads?

In my view there is a little too much hype around ‘big data’ and the power of analytics to drive business growth and profitability.  Can ‘big data’ and ‘analytics’ help you improve operations?  Yes – they can help you better staff and manage your call centre  or improve your supply chain or target your marketing better.   Will ‘big data’ and analytics make you the next Apple?  Highly unlikely.  Why does that matter?  Because whilst you are busy optimising operations someone else is inventing a future in which your optimised operations become redundant: think music, think publishing, think mobile phones.  Let’s explore this further.

What are the root causes?

Years ago when I worked in the business planning & analysis team of a brand name drinks company I noticed something interesting.   Managers could drill down and find out which particular markets had failed to make their numbers.  Great – we know which business unit is underperforming.  But why is this unit doing better or worse than expected?  This is where the fun started.  First, there were almost as many opinions as the people we asked.  Second, there was no easy to work out whether the answers given by local management held any resemblance to the ‘truth’.  When I dug further I found out that local management did not know why they had failed to make their numbers (revenues).  When they were asked, the local managers simply came up with the most plausible story.  So month end because a ritual where HQ asked questions and the local managers invented plausible stories.

Lesson 1:  For any complex event there are a multitude of plausible answers and working out the ‘real reason’ is notoriously difficult.

Lesson 2:  Without a sound grasp of the root causes it is difficult to formulate a sensible course of action to address the situation.

What do we do about it?

Lets assume that you have all the data and analysis has been done.  You know there is a problem.  What do you do about it?  Is it easy to get all the actors – who have to play ball – to agree on the course of action to take?  In my experience the answer is no: the more ‘strategic’ the issue at hand the more difficult it is to come to an agreement on a sensible course of action.  Let’s take a look at the recent banking crisis.  Did all the main actors (the western economies) come to a consensus on what course of action to take?  No.  Just take a look at the Euro crisis: why is it that the leaders of the EU cannot agree on the right course of action?  First, because different people have different ideas about what constitutes the right course of action.  Second, the right course of action from an objective perspective may simply not be viable from a political perspective.

Lesson 3: The more that is at stake the harder it is to get all the actors to agree to a single course of action and then act to play their part and execute that course of action

Lesson 4: If you are unable to act decisively and as a single unit then all the data, analysis and insight is worthless

Does it really tell you what you need to know to thrive in the future?

Larry Freed has written an article that resonates with me.  He points out that you need to be clear on what you know and what you do not know.  I’d say that you need to be clear about what data and analytics is telling you and what it is not telling you.  Larry, talking about a website, asks do you know:

  • Why visitors come to your site (to research, to buy, to complete a transaction, to get product support, to learn more about your company before interacting with you through another touch point, etc.)?
  • What influences visits to your site (a referral, a social media interaction, a failure to resolve an issue with a call centre, an advertisement, a news story, a previous affinity with your brand, etc.) and which customer acquisition sources result in traffic that is the mostly likely to convert?
  • What visitors need from your website? How needs differ by population segment or other segmentation that is useful to your business—perhaps first-time vs. repeat visitors, heavy users vs. light users, etc.?
  • What visitors expect from your website? Do men and women have the same expectations? Old and young? Do people who arrived as a result of a Google ad have the same expectations as those who arrived because of a TV ad?
  • What channel your visitors prefer, and are there ways you can influence that preference so they frequent less costly, more profitable channels?
  • How customers view your business, compared to the way non-customers view your business, relative to your competition?
  • How your customer profiles and expectations change in response to market and broader economic conditions? And what, if anything, you need to change as a result?”

Colin Shaw in a recent post makes the same point in a different way.  Here are some relevent extracts from his post:

“Google and Facebook, as Eli Pariser discusses as a part of TED, are engaged in the process of quantifying preferences from the timing and frequency of online clicks, and using this information to alter web content. The stated goal of this practice is to “personalize” the web experience.

A lesson gleaned from Dell’s 1990s laptop boom illustrates the point that preference and value are two different things. Dell let its customers customize all aspects of their computer’s hardware – from screen size to keyboards to RAM – everything but color. Nobody thought to customize color, because a laptop was supposed to be black or gray. However, when color laptops were introduced, sales skyrocketed and we all learned that color was indeed an important factor.

Imagine if Google and Facebook had monitored “clicks.” They would infer that because customers did not indicate a laptop color preference, it doesn’t drive value and is therefore irrelevant.”

Lesson 5: there is an assumption behind all predictive analytics and that is “all things being equal” – that is to say that predictive analytics assumes that the future will be a replay of the past.

Lesson 6: human behaviour is shaped by the ‘structures’ in which human beings are embedded, change the structure and you are likely to see human beings change their behaviour. Think about how the recession (e.g. job losses) have changed the shopping habits of consumers in the western economies.

Why won’t big data and analytics make you into the next Apple?

Apple was busy creating a new future (a break from the past) rather than exploiting the past.  If you take a look at the US automotive industry the big US automakers were busy building and selling gas guzzlers because the analytics showed that these were the cars that Americans were buying.  At the same time Toyota was busy living into a very different vision of the future: hybrid cars and electric cars.   Who was right?  According to the data and the analytics it was the US automakers.  What would you say now?  Toyota?

If you are not inventing the future you can still prosper by picking up the weak signals that point towards a new trend.  I once asked Bob Greenberg (R/GA) the secret of his success and he told me it was his ability to see these trends and act upon them before others.  You might imagine that analytics might help you to spot trends.  My experience of traditional analytics is that the modelers do all they can to strip out the outliers and create a normal distribution so that the maths works – in doing that they filter out the ‘weak signals’ that point towards these trends.

Perhaps it is best to end by remembering what Colin Shaw points out: how would analytics have disclosed that customers wanted to customise the colour of their laptops and that once this option was made available then Dell’s laptop sales would surge.

What do you think?  If I have it wrong then please do educate me.

The missing piece of the customer experience puzzle

What is the missing piece of the Customer Experience puzzle?

Is it customer service?  Hardly, it seems that it is rather old-fashioned to say customer service when the speaker is talking about customer service.  No, the in-term is customer experience.  Is it marketing?  No, whilst it has taken a back seat many authors do recognise the importance of marketing communications (brand, advertising, direct marketing….) on the customer experience.  Is it the website? No, many of us get the need to design websites so that they are attractive, usable and useful and thus contribute to the Customer Experience. So what is the missing piece of the Customer Experience puzzle?

The ‘product’ is the missing piece

Just imagine that you head to the hairdresser and everything is perfect: the name, the location, the ‘store’, the welcome that you receive, the pricing, the staff that serve you….Yet your hair does not turn out the way that you expected?  What impact does that have on your entire Customer Experience?  Turns it negative right?  In this case the ‘product’ has failed to meet your expectations and that one failure has turned what had been a positive experience into a negative.

The product is the missing piece.  Nintendo turned around its fortunes and claimed the number 1 slot when it launched the Nintendo Wii.  Dyson did the same thing for vacuum cleaners.  And of course Apple with the ipod, the iphone and now the ipad.   The product is the reason that the buyer searches you out and becomes a customer.  If you have the right product then the customer will put up with all kinds of interaction hassles to buy that product of you – and come back to buy accessories.

Why do I say that the product is the missing piece of the Customer Experience puzzle?  Because it simply is not mentioned in Customer Experience speeches, articles and conversations.  The assumption seems to be that Customer Experience = Interaction Assessment and Design.  The need to pay attention to the product was brought home to me this week because two products failed to meet my expectations in a big way.  Allow me to share those with you.

A headset that is uncomfortable on the head

I needed a headset and was in a hurry to buy one so I did not do any research.  Instead I popped into a store and picked the first one that looked like it would do the job at a reasonable price.  The headset was well presented.  And I was delighted that some thought had gone into the packaging – making it easy for me to open up the packaging without having to get a chainsaw to cut through the plastic packaging that is all too common for some electronic products.

The surprise came when I put on the headset – it simply is not comfortable and does not fit around my head.  After about ten minutes of using it I took the headset off because it pinched by head – I could feel it pressing into my skull.  I would call that a major design flaw: a headset that cannot be worn because it is uncomfortable. Being scientifically trained I decided to see what other users had to say about the product.  I found it on Amazon and sure enough there were people complaining about the fit/comfort about the headphone.  Will I buy any other product from Creative?  Unlikely.

Twinings Earl Grey tea – new coke / classic coke?

I am a tea drinker and the tea that I drink the most is Earl Grey and as my wife is the one that does the shopping she buys Twinings Earl Grey tea.  I have got used to it and I like it.  Except that now I don’t like it at all.  Let me explain.

Twinings have changed the Earl Grey formula – to my palate it simply does not taste the same.  So I did some research and found that I am not the only one: “Twinings changes its Earl Grey tea formula and customers revolt”.  Digging into it deeper it appears that Twinings have changed the formula for the UK but will stick with the “classic” formula for all export markets.  And due to the customer reaction Twinings will allow customers to buy directly from them via their website.  Here is the Twinings statement and customer comments on that statement – worth reading the customer comments to see how much the product matters.  Personally, I have asked my wife not to buy Twinings Earl Grey anymore – I will give other brands a go.

Conclusion

The product is the centre-piece of the customer experience in the sense that if you get this wrong then it does not matter what else you get right.  You can add all the customer experience wrapping that you want but if the product is weak then you are fighting a losing battle because the flaws in the product noticed and shared with the world – like I am doing right now. I will never buy a Creative product again: if they can’t make a simple headset what can they make?

If you have a winning product with a loyal customer base then think twice before changing that product.   In the customer age ‘products’ belong as much to customers as they do to the companies that make them.  Changing these products without involving the customer base (co-creation, new product development) is asking for trouble.  Customers like to be in control and they do not like to have things taken away from them.  I wonder how many letters, emails and calls Twinings is receiving from customers?

Make sure that you think deeply about the ‘product’ and your customer’s experience around the product.  There is no surer way to build an empire than to create a ‘must-have’ product and then promote this through the right marketing and advertising.