Tag Archives: customer relationship

Customers-first philosophy: Success of e-commerce giant Alibaba

May 3, 2015 okaya88 Leave a comment

The chairman and CEO of Chinese e-commerce giant Alibaba has a deep appreciation for the role of consumers in navigating a business. Alibaba’s social responsibility includes providing 0.3% of their revenue to environmental protection. His priority list, even surpassing social responsibility, includes businesses concentrating on Alibaba’s beliefs and hopes, the reasons as to why they got into this business and their approach in satisfying consumers, in contrast to focusing solely on profits and margins.

There are vital lessons that other businesses can learn from Alibaba’s customers-first philosophy:

Businesses need to think like their customers.

Many technology innovators accentuate technology and place products above everything else, thus loosing sight of the target audience. Alibaba states that they look at technology through the eyes of their consumers. The great achievement of Alibaba thus far has been achieved through placing consumers first. This can be seen by their acquired knowledge and understanding of the Chinese Market, which has had an effect on their approach to even their product variety. They help small businesses and are adamant about caring more about them than caring for yourself.

“Focus first on customer satisfaction and second on teamwork. Shareholders’ interests come third because they are outcomes, not inputs.”

-Jack Ma, Alibaba chairman and CEO

Alibaba makes it effortless for small businesses to use their website as they have constructed a customer-oriented design that makes it more easy for consumers to seek and buy items on this website.

Businesses should treat their consumers like a crystal ball.

Alibaba is dedicated on having a long-term vision for their business. The company has previously stated that this long-term vision requires them to not be sidetracked by transitory of the economy as it will have its ups and downs.

Alibaba achieves this by being focused on the consumer and watching their actions as they have also predicted the rise of customer-to-business (C2B) corporate strategies for the near future, and predict that consumers will be empowered resulting in fully commanding their needs to companies.

Businesses must create value for their consumers.

Alibaba acknowledges that consumers are more then customer who buy products. The consumer of today is a member of society that is concerned with their environment and social outcomes.

“Your business model, it should create value and be good to society.”

– Jack Ma, Alibaba chairman and CEO

Companies must have this wider lens perspective when it comes to consumers. In this new era of empowered consumers, they select the brands that demonstrate the same ideals that support theirs, making them the values-driven consumers.

References:

Najberg, A. (October 20, 2011) “Jack Ma: Business Model ‘Should Be Good to Society’” The Wall Street Journal (WSJ Blog) Web. http://blogs.wsj.com/digits/2011/10/20/jack-ma-business-model-should-be-good-to-society/

Claveria, K. (December 8, 2014) “What CMOs and CEOs can learn from Alibaba’s Jack Ma” Visioncritical.com Web. https://www.visioncritical.com/jack-ma-customer-centric/

Photo credit:

<http://graphics8.nytimes.com/images/2014/09/19/business/dbpix-alibaba-jackma5alt/dbpix-alibaba-jackma5alt-blog480.jpg>

<https://communities.intel.com/servlet/JiveServlet/showImage/38-16958-235873/age+of+the+customer.png>

Business Case

Loyalty through Social Networks

May 3, 2015 okaya88 Leave a comment

Due to the drastic transformation in the media landscape Social Media has surfaced and has become widespread as it is growing rapidly in the last couple of years, totaling the number of active social media as of January 2015 to account for 2.08 billion worldwide according to Statista.com. Businesses’ accelerating investments in Social Media, especially in in Facebook, is the status quo right now. Yet, a lot of firms still do not perceive social networks to be a vehicle for gaining customer loyalty. These companies perceive social networks to be a source for generating brand awareness.

A different view was added to this discussion of Social Media by researchers Gamboa & Goncalves (2014), who did a case study on Zara and their use of Social Media as a source towards building and enhancing customer relations. On the social network site Facebook, Zara classes in their respective category of fashion brands, as having one of the largest number and most valuable fans. This study showed that companies could increase customer loyalty through building upon important factors such as trust, customer satisfaction, perceived value, and commitment. Fans as well as non-fans of brand on Facebook were used in this research and it showed that relations are more improved for Facebook fans of the brand compared to the non-Facebook fans, showing that the most important cause of loyalty is customer satisfaction, as seen in Table 1 below.

(Table 1: Gamboa & Goncalves , 2012, p.714)

Personal Relationship Focus

For businesses, the greatest task is forming a personal relationship with the consumer, similar to the interaction of them with their friends on Facebook. A company’s Facebook brand page must be a “place” where consumers can dialogue with the brand as well as be part of a community. The old-school era of only focusing on commercial goals has ended, as the important of a relational context is a definite requisite for companies to survive in Web 2.0.

Customer satisfaction is crucial

Businesses that desire to attain customer loyalty must have a priority in seeking customer satisfaction. Customer satisfaction is the most important driver with the most positive (direct and indirect) effect on fans’ loyalty. The social network site, Facebook is a communication channel that can increase consumers being more satisfied, and as a result of this, can create deeper client-brand relationships. However, as customer satisfaction is an outcome of the consumer being fulfilled of created expectations, brands on the social networking site should be quick and transparant in answering their Facebook fans’ questions. The most crucial element is frequent interaction as well as maintaining an active and dynamic presence on this platform.

Tools and practices

Being dynamic and interactive with fans are essentials in making consumers come back, trust a brand, and be satisfied. Creating content (such as quizzes or poll questions) that encourages fans’ active behavior is also essential, and it can also serve as a mean to gaining knowledge about customers’ opinions regarding the brand.

Facebook to serve as a stand-alone tool. Customer questions or critiques should receive answers very quickly. When consumers are forced to use other methods to come in contact with the company, it will increase customer dissatisfaction.

Content relevance of the brand page is important. Only sharing brand advertisements or internal information not be effective. Content sharing such as news, funny updates, suggestions suggestions for the weekend or holidays are great ways to achieve engagement.

Identify target group and their interests. Specifically targeting consumers while sharing content will increase customer satisfaction, trust, and commitment.

Create exclusive content. Such as games or applications for Facebook fans. Consumers love campaigns that propose advantages to them and posting exclusive content via Facebook will create alertness of the Facebook Fans to the brand page and as a result they will become loyal.

Always be professional, yet never boring. Brans will lose fans if they consistently post advertisements, post too much, too few or post irrelevant information.

Brands can communicate with consumers by by integrating Facebook into their marketing strategy. The expectancy is that Facebook will maintain and even increase its effect by 26%. In this current landscape of web 2.0 and social media with substantial growth margins, businesses should start being very active on Facebook by maximizing the benefits of it and by captivating brand loyalty in the online world.

Reference: Gamboa, A. M., & Gonçalves, H. M. (2014). Customer loyalty through social networks: Lessons from Zara on Facebook. Business Horizons, 57(6), 709-717.

Business Case

What the consumer wants, the consumer gets.

April 26, 2015 okaya88 Leave a comment

When a company’s vision is to offer “Earth’s biggest selection and to be Earth’s most customer-centric company”, they’ve got some big shoes to fill. Due to the popularity of the term “customer-centric”, everybody’s been claiming they’re dedicated on the customer, however, are their real-time activities supporting this claim?

Amazon’s Vice President of External Payments, Patrick Gauthier is not in agreement with the statement that everybody is truly focused on the customer, as too many are obsessed by the industry lingo, too fixated on generating the next big cash cow, and repeatedly overlooking who’s voice it is that they are representing, namely that of the consumer and the merchant. Payments and commerce leaders should analyze the situation with a customer-first mentality in this industry in order to enter into true innovation.

“Start with the customer and work backwards.”

Most companies claim they begin their processes with the consumer in mind, however in amidst of the translation, the lingo which is used in the industry – that of the insiders, in essence keeps innovation away from the vision, as the true message appearing in the lingo of the consumer is lost in translation. Gauthier perspective, also shared by payments, commerce and retail experts at Innovation Project 2015, proposes a backward motion of customer-first mentality in seeking what a business model needs to solve. For example, every Amazon product manager is known to write and internal press release, which focuses on the problem of the customer and the current solution they are offering and how this offering fails. Following this, the managers write down every single benefit that the new product will provide to this problem, and will not stop until the benefits will be of interest for the customer. They stay that the money will follow once the company focuses on what the customer truly want. In this new era, having the perspective of a customer-focused company is surpassing having a financial perspective. Starting with the consumer in the back of your mind and going backwards, thus focusing on what a company believes the business model is intended to solve, as this will deliver diverse methods of serving those customer needs. Innovation can occur quickly, but more importantly, instead of focusing on the speeds, it is more significant that innovation happens right as well as for the right target audience.

How to approach this according to Gauthier:

Being part of more dialogues with outsiders
Connecting to the merchant and consumer
Having more conversations that are focused on actual consumer needs
Conversing less regarding payments
Conversing more about the commerce experience

Drop the industry jargon

When the industry jargon is dropped, a focus can be given to consumer identity and true innovation, and in turn enables a full customer experience. Companies can only provide this by forming an open setting of transparency, enabled through conversations. Listen and acknowledge who the consumer is, and it will answers how the consumer prefers to pay will come to the surface. This in turn has the potential to open gateways to a richer commerce experience for the company as well as the customer.

Botch the customer and the merchants in essence want be part of a commerce experience, in contrast to a payment experience. Gauthier states that companies need to focus less on payments and more on the individuals that are making the transactions. He discusses identity and economics in the same sentence, as he believes it is pivotal.

“Who I am [as a consumer] is pretty key to what I’m going to do. Today, the economics is very centered around how I pay. And maybe at some point the economics should be centered, or certainly migrated, not with just so much just how I pay, but who I am. The who I am, and the willingness to share who I am — what I choose to share — should potentially change the economics of a transaction.”

– Patrick Gauthier, Amazon’s VP of External Payments

Both identity and payment experience are part of the commerce experience. Yet, from the merchants’ side, the occurring conversations focus on the payments side. The downside of this occurrence is that it diminishes the key role of the retail and commerce experience during the transaction stage, loosing out on the important achieving merchant-centric experience.

The industry is battling with conflicts due to having opposing viewpoints, on how payments and commerce ought to be engaged into the consumer experience. This tension of sort is a result of commerce innovation is completely being overtaken by payments innovation, similar to the example of a current successful business model Uber.

“The [retail] industry needs to embrace customer-centricity in order to really get to what it can be in the next 10 years.”

– Patrick Gauthier, Amazon’s VP of External Payments

Many views, and opinions from payments-, retail- and commerce sectors as well as managers with innovative perspectives are opening up discussion points. What is essentially needed though is a dialogue regarding what and who these individuals are actually chatting about.

References:

Pymts (2015) “Amazon’s customer-centric Focus.” pymnts.com. 24 Mar. 2015. Web. <http://www.pymnts.com/in-depth/2015/whos-talking-about-innovation/#.VT0yIxOUee4>.

McAllister, Ian. (2012) “What Is Amazon’s Approach to Product Development and Product Management?” Quora.com, 18 May 2012. Web. <http://www.quora.com/What-is-Amazons-approach-to-product-development-and-product-management>.

Bulygo, Z. “Becoming a Customer Centric Company” 9 June 2014. Web. <https://blog.kissmetrics.com/customer-centric-company>

Header image: http://pretiumsolutions.com/wp-content/uploads/2012/02/Customer-Experience-Management-Customer-Centric-Organization-copy.jpg

Infographics: Web. <https://blog.kissmetrics.com/wp-content/uploads/2014/06/how-to-survive-and-thrive-in-the-customer-revolution-exacttarget-infographic.png>

Business Case

Minecraft aka Digital Lego

April 4, 2015 Maria Abrantes Leave a comment

“It isn’t like other games. There are no instructions, no levels, no mission structure, no story, no lives, no points, no clear goal. The only aim is to survive”

User design and co-creation have emerged as a mechanism to build brand loyalty, to fit products to the heterogeneous needs of a market, and to differentiate the offerings of a manufacturer. More than ever, customers want to make their own choices and demand uniqueness. Minecraft was born in the context of our increasingly individualized and digitalized world.

You start Minecraft in the middle of a randomly generated, “blocky-looking” world about eight times the size of Earth and are completely free to do what you want. You can go exploring, or you can get creative.

Minecraft allows users to create their own environment and build new structures with the building blocks provided by the game designers. At the start of the game, the player is placed on the surface of a procedurally generated and virtually infinite game world. The game world is procedurally generated as players explore it. Minecraft also enables multiple players to interact and communicate with each other on a single world.

The game was created by Markus Persson and was recently sold to Microsoft for $2.5 billion. Without any advertisements, Minecraft had 1 million purchases, less than a month after entering its beta phase.

In addition to Minecraft, there are several games that allow users to generate content. For instance, Sim City lets players build up their own city within the game constraints. The novelty of Minecraft is that it offers infinite creativity and control!

Like in mass customization, in Minecraft users are active co creators and are the beneficiaries of their creations. However as some of the best Minecraft creations can be shared, they might benefit others (game developers, architects etc.) But why do customers benefit from playing Minecraft? Firstly because it’s fun, second because it enables users to create experiences that are tailored to their needs and finally, because it may fulfill their social needs, in particular when publicly showing their creations.

Check out some of the best creations: http://www.bbc.com/news/technology-29211032

“It offers infinite creativity and control”

By giving so much freedom, is Minecraft able to maximize users’ satisfaction? Given that Minecraft players may not fully understand their needs or may have different levels of skills, the game bears the risk of a “design defect”: a choice of design parameters that does not maximize user satisfaction (Randall, T., Terwiesch, C., & Ulrich, K.T. (2005). This design defect concept reflects a misfit between the game designed and the one that might have been designed, despite the fact that the user is in control of all of the design decisions. Minecraft mitigates this risk by including some default options that enhance customer satisfaction. For instance, gameplay by default is in first person, but players have the option to play in third person mode.

References

Randall, T., Terwiesch, C., & Ulrich, K.T. (2005). Principles for user design of customized products. California Management Review, 47(4), 68.

http://gamificationnation.com/gamification-mechanic-monday-co-creation/

http://www.wired.co.uk/magazine/archive/2012/07/features/changing-the-game

Articles

The Dark Side of Customer Co-Creation

April 1, 2015 rsmstudent Leave a comment

In this blogpost I will talk about the article “The dark side of customer co-creation: exploring the consequences of failed co-created services” by Heidenreich, Wittkowski, Handrich and Falk (2014).

Co-Creation
Co-creation becomes more and more common. Co-creation can take place in product development and service development. The authors focus in this article on co-creation in services, whereas in services “innovation always starts with customers’ unmet needs” (Ostrom et al. 2010, p. 16). Co-creation is beneficially for both firms – which are able to adapt changes better to customer needs – and customers – who will be more satisfied because of more empowerment. However, more involvement asks for more contact points between the firm and the customer, which in turn leads to higher complexity of the process and service. And as we all know, higher complexity increases the risk of failure.

Whereas current literature emphasizes the positive effects of co-creation, this article highlights potential negative influences of co-created services. The authors conducted four studies to investigate this dark side of customer co-creation. In this blog post I will highlight the outcomes and implications of these four studies, without mentioning all methodological and statistical characteristics.

Study 1 + Study 2
The authors show that in case of service success, highly involved customers are more satisfied than customers who barely participated in co-creation. However, in case of failure, co-creation triggers a greater imbalance between customers’ expectations of delivery and the actual outcome. As a result, negative disconfirmation is enahnced, leading to a decline in satisfaction.

Service Recovery
After failure of service delivery, a firm must make up for its mistakes. The process of fixing failures is referred to as service recovery. Current literature even shows that sometimes customer satisfaction, customer loyaly, and customer repurchase intentions are higher after successful service recovery than if the service delivery was successful in the first time. The authors now include the degree of customer co-creation.

Study 3 + Study 4
The outcomes of studies 3 and 4 indicate that consumers who experience a mistake in the service delivery of a highly co-created servicetend t oblame themselves for the flawed outcome and thus feel a sense of guilt. In such cases it is best to have no recovery process at all to restore customer satisfaction.

The outcomes of this study lead to some interesting implications for managers. First it highlights the importance of awareness of the potential negative consequences of offering highly co-created services. However, because of the high potential positive influences, firms might want to offer highly co-created services. Therefor, firms should implement measuring indicators to minimize the change of co-created service failure caused by human mistakes. Because not all failure is inevitable, managers must focus on higher customer satisfaction along with the overall service. This can mitigate negative effects in case of failures. The importance of a proper recovery system is highlighted in this research.

Finally, even though there exists a dark side in customer co-creation, managers must try to overcome these difficulties and create light in the darkness…

References
Heidenricih, S., Wittkowski, K., Handrick, M. & Falk, T. (2014). ‘The dark side of customer co-creation: exploring the consequences of failed co-created services’. Journal of the Academic Marketing Science.
Ostrom, A. L., Bitner, M. J., Brown, S. W., Burkhard, K. A., Goul, M., Smith-Daniels, V., et al. (2010). ‘Moving forward and making a difference: research priorities for the science of service’. Journal of Service Research, 13 (1), pp. 4 – 36.

Opinion

The worst will be best, and the best will be worst

April 21, 2014 embee14 Leave a comment

Lately, I stumbled over the blog post “All around the world, you’re a great way to fly – Selling an experience“. The post contains a list of “profound services, which only the best airlines offer” (1) . It reminded me of heated discussions about the positioning and quality of airlines today, and how low-cost aircarriers’ (LCA) terrible reputation is a constant topic in media. Websites express the ‘general disgust’ about these firms (2), and passengers even take over planes (3). So, is it justified that many people perceive LCAs as the ‘worst airlines’ and most people think similar as the folks below?