Walter Adamson

The Value of Hutch Carpenter's Customer Feedback Innovation Model

Hutch Carpenter's Three Models For Applying Customer Feedback to Innovation is the best post on business innovation and social media feedback that I have read. For two reasons, one is that it provides a nice, succinct business-oriented model, and secondly it doesn't mention "creativity" - my pet hate when it comes to business innovation consultants.

Carpenter simply plots a nice graph with the X-axis representing the difficulty of getting feedback relevant to a particular objective and the Y-axis representing the impact on company results for the different objectives.

What a great image - something that could be left on the screen for the duration of a half-day workshop on the subject.

He also gives specific examples, applying his categorisation to My Starbucks Ideas which shows very clearly and simply the power of his model. I previously wrote about My Starbucks Ideas, noting that 0.03% of ideas get through - a simplistic analysis in the light of Carpenter's model.

Value = Benefits - Costs

I'm a bigot for my own model of Value = Benefits - Costs, along with the hierarchy:

• Value; is a subset of
• Benefits; which is a subset of
• Advantages; which is a subset of
• Features.

To my admittedly biased mind this maps nicely into Carpenter's model, where he categorizes suggestions into three groups, those which describe Features - product or service requests, or the Product's "job" - understanding the deeper purpose your product fulfills, or form a Proposal - putting a new concept in front of customer's to understand its key value drivers.

How the models align

Carpenter's Features actually embrace my Features and Advantages. The reason? Features are just "messaging", hoping to hook into a segment which will respond to them. Where they do evoke a response, then the first level of that response is because of perceived advantages, to that segment, for some of the features.

Therefore some or all the Features become Advantages to that segment, while remaining of no advantage to other segments. Thus "Advantage" requires some form of engagement.

My Starbucks Ideas already has that engagement. By the very act of people saying that they want something it means that they see an advantage in having it. A segment of 1. Therefore the base level of input are Advantages, in my terminology.

These Advantages (Carpenter's Features) are essentially context-free - they would probably work in many other coffee chains and are without any linkage to business objectives.

When a suggestion becomes a Benefit

Next come suggestions for which it is possible to link into or align with the context of Starbucks mission and business purpose and therefore transform themselves into Benefits, or what Carpenter labels the Products "job".

By this definition, a Benefit can only come from a business perspective e.g. from a Starbucks' perspective, whereas a Feature/Advantage is from a customer's perspective. It drives at extending the purpose of the business, but not radically - that's the role of the Proposal/Value category of suggestions and analysis.

Proposals require business analysis

Suggestions which go beyond Features, far beyond, and beyond alignment with the current business model, are those which become Value, or in Carpenter's model Proposals. Here we are looking for ideas that are at the fringe, are potentially radical, are from the edge inwards, and are somehow visionary. Carpenter notes that Roberto Verganti would also say that they have to be "attractive, sustainable, and profitable" and that's the link to Value = Benefits - Cost.

At this Proposal level, the value can only be determined after clear definition of the benefits, and the costs, which would form part of a normal business case. Developing that kind of case, for a new visionary offer, is certainly hard work but with potentially outstanding business results, and that's reflected by its top position on Carpenter's Y-axis.

For me, combining Carpenter's model with the "Value = Benefits - Cost" equation and the hierarchy of Features, Advantages, Benefits and Value delivered clarity and new insight into how to apply customer feedback to business innovation.

http://xeesm.com/walter

What value do you get form one or both or the combined models?

Have you seen better models for applying social media customer feedback to business innovation?

What's your best example of these different forms of customer feedback and their results?

Related articles

• Changing Beliefs: Business Models (relationship-economy.com)
• Should the "Competitive Leadership Model" Really Be "The Value Leadership Model"? (leveragepoint.com)

Social media brings 100X improvement in customer insights

In a report called Social Media Monitoring: Why It Pays to Listen to Online Conversation Aberdeen Group concludes that Best-in-Class organizations are 2.6-times more likely than Industry Average companies, and 93-times more likely than Laggards, to improve their ability to generate consumer insights that drive new product/service development.

That's a remarkable difference, and if you added up the money spent on investment in innovation you would probably find the Best-In-Class companies are spending significantly less and achieving much better results also because of their use of social media.

It's these kind of reports and figures which can provide essential input for a business case for social media, among those firms still to be convinced or wishing to increase their investment.

The report, covering 250 companies, adds to the unabating trend for business organisations to invest in social media, despite, for example, the GFC.

In fact, the research found that, despite the substantial cutbacks that most companies have been forced to make in light of the global economic recession, 50% of all companies are increasing their investment level in social media monitoring initiatives.

Aberdeen is a rock solid research group, so this research is quite significant. It comes on the back of Inc's recent study showing an accelerating use of social media among the Inc 500, and the Social Media Academy's recent survey showing that 75% of the Fortune 500 are engaged already in social media.

In fact the Social Media Academy uncovered the fact that many of the Fortune 500 are coy about their activities because they seem them as a competitive advantage.

It's a tsunami

This all adds up to one big wave pounding over the corporate world and how it interacts with its customers.

The Aberdeen study, found a series of other significant differences between Best-in-Class and Laggard companies in their survey:

• Best-in-Class are 3.3-times more likely than Industry Average companies, and 82-times more likely than Laggards, to improve their ability to identify and reduce risk to the brand;
• Best-in-Class organizations also outperformed Laggards when it comes to improving customer advocacy and decreasing customer service costs.

In addition to deploying the right set of enabling technologies, success in social media monitoring requires a combination of strategic actions and organizational capabilities. To that point:

• Best-in-Class companies are 42% more likely than Laggards to have a process for disseminating insights gleaned from consumer-generated content to key decision-makers and also twice as likely to have a process for applying the insights in the context of specific needs;
• Best-in-Class companies are 1.9-times more likely than Laggards to have dedicated operations resources devoted to social media monitoring, analysis and reporting. 

The report includes a number of recommendations which it says companies must do in order to achieve best performance, including:

• Integrating social media monitoring activities with customer feedback management activities at a granular level;
• Defining event triggers and implementing alerts to communicate insights that are urgent in nature.

In addition to hiring resources that have social media monitoring as part of their job description, recommended actions also include conducting online consumer sentiment analysis at a granular level, identifying and measuring the value of key influencers, and implementing time-sensitive performance metrics.

So, what's the bottom line?

Firstly, if you're "not yet convinced" or "your customers aren't ready for it" then you're already a terminal Laggard.

Secondly, if you're getting going then stay on track and have a good strategy and organisational implementation plan because if you're not committed to staying ahead then you are going to be passed by others who are.

Thirdly, if you're building a business case and you need some "facts" then go figure how much you are spending on some of these key customer and product activities today and extrapolate a conservative achievable saving if you could approach the current best practice.

Fourthly, if you are about to invest in new product development research, or brand monitoring, or customer service, then step back and think hard about the full opportunities for social media investment to bring better and more cost effective results.

Finally, because I work with a lot of Software as a Service companies helping them rebuild and shape their business and marketing models, I noted the following statistic from the report:

• 78% of Best-in-Class companies, compared to only 8% of Laggards, have improved their year-on-year customer retention rates.

That's gold, and very very expensive if the Laggards have to play traditional marketing/sales catch-up with the Best-in-Class.

Social media is game changing for business, and it is in play today, now!

http://xeesm.com/walter

Forward thinking of better banking

The Better Banking Blog is a great read if you're interested in forward thinking about better banking and banking services.

I liked this post about community involvement in product and service development, and opening up the banking platform to mashups.

Can you imagine if a bank opened up development in such a way? What if customers could design their own widgets for desktop banking using your Internet banking platform? How about the capability to set up a mobile banking tool that brings in transactions from all your bank accounts? Again, it’s already happening, albeit without the permission of the bank and security issues being addressed.

In fact, as they point out, this may become a competitive necessity in Australia as competition is able to enter the payments and funds transfer business, which was previously restricted.

There's an obvious strategic role for social media, which is one of the points of my comment on that post. Brand promises are becoming worthless and in fact negative in the face of brand depth which fails - fails to deliver the promise and social media accelerates this failure through connectivity and transparency.

Utilising social media strategically to gain transparency, customer insights, and engagement is going to become a necessity over time. Although I'm not holding my breath that it will happen soon in Australia for banks per se as there is low competition and little incentive - but in financial services there are many opportunities.

- You can read here about the American Express Open Forum and some of their tactics.

In the social media world Wells Fargo is often quoted as a banking leader, and no doubt they are as they are doing more than twittering for sure. I'm not up with the best examples, but you might be interested to read some of the comments on this Wells Fargo blog post which are less than complimentary and show how well the whole effort has to be coordinated in a complex organisation.

I'm glad it demonstrates this mayhem as it brings home that social media "strategy" is not just some clever campaign from an Agency.  It takes a thorough assessment and sound business-like methodologies to create the strategy, and to execute, monitor, measure and improve it.

I enjoyed reading many of the posts on Better Banking and pleasantly surprised to see the forward view and progressive thinking in a sector not renown for such.

Cocreation of Marketing Language

Rob Birgfeld at SmartBlog recounts a great example of product cocreation by IBM.

The point of his post was not the grass-root creation of the product, which was impressive enough, but how IBM picked up the language and "keywords" those in the communities used to talk about the product.

After much work building a significant community, IBM was able to gather data from comments on its blog, in its forum, on Twitter and on YouTube — and not just data on how to make the product better. The IBM team looked at how the community was describing the product — the benefits, the features — and integrated that language into the marketing materials.

This is a real insight for many companies wondering about how to use social media, how to use it more deeply, or the benefits of such social media collaboration in product development.

As Birgfeld says:

To many businesses, this is the inverse of their marketing strategy. They define their messaging either in a closed room, cross their fingers and hope the message spreads across social media channels. That’s only using half the value of social media. Interacting and engaging on Twitter, Facebook, LinkedIn and blogs continues to be key in a successful social media strategy, but it’s time we take a closer look at the data we might be ignoring. Getting people to talk is great — but monitoring how they’re talking and integrating that language throughout your marketing campaigns can help extend and expand that conversation. A good message will travel regardless of where it originates. But if you use your community to help identify that message, you’re arming yourself with the best market intelligence money can buy.

While marketing and sales are the poster boys of social media, it is most likely in these "back office" efforts, whether they be in product development, or product support and service, where very significant benefits lie for business.

See Axel Schultze's post Social Media Rock Star or Social Media Business Consultant?

It's important for companies to develop strategies around these kinds of activites, and to think through the dual roles of branded and non-branded communities and how they interplay. And also how the ongoing dialogue is maintained and the enthusiasm maintained after say a new product release.

There is not doubt that by IBM developing and harnessing people in product design, and giving communities and people that sense of ownership, they have created a force more powerful than any marketing dollars could buy.

By the way the product is sMash, which evolved from IBM's Project Zero "community-driven commercial development" which is a great example of cocreation and well worth examining the site.