Voice of the Emergent Customer

by Drew Boyd

Are some customers better than others at developing new concepts? Professor Donna L. Hoffman at the University of California Riverside thinks so. Emergent customers have a unique ability to "wrap their head" around a new concept and improve it. She created a scale to identify them so companies hear the voice of the 'right' customer during new product development.

Emergent customers are better at imagining how concepts address latent unmet needs. Dr. Hoffman describes it as a "unique constellation of personality traits and processing abilities that enables such consumers to engage in a synergistic process of visualization and rationalization to improve product concepts." Those characteristics are:

• Openness to new experiences
  
• Reflection
  
• Experiential and rational processing style
  
• Verbal (rational style) and Visual (experiential style)
  
• Creativity (self perceived)
  
• Creative personality
  
• Optimism

The study included 1,124 respondents and compared performance of those identified as emergent customers against those of lead users, early adopters, and a control group. The emergent customers significantly outperformed the other groups.

How would you put this to use?

• Market research firms could use the scale to screen research candidates. Emergent customers focus on improving concepts, while 'non-emergent' customers judge marketplace acceptance.


• Companies could learn about their emergent customer's behaviors and beliefs. Do they buy more, use more, or pay more for certain products? Do they use products in a different way? Do they influence other customers?


• Companies could set up advisory panels of emergent customers to watch for opportunities and threats.

How would emergent customers perform using a structured innovation method? It is tempting to assume they would do better using methods like S.I.T. These people are more motivated and optimistic. They are more hopeful about the output of innovation workshops and are likely to push harder. Star performers "Google" their mind to make innovative connections and associations in rapid fire fashion. This relates to Dr. Hoffman's factor of "experiential and rational processing style."

For innovation workshops, my 'dream team' would include a mix of emergent and non-emergent participants. Perhaps the ideal scenario is pairing them together. As the emergent thinker pushes ideas into new territory, the non-emergent thinker can offer quick feedback. Innovation is a team sport after all.

Researchers have long noted that the "voice of the mainstream customer" is not that useful in developing new products. Instead, finding the 'Voice of the Emergent Customer' could be a new source of competitive advantage.


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Drew Boyd is Director of Marketing Mastery for Johnson & Johnson (Ethicon Endo-Surgery division). He is also Visiting Assistant Professor of Marketing and Innovation at the University of Cincinnati and Executive Director of the MS-Marketing program. Follow him at www.innovationinpractice.com and at http://twitter.com/drewboyd

Driving Trial to Drive Sales

by Paul Williams

Mocha Valencia Frappuccino, was the one of the new beverages in the summer of 2002* at Starbucks Coffee. I was the marketing manager in charge of the summer promotion.

The beverage team described the taste profile like eating pieces of "chocolate orange" - like that made by Terry's. (Which is interesting - because Terry's Chocolate Orange wasn't / isn't a universal flavor the way Oreo Cookie or Orange Creamsicle are).

Anyhow, it became a featured beverage.

I don't know about you... but orange + chocolate isn't one of my favorite flavors.

I don't know about you... but I would never order that flavor... I wouldn't even try it because it was new and different - it is not a taste that sounds appealing to me.

However, sales of Mocha Valencia Frappuccino did fairly well that summer.

Why?

Because partners (employees) in stores sampled it morning, noon, and night. That summer, you couldn't walk into a Starbucks without a tray of mini-Frappuccino samples being thrust at you.

Long story short - trial led to purchase. Through trial you drive sales.

Allowing me to try your product or service prior to purchase reduces the anxiety I have about buying your product. The risk is gone. I'm not going to fork-out $50 for your software to find out it doesn't do what I want. I'm not going to buy that phone without first trying out the buttons.

Which leads to this great direct mail ad.


Neat Idea No. 1

How does a phone company get you to try their product before purchase? They get you to try it at the retail store. But how do they get you if you're not visiting the store?

Below is a way to creatively solve the problem of "how do we get trial of our expensive device."


[click for larger view]

The purple area is actually cut out... The idea is to put your thumbs through the holes and "try" the BlackBerry...



I'm not sure if this ad for this "groundbreaking new phone" drove sales and exceeded expectations. But it was a clever way to engage the customer. I wouldn't be surprised to find out the mail carrier tried it - just for fun - before he delivered it.


Neat Idea No. 2

How do you get people to try grape juice? You could sample in-aisle at the grocery store. Or, maybe have a booth at the mall. But how do you get them in their home? Short of shipping small bottles to customers?

Welch's used a flavor strip in print ads. Peel up the tab and lick to taste. (I wouldn't recommend this if you found the ad at the doctor or dentist office).

I used to drink grape juice all the time as a kid. I can't recall ever buying it myself. Perhaps the taste is enough trigger the memory of that flavor as a kid and prompting the addition of "grape juice" to this week's grocery shopping list?


So, what are ways you can get your customers to - taste, smell, feel, see, touch, hear - experience your product?


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*I'm pretty sure it was 2002 that the Mocha Valencia drink launched, it could have been 2001 or 2003...

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Paul Williams is a professional problem solver at Idea Sandbox. He can help you create remarkable ideas to grow your business. You may read more at his website and find him Twittering as @IdeaSandbox.

Mapping Customer Experience Excellence

10 Steps to Customer Journey Mapping

by Arne van Oosterom

When the nice people at MyCustomer.com asked me to write an article about customer journey mapping, I knew right where to begin.

A product or service is merely a means to an end. The real deeper value lies in the story attached. I don't want to own a coffee maker - I need to wake up early with a little help from a cup of coffee. I don't want to use a train - I want to get home to my wife and children. I don't want to go to a store and buy a stereo set - I just want to listen to my favorite rock music when I'm home, it makes me unwind after work.

Unfortunately, most organizations are not capable of listening to stories. And this is why the gap between "inside and outside" has grown too wide. To stay competitive and survive the changes organizations are presently facing, they need to reassess the way they are structured, function and build relationships with customers. Closing the "reality gap" between organizations and people (employees and customers alike) should be the number one priority. And for this we need a new set of skills, methods and tools.

People-centered approaches like Design Thinking, Social Design and Service Design have emerged because it provides us with useful methods and tools to bridge the gap. One of the tools is customer journey mapping. And in this article I'll explain what customer journey mapping is, and how it is used to improve quality and foster a culture of innovation. But first I'll explain why tools like customer journey mapping emerged and are needed.

I like the description given to it in an article by Kable:


"CJM maps the route people take as they interact with services, taking quantitative measures such as number of contacts made and the time taken to access a service. What distinguishes it from data that might be gleaned from customer relationship management systems is its equal focus on emotional insights about the citizen's experience. The goal is to mix quantitative approaches with qualitative, experiential data, providing a dispassionate analysis of the issues."


Change Causes Friction

Thinking in journeys can be very helpful. Change is a constant. And thinking in journeys takes this into account and puts more emphasis on quality of the whole experience. Dwight Eisenhower said it like this: "planning is everything, the plan is nothing."

Only those who are adaptable survive. That's just one of those inconvenient evolutionary things. But generally speaking, companies and governmental organizations are not designed for adaptability. They are organized in static, pyramid shaped, top-down-broadcasting models and not organized to receive feedback from the outside or the bottom of the pyramid or to use this information for change and continuous improvement. Most organizations are incapable of having real and meaningful (two-way-street) conversations with their customers.

And it's exactly in this area where the biggest business opportunities lie. We need to design and implement systems that will allow our organizations to have meaningful and ongoing conversations with our customers, using the insight we gain to improve and innovate in an ongoing iteration. And this all starts by taking a good look at the organization from the outside. There are no magic tricks. But it's just common sense to start with the people you work with and your customers.

Customer journey mapping builds a mirror and enables us to question why we do the things we do. It makes things visible, which might have been right in front of us, but were so familiar we did not notice them or question them. It never occurred to us we could change them. It brings knowledge, already embedded in the organization, to the surface and makes explicit what is implicitly already there.

It allows us to take a step back from where we are, away from our internal targets and agendas and lets us be open-minded and put our creative energy to good use. And the beauty of it: there is no lengthy report, which no one actually reads. Customer journey mapping is a creative tool and works with visualizations. It is meant to inspire, energize and kick-start good conversations and ideation. And it's the conversation that matters - and the opinions and ideas it brings to the surface.


Building a Culture of Trust

Customer journey mapping is primarily used as a tool to investigate, analyze and improve customer experiences. However there is another more profound use of the customer journey. DesignThinkers, for instance, has developed a system called the Customer Journey LAB.

The Customer Journey LAB is used to facilitate an ongoing conversation within the organization and build or strengthen a culture of mutual trust. The LAB is embedded into the internal workings of an organization. It's a "short iterative feedback loop" and allows for top-down and bottom-up conversations. It's facilitated by an online LAB and offline media and events.

The Customer Journey LAB is an iterative method to build a culture of trust and adaptability, which is the most important step into building a relationship with your customer and maintain a strong, long term, almost irreplaceable competitive edge.


A quick guide to customer journey mapping

This allows us to step into the customer shoes. It shows us the customer's perceptions and the larger context in which we play a part. It lets us be emerged in their world, their reality. Get a deeper insight into customer needs, perception, experience and motivation. It will answer questions like: What are people really trying to achieve? How are they trying to achieve this? What do they use and in what order? Why do they make a choice? What are they experiencing, feeling, while trying to reach the desired outcome?

A customer journey map is built up layer by layer. We start 'above water', with the customer and slowly dive deeper and deeper into the organizational structures and context. The tool can be used with customers or management, employees and other stakeholder or, even better, in a mix.

A customer journey map (e.g. used by front-office employees) in its simplest form will contain the following:

1. Context or stakeholder map. We list all stakeholders and we order the hierarchy in circles of influences around the centre, where you are. When working with customers you'll have the customer in the centre. Describe all relationships on the map by answering the question: what do we do for them; what do they do for us? This map shows you the landscape or force field you are dealing with. And you can discuss how this influences the quality of your work and how a customer benefits or suffers from it.


2. Persona. We need a rich customer profile or persona. Describe his/her personal and business situation now (present situation) and in the future (ambitions).


3. Outcomes. A description of his/ her desired outcome - what is he/she trying to achieve?


4. Customer journey. We list all actions (as far as possible) the customer has to take to reach the outcome (placed in a horizontal line). Don't start listing actions when the customer uses your service the first time. Start before the moment he/she decided to use your product or service. This way we visualise behavioural patterns.


5. Touchpoints. Underneath every action we list all channels and touchpoints services the customer encounter. Not just yours! This way you'll discover the landscape you are in form the customer's perception.


6. Moments of truth. Then we identify the moments the customer encounters your touchpoints and channels. We start focus on those (you can move them down a bit). Identify the most important 'moments of truth'.


7. Service delivery. Underneath every touch point, we write down who delivers the service. Who is directly responsible for it (e.g. front office personal)?


8. Emotional journey. Then give every vertical line a grade for the experience (Actions -> touch point -> who delivers the service -> grade). Don't grade the functionality, grade the work. For the emotion, how do you think the customer felt at that moment? Use a scale from 0 to 10. The higher the number, the better the experience. This can be visualised (e.g. by a line going up and down), and is very effective as a conversation starter. It can often be a real eye-opener.


9. Blueprint. Now, to make a long story a bit shorter, we can go on listing the organisation underneath, writing down who supports the people delivering the service (backoffice), and in turn who influences the back office (we link back to the stakeholders map), until we have a complete organisational blueprint, a complete picture of the working of an organisation and emotional journey, from the outside in.


10. Improve and innovate. Use creative, brainstorming and any other ideation techniques for the service opportunities you identified (low grades) and/or design complete new and ideal journeys or services. This usually is the moment people have the most fun. I have been surprised many times by the talent and eagerness of people to engage in this creative process. People are usual a lot more creative than you think. We just need to put them in the right situation and mood.

Don't wait until the end to collect ideas. Write down all ideas and insights during the building of the customer journeys. These insights will be a rich source for improvements and innovative ideas. And all you need to start are some large sheets of paper, markers and a lot of sticky-notes.

We will shortly be publishing all the materials for building your own Customer Journey LAB and all the material will be downloadable with a guidebook from the DesignThinkers website.


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Arne van Oosterom is lecturer at various International institutions, owner at DesignThinkers Amsterdam, founder of WENOVSKI and Chairman of the Service Design Network Netherlands.

Boosting Sales for Beginners

by Paul Williams

Ah... "Drive Sales." Is there a company that doesn't have 'sales driving' as a key strategy?


It can't be much simpler than a choice of three levers.

1. Find New Customers
   
   • Create a New Market with a new product or service, or
     
   • Go deeper with your existing targets
   
   
2. Increase Frequency - Get existing customers to use your business more often.


3. Increase Average Ticket - Get existing customers to spend more when they use your business.

While simple doesn't mean easy. It helps to know that these are your three launching points.

When choosing one - or perhaps all three - of these strategies. The next step is to ask "How?"

• How can I find new customers?
  
• How can I get existing customers to come more often?
  
• How can I get them to buy more?

From these base questions will branch new, potential solutions.


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Paul Williams is a professional problem solver at Idea Sandbox. He can help you create remarkable ideas to grow your business. You may read more at his website and find him Twittering as @IdeaSandbox.

Open Innovation Side Effects

by Stefan Lindegaard

Open innovation will not only lead to new ways of making innovation happen. Innovation leaders and their executives will also experience side effects. I think most of these effects will be positive, but some will be mixed or perhaps even negative.

As innovation leaders and their executives implement open innovation practices, they can just as well start figuring out how to deal with side effects of open innovation such as described below:

• Open innovation is very much about managing change. If a company can handle the change process related to implementing open innovation, then they have learned valuable lessons that can be used in change management situations. In the current and future business climate, I think everyone should appreciate working in an organization that is agile and prepared for changes.


• Often, the biggest enemy of innovation is the company itself as the company begin to focus more on its needs than the needs of the market. When you begin to innovate with partners, you will see that these partners either focus on their own needs - and then innovation will definitely fail - or you will see that they come together and funnel their resources towards a market need. If the latter happens, then you have a great chance to succeed with innovation. Pressure from external partners can shift awareness from internal needs to market needs and this move can be helpful beyond the innovation process.


• Open innovation can bring along new organizational structures. As open innovation becomes the way to innovate, the functional/divisional or matrix organizational structures as we know today will change - or perhaps even break down. I am not sure what will be next...


• Open innovation will be one of the key drivers in bringing in new types of communication tools into the organization. Think LinkedIn, Twitter and Facebook. Once the initial resistance has been defeated, this can benefit many business functions.


• Customers are one of the first places to look for external input. Although, there are dangers involved in listening to customers when it comes to innovation, the increased focus on customers can lead to better relationships with them. This can change the role of sales and marketing units as they need to get even more involved in innovation.


• At a recent open innovation conference, Cisco said that they are trying to move from a culture of competition to a culture of shared goals. This was by large driven by a desire to make innovation happen with external partners. There is much talk on changing the not-invented-here culture, but perhaps open innovation will drive even more corporate culture change.


• As you work with external partners, you are exposed to other ways of getting things done. You bring diversed thinking into the organization. This can make you consider whether your current practices are good enough, whether you have to adjust these or perhaps even develop new next practices for your organization. An example: You get new perspectives on collaboration. Perhaps this can inspire to better interaction and collaboration between business units.


• Overall creativity as well as overall complexity increase with open innovation. The increased number of actors provides new ways for people to be creative. This can also increase the level of complexity, which is also driven by fact that the organization is no longer itself in control.

Let me know what you think of this and please share your own views.


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Stefan Lindegaard is a speaker, network facilitator and strategic advisor who focus on the topics of open innovation, intrapreneurship and how to identify and develop the people who drive innovation.

2010 - Beginning of a Touch and Gesture Future?

by Idris Mootee

With the proliferation of multi-touch technologies and innovations, we face an exciting new future of physical interactivity that will be like doing tai-chi.

Will multi-touch become the mainstream interactive experience on small devices? The holy grail of touch interactivity is bringing together the simplicity of hand gestures with deep navigation. Will multitouch create a new user language much as we learn how to type? Imagine when multi-touch is deployed in home appliances such as washing machines and microwave ovens? Gestural commands can be much less obvious to users than those written on buttons and menus and can create a whole new set of challenges. It means more challenge for human factors people.

It is interesting to envision how a broad-based, mass-scale utilization of the technology beyond the iPhone/iTouch/iPad/iDesk. I want to see a digital desk where there are no computers, the surface is the computer and my smartphone connects to the cloud. And I want the desk to look like a Herman Miller Sense desk. I want to have a built-in Skype conference call widget and... oh yes, Facebook on my desk. I guess we need to retrain ourselves to use this, as we need to create a set of hand gestures standards in order to be productive with our digital desk.

Asus already has a dual-screen laptop, still in concept stage, but with a touchscreen instead of a keyboard, opting for a virtual keyboard just like the iPhone. This is a step towards the digital desk. The dual panel offers a flexible working space in which users can adapt to suit their prevailing usage scenarios, for example adjusting the size of the virtual touchpad and keyboard. Through hand gestures, handwriting recognition and multi-touch, users are given with a control surface that is both flexible and intuitive.

The touchscreen display market will be growing from US$2.2 billion this year to US$3.4 billion in 2014 according to NanoMarkets, a research firm. The growing demand for touch-screen technologies in mobile and portable computing will create new opportunities for suppliers of conductive coatings, substrates and sensors in addition to the display firms themselves. Mainstream display makers have begun to develop their own "in-pixel" technologies as an alternative to the current industry practice in which third-party suppliers add a touch sensor subsystem on top of an LCD display and then sell to OEMs. Instead of supplying companies such as HP, LG, Samsung, Toshiba and Sony, these mid-size touchscreen OEM manufacturers may end up competing against them. These companies include FlatFrog, RPO, Microsoft, NextWindow, TouchCo and Vissumo.

In the next 24 months we can expect to see the increasing prevalence of physical and gestural interactivity, beyond the Wii and the iPad. One thing for sure is that we're all going to be dealing with the fun as well as the challenge of interacting with and designing devices in different ways. One big challenge is simply due to the lack of transparency into the "commands" or actions available with a given device or environment, we don't see a switch in the air and there is nothing for us to touch.

Looking into the exciting new future of physical and special interactivity, we will need to create idioms and new vocabulary that are as discoverable and useful as possible. We will find out in 10 years time whether these new touch-based interactive paradigms such as gestural interfaces will be making life easier for us or creating a new interactivity divide between those who can use it and whose who gave up on it. Instead of learning to type like my parent's generation, the next generation may be learning how to do the 'tai-chi' of interactive gestures. Human Factors guys now need to learn tai-chi.


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Idris Mootee is the CEO of idea couture, a strategic innovation and experience design firm. He is the author of four books, tens of published articles, and a frequent speaker at business conferences and executive retreats.

Disney's Berms and Contradictions

by Paul Williams

The Imagineers at The Disney Company, the folks who dream-up theme parks and make them a reality, have created their own terms that allow quick understanding.

The Imagineer Terms

Berm - A raised earthen barrier, typically heavily landscaped, which serves to prevent visual intrusions into the Park from the outside world and block the outside world from intruding inside.

When you're in the fantasy world of a Disney theme park - Disney didn't want the outside world to break that spell.

Contradictions - Elements that could break the spell and ruin the experience. Walt Disney taught his team to be attentive to details and to think things through to the very end. They don't leave the experience to chance, it is all calculated.

The Disney Imagineers go to great lengths to eliminate contradictions. They have taken care to ensure you can't see the future of Tomorrowland while standing in ye olde Frontierland. Cowboys and Astronauts don't mix. They built 'utilidors' - a basement beneath the Magic Kingdom in Florida - that allows cast members (employees) to travel directly to their attraction from beneath the scenes in their themed costume. The guy wearing his silver Space Mountain costume would look quite alien strolling to his shift along Victorian Main Street, USA.


Broader Marketing Interpretation

While we may not worry whether customers can see the outside world, we do have to be attentive to visual intrusions and contradictions within our locations.

Typical examples may include:

Smoking employees - especially if your business has anything to do with food. Yeah, maybe your wait staff or chef needs a break to chill with a smoke... But don't let your customers see it. And for Pete's sake as a courtesy - please make sure they wash their hands before returning to work.

Incentive posters - Customers don't care or want to see employee-targeted posters for your 'extended warranty incentive'. How genuine do you think it's going to sound to the customer - who spots the partly shaded "Warranty Sell to Sail" bar graph - that the warranty is really in their best interest?

Sales awards - Don't let the manager post their 90% secret shopper score award in customer view. Doing your job right is not something to boast to your customers. It's an expectation. That's meant for backstage. Note to self... do a post about 'backstage'.

Drive-Thru Dumpster/Grease Buckets - Garbage, trash and used frying oil are realities of most fast food restaurants. But, when is someone going to invent a drive-thru design that doesn't parade drive-thru customers past a kid dragging an oozing bag of restaurant waste to the dumpster? A dream I had, while working at Starbucks, was to be part of the Drive-Thru Development team and make the drive-thru experience like no other. A challenge I proposed was: How would Disney do a drive-thru? (My dream was to make it operate like a car wash where you put your car in neutral, and you were guided by the drive thru like a Disney attraction)

Decompression Zone - Paco Underhill the cultural anthropologist and author in his book "Why We Buy wrote" about 'decompression zones'.

This is offering an area at the entrance of a store/business where the shopper can make a transition from one environment to the next. For example, from the main mall to the entrance to your retail store. Think about the first time you entered a new store; the lighting is different, the decor, the music, the smells, and sometimes the temperature. You're not taking time to read a sale banner or want someone asking, "May I help you?" As a customer you're simply trying to get acclimated to the new space - get your bearings.

Back to Disney for a great example of a 'decompression zone'. And for this one, I've even provided an annotated illustration diagram below.

Disney knows the reality of the world doesn't wear off easily. So, when entering the Magic Kingdom theme park at Walt Disney World in Florida, after you pass the ticket entrance you have to enter the park through two short, slightly dark tunnels. These run underneath the railroad station. When you emerge you are on Main Street USA. However, you still don't see Cinderella's Castle yet - the icon of the park - until you've started to head down Main Street.

These tunnels serve as a final buffer between the outside (reality) and the fantasy of the park.

[Fig. 1 Magic Kingdom Entrance - Walt Disney World Resort, Florida]

Are you giving your customers the experience they deserve?


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Paul Williams is a professional problem solver at Idea Sandbox. He can help you create remarkable ideas to grow your business. You may read more at his website and find him Twittering as @IdeaSandbox.

What's in a Name?

Lessons in Insights & Innovation From Anti Monkey Butt Powder

by Mark Prus

I am a professional name developer, and I like to gather opinions about product names. Earlier this year I posted a Twitter Poll to gather opinions on Anti Monkey Butt Powder... Good Name or Bad Name? The results indicated that about 70% of people thought Anti Monkey Butt Powder was a bad name.

However, the real learning came from the comments I received about the posting. The people who thought it was a bad name were making fun of the name and the product. The people who thought it was a good name were people who suffered from what might be described as a "chafed butt" due to extended horseback riding or motorcycle riding or truck driving. Several claimed to be consumers of the product and they were very defensive about the name... they thought it was perfect.

So what is the lesson on insights and innovation? It is very simple... do a great job of developing consumer insights behind your product and those insights will lead you to terrific ideas, such as a novel name for your product that speaks loudly to your target market. Who cares about the majority of people who might ridicule your product? What you should really care about is the "passionate minority" who will turn into loyal fans!

The owners of Anti Monkey Butt Powder did a terrific job of identifying with their very narrow target market. The "problem" of having a chafed butt is not one that everyone has, but if you do have it, you understand what Anti Monkey Butt Powder is designed to do. If you do not have this "problem" then it really does not matter what you think because you will never buy this product.

I chose Anti Monkey Butt Powder for the Good Name Bad Name poll because I thought it was a clever name, but when the passionate responses came in from people who identified with the product, I loved the name even more!


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Mark Prus is a marketing consultant who offers a name development service called NameFlash^SM.

The 'Captive Upsell' Business Model

by Rocco Tarasi

I was reading Free: The Future of a Radical Price by Chris Anderson the other day, and it got me thinking about other innovative business models. One of the best that I have encountered recently was at the Bridgestone tire store when I got new tires for my car.

What was so impressive was how they convince you to purchase an alignment while they are mounting your new tires. While your car is being worked on, they come out with a computer generated report that shows the misalignment of each of your tires, and offer to do the alignment for an additional fee. It is a very compelling sales pitch:

1. The computer generated report provides reliable evidence that your tires are misaligned, instead of just looking at the wear on your tires (a computer can't lie, right?).


2. To some extent, you have already experienced the problem that they are selling you a solution for - the reason you are there in the first place is for new tires, and misalignment wears tires out faster. The alignment is offering you a chance to extend the life of your tires, and you are most receptive to that sale when you are about to pay for your new tires.


3. Since your car is already up on the jacks, you believe - rightly or wrongly - that doing the alignment will be cheaper now than if you want to do it later. You've already paid, via your new tires, for the labor to get the car on and off the jacks.


4. You expect (and they verify) that it will only take a few additional minutes to do the alignment, since again it is already on the jacks. Deciding to get an alignment later will most certainly take more time.


5. You are already spending many hundreds of dollars on new tires, so the alignment seems inexpensive in comparison.

This honestly is an impressive sales technique. The manager that I worked with was personable and not at all pushy - he didn't have to be, he had all of the above factors in his favor. I bought the alignment - I wouldn't say I "happily" bought it, but I didn't leave there with a negative experience even though I spent more on the trip than I intended to.

It is interesting to compare this to a somewhat similar sales technique - an electronics store trying to sell you the extended warranty on your new technology purchase. How does that situation compare to the five factors above?

1. Reliable evidence? Not really. TVs, stereos, cameras, DVD players – they aren't known for their poor quality.
   
2. Already experienced the problem? Probably not. Odds are you are buying a new toy not to replace a broken one, but because you are upgrading (DVD to Blu-ray) or because you have a new need (like a bigger house).
   
3. Cheaper now? Yes. You can only buy the extended warranty at or soon after your purchase.
   
4. Only take a few minutes? Yes.
   
5. Inexpensive in comparison? Yes (usually).

So three "Yes" and two "No" answers. But those two "No's" are important - without reliable evidence you don't believe your new purchase is going to break, especially if you haven't had one break before.

The lack of evidence is also supported by countless stories you've read of how extended warranties are a rip-off. Perhaps if they lowered the warranty price then it wouldn't be considered a rip-off anymore - but then again, they have likely maximized the price that consumers would consider "acceptable" to maximize their revenues. If they lowered the price it probably wouldn't gain any new consumers, so they would be just giving away revenues.

There is one other problem with the extended warranty purchase - there is no "immediate gratification". The warranty payment is for something that might happen in the future. It doesn't make me enjoy my new TV or DVD player any more now. This reminds me of one more experience - buying my first big screen TV at Best Buy, and the salesperson talking me into an overpriced Monster surge protector. I bought it - partly for its insurance policy, and partly for the supposed immediate improvement in having a "cleaner electrical signal to the TV". I know, I know... but how did that experience stack up against our five factors above (plus our new sixth "immediate gratification" factor)?

1. Reliable evidence? Not for the "cleaner signal"
   
2. Already experienced the problem? Not for the cleaner signal either, but I did have a relative lose their electronics from a lightning strike.
   
3. Cheaper now? Not really, I could buy it at any time.
   
4. Only take a few minutes? Yes.
   
5. Inexpensive in comparison? Yes.
   
6. Immediate gratification? Yes.

When I think back to why I chose the surge protector and not the extended warranty, I think it was a combination of (1) from every news story I heard I knew the warranty was overpriced; and (2) since the surge protector served a dual role - part product improvement, part insurance policy, I was able to more easily justify the high price since it was still much less expensive relative to the TV itself.

I know that I didn't need a Monster surge protector, but I wonder how many other people have gone through the same thought process, and what other similar sales cases we could apply these factors?


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Rocco Tarasi was an accountant, investment banker, and CFO before becoming a technology entrepreneur. He writes about innovation at www.InnovationMinute.com with a focus on "everyday" innovations in business models, sales strategies, products and services.

Innovation vs Commoditization

by Steve McKee

You can hardly turn around these days without running into some sort of reference to innovation. Dozens of books about the topic line the shelves at Borders and Barnes & Noble, from "The Art of Innovation" to "The Myths of Innovation." Innovation is rapidly becoming the latest business buzzword.

But before you dump 'innovation' into the jargon dustbin along with 'reengineering', 'rightsizing' and 'paradigm shift', consider this: the need for innovation has never been greater than it is today.

Doug Hall is founder and CEO of Eureka! Ranch, an organization that helps companies define, refine and improve their new ideas. In an interview with SmallBiz magazine, Hall defined innovation as that which:


"moves companies and their offerings along a continuum from providing commodity products or services to having a monopoly that is extremely difficult to combat."


Hall's definition is spot-on, and made even more significant by the fact that no company's position along that continuum is static. If you're not actively moving your company away from commoditization, it's destined for it. The extent to which any business proposition or value equation is achieving success in the marketplace is the extent to which it will attract competitors who want what it's got. There's simply no free pass to sustainable success.

If you're making money you're making noise, and competitors are bound to notice. They'll deconstruct your products, mimic your pricing structure, duplicate your distribution system, infiltrate your customer relationships, and do anything else they can to take your margin and market share. In so doing, they'll be creating acceptable substitutes for your products and services, which without intervention will inevitably lead to a price war in which no one wins. Unless you can stay ahead of the game through continuous renewal and change (i.e. innovation), your competitors will commoditize you right out of business.

As frightening as this prospect might be, many companies are intimidated by the concept of innovation. They somehow think it's the purview only of organizations with massive R&D departments funded by equally massive budgets, not the typical small- or medium-sized business. But this reflects an incomplete and unrealistic understanding of what innovation is really all about.

One of the reasons executives think this way is because we tend to associate innovation with breakthrough leaps forward - advances that change the playing field, shift competitive dynamics, make the covers of Forbes and Business Week and end up as business school case studies. Certainly, big innovations can be big news, and for good reason (Doug Hall's research shows that major breakthroughs are worth four times as much as minor innovations). Naturally, they're the ones that get the most press.

But the systematic introduction of even small improvements along the commodity-monopoly continuum can compound to deliver just as much (if not more) impact as a single big breakthrough. Popular Science says of innovations:


"The objects don't necessarily need to be beautiful. They don't have to be eco-friendly. They don't even have to be difficult to build. They just have to push past what we thought was possible just twelve months ago."


To that I would add that they don't have to be big. They just have to be consistent.

If you spend just a few hours critically analyzing your industry from a customer's perspective (perhaps even involving customers themselves), you'll identify dozens of pain points about which somebody ought to do something. Airline seats should be comfortable. Take-out orders shouldn't be wrong. Physician's handwriting should be legible. The better you can anticipate what customers will be wanting/needing/expecting down the road, the more likely you can be the leader that first addresses the issue. No one, as they say, ever asked for a microwave oven. Or even a curved shower rod.

Want to keep commoditization at bay? Focus on innovation. No matter what size, shape or form your company is.


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Steve McKee is a BusinessWeek.com columnist, marketing consultant, and author of "When Growth Stalls: How it Happens, Why You're Stuck, and What To Do About It." Learn more about him at www.WhenGrowthStalls.com and at http://twitter.com/whengrowthstall.

Pretending to be a Customer

by Mike Brown

It's a challenge to objectively examine your own website as if a prospect or customer seeking information would. There's an approach you can follow to get ideas flowing though: Look at a direct competitor's online presence, trying to shoot holes in it based on how a customer might view it.

You should really be able to get into it by answering a few questions:

• What misleading or out-of-date information is presented?


• What's not compelling about the website?


• What's confusing about the navigation?


• How much unnecessary detail do I have to supply to get a copy of the "free" download?


• What questions do I have that the website doesn't answer?


• Do I know where to get my other questions answered?


• In what ways did I get smarter by browsing this website?


• In what ways were my information needs left wanting?

After doing this, go back and see how your own online presence compares. Looking at yourself from a customer perspective should now be much easier!


Editor's Note: When you're in a pinch (or without a research budget), you could also use this technique with employees (preferably new ones) for more than just web sites.


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Mike Brown is an award-winning marketer and strategist with extensive experience in research, strategy, branding, and sponsorship marketing. He's a frequent keynote presenter on innovation and authors Brainzooming!

Innovation by Subtraction

by Paul Sloane

We tend to think that the best way to innovate is to add new features to our products or services. What can we add that increases the appeal of our offering? This route can easily lead to extra cost, feature overload and customer fatigue. Sometimes a better answer lies in subtraction.

Michael O'Leary, the founder of Ryanair, looked at the business process of passenger flights and built a new model by subtracting all the frills that meant extra cost. He subtracted:

• Travel agents - you book direct over the Internet so the middlemen and their costs are cut out.


• Tickets - you show your passport and quote your reference number. Subtracting tickets saves costs.


• Allocated seating - you choose a seat when you get on the plane - just like on a train or bus.


• Free drinks and snacks - if you want a drink you have to buy it.


• Customer care - Ryanair has one-tenth the number of customer care attendants per passenger mile compared to BA. If you have a complaint the answer is generally - 'hard luck but what did you expect with such a cheap flight?'

(Editor's note: In the U.S., JetBlue, Virgin America and Southwest Airlines operate using a very similar model)

What can you take away from your current business process in order to save cost and simplify operations? Can you unbundle your product into separate components? Can you strip out costs or processes that not all customers want? Can you bypass a middleman on the route to your customer - as Direct Line, Amazon and Ryanair did? Egg and First Direct offered on-line banking and made it cost effective by cutting out all the branches that burden the traditional banks.

Sometimes you can get the customer to do something that you do right now. The supermarket was a remarkable innovation in the 1920s. The key new idea was to get the customer to serve themselves rather than having an assistant serve them. A modern updating of the idea is provided by IKEA. Not only do customers act as assemblers in putting the furniture together, they also act as store men in collecting the flat packs from the warehouse.

The whole do-it-yourself business was built on the back of getting individuals to do what tradesmen had done for them in the past. eBay has built a business that runs like clockwork by getting the clients to place their own advertisements, hold their own stock, sell their own goods and give each other recommendations. It is a triumph of transferring services to clients.

Next time you face the challenge of how to refresh your product don't just think about adding new features or services. Think about what you can cut out of the process or product. How can you make things simpler, less costly and more appealing to customers?

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Paul Sloane writes, speaks and leads workshops on creativity, innovation and leadership. He is the author of The Innovative Leader published by Kogan-Page.

Keys to Growth for 2010

by Mike Myatt

While today's post is short, it truly merits the attention of anyone still grappling with 2010 budget concerns. I'm going to share something with you that you might not want to hear, and quite frankly, something that will likely send your CFO straight into apoplexy. You don't grow a business by shrinking it. The key to corporate growth is not to fall into decline; hopefully not by default, but certainly not by design. If your 2010 plan is one that involves constriction, contraction, shrinkage or retraction, you should note that this is not what your clients and prospects are looking for.

Do you think your clients will be impressed that you're cutting staff, shrinking marketing budgets, eliminating service lines or any other item that they perceive as a limiting factor in your ability to help or add value? Know this: your clients and prospects will never see any form of bunker mentality as being beneficial to them. One of the great business myths is the theory of "remaining flat" - it simply is not possible. A business grows or shrinks - it gains ground on competitors, or loses ground to them. So my question to you is this: What are you specifically going to do in 2010 to better serve your clients, to continue acquiring and developing talent, to build your brand, and to grow your business? General George C. Patton said it best: "Never defend, always attack."

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Mike Myatt, is a Top CEO Coach, author of "Leadership Matters...The CEO Survival Manual", and Managing Director of N2Growth.

Scouting for Innovation

by Stefan Lindegaard

Nerac is a global research and advisory firm for companies developing innovative products and technologies. Two of their employees, Kristy Lutz Ulmer and Margaret Fiore, recently published a report on how companies scout for innovation.

I just got to read it and I find this to be great stuff that I want to share with you. You should also download the full report here - Innovation Scouting For 2009

The findings in the report fit well into a key thing being discussed in the open innovation community right now; the real effects of open innovation are due to behind-the-scenes activity rather than flashy portals and idea-generation campaigns.

The report has lots of great insights and the authors want to highlight these conclusions:

• Innovation scouts acknowledge a general lack of formal knowledge of the process of scouting, including how to find and evaluate ideas.


• The more integrated a company's products are into other companies' products, the higher the likelihood that scouting is considered important.


• There are many different approaches for implementing innovation scouting, with companies using internal innovation scouts, external partners, third party scouts, and consultants.


• Most companies operate with a small cadre of scouts, usually fewer than six resources.


• The scouting role is not always confined to internal R&D departments within an organization, but instead is often jointly sponsored across multiple business units.


• Innovation scouts use many methods for finding new ideas, with competitive intelligence the most prevalent source of ideas.

As we can see from the snippets below, the report is full of data and interesting conclusions:

Usage of Innovation Scouts:
Of the nearly 600 companies surveyed, approximately 30% of the respondents knew that their companies use innovation scouts. Another nearly 8% were aware of plans to begin using innovation scouts. Surprisingly, just over 42% were unsure whether or not their company employed scouts, so the usage rate could actually be higher.

Age of Scouting Program:
When asked how long scouts had been in place, 37% reported their companies have used innovation scouts for over five years, followed by another quarter that have used scouts between two and five years.

Size of Scouting Program:
Most companies operate with only a handful of innovation scouts. Our survey found that of the respondents who use innovation scouts, nearly one third have fewer than three employees in this role. Only 14% have more than 25 scouts.

Objectives of Scouting Programs:
The most important driver cited by 70% of respondents was "early identification of disruptive technologies." This is followed closely by building the product pipeline, leapfrogging the competition, and creating something novel.

Sponsorship of Scouting Program:
38% said that scouting was sponsored by their R&D organization. Another 24% reported that it was sponsored by Business Development followed by 21.8% respondents that indicated their scouting was jointly sponsored by several executives or groups.

Scouting Resources:
Our survey sought to identify norms regarding how scouting programs are staffed. We found that the most common staffing approach (at 63%) is to tap company employees on a part-time basis. However, over 25% have full time employees in this position. Over a third of the respondents characterize their scouts as technically oriented, and over one quarter as business/marketing oriented.

Scouting Methods:
We found the most common techniques for uncovering external ideas include conducting competitive intelligence (76%), attending relevant conferences and tradeshows (72%), leveraging academic connections (71%), and exploiting their network of innovators (55%). Other, less common methods include the use of third party networks (41%), innovation "bounty" challenges (18%), and crowd sourcing (8%).

Knowledge Gaps of Scouts:
Our survey asked an open-ended question regarding the biggest knowledge gaps or primary training needs for innovation scouting. The most common response, by a measure of over 3:1, was a lack of understanding the "process" of scouting, that is, how to actually go about doing the job.

Successes and Failures:
More than two-thirds of respondents rated their innovation scouting programs as just "moderately successful," with only 12% rating their efforts as "very successful." While a majority of companies surveyed feel their scouting programs are successful, this indicates there is certainly room for improvement.

Great job by Kristy and Margaret of Nerac! Check the full report here: Scouting For Innovation 2009

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Stefan Lindegaard is a speaker, network facilitator and strategic advisor who focus on the topics of open innovation, intrapreneurship and how to identify and develop the people who drive innovation.

Creating New Innovations with Customer Insights

by Jeffrey Phillips

I guess my kids are just too old for crayons anymore, so I missed the Crayon Maker when it was first released, but I'd like to use it as an example of understanding customer needs and identifying lead users, and how an innovation can open up an entirely new market space and revenue opportunity.

For years kids have had broken crayons and their parents have melted them down and formed new crayons, often by mixing the broken pieces. My wife did this for our kids just a few years ago using a muffin tin in the oven. I'm going to guess that Crayola was aware of this activity, neither encouraging or discouraging the activity, until 2003, when it released the Crayon Maker, a machine that allows kids to melt down their crayons and create new ones. Now, crayons have been with us quite a while, and parents have been melting down the broken pieces for quite a while. What took Crayola so long to respond to these lead users who were creating their own crayons?

But let's push through the existing Crayon Maker and think about the opportunities for new innovation. Right now Crayola is only positioning the Crayon Maker to melt down old, broken Crayons. Why not offer Crayon Shavings or Crayon Bits, built specifically for melting down? These would probably be cheaper to produce, and Crayola could probably charge more for them, giving kids two activities - making crayons and using the crayons. Next, why not let kids make Crayons in different shapes? Right now the Crayon Maker makes Crayons in the same shape as they come out of the box. Creating forms or molds in different shapes wouldn't be difficult and could be more fun for kids.

Next, why not sell dies or additives that let kids make their own crayon colors? You could turn the creation of crayons into a science experiment, allowing kids to create their own colors, textures and perhaps even scented crayons. Simply by creating a machine that allows kids to create new crayons we can open up a lot of other product and service offerings. What's taking you so long, Crayola?

Or how about a mold that allows you to make your own Legos? A firm such as Lego could easily create and sell molds that allowed children and parents to make their own Legos out of Play-Dough or bread dough or a host of other viscous material. Then the kids could create, and play with, their own Legos, perhaps creating Legos of different colors and textures. When they were done playing with them, they could easily dispose of them (or in the case of Bread Legos, perhaps eat them!)

These examples are simply thought exercises that indicate how innovation should work. A customer need or lead user is identified, a new product or services is delivered and it opens up an entirely new market opportunity. What customer insights are hiding in plain sight in your business? What lead users are creating products and services to simplify their lives based on your products or information?

Think this doesn't happen in the "real world" of adults? Check out Mint.com, which is taking the financial world by storm. Mint simply helps individuals consolidate a view of their financial lives online. What we've been doing in spreadsheets is now done automatically for us by Mint. Why didn't the banks see this opportunity? What new products and services could a Mint create by offering a consolidated view of your financials?

It's important to interact with your customers and understand what they are doing and creating to improve your products. Sometimes you may discover customers who have created entirely new products or solutions based on your existing products. These lead users often point the way for new product or service development. Once that new product or service is developed, it can open an entirely new market for your firm.

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Jeffrey Phillips is a senior leader at OVO Innovation. OVO works with large distributed organizations to build innovation teams, processes and capabilities. Jeffrey is the author of "Make us more Innovative", and innovateonpurpose.blogspot.com.

Panera Bread Rising

by Steve McKee

"Most of the world seems to be focused on the Americans who are unemployed. We're focused on the 90% that are still employed."


Those are the words of Ron Shaich, CEO of Panera Bread, the 1,300-unit bakery-cafe that has found a way to thrive in spite of the recession. Its formula? A combination of smart financial management and keen understanding of its core customers, most of whom remain gainfully employed (and ever-more attuned to good value).

Rather than cutting corners, Panera has focused on offering more to its broad range of middle income customers, including free wi-fi access and frequent new menu offerings. According to Shaich:


"In many ways, we're renting space to people and the food is the price of admission,"


Panera COO Rick Vanzura agrees, saying, "A bunch of folks have been cutting quality to cut price to go after the marginal customer. We said a better strategy that addresses a bigger group of people is providing better value."

The strategy is working. In 2008 (a very bad year for most fast-casual restaurants), Panera Bread grew by double digits. In 2009 - the worst economic year in generations - the company managed to keep same store sales from declining, and in the third quarter actually increased them by 3 percent. Food industry analyst Darren Tristano pinpoints why:


"Panera's on-trend with what consumers are asking for: fresh, customizable, convenient, won't break the bank."


Panera Bread has been able maintain its focus because of careful cash management. Rather than using debt to expand, assuming the good times of years past would keep on rolling, the company grew slowly and deliberately over the past decade. That kept it healthy from a cash flow perspective and prevented it from having to cut corners or cut margins (or both) when times got tough. As Shaich says:


"Every chain is cutting something - portion size, quality, hours of labor. The result is that ultimately the customer feels it."


Most players in the restaurant industry - in most industries, for that matter - think the current game is all about price. Panera Bread is an all-too-rare exception, demonstrating that companies that keep their focus, nerve, consensus and consistency can thrive even in bad times. I'm a fan.

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Steve McKee is a BusinessWeek.com columnist, marketing consultant, and author of "When Growth Stalls: How it Happens, Why You're Stuck, and What To Do About It." Learn more about him at www.WhenGrowthStalls.com and at http://twitter.com/whengrowthstall.

Double the Fun - If You Follow the Rules!

Out and About Marketing

by Mike Brown

The Baskin Robbins Double Header Cone screams, "I came out of an innovation session!"

That's okay though because it appears from the outside-looking-in to have a solid customer experience-based strategic foundation.

An ice cream cone allowing multiple flavors and formats side by side lets customers preferring cones experience them in a new, fun way. Who can beat two different ice cream flavors and formats (soft serve and scoop) the way YOU want to combine them, instead of randomly (mashed scoops), sequentially (scoops on top of each other), or in a forced swirl (for soft serve)?

It's fun for kids (who seemed to be the primary audience the day we were in Baskin Robbins) and probably makes a parent's life a little saner (since it helps more easily please a kid wanting multiple flavors). For Baskin Robbins, it creates some near term buzz and introduces a new, slightly higher price point to upsell customers who'd typically only buy a single cone.

Unfortunately, the poster's fine print clearly states "no substitutions." You can't have two scoops or two soft serve flavors. The Double Header cone "fun" doesn't extend to customer-driven innovation at the point of sale.

Have a wonderful Thanksgiving (US-based readers), and be on the look-out for more "out and about marketing" examples to share here! Brainzooming is taking a few days off and will be back next week.

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Mike Brown is an award-winning marketer and strategist with extensive experience in research, strategy, branding, and sponsorship marketing. He's a frequent keynote presenter on innovation and authors Brainzooming!

Joining, Talking and Participating

by Matt Heinz

Want credibility with a set of prospective customers? Want to be accepted as one of them, as a part of their tribe?

It takes more than just joining their club. It takes more than just speaking their language, and talking at them.

To be accepted today, you have to participate.

Participation means two-way communication, in an authentic manner, on a regular basis. It takes more time, more effort, and more investment than what we used to be able to do - buy a list, get some PR, write a letter. In other words, talk at the prospect.

Today, prospects require and expect more. If you talk at them (in a letter, a blog post, an article in a trade publication), they expect to be able to talk and comment back. And then, in turn, they expect you to read their response and engage yet again.

It's more work. And as long as your prospects keep responding, it doesn't really end. But isn't that awesome?

The companies you want as your customers aren't just reading your stuff anymore. They're responding, engaging, asking you questions, questioning your opinions. They're getting to know you, and by participating back you're earning their trust and respect. And if you keep participating, you can earn their business too.

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Matt Heinz is principal at Heinz Marketing, a sales & marketing consulting firm helping businesses increase customers and revenue. Contact Matt at matt@heinzmarketing.com or visit www.heinzmarketing.com.