Feeds:
Posts
Comments

Posts Tagged ‘Marketing’

Transparency; reliability; trust: These key terms are rehearsed and highlighted many times in textbooks and business books, academic and trade articles about managing customer relationships. Holding up to them is based, for example, on being honest, truthful and fair when making product or service offers to customers and in any other dealings between a company and its customers. However, those concepts that are good in managerial and marketing theory are too often lost when it comes to practice.

In addition, experts, technology consultants and other advocates of digital marketing are praising the capacity gained by companies to know so much about the behaviour and personal characteristics of their customers. One of the great benefits of this customer knowledge is in enabling companies to construct offers that will closely fit the needs, preferences and consumption or usage habits of their customers. Again, a gap emerges between what companies are supposedly capable to do with digital technologies available to them, including information and tools, and what they actually do. More accurately,  oftentimes companies are not doing enough in utilising those technologies to the intended purpose of creating better fitting offerings and messages.

The present post is based on a true story of a troubling journey to acquire an iPhone from a mobile telecom service provider (it will be called here ‘WM’). But this post is not just about the case of a particular company. Similar forms of problematic conduct are likely to be encountered at competing mobile service providers as well as other telecom service companies such as TV (cable and satellite), telephony (voice and data) and Internet providers. Moreover, at least some of these types of flawed conduct will be familiar to the reader from interaction with service providers in other domains (e.g., banking and finance, credit cards, insurance, healthcare, travel and tourism). In essence, this conduct refers most typically to providers of contractual services, and particularly when services extend over months and years.

An upgrade of a customer’s mobile phone is often accompanied by a modification of his or her service package; it is justified especially when a large generation gap exists between the previous and the new model. Two-part and three-part tariff schemes have been common in mobile communication for many years, splitting the price of service between fixed and variable components. Usage possibilities and patterns have changed, however, with smartphones, pertaining in particular to the online flow of data and the use of mobile applications (‘apps’). Service packages more frequently combine bundles of included (‘pre-paid’) units — minutes (voice), messages (SMS), and data MBs/GBs (mobile websites and apps); the weight of variable cost (i.e., based on price per unit), drops vis-à-vis a fixed cost component.

Subscribed customers are encouraged to pre-commit to ever larger bundles or unit quotas, some of them could constantly be left unspent each month. At least in one category it is sensible for mobile service providers to ‘give away’ a large quantity of messages amid the expanded messaging by customers via free chatting apps (e.g., WhatsApp, Facebook’s Messenger). The marginal cost per unit of any kind could be much lower now for the mobile network companies to make it economic for them to offer larger bundles, and thus attract customers to their ‘great value’ plans (i.e., the customer gets lots of ‘free’ units). Albeit, if customers do not utilise large enough portions of their quotas, they could end up paying for units they never get to benefit from.

A service plan was offered with the new phone purchased, including 10GBs of data, 5000 minutes and 5000 messages per month. This volume signalled a dramatic increase from my previous consumption levels. No doubt the new smartphone could support a huge data volume not possible with the previous semi-smartphone model, but also a volume hard to imagine how it may be used. Nor was it perceivable how to use anything near 5000 SMS. That is the magic of large numbers — they can be fascinating and captivating, yet meaningless at least in a short to medium term. The sales representative at the store and service centre of WM promised that it will save up to 45% of my bill so far. With the service package I get also ‘marvellous high-fidelity’ wireless-Bluetooth earphones, supposedly as a bonus or gift. No other plan was suggested. The relation of the earphones to the discount was not explained. Protesting that I do not really need those earphones did not help. It was awkward, but then it seemed that the enlarged traffic volume, that one might learn how to take advantage of, with a reduction in monthly cost could be worth it. The value of the earphones was negligible to me (but apparently not to WM). That is probably where System 1 got the hold of me. When not feeling on solid ground, swapped with documentation, and distracted, one may fail to pose difficult, intelligent questions;  System 2 remains dormant or blocked. It was a combination of desire to believe the offer is good for me, and to trust the company that it will treat me fairly.

The secret behind the earphones was revealed in the next monthly bill. If paid in cash, their price was about $150 vis-à-vis $900 for the iPhone. I agreed to pay for the iPhone in 12 credit installments (adding  5% in cost). However, the additional and unexpected payment for the earphones was set to be spread over 36 months (+65%! added to price in cash). The discount on service was for 12 months. The payments for the earphones would “eat” much of the discount during the first year. Furthermore, they will drag for another 24 months while the cost of service package returns to its previous level, though of course with a much greater usage allowance. Lesson: Beware of ‘free gifts’ and make sure to get all the details (see more in the section below on contracts).

This has brought me promptly back to the service centre — the staff refused to take their earphones back and gave me another nice demonstration of their performance. However, with the help of a kind supervisor we agreed that payments for both iPhone and earphones will be changed to 6 instalments with no interest (see more in the section on execution).

The Bluetooth earphones may well be a good product and the representatives were right to offer it, but it is wrong to impose the earphones as a ‘bonus’ or incentive if the customer is not interested and declines the offer. Furthermore, at least one other package option should have been recommended that would be more aligned with previous usage in recent months. A smart system should know how to use past behaviour of the customer as a benchmark and propose a reasonable expansion of usage levels of minutes, messages and data. First, it would make the customer feel that the company knows him or her (e.g., needs and usage patterns) and is trying in accordance to provide the most suitable personalised solutions. Second, when the quota of units posits a sensible ‘ceiling’ to the customer it may serve as a goal or an aspiration level to gradually increase his or her usage towards it, and then upgrade the service plan. Otherwise, the customer may be just lost, having no appreciative reference for scaling one’s personal usage levels (perhaps that is the objective, to let customers with less self-control carry away, but that is beyond the scope of this story).

Signing contracts to purchase products or receive services is frequently a sensitive matter and a host of potential pain points. This happens because customers usually cannot fully or even adequately read the contract and comprehend it at the time of transaction, and they are not sufficiently encouraged to spend the time reading and asking questions. The contract for my smartphone included, for example, the terms of payment, basic support, terms of usage,  liability and warranty, etc.. On each desk at the store and service centre of WM stands a tablet in portrait position. Regularly, it displays ads for services and products. However, WM saves on paperwork and employs the screen also to display contracts that can be signed digitally (later sent by e-mail). Reading the contract from the screen is not very convenient and the customer also cannot control the display to the pace of his or her reading. One is quickly brought to the place for signing. The contract for the earphones was separate in origin from the iPhone’s (later corrected); when the representative came to it, he jumped to the signature position which incidentally fell at the top of the screen. When asked to see what comes before, he said this is simply to confirm that I accept the earphones. At that point I wanted to trust him and WM. This turned out to be a mistake. Lesson: Never agree to sign a contract on a screen without seeing the previous screen pages (as you should not do when signing a paper contract). The tablet screen may appear informal and friendly but the contract is binding.

  • In fact, by returning to the issue of service plans, the tablet already on the desk can be used cleverly for displaying service options to a customer while taking into account his or her personal usage patterns. That is, the company can show the customer what would be the cost implication of a proposed service plan given current usage levels, and how it may change if usage levels increase by X%.

On top of all, bad execution of proceedings can temper even actions taken in good faith. It may happen as a result of neglect, lacking proficiency by the staff (e.g., how to use the computer system), or flaws in computer software (e.g., poor execution of instructions). Here are two examples — no attempt is made to guess what has caused them:

As told above, the payment arrangement was changed with special managerial consent to six instalments with no interest, as an option in the contract allows, for both the iPhone and earphones. Unfortunately, a notice from the bank as well as the credit card monthly bill soon revealed that the whole amount was charged in a single payment. The trap is apparently in the phrasing of the contract (translated): “The sum of $$$ that will be charged in one payment (or up to six payments to the choice of the customer at the time of acquisition)”. The phrase ambiguously does not specify in how many (equal) payments, up to six, that (cash) price will be charged. This ambiguity has led to practically ignoring the content in parentheses and what was agreed accordingly. It is noted that a statement on an option of payment in instalments with interest explicitly indicates the number of payments and amount of each one. The phrasing of the first statement must similarly be fixed for that option to have any validity.

In the second case, the company left in place a monthly charge (~$6) for a quota of 70 SMS from my previous service package. Obviously, this number is negligible relative to the new allowance of 5000 SMS a month in the new service plan with the iPhone. They should have automatically removed this obsolete component together with other components from the older plan. The customer service representative at the call centre argued that I should have asked it to be cancelled. That is, instead of apologising for an honest mistake, and possibly reimbursing me for the past month, she made it look as if I may have wanted a non-significant addition of 70 SMS to 5000 SMS (>70:1 ratio). That was already infuriating because it made no sense at all. Lesson: Always check your bills carefully.

The customer journey to purchase an iPhone evolved into a kind of chain of pitfalls, acts of malpractice, and errors of unknown source or cause. It must be emphasised that the troubles are concerned with the envelope of services that enable using the iPhone and not the device itself. It is a story of failure of sales and service representatives to listen, a tendency to repeat answers regardless of the customer’s response (i.e., lack of sensitivity or rigidity forced from above), and possibly a skill problem in retrieving information and instructing their computer systems correctly. Where supervisors or managers do try to fix things, organisational and technological pitfalls may stand in their way. Nonetheless, the more disturbing moments of the experience surface when a customer feels an attempt to manipulate has been made (e.g., by diverting attention or hiding information). Being manipulated generally feels uneasy, because among other things it infringes on a consumer’s autonomy to make a decision in one’s own good, but it is all the more damaging when done just to serve the manipulator’s interest (e.g., make a sale)[*].

Companies and customers alike can help in minimising negative encounters that can spoil customer journeys. Consumers can be more vigilant, pay more attention to details, and ask questions when offers do not sound or look right. Yet in the real world consumers cannot avoid being off guard, erring in judgement, or being complacent — much of the time humans are driven by the intuitive and instinctive System 1 mode of thinking. Companies can make greater effort to ensure customers have the relevant information and comprehend it; be attentive to what customers ask or argue; and overall show respect to customers and refrain from egregiously exploiting their cognitive vulnerabilities — perhaps naïve, but not illegitimate to expect.

Ron Ventura, Ph.D. (Marketing)

 

[*] Further reading: “Fifty Shades of Manipulation”; Cass R. Sunstein , 2016; Journal of Marketing Behavior, 1 (3-4), pp. 213-244.

Advertisements

Read Full Post »

In late February the annual Mobile World Congress (MWC) 2016 took place in Barcelona, including a large festive exhibition and a conference next to it. The leading motto of the MWC declared that “Mobile Is Everything“. This motto, directed primarily at people involved in the mobile industry, on either the technology-side or the management-side, could help to increase their interest in the event, create a uniting theme, and energise them to be part of the congress and its community. But what does this ‘invitation’ tell client-companies operating mainly outside the field of mobile telecom and technology? Moreover, what does this call suggest for the lives of consumers?

A little over 100,000 people from 204 countries attended the MWC this year according to MWC official website. Some 2,200 companies were represented in the exhibition; during that time the conference hosted speeches and panel discussions by experts and business leaders. An intensive media coverage on TV, online, and in the press, made sure news from the event reach almost everyone. Everything important, it would appear, has happened that week at the MWC.

Companies were presenting in the exhibition their technological solutions, methods and products. Each company could summarily describe its areas of specialisation by classification in any of 90 different product categories (companies more frequently applied 3-5 categories). A remarkable variety of mobile-related products, applications and services were shown in the exhibition: mobile devices (i.e., latest models of smartphones and tablets); accessories and mobile-supported peripheral equipment (e.g., virtual reality [VR], 3D printing, Internet of Things [IoT]); mobile apps; equipment and services in connection with mobile communication (e.g., infrastructure, business & tech consulting, data analysis). While some companies demonstrated apps as designed to be used by consumers, most exhibitors offered  platforms for developing apps (custom or adapted) and mobile-oriented methodologies and services intended for business clients.

  • The classification appears to single out the salience of mobile apps these days. It is interesting to note that out of the ninety categories, five were dedicated to App Development: General, Film, Gaming, Music, and Shopping.

Key areas associated with digital marketing (e.g., data analysis, CRM, content management) need to be extended from online (PC-based) to smart mobile devices. Clearly, technology companies that were not originally in the mobile industry have to adapt and add digital solutions respectively for the mobile channel. Yet it is no less a challenge for companies in lines of business that only use digital technologies for improving their performance (e.g., food, cosmetics, fashion, retail) to keep pace with the latest developments — in mobile communication to this matter. Some companies may produce their solutions in-house but many others have to hire specialist companies to provide them with systems or services tailored to their needs. Those kinds of companies, offering business solutions in a mobile context, would be found most likely at the MWC.

Mobile Advertising and Marketing was one of the more crowded categories (290 companies classified). One of the issues receiving particular attention in companies’ offerings is targeted advertising on mobile devices as well as improved targeting techniques for mobile apps. This category is closely tied with data analysis (e.g., to provide input for implementing more accurate personalised targeting), and is also connected with topics of customer relationship management (e.g., loyalty clubs) and content management in the mobile environment. For example, Ingenious Technologies (Germany) is an independent provider of cloud utilities for business analytics and marketing automation (e.g., omni-channel activities, tracking customer journeys), and Jampp (UK) specialises in app marketing, offering ways to grow consumer engagement in mobile apps (e.g., combine machine learning with methods of big data and programmatic buying). Exhibitors also addressed an increasing concern of monetization, that is the ability of businesses to charge and collect payments for content or for products and services that can be ordered on mobile devices, especially via apps.

In an era that promotes digital and data-driven marketing, it becomes imperative to cover and analyse data from mobile touchpoints. The category of Data Analysis (148 companies) includes the marketing aspect, yet relates to applications in other fields as well.  Among the applications concerned: integrating predictive analytics with campaign management (e.g., Lumata [UK]); analytic database platform for IoT and processing app-based queries (e.g., Infobright [Canada]); traffic analytics for enhancing urban mobility of vehicles and people (e.g., INRIX [UK]).

In the category of Consumer Electronics (222 companies) one may find: (a) devices (e.g., Samsung Galaxy S7 smartphones); (b) accessories (e.g., SanDisk’s portable data storage solutions, fast charging [Zap-go-charger, UK] or portable power backup [CasePower, Sweden]); and (c) components (e.g., LED components by Ledmotive [Spain]). But there were also some less usual devices such as a wearable device for tracking a dog’s health and fitness, which comes with an app (Sense of Intelligence [Finland]).

  • The area of audio (music) and video playing gains special interest, and is further connected to gaming and mobile entertainment overall. A couple of examples under the heading of consumer electronics: software for audio enhancement (AM3D A/S [Denmark]; a mobile video platform, supporting live streaming and video chat (avinotech [Germany]). Video also appears in the context of content management, such as an advanced technology for accelerating display of video content in HD TV quality (Giraffic [Israel]).

This brief review would not be complete without the rising category of Location Technologies and Services (141 companies). Location technologies and their applications can be found in different areas, not just marketing or shopping. For instance, a French company (Sensineo) offers an ultra-low-GPS tracking and positioning device which may help in locating cars or dogs, but furthermore important, tracing vulnerable people who may have lost their way and need support or medical assistance — location apps and mobile alarm devices emerge as new aids to healthcare. In the context of advertising, we may refer to technologies that bridge online and offline domains (e.g., targeting by combining text analysis of consumers’  conversations in social media and intelligence on where they go in the physical world [Cluep, Canada], eliciting online-to-offline engagement in brand or retail campaigns [Beintoo, Italy]). Another technology (by Pole Star [France]) specialises in indoor location, involving analytics through precise geofencing (i.e., activation as people enter specified perimeters) and proximity detection. The last three examples have apparent relevance to consumer behaviour during shopping trips.

  • In regard specifically to development of shopping mobile apps (46 companies), there seems to be greater reference of exhibitors to technologies that may support shopping utilities but not enough examples for apps that truly connect retailers and shoppers. As an example for a more relevant app, Tiendeo Web Marketing (Spain) offers an app, working in partnership with retail chains, that informs consumers of weekly ads, deals or coupons in their area of residence.

For businesses that are client-users of technologies and associated services, the message is very clear — in order to be accessible and relevant to consumers, the business must have mobile presence. Consumer brands of products and services, and in retail, cannot afford to neglect the mobile channel. Moreover they must have a strong showing because the competition is intense and ‘mobile is everything’. The need to be present and useful via mobile devices (mobile websites and apps) is undisputed. As more consumers are engaged with their smartphones much of the time, and perform more tasks in mobile mode, companies should be there available to them. The idea, however, that this is all that matters for marketing and customer service is dubious. Companies are under endless pressure to keep to-date with continuous advances in technology. Technology and consulting companies remind their clients all the time that in order to be competitive they must apply the most advanced mobile features and tools. But companies have to be available, effective and attractive through multiple channels and the kind of pressure implied by the MWC’s motto is neither helpful nor productive.

The danger is that companies engaged in consumer marketing may neglect other important channels in attempt to develop a strong mobile presence. In fact, this kind of shift to interactions through newer technological channels has been happening for years. The latest shift advised to companies is from Web 2.0 on personal computers to mobile websites and apps. It could mean that companies would be forced to invest more in mobile compatibility of their websites, while neglecting improvement of the functionality and visual attractiveness of their usual websites. One of the implications of the shift to online and mobile touchpoints is reduction in direct human interactions (e.g., fewer brick-and-mortar service branches, fewer service hours, not enough trained and skilled personnel in call centres). But consumers continue to appeal call centres for help, and when faced with inadequate assistance they are encouraged to prefer computer-based interactions. More companies offer customers options to chat by text, audio and video, but on the other hand they also refer customers more frequently to virtual agents. The mobile facilities are not desirable for everyone, and at least not all of the time; having the most advanced technology is not always an advantage, except for tech-enthusiasts.

Companies that develop technologies and market hardware and software products and associated services are on a constant race to provide more advanced competent solutions. It starts to be a problem when too many companies are pursuing a single main course — mobile in our case. It is the kind of push induced by MWC’s organizers that should worry us. The interest of GSMA — a consortium of mobile telecom operators, joined by device manufacturers, software companies etc. (“broader mobile ecosystem”) — in putting mobile under the spotlight is clear. However, following the claim that “mobile is everything” can have negative consequences for many stakeholders in industry and also for the general public. There is a sense of rush to develop apps and all other sorts of mobile products and utilities that is concerning. It may never develop into a bubble as fifteen years ago because the conditions are different and better (i.e., stronger technological foundations, greater experience), but there are disturbing signs that should alert stakeholders.

It is hard to argue with the many conveniences that mobile phones, particularly smartphones, provide to consumers. Basically, if one is late for a meeting, wants to set a meeting point with a friend in the city, or just needs to update a colleague in the office about anything, he or she can call while being out on the way somewhere. It has become an invaluable time saver as one can settle any professional or business issues at work while travelling. Yet the elevation of mobile phones to computer-based ‘smart’ phones (and in addition tablets) has expanded greatly the number and types of tasks people can perform while being away from home or office. It is not just sending and receiving voice calls and SMS but also e-mails and various forms of updates on social media networks. Then one can check the news and stock prices, prepare shopping lists and compare products and prices while visiting shops, schedule a forgotten appointment for the doctor, order a table at a restaurant for the evening, listen to his favorite music, and far more. The point is that any minute one can find something to do with the smartphone; people cannot lose hold and sight of their smartphones. Smartphones no longer just serve consumers for their convenience but the consumers ‘serve’ the smartphones.

The motto of MWC could be right in arguing that for consumers ‘mobile is everything’, yet it is also complicit in eliciting the consumers to become even more preoccupied with their mobile devices and adopt forms of behaviour that are not honestly in their benefit. Consumers bear a responsibility to notice these effects and sanction their use of mobile devices reasonably. For instance, people not only can call others when convenient but may also be reached by others in less convenient times (e.g., by an employer). Talking and messaging while travelling on a bus, taxi or train is fine but there are stronger warnings now that people put themselves and others in greater danger if doing so while driving, because this diverts their attention from the road. Being preoccupied with their smartphones causes people in general to look less around them and be less communicative with other people. Immediately sorting every query on a website or app may get consumers hasten purchase decisions unnecessarily and also ignore other channels of resolution (e.g., consulting staff in-store). Finally, relying on mobile devices to find any information instantly online evokes people to make less effort to remember and accumulate new knowledge, to retrieve information from memory, and think (i.e., less cognitive effort).

The motto “Mobile Is Everything” sounds shallow and simplistic. Sweeping generalisations usually do no much good — they cannot be taken too seriously. Perhaps this title was meant to be provocative, so as to fuel the MWC with enthusiasm, but it can end up aggravating. The field of mobile telecom and digital technology has much to show for in achievements in recent years. There is no need to suggest that businesses and consumers cannot do without ‘mobile’ and should invest themselves even more fully into it. Using such a motto is not acting out of strength.

Mobile indeed is a great deal, yet is definitely not everything.

Ron Ventura, Ph.D. (Markting)

 

Read Full Post »

The location-based technology of beacons is a relatively recent newcomer in the retail scene (since 2013). Beacons provide an additional route for interacting with shoppers in real-time via their smartphones as they move around in stores and malls. Foremost, this technology is about marrying between the physical and the digital (virtual) spaces to create better integrated and encompassing shopping experiences.

It is already widely acknowledged that in-store and online shopping are not independent and do not happen completely separate from each other; instead, experience and information from one scene can feed and drive a shopping experience, and purchase, in the other scene. In particular, mobile devices enable shoppers to apply digital resources while shopping in a physical shop or store.  Beacons may advance retailers and shoppers another step forward in that direction, with the expectation to generate more purchases in-store. The beacon technology was received at first with enthusiasm and promising willingness-to-accept by retailers, but these subdued in the past year and adoption has stalled. A salient obstacle appears as consumers remain hesitant and cautious about letting retailers communicate through beacons with their smartphones and the implications it may have on their privacy.

In essence, beacons are small, battery-powered, low-energy Bluetooth devices that function as transmitters of information — primarily unique location signals — to nearby smartphones with an app authorised to receive the information. The availability of an authorised app (e.g., retailer’s, mall operator’s) installed on the consumer’s smartphone (or tablet) is critical for the communication technology to function properly. Upon receiving a location signal, the app is thereby triggered to display location-relevant content for the shopper in-store (e.g., product information, digital coupons, as well as store activities and services).

Additional requirements may be in force such as the retailer’s app being open during the shopping trip or that the shopper consents (opts-in) to allow the app receive information from beacons, but these do not seem to be necessary or mandatory conditions for the technology to work (e.g., an app may be set with ‘approval’ as default). Ambiguity that seemingly prevails about the extra requirements could be one of the sour points in the technology’s implementation. On one hand, the application of beacons is more ethical when setting up at least one of these requirements, and should endow it with greater credibility among consumers. On the other hand, any additional criterion for access of beacons to smartphones — assuming the app is already installed — could limit further the number of participating shoppers and reduce its marketing impact.

  • Only smartphones (and tablets) support apps, not any mobile phone. It should not be taken for granted that everyone has supporting smartphones, hence raising another possible limiting requirement on access for beacons (though in decline in developed countries). Another problem, yet, concerns the distinction between Apple iPhones operated with iOS and smartphones of other brands operated with Google’s Android — beacons have to work with either type of operating system and compatible apps but they do not necessarily do so (e.g., iBeacons are exclusive for Apple’s own mobile devices).

There are some more variations in the application of beacon technology in retail. Beacon devices may be attached to shelves next to specific product displays or to fixtures and building columns in positions aimed at capturing smartphones of shoppers moving in a close area (e.g., an aisle). If the beacon is associated with a particular product, the shopper may engage using the app by actively approaching the phone to the beacon. Otherwise, the app communicates with the beacons without  shoppers taking any voluntary action. Furthermore, some applications of beacon technology suggest sending information other than location signals from the beacon, such as product-related information, and receiving customer-related information by the beacon from the smartphone.

Reasonably, retailers would be interested first in applications of the technology for practical marketing purposes in their stores. However, beacon technology may also be utilised in research on shopper behaviour, a purpose now appreciated by many large retailers.

Marketing Practice in Retail

The instant sales-driven idea of application of beacon technology evoked by retailers is to introduce special offers, discount deals and digital coupons for selected products as shoppers get near to their displays. Notwithstanding this type of application, location-based features and services enabled via beacons can be even more creative and useful for shoppers, and beneficial for the retailers.

Relevance is key in achieving an effective application of the technology. Any message or content must be relevant in time and place to the shopper. That is, the content must be related to available products when the shopper is getting close enough to them. The content should not be too general in reference to any product in the store but to products in a section of the store where the shopper passes-by. Triggering an offer for a product just after the shopper entered a store is less likely to be effective, unless, for example, there is a special promotional activity for it in a main area of the floor. The retailer should not err in introducing an offer for a product item that is not available in the specific store at that time. Furthermore, if the app can link product information with customer information, it may be able to generate better content that is both location-relevant and personalised. The app could make use of accessible information on personal purchase history, interests and demographic characteristics. This higher-level application surely requires greater resources and effort of the retailer to implement.

The beacons’ greatest enemy could be their use for bombardment of shoppers with push or pop-up messages of offers, deals, discounts etc. This practice is suspected as a major fault in the early days of the technology that may be responsible for the slowdown in adoption lately. There could be nothing more irritating for a shopper if every few meters walked in the store he or she is interrupted by a buzz and message of “just today offer on X” that appears on the smartphone’s screen. Retailers have to be selective lest customers will avoid using their apps. It is much more important to produce adaptive, relevant and customer-specific messages and content overall (Adobe, Digital Marketing Blog, 4 February 2016).

  • The grocery retail chain Target, that launched a trial with beacons in 50 US stores in the second half of 2015, committed, for instance, to show no more than two promotional (push) messages during a store visit (TechCrunch.com, 5 Aug. ’15).

More intelligent and helpful ways exist to apply the beacon technology in interaction with the app than promotional push messages. First, content of the “front page” of the app can change as the shopper progresses in the store to reflect information that would be of interest to the shopper in that area of the store (e.g., show hyper-linked ’tiles’ for nearby product types). Second, beyond ‘technical’ information on product characteristics and price, a retailer can facilitate shopper-user access to reviews and recommendations for location-relevant products via the app. Third, if the shopper fills-in a shopping list on a retailer’s app (e.g., a supermarket), and the app has a built-in plan of the store, it can help the shopper navigate through the store to find the requested products, and it may even re-order the list and propose to the shopper a more ‘efficient’ path.

Beacons are associated mostly with stores (e.g., department stores, chain stores, supermarkets). However, beacons may also be utilised by mall operators where the ‘targets’ are stores rather than specific products. An application programme in a mall may command collaboration with the retailers (e.g., store profile and notifications, special promotional messages [for extra pay], content contributions).

In another interesting form of collaboration, the fashion magazine Elle initiated a programme with ShopAdvisor, a mobile app and facilitator that assists retailers in connecting with their shoppers through beacons. As an enhancement to its special 30th anniversary issue, Elle launched a trial project in partnership with some of its advertisers (e.g., Guess, Levi’s, Vince Camuto) to introduce their customers to location-based content with the help of ShopAdvisor (focused on promotional alerts)(1).

Consumers are concerned about tactics of location-based technologies like beacons that get intrusive and even creepy; they become adverse towards the way such apps sometimes surprise them (e.g., in dressing rooms). Indeed, only shoppers who installed an authorised app can be affected, but for customers who installed such a retailer’s app, with other benefits in mind, it can be disturbing at times. The hard issue at stake is how the app alerts or approaches its shoppers-users with location-based messages. Shoppers do not like to feel that someone is watching where they go.

The shopper may believe that if the app remains closed on the smartphone he or she cannot be approached. But if, as reported in CNBC News, a dormant app can be awaken by a beacon signal, this measure is not enough. This may happen because the shopper previously allowed the app to receive the Bluetooth signal or the app “assumed” so as default.  The shopper must take an extra step to disable the function at the app-level or device-level (Bluetooth connectivity). Retailers should let their customers opt-out and be careful in any attempt to remotely open their apps on smartphones (so-called “welcome reminders”), because imposing and interfering with customer choices may get the opposite outcome of removing the app.

The app may display ‘digital’ coupons for the shopper to “pick-up” and show later at the cashier (or self-service check-out). It is reasoned that if coupons are shown at the right time shoppers will welcome the offer, no resentment. The manner shoppers are alerted can also matter, by not being too obtrusive (e.g., “Click here for coupons for products in this aisle”). Shoppers told CNBC News that if digital coupons were offered to them by the app just when relevant, they would be glad to use this option, being more convenient than going around with paper coupons, but they would want the ability to opt-out.

Shopper Behaviour Research

The beacon technology may further contribute to research on shopper behaviour in stores or malls. Specifically, it may be suitable for collecting data of shopper traffic to be used in path analysis of the shopping journeys. The information may cover what areas of the store shoppers visit more frequently, how long one stays in a given area, and sequences of passes between areas.

Nonetheless, there are methodological, technological and ethical factors retailers and researchers have to consider. At this time, there are distinct limitations to be recognized that may inflict on the validity and reliability of the research application of beacons. Ethical issues discussed above regarding the provision of access of beacons to mobile apps furthermore apply in the research context.

This methodology involves tracking the movements of shoppers. Beacon technology may record frequency of visits in each area of the store separately or it may track the presence of a particular shopper by different beacons across the store. A beacon may also be able to send repeated signals at fixed intervals to a smartphone to measure how long a shopper remains in a given area. However, this type of research is not informative about what a shopper does in a specific location as in front of product shelves, and thus it cannot provide valuable details on her decision processes. Hence, retailers cannot rely on this methodology as a substitute for other methods capable of studying shopper behaviour more deeply, especially with respect to decision-making. A range of methods may be used to supplement path analysis such as interviewer’s walk-along with a shopper, passive observations, video filming, and possibly also in-store eye-tracking.

An implementation of the technology for research would require a comprehensive coverage of the premises with beacons, perhaps greater than needed for marketing practice. It should be compared with alternative location-based technologies (e.g., Radio Frequency Identification [RFID], Wi-Fi)  on criteria of access, range and accuracy, and of course cost-effectiveness. For example, the RFID technology employs tags ( transmitters) regularly attached to shopping carts — if a shopper leaves the cart at the end-of-aisle and goes in to pick-up a couple of products, the system will miss that; smartphones, however, are carried on shoppers all the time. Beacon technology may have an important advantage over RFID if location data is linked with customer characteristics, but this is a sensitive ethical issue and at least it is imperative to ensure no personal IDs are included in the dataset. All alternative technologies may also have to deal with different types of environmental interferences with their signals. Access would have both technical and ethical aspects.

A mixture of problems emerges as responsible for impairing the utilisation of beacon technology, according to RetailDive (online news and trends magazine), mainly consumers who do not perceive beacon-triggered features as useful enough to them and retailers troubled by technical or operational difficulties. Among the suggestions made: encourage pull of helpful information from beacons by shoppers rather than push messages, and speed-up calling staff for assistance via beacons (RetailDive, 17 December 2015). A recent research report by Adobe and Econsultancy on Digital Trends for 2016 indicates that retailers are becoming more reluctant to implement a geo-targeting technology like beacons this year compared with 2015 (a decrease in proportion of retailers who have this technology in plan or exploring it, against an increase in proportion of those who are not exploring or do not know). Conspicuously, there seems to be much more optimism about high effectiveness of geo-targeting technology at technology and consultancy agencies than among retailers, who seem to be much more in the opinion that it is too early (2). Agencies could have better understanding of the field, yet it signals an alarm of disconnect between agencies and their clients.

There is potential to beacon technology with clearly identifiable benefits it can deliver to retailers and consumers. It is still a young technology and requires more development and progress on various technical, applied and ethical aspects.  Promotional messages are  important tools but must be used in a good and sensible measure. A retailer cannot settle for a small set of fixed messages. It has to develop a dynamic ‘bank’ of messages, large enough to be versatile over products, (chain) stores, and consumer groups, and maintain regular updates. However, retailers have to develop and provide a more rich suite of clever content and practical tools based on location. Consumers will have to be convinced of the benefits enabled by beacons, yet feel free to decide when and how to enjoy them.

Ron Ventura, Ph.D. (Marketing)

Notes:

(1) “App Helps Target Shoppers’ Location and Spontaneity”, Glenn Rifkin, International New-York Times, 31 December 2015 – 1 January 2016.

(2) “Quarterly Digital Intelligence Briefing: 2016 Digital Trends”, Adobe and Econsultancy, January 2016 (pp. 24-25). The findings are considered with caution because of relatively small sub-samples of respondents on this topic (N < 200).

Read Full Post »

Surveys, being a major part of marketing research, seem to be in perpetual movement of change and development. Many of the changes in recent years are tied with technological advancement. About fifteen years ago online surveys — delivered over the Internet — began to rise as a dominant mode of survey administration; but now, researchers are pushed to perform more of their surveys via mobile devices, namely smartphones and tablets, in addition or as a replacement to being administered on desktop and laptop computers.

Yet some important distinctions between those two modes can make the transfer of surveys between them flawed. Just as much as it was wrong to suggest in the past that survey questionnaires administered in face-to-face interviews could be seamlessly transferred to phone interviews, it would be wrong today to suggest a seamless transfer of surveys from web browsers on desktops/laptops to mobile browsers (or apps).

In the latest Greenbook Research Industry Trends (GRIT) Report of Q3-Q4 2015, the authors suggest that there is still much room for improvement in adjusting online survey questionnaires to run and display properly also on mobile devices. They find that 45% of their respondents on the research supplier side and 30% on the research buyer (client) side claim that their companies design at least three quarters (75%-100%) of their online surveys to work effectively on mobile phones; however, “that tells us that over 50% of all  surveys are NOT mobile optimized” (p. 14, capital letters are in origin). The authors hereby implicitly call on marketing researchers to do much more to get their online surveys fully mobile-optimized. But this is not necessarily a justified or desirable requirement because not all online surveys are appropriate and applicable to be answered on smartphones nor on tablets. There could be multiple reasons for a lack of match between these modes for administering a particular survey: the topic, the types of constructs measured and instruments being used, the length of the questionnaire, and the target population relevant for the research. Consumers use mobile devices and personal computers differently (e.g., purpose, depth and time) which is likely to extend also to how they approach surveys on these products.

  • The GRIT survey of marketing researchers was conducted in a sample of 1,497 respondents recruited by e-mail and social media channels, of whom 78% are on the supplier-side and 22% on the client-side. Nearly half (46%) originate in North-America and a little more than quarter (27%) come from Europe.

Concerns about coverage and reach of a research population have followed online surveys from the beginning. Of different approaches for constructing samples, including sampling frames (e.g., e-mail lists) and ad-hoc samples (i.e., website pop-up survey invitations), the panel methodology has become most prevalent. But this approach is not free of limitations or weaknesses. Panels have a ‘peculiar’ property: If you do not join a panel you have zero probability of being invited to participate in a survey. Mobile surveys may pose again similar problems, and perhaps even more severely, because users of smartphones (not every mobile phone is able to load surveys), and moreover tablets, constitute a sub-population that is not broad enough yet and the users also have rather specific demographic and lifestyle characteristics.

  • Different sources of contact data and channels are being used to approach consumers to participate in surveys. Companies conduct surveys among their customers for whom they have e-mail addresses. Subscribers to news media websites may also be included a in survey panel of the publisher. Members of forums, groups or communities in social media networks may be asked as well to take part in surveys (commissioned by the administrator).

Decreasing response rates in phone and face-to-face surveys has been an early drive of online surveys; these difficulties have got only worse in recent years so that online surveys remain the viable alternative, and in some situations are even superior. Online self-administered questionnaires (SAQ) of course have their own genuine advantages such as ability to present images and videos, interactive response tools and greater freedom to choose when to fill the questionnaire. However, as with former modes of data collection for surveys, response behaviour may differ between online surveys responded to on personal computers and on mobile devices (one should consider the difficulty to control what respondents do when filling SAQs on their own).

The GRIT report reveals that the greatest troubling aspects of panels for marketing researchers are the quantity and quality of respondents available through those sampling pools (top-2-box satisfaction: 36% and 26%, respectively). In particular, 33% are not at all satisfied or only slightly satisfied with the quality of respondents. The cost of panel is also generating relatively low satisfaction (top-2-box 34%). Marketing researchers are more satisfied with timeliness of fielding, purchase process, ease of accessing a panel and customer service (49%-54%). [Note: 33% is compared with ~20% for ‘quantity’ and ‘cost’ and ~12% on other aspects.]

The GRIT report further identifies four quadrants of panel aspects based on satisfaction (top-2-box) versus (derived) importance. The quality and quantity of respondents available in panels occupy the ‘Weaknesses’ quadrant as they generate less satisfaction while being of higher importance. Customer service and purchase process form ‘Key Strengths’, being of higher importance and sources of higher satisfaction. Of the lower-importance aspects, cost is a ‘Vulnerability’ whereas access and timeliness are ‘Assets’. The ‘Weaknesses’ quadrant is troubling especially because it includes properties that define the essence of the panel as a framework for repeatedly extracting samples, its principal purpose. The assets and strengths in this case may not be sufficient to compensate for flaws in the product itself, the panel.

Surveys allow researchers to study mental constructs, cognitive and affective: perceptions and beliefs, attitudes, preferences and intentions; they may broadly look onto thoughts, feelings and emotions. Survey questionnaires entail specialised methods, instruments and tools for those purposes. Furthermore, surveys can be used to study concepts such as logical reasoning, inferences, relations and associations established by consumers. In the area of decision-making, researchers can investigate processes performed by the consumers or shoppers, as reported by them. Advisedly, the findings and lessons on decision processes may be validated and expanded by using other types of methods such as verbal protocols, eye tracking and mouse tracking (web pages) as research participants perform pre-specified tasks. However, surveys should remain part of the research programme.

Much of the knowledge and understanding of consumers obtained through surveys cannot be gained from methods and techniques that do not directly converse with the consumers. Data from recording of behaviour or measures of unconscious responses may lack important context from the consumer viewpoint that may render those findings difficult to interpret correctly. Conscious statements of consumers on their thoughts, feelings, experiences and actions may not be fully accurate or complete but they do represent what they have in mind and often enough guide their behaviour — we just need to ask them in an appropriate and methodic way.


The examples below are brought to demonstrate why different approaches should be used collaboratively to complement each other, and how surveys can make their own contribution to the whole story:

  •  Volumes of data on actions or operations performed by consumers, as entailed in the framework of Big Data, provide ‘snapshots’ or ‘slices’ of behaviour, but seem to lack the context of consumer goals or mindsets to meaningfully connect them. One has indirectly to infer or guess what made the behaviour occur as it did.
  • Big Data also refers to volumes of verbatim in social media networks where the amount of data gives an illusion that it can replace input from surveys. However, only surveys can provide the kind of controlled and systematic measures of beliefs, attitudes and opinions needed to properly test research propositions or hypotheses.
  • Methods of neuroscience inform researchers about neural correlates of sensory and mental activity in specific areas of the brain, but it does not tell them what the subject makes of those events. In other words, even if we can reduce thoughts, feelings and emotions to neural activity in the brain, we would miss the subjective experience of the consumers.

 

It is not expected of marketing researchers to turn all their online surveys to mobile devices, at least not as long as these co-exist with personal computers. The logic of the GRIT’s report is probably as follows: Since more consumers spend more time on smartphones (and tablets), they should be allowed to choose and be able to respond to a survey on any of the computer-type products they hold in time and place convenient to them. That is indeed a commendable liberal and democratic stance but it is not always in best interest of the survey from a methodological perspective.

Mobile surveys could be very limiting in terms of the amount and complexity of information a researcher may reliably collect through them. A short mobile survey (5-10 minutes at most) with questions that permit quick responses is not likely to be suitable to study adequately many of the constructs previously discussed to build a coherent picture of consumers’ mindsets and related behaviours. These surveys may be suitable for collecting particular types of information, and perhaps even have an advantage at this as suggested shortly.

According to the GRIT report, 36% of researchers-respondents estimate that online surveys their companies carry out take on average up to 10 minutes (short); 29% estimate their surveys take 11-15 minutes (medium); and 35% give an average estimate of 16 minutes or more (long). The overall average stands at 15 minutes.

These duration estimates correspond to online surveys in general and the authors note that particularly longer surveys would be unsuitable for mobile surveys. For example, 16% of respondents state their online surveys take more than 20 minutes which is unrealistic for mobile devices. At the other end, very short surveys (up to five minutes) are performed by 10%.

There are some noteworthy differences between research suppliers and clients. The main finding to notice is that clients are pressing to shorter surveys, such that may also be applicable to respond to on mobile devices:

  • Whereas just near to 10% of suppliers perform surveys of up to 5 minutes on average, a little more of 15% of clients perform surveys of this average length.
  • Suppliers are more inclined to perform surveys of 11-15 minutes on average (approx. 33%) compared with clients (about 23%).
  • Suppliers also have a little stronger propensity for surveys of 16-20 minutes (20% vs. 16% among clients).

Researchers on the supplier side appear to be more aware and sensitive to the time durations online surveys should take to achieve their research objectives and are less ready to execute very short surveys as clients drive to.

  • Interestingly, the report shows that the average estimated time length in practice is similar to the maximal length respondents think an online survey should take. The authors propose these results can be summed up as “whatever we answered previously as the average length, is the maximal length”. They acknowledge not asking specifically about mobile surveys — the accepted maximum is 10 minutes. This limit is more in accordance with clients’ stated maximum for online surveys (52%) whereas only 36% of suppliers report such a goal (32% of suppliers choose 11-15 minutes as the maximum, above the expected maximum for mobile).

Online surveys designed for personal computers are subject to time limits, in view of respondents’ expected spans of attention, yet the limits are expected to be less strict compared with mobile devices. Furthermore, the PC mode allows more flexibility in variability and sophistication of questions and response scales applied. A smartphone does not encourage much reflective thought and this must be taken into consideration. Desktops and laptops accommodate more complex tasks, usually executed in more comfortable settings (e.g., consumers tend to perform pre-purchase ‘market research’ on the their personal computers and conduct quick queries of the last-minute during the shopping trip on their smartphones) — this works also to the benefit of online surveys on personal computers. (Tablets are still difficult to position, possibly closer to laptops than to smartphones.)

Online surveys for mobile devices and for desktops/laptops do not have to be designed to be the same in content of questionnaires (adapting appearance to device and screen is just part of the matter). First, there is justification to design surveys specifically for mobile devices. These surveys may be most suitable for studying feedback on recent events or experiences, measuring responses to images and videos, and performing association tests. Subjects as proposed here are afforded in common by System 1 (Automatic) — intuition and quick responses (immediacy), emotional reactions, visual appeal (creativity), and associative thinking.

Second, it would be better to compose and design separate survey questionnaires for personal computers and for mobile devices at different lengths. Trying to impose an online survey of fifteen minutes on respondents using mobile devices is at considerable risk of early break-off or worse of diminishing quality of responses as the survey goes on. At least a short version of the questionnaire should be channeled to the mobile device — though it still would not resolve issues of unfitting types of questions posed. Even worse, however, would be an attempt to shorten all online surveys to fit into the time spans of mobile surveys because this could make the surveys much less effective and useful as sources of information and miss much of their business value.

Marketing researchers have to invest special effort to ensure that online surveys remain relevant and able to provide useful and meaningful answers to marketing and business questions. Reducing and degrading surveys just in order to obtain greater cooperation from consumers will only achieve the opposite — it will strengthen the position of the field of Big Data (that worries some researchers), as well as other approaches that navigate the unconsciousness. Instead, marketing researchers should improve and enhance the capabilities of surveys to provide intelligent and valuable insights, achieved particularly by designing surveys that are best compatible with the mode in which the survey is administered.

Ron Ventura, Ph.D. (Marketing)

Read Full Post »

Companies are increasingly concerned with the “customer journey“, covering any dealings customers have with their brands, products and services; it has become one of the key concepts associated with customer experience in recent years.  Companies are advised to map typical journeys of their customers, then analyse and discuss their implications and consequences with aim to ameliorate their customers’ experiences.

At the foundation of the customer journey underlies a purchase decision process, but the developed concept of a “journey” now expands beyond purchase decisions to a variety of activities and interactions customers (consumers) may engage, relating to marketing, sales, and service. This broad spectrum of reference as to what a journey may encompass could be either the concept’s strength (establishing a very general framework) or a weakness (too generalised, weak-defined). Another important emphasis accepted with respect to contemporary customer journeys accentuates consumers’ tendency to utilise multiple channels and touch-points available to them, especially technology-supported channels, in their pathway to accomplish any task. Furthermore, interactions in different channels are inter-related in consumers’ minds and actions (i.e., a cross-channel journey). This post-article reviews propositions, approaches and solutions in this area offered by selected consultancy, technology and analytics companies (based on content in their webpages, white papers, brochures and blogs).

Multi-channel, omnichannel, cross-channel — These terms are used repeatedly and most frequently in association with the customer journey. Oracle, for instance, positions the customer journey squarely in the territory of cross-channel marketing. But companies not always make it sufficiently clear whether these terms are synonymous or have distinct meanings. All above descriptive terms agree that consumers more frequently utilise multiple channels and touch-points to accomplish their tasks yet “cross-channel” more explicitly refers to the flow of the journey across channels, the connectivity and inter-relations between interactions or activities customers engage.

Writing for the blog of Nice “Perfecting Customer Experience”, Natalia Piaggio (5 Feb. 2015) stresses that for better understanding the end-to-end customer experience through customer journey maps (CJMs), focus should be directed to the flow of interactions between touch-points and not to any single touch-point. She explains that customers encounter problems usually during transitions between touch-points (e.g., inconsistency of information, company is unable to deliver on a promise, the next channel transferred to cannot resolve the customer’s problem) and therefore touch-points must be considered connectedly. Oracle notes in its introduction to cross-channel marketing that companies should see the big picture and consider how devices (i.e., laptops, smartphones and tablets) are being used in tandem at different points or stages in the customer journey (whether customers use their email inbox, the Web or social media). Paul Barrett (22 Feb. 2010), an industry expert contributing to a blog of Teradata, adds a nice clarification: when talking about (multiple) channels, moments-of-truth relate to individual and separate channels; yet in a cross-channel environment those moments-of-truth are connected into a customer journey. In other words, the customer journey puts moments-of-truth in context.  Therefore, cross-channel customer journeys refer to the flow as well as inter-dependencies of channels and their touch-points engaged by a customer.

TeleTech enhances the salience of the multi-channel and cross-channel aspects of the customer journey but further adds some valuable observations (TeleTech is parent company of Peppers & Rogers Group as its consultancy arm). First, they propose an association between all three terms above when defining a customer ‘path’ or ‘journey’:

Multichannel signifies the digital and physical channels that customers use in their path to purchase or when seeking support for a product or service. Omnichannel represents the cross-channel path that customers take for product research, support and purchasing.

Notably in the view of TeleTech, “omnichannel” is more directly associated with “cross-channel”. Also noteworthy is the inclusion by TeleTech of physical and digital channels. TeleTech emphasise the need to characterise different customer personas, and construct a map for each persona of her typical journey through channels and touch-points; thereafter a company should be ready to notice changes in customer behaviour and modify the map accordingly (“Connecting the Dots on the Omnichannel Customer Journey“, 2015 [PDF]). Nevertheless, Jody Gilliam contends in a blog of TeleTech that companies should attend not only to the inter-relations between touch-points but also to the (reported) mood of customers during their interactions. It is important to describe and map the whole experience ecosystem (The Relationship Dynamic, Blog: How We Think, 19 July 2013).

  • Teradata addresses the complexity introduced by the use of multiple channels through a customer journey from an analytic viewpoint. They propose a multi-touch approach to attribution modelling   (i.e., evaluating to what extent each touch-point contributed to a final desired action by the customer). Three model types for assigning weights are suggested: unified (equal) weighting, decay-driven attribution (exponential: the later an interaction, the higher its weight), and precision (customised) weighting.

The scope of the customer journey — Consensus is not easy to find on what a customer journey encompasses. On one hand, professional services providers focus on particular components of a journey (e.g., interactions, digital touch-points, purchase or service), on the other hand there are attempts to present at least an all-inclusive approach (e.g., reference to a “customer lifecycle”). It may also be said that a gap currently exists between aims to cover and link all channels and the ability to implement — some of those companies talk more openly about their challenges, particularly of including both digital (e.g., web, social media) and physical (in-store) channels, and linking all types of channels during a journey of a given customer.  Orcale relates specifically to the problem of identity multiplicity, that is, the difficulty to establish the identity of actually the same customer across all channels or touch-points he or she uses, since overcoming this challenge is essential to unfolding the whole journey (“Modern Marketing Essentials Guide: Cross-Channel Marketing“, 2014 [PDF]). This challenge is also echoed by Nice, termed as identity association (Customer Journey Optimization [webpage]).

Another key issue that needs to be addressed is whether a customer journey includes only direct interactions between a customer and a focal company through channels where it operates (e.g., call centre, website, social media) or are there other activities consumers perform towards accomplishing their goal to be accounted for (e.g., searching other websites, consulting a friend, visiting brick-and-mortar stores).

  • In a blog of Verint (In Touch), Koren Stucki refers to a definition of the customer journey as a series of interactions performed by the customer in order to complete the task. Stucki thereafter points out a gap between the straightforward definition and the complexity of the journey itself in the real world. It may not be too difficult to understand the concept and its importance for customer engagement and experience, but capturing customer journeys in practice, identify and link all channels the customer uses for a given type and purpose of a journey (e.g., product purchase, technical support) can be far more complicated. Understanding these processes is truly imperative for being able to enhance them and optimise customer engagement (“Why Customer Journeys?“, 16 Sept. 2014).
  • Piaggio (Nice) also related to the frustration of companies with difficulties in mapping customer journeys. She identifies possible causes as complexity, technical and organizational obstacles to gathering and integrating data, and the dynamic nature of consumer behaviour. She then suggests seven reasons to using CJMs. In accordance, in their brochure on customer journey optimization, Nice see their greater challenge in gathering data from various sources-channels and of different types, and integrating the data, generating complete sequences of customer journeys; three main analytic capabilities they offer in their solution are event-sequencing and visualisation in real-time, contact reasoning (predictive tool), and real-time optimization and guidance (identifying opportunities for improvement).
  • In their first out of four steps to a customer journey strategy — namely map the current customer journey — IBM state that the customer journey “signifies the series of interactions a customer has” with a brand (IBM refers specifically to digital channels). Importantly, they suggest that customer journeys should be mapped around personas representing target segments. The CJMs should help managers put themselves in their customers’ shoes (“Map and Optimize Your Customer Journey“, 2014 [PDF])..
  • In the blog of TeleTech (How We Think), Niren Sirohi writes about the importance of defining target segments and mapping typical customer journeys for each one. Sirohi emphasises that all stages and modes engaged and all activities involved should be included, not only those in which the company plays a role. Next, companies should identify and understand who are the potential influencers at every stage of the journey (e.g., self, retailer, friend). Then ideas may be activated as to how to improve on customer experiences where the company can influence (“A Framework for Influencing Customer Experience“, 16 Oct. 2014).

Customer engagement — This is another prominent viewpoint from which companies approach the customer journey. Nice direct to Customer Journey Optimization via Multi-Channels and Customer Engagement. Verint also present customer journey analysis as part of their suite of Customer Engagement Analytics (also see their datasheet). The analytic process includes “capturing, analysing, and correlating customer interactions, behaviours and journeys across all channels”.  For IBM, the topic of customer journey strategy belongs in a broader context of Continuous Customer Engagement. The next steps for a strategy following mapping (see above) are to pinpoint areas of struggle for customers, determine gaps to fill wherein customer needs and preferences are unmet by current channels and functionalities they offer, and finally strategize to improve customer experiences.

  • Attention should be paid not only to the sequence of interactions but also to what happens during an interaction and how customers react or feel about their experiences. As cited above, Gilliam of TeleTech refers to the mood of customers. Verint say that they apply metrics of customer feedback regarding effort and satisfaction while Nice use text and speech analytics to extract useful information on the content of interactions.

Key issues in improving customer engagement that professional services providers recognize as crucial are reducing customer effort and lowering friction between channels. Effort and struggle by customers may arise during interaction in a single touch-point but furthermore due to frictions experienced while moving between channels. Behind the scenes, companies should work to break down walls between departments, better co-ordinate functions within marketing and with other areas (e.g., technical support, delivery, billing), and remove silos that separate departmental data pools and software applications. These measures are necessary to obtain a complete view of customers. At IBM they see departmental separation of functions in a company, and their information silos, as a major “enemy” of capturing complete customer journeys. Ken Bisconti (29 May 2015) writes in their blog Commerce on steps that can be taken, from simple to sophisticated (e.g., integrated mapping and contextual view of customers across channels), to improve their performance in selling to and serving customers across channels, increase their loyalty and reduce churn. Genesys see the departmental separation as a prime reason to discrete and disconnected journeys; continuity between touch-points has to be improved in order to reduce customer effort (solution: omnichannel Customer Journey Management). Piaggio (Nice) suggests that input from CJMs can help to detect frictions and reduce customer effort; she also relates to the need to reduce silos and eliminate unnecessary contacts. Last, TeleTech also call in their paper on “Connecting the Dots” to break down walls between customer-facing and back-office departments to produce a more channel-seamless customer experience.

  • Technology and analytics firms compete on their software (in the cloud) for mapping customer journeys, the quality of journey visualisation (as pathways or networks), their analytic algorithms, and their tool-sets for interpreting journeys and supporting decision-making (e.g., Nice, Verint, Teradata, TeleTech while IBM intend to release their specialised solution later this year).

Varied approaches may be taken to define a journey. From the perspective of a purchase decision process, multiple steps involving search, comparison and evaluation up to to purchase itself may be included, plus at least some early post-purchase steps such as feedback and immediate requests for technical assistance (e.g., how to install a software acquired). In addition, a journey of long-term relationship may refer to repeated purchases (e.g., replacement or upgrade, cross-sell and up-sell). Alternatively, a journey may focus on service-related issues (e.g., technical support, billing). How a journey is defined depends mostly on the purpose of analysis and planning (e.g., re-designing a broad process-experience, resolving a narrow problem).

As use of digital applications, interfaces and devices by consumers grows and expands to perform many more tasks in their lives (e.g., in self-service platforms), we can expect reliance of CJMs on digital channels and touch-points to become more valid and accurate. But we are not there yet, and it is most plausible that consumers will continue to perform various activities and interactions non-digitally. Consumers also see the task they need or want to perform, not merely through the technology employed. Take for example physical stroes: Shoppers may not wish to spend every visit with a mobile device in hand (and incidentally transmit their location to the retailer). Don Peppers laments that companies have designed customer experiences  with a technology-first, customer-second approach whereas the order should be reverse. Undertaking a customer perspective is required foremost for effectively identifying frictions on a journey pathway and figuring out how to remove them  (“Connecting the Dots”, TeleTech). Excessive focus on technologies can hamper that.

Bruce Temkin (Temkin Group, Blog: Experience Matters) provides lucid explanations and most instructive guidance on customer journey mapping. However, it must be noted, Temkin advocates qualitative research methods for gaining deep understanding of meaningful customer journeys. Quantitative measures are only secondary. He does not approve of confusing CJMs with touch-point maps. His concern about such interpretation is that it may cause managers to lose the broader context in which touch-points fit into consumers’ goals and objectives. Temkin puts even more emphasis on adopting a form of Customer Journey Thinking by employees to be embedded in everyday operations and processes, following five questions he proposes as a paradigm.

There are no clear boundaries to the customer journey, and doubtful if they should be set too firmly — flexibility should be preserved in defining the journey according to managerial goals.  A journey should allow for various types of activities and interactions that may help the customer accomplish his or her goals, and it should account not only for their occurrence and sequence but also for content and sentiment. A viewpoint focusing on channels and touch-points, leading further to technology-driven thinking, should be modified. An approach that emphasises customer engagement but from the perspective of customers and their experiences is more appropriate and conducive.

Ron Ventura, Ph.D. (Marketing)

Read Full Post »

Since the mid-1990s the dominant approach to marketing is centered on the customer (cf. previous approaches emphasised production, the product and sales); more fully, the customer-centric approach evolved from a modern marketing approach, conceived somewhat earlier (1970s to early 1980s), as it sharpened the focus on the customer (*). In this era theories and concepts have developed of relationship marketing (and customer relationship management, CRM, more generally), customer experience and data-driven marketing. Retrospectively,  brand theory has been the bridge linking between the early stages of the marketing approach and the advanced customer approach, and truly to this day the brand and customer views are inter-dependent and should not be separated.

In the past twenty years we have further witnessed intensive developments in digital technologies (e.g., computer information processing, Internet and communication). Their effects on marketing and retailing now call into debate whether the technologies still constitute a progression in the execution of the customer-centric approach or already its evolution into a new approach, entering an era of “digital marketing”. This question is at the core of a recent article in the McKinsey Quarterly magazine  titled “The Dawn of Marketing’s New Golden Age” (Issue 1 of 2015). The authors (Jonathan Gordon, New-York City, and Jesko Perrey, Düsseldorf) outline five forces driving this new age: science, substance, story, speed and simplicity.

The picture emerging from the article entails consumers conducting most or all of their interactions with companies through digital portals or applications on computer-based appliances and mobile devices, and communicating among themselves and with companies about products and services in social media platforms; companies on their part analytically employ huge streams of data associated with their customers (active as well as prospects) to perform automated processes for selling to and servicing the customers. What we are about to see is a formidable enhancement on a large-scale of digital methods and programmes already familiar from the past few years. The engine of marketing will be increasingly powered by modelling, segmenting and predicting customer preferences and behavioural actions with little need for day-to-day human inspection and intervention.

Managerial thinking usually views instruments, data and methods as the tools for executing a well-specified strategy, as in customer-oriented marketing. Undoubtedly the new digital technologies have been vital for engaging customers at an individual level on a large-scale (e.g., one-to-one marketing, personalising and customising). But there are strong signs that in the new golden age the digital technologies, their tools and data-driven methods, will become the essence, the fundamental way in which marketing and retailing function, and not just as a means to an end. They will not be used to perform a customer-driven strategy — they will be the strategy in and by itself. That is what a new digital approach to marketing could mean. McKinsey & Co. already seem to adopt and support that kind of marketing empowered by Big Data, and they are not alone in this attitude. However, a prognosis for such a new age of marketing should be put up to a debate in business circles and in consumer or social circles.

Science has made significant contributions in extracting meaningful information and insights from large amounts of data for marketing purposes. It is the primary engine of the new age foreseen by the authors. The broader impact of science now spans from measurement by sensors and cameras (e.g., in smart and wearable devices) through analytics and modelling to the utilities and services that apply the derived information. Scientific advancement in the area of Big Data enable the automated estimation of multiple statistical models and handling of their results in marketing platforms. Just two examples of applications are (a) customised recommendations based on learned preferences of users; and (b) geo-location and mapping utilities that can direct shoppers to relevant stores in their vicinity. Yet science in marketing has also led to the development of more sophisticated models and better optimization and estimation techniques even before Big Data. The authors note that advanced analytic capabilities also play an important role in managerial decision-making by enabling quicker responses (e.g., in the area of hospitality, noticing trends and changes in hotel room reservations).

It is completely agreed that managers should be trained and encouraged to base their decisions more on information derived from research and analyses of customer and marketing data than on intuition. For achieving that aim managers need to understand better analytics and their outputs, and wisely combine their insights with knowledge from their practical experience. But a problem arises when more processes are channelled to automation and managers are not required to interfere and make decisions. Definitely when a company needs to handle transactions, calls and other activities from hundreds-of-thousands to millions of customers, automation of procedures is essential to let the marketing system work, but keeping an open eye by managers is as essential, particularly to make sure that customers are well-served. Automation is desirable to the extent that it allows decision-makers to devote their time to more complex issues requiring their judgement while not sacrificing the quality and sensibility of processes automated. Human reason and sense of fairness are still valuable.

Of course not every marketing and service process is automated (as yet); customer service representatives (CSRs) are required to navigate the information provided to them on any individual customer to decide on the best approach or solution for helping him or her. Information in the customer profile may include characteristics and recommendations produced by prior modelling and analytic processes. It should be the responsibility of the CSR finally to utilise the information and choose the best-apparent mode of action. The CSRs can be presented with a few feasible alternatives for a type of service or other assistance requested and should be trained how to assess and choose the most appropriate solution for the situation at hand and the customer served. As the authors Gordon and Perrey importantly observe, “Knowing what can be automated, when judgement is required, and where to seek and place technical talent are becoming increasingly central to effective marketing leadership”. Taking a position that employees, from CSRs to managers, are inadequate evaluators or judges of information who are bound to make mistakes, and therefore their decisions are better computer-automated, is misguided. It may get the opposite negative outcome where employees rely on the information system to provide also the best solution and not think for themselves which possible solution is the most appropriate or the most effective.

  • Take for example the domain of healthcare: Suppose that an elder patient calls her HMO to make an appointment for a clinical test. The system may suggest a medical center or clinic that is in a neighbouring town because that is the closest date available or because performing the test in that facility (out-sourced) is less expensive for the HMO. Yet especially for patients in their golden age a CSR should also consider the distance from the patient’s home and the time of day (e.g., not too early) so that it would be convenient enough and not too complicated for the patient to keep the appointment.

The article does not neglect the Substance of marketing and business overall. The authors suggest in particular the experiences of customers, the delivery of functional benefits, and the development of new products and services as the core interests of substance. In this important section they truly explain, through examples, how Big Data, analytics and digital technologies are used by companies to adapt to changes in the market and achieve customer-driven marketing goals.

In another article of McKinsey Quarterly, Getting Big Impact from Big Data (January 2015), its author (David Court, Dallas) acknowledges that the predictions of McKinsey Global Institute (MGI) on the adoption of Big Data in their report from 2012 may have been too optimistic, saying that achieving the expected impact has proved difficult. The article appears as a new effort to re-ignite the growth of Big Data implementation. Some of the explanations given for lagging behind, however, are puzzling. A general claim made in the article is that companies did not realise the expected returns because their financial investments and efforts were not big enough: “many senior managers are reluctant to double down on their investments in analytics — investments required for scale, because early efforts have not yielded a significant return.” How can managers be expected to expand their investment in an initiative if they were not convinced in earlier tests of its benefits? There should be special circumstances to convince them that if a project did not work well in small-scale it would if undertaken in large-scale. While that may be the case with Big Data projects, managers should not be blamed for not seeing it or for not trusting the claim blindly.

The article further points out that companies were not focused enough and did not plan their analytic initiatives with well-specified goals. But responsibility is also put at the doorsteps of analytic vendors and data scientists for misleading managers by making unfounded promises about the kind of valuable information they could extract (or mine) from a company’s data pools. As told by Court, it was not unusual for executives to hear the claim: “just give us your data and we will find new patterns and insights to drive your business” — yet executives became disappointed and discouraged to invest further. Notably, albeit the author’s charge about the insufficient scale of investment in Big Data, he leads to the more welcome conclusion that it is “better to pursue scale that’s achievable than to overreach and be disappointed or to scatter pilots all over the organization”.

  • Automated dynamic pricing: With regard to setting prices, this article maintains that “it’s great to have real-time data and automated pricing engines, but if management processes are designed to set prices on a weekly basis, the organization won’t be able to realize the full impact of these new technologies”. Here lurks another enigma about the new way of thinking. It is technology that should adjust to management processes which in turn accommodate the structure and behaviour of the market (e.g., consumers, shoppers) and not the other way round. For once, if prices change daily or hourly (e.g., in an online store) it is likely to be perceived by consumers as lack of stability, unreliability, an attempt to manipulate, or unfair conduct by a retailer not to be trusted. Moreover, it may not be even economically justified: if most consumers perform concentrated shopping trips in supermarkets between weekly to monthly, it should not be necessary nor beneficial to update prices much more frequently.

The third driver of the new golden age — Story — is an interesting contribution in Gordon and Perrey’s article. However, it brings up again the discussion on who creates and who owns the story of a brand or a company. It is well appreciated that consumers participate and contribute to the story of a brand. Agreeably, the story would not be able to exist without the customers. Yet composing the story should not be relinquished to consumers — the company must remain in charge of designing and presenting it. First, a brand’s story is built around its history and heritage. Second, the story is enriched by the customers’ experiences with the brand. Nevertheless, a company cannot rely on discourse of customers in digital social media networks (e.g., in text and photos) to tell the whole story. The company is responsible for developing the shared experiences and  customer interactions into a narrative and coming up with a compelling story. It may use as input its maps of customer journeys to develop the story.

Speed and Simplicity entail the measures that companies have to take to organise themselves better for the new age. These may be structural, functional and logistic measures that improve the implementation of data-driven processes and marketing initiatives (e.g., reducing layers and connecting silos, sharing data and smoothing operations, more agile product development).

  • Digital self-service, through Internet websites or mobile apps, is widespreading for product or service ordering and customer support. But managers should remember that not all consumers feel equally comfortable with these platforms and have the skill and confidence in using them; consider in particular that the proportion of people age 65 and above is forecast to rise in developed countries and may reach 20% in two to three decades). Furthermore, many people do not like to “talk” with algorithms; they prefer to talk with other people to get the assistance and advice they seek.

It is important to draw a line and respect a distinction between the customer-centric approach (“what”) and the technologies, data and methods that can be employed to implement it (“how”). There is no need to declare a new age of marketing, at least not on behalf of digital technologies or Big Data. Advancement of the latter may signal a new phase of progression in implementation of the customer approach (i.e., ‘marketing in a digital age’), but suggesting beyond that may lead to dilution of the focus on the customer. Nonetheless, time may be ripe for a mature integrated approach that is guided by a triad of Customer-Product & Service-Brand as the complex of these entities and the relations between them are at the foundation of modern marketing.

Ron Ventura, Ph.D. (Marketing)

(*) The marketing approach was already oriented towards the customer as its focal target but largely at a segment-level; it advanced strategic thinking beyond sales. Consumer marketing most progressed during this period.

Read Full Post »

Psycographic-oriented research of consumer lifestyles based on surveys for collecting the data is losing favour among marketers and researchers. Descriptors of consumer lifestyles are applied especially for segmentation by means of statistical clustering methods and other approaches (e.g., latent class modelling). Identifying lifestyle segments has been recognized as a strategic instrument for marketing planning because this kind of segmentation has been helpful and insightful in explaining variation in consumer behaviour where “dry” demographic descriptors cannot reach the deeper intricacies. But with the drop in response rates to surveys over the years, even on the Internet, and further problematic issues in consumer responses to survey questionnaires (by interview or self-administered), lifestyle research using psychographic measures is becoming less amenable, and that is regrettable.

The questionnaires required for building lifestyle segmentation models are typically long, using multi-item “batteries” of statements (e.g., response on a disagree-agree scale) and other types of questions. Initially (1970s) psychographics were represented mainly by Activities, Interests and Opinions (AIO). The measures cover a wide span of topics or aspects from home and work, shopping and leisure, to politics, religion and social affairs. But this approach was criticised for lacking a sound theoretical ground to direct the selection of aspects characterising lifestyles that are more important, relevant to and explanatory of consumer behaviour. Researchers have been seeking ever since the 1980s better-founded psychology-driven bases for lifestyle segmentation, particularly social relations among people and sets of values people hold to. The Values and Lifestyles (VALS) model released by the Stanford Research Institute (SRI) in 1992 incorporated motivation and additional areas of psychological traits (VALS is now licensed to Strategic Business Insights). The current version of the American model is based on that same eight-segment typography with some updated modifications necessary to keep with the times (e.g., the rise of advanced-digital technology) — the conceptual model is structured around two prime axes, (a) resources (economic, mental) and (b) motivation or orientation. Scale items corresponding to the AIOs continue to be used but they would be chosen to represent constructs in broader or better-specified contexts.

Yet the challenge holds even for the stronger-established models, how to choose the most essential aspects and obtain a sufficient set of question items consumers are likely to complete answering. Techniques are available for constructing a reduced set of items (e.g., a couple of dozens) for subsequent segmentation studies relying on a common base model, but a relatively large set (e.g., several dozens to a few hundreds of items) would still be needed for building the original model of lifestyle segments. It is a hard challenge considering in particular the functions and limitations of more popular modes of surveys nowadays, online and mobile.

Lifestyles reflect in general the patterns or ways in which people run their ordinary lives while uncovering something of the underlying motives or goals. However,  ‘lifestyles’ have been given various meanings, and researchers follow different interpretations in constructing their questionnaires. The problem may lie in the difficulty to construct a coherent and consensual theory of ‘lifestyles’ that would conform to almost any area (i.e., product and service domain) where consumer behaviour is studied.  This may well explain why lifestyle segmentation research is concentrated more frequently on answering marketing questions with respect to a particular type of product or service (e.g., banking, mobile telecom, fashion, food). It can help to select more effectively the aspects the model should focus on and thereby also reduce the length of the questionnaire. The following are some of the concepts lifestyle models may incorporate and emphasise:

  • Values that are guiding and driving consumers (e.g., collectivism vs. individualism, modernism vs. traditionalism, liberalism vs. conservatism);
  • In the age of Internet and social media consumers develop new customs of handling social relations in the virtual world versus the physical world;
  • In view of the proliferation of digital, Internet and mobile communication technologies and products it is necessary to address differences in consumer orientation and propensity to adopt and use those products (e.g, ‘smart’ products of various sorts);
  • How consumers balance differently between work and home or family and career is a prevailing issue at all times;
  • Lifestyles may be approached through the allocation of time between duties and other activities — for example, how consumers allocate their leisure time between spending it with family, friends or alone (e.g., hobbies, sports, in front of a screen);
  • Explore possible avenues for developing consumer relationships with brands as they integrate them into their everyday way of living (e.g., in reference to a seminal paper by Susan Fournier, 1998)(1);
  • Taking account of aspects of decision-making processes as they may reflect overall on the styles of shopping and purchasing behaviour of consumers (e.g., need for cognition, tendency to process information analytically or holistically, the extent to which consumers search for information before their decision).

Two more issues deserve special attention: 

  1. Lifestyle is often discussed adjacent with personality. On one hand, a personality trait induces a consistent form of response to some shared stimulating conditions in a variety of situations or occasions (e.g., responding logically or angrily in any situation that creates stress or conflict, offering help whenever seeing someone else in distress). Therefore, personality traits can contribute to the model by adding generalisation and stability to segment profiles. On the other hand, since lifestyle aspects describe particular situations and contexts whereas personality traits generalize across them, it is argued that these should not be mixed as clustering variables but may be applied in complementary modules of a segmentation model.
  2. Products that consumers own and use or services they utilize can illustrate  figuratively their type of lifestyle. But including a specific product in the model framework may hamper the researcher’s ability to make later inferences and predictions on consumer behaviour for the same product or a similar one. Therefore, it is advisable to refer carefully to more general types of products distinctively for the purpose of implying or reflecting on a pattern of lifestyle (e.g., smartphones and technology-literacy). Likewise, particular brand names should be mentioned only for an important symbolic meaning (e.g., luxury fashion brands, luxury cars).

Alternative approaches pertain to portray lifestyles yet do not rely on information elicited from consumers wherein they describe themselves; information is collated mostly from secondary databases. Geodemographic models segment and profile neighbourhoods and their households (e.g., PRIZM by Claritas-Nielsen and MOSAIC by Experian). In addition to demographics they also include information on housing, products owned (e.g., home appliances), media used, as well as activities in which consumers may participate. However, marketers are expected, by insinuation, to infer the lifestyle of a household, based, for instance, on appliances or digital products in the house, on newspaper or magazine subscriptions, on clubs (e.g., sports), and on associations that members of the household belong to. Or consider another behavioural approach that is based on clustering and “basket” (associative) analyses of the sets of products purchased by consumers. These models were not originally developed to measure lifestyles. Their descriptors may vicariously indicate a lifestyle of a household (usually not of an individual). They lack any depth in describing and classifying how consumers are managing their lives nor enquiring why they live them that way.

The evolving difficulties in carrying-out surveys are undeniable. Recruiting consumers as respondents and keeping them interested throughout the questionnaire is becoming more effortful, demanding more financial and operational resources and greater ingenuity. Data from surveys may be complemented by data originated from internal and external databases available to marketing researchers to resolve at least part of the problem. A lifestyle questionnaire is usually extended beyond the items related to segmentation variables by further questions for model validation, and for studying how consumers’ attitudes and behaviour in a product domain of interest are linked with their lifestyles. Some of the information collected thus far through the survey from respondents may be obtained from databases, sometimes even more reliably than that based on respondents’ self-reports. One of the applications of geodemographic segmentation models more welcome in this regard is using information on segment membership as a sampling variable for a survey, whereof characteristics from the former model can also be combined with psychographic characteristics from the survey questionnaire in subsequent analyses. There are furthermore better opportunities now to integrate survey-based data with behavioural data from internal customer databases of companies (e.g., CRM) for constructing lifestyle segments of their customers.

Long lifestyle questionnaires are particularly subject to concerns about the risk of respondent drop-out and decreased quality of response data as respondents progress in the questionnaire. The research firm SSI (Survey Sampling International) presented recently in a webinar (February 2015 via Quirk’s) their findings and insights from a continued study on the effects of questionnaire length and fatigue on response quality (see a POV brief here). A main concern, according to the researchers, is that respondents, rather than dropping-out in the middle of an online questionnaire, actually continue but pay less attention to questions and devote less effort answering them, hence decreasing the quality of response data.

Interestingly, SSI finds that respondents who lose interest drop-out mostly by half-way of a questionnaire irrespective of its length, whether it should take ten minutes or thirty minutes to complete. For those who stay, problems may yet arise if fatigue kicks-in and the respondent goes on to answer questions anyway. As explained by SSI, many respondents like to answer online questionnaires; they get into the realm but they may not notice when they become tired or do not feel comfortable to leave before completing the mission, so they simply go on. They may become less accurate, succumb to automatic routines, and give shorter answers to open-end questions. A questionnaire may take forty minutes to answer but in the estimation of SSI’s researchers respondents are likely to become less attentive after twenty minutes. The researchers refer to both online and mobile modes of survey. They also show, for example, the effect of presenting a particular group of questions in different stages of the questionnaire.

SSI suggests in its presentation some techniques for mitigating those data-quality problems. Two of the suggestions are highlighted here: (1) Dividing the full questionnaire into a few modules (e.g., 2-3) so that respondents will be invited to answer each module in a separate session (e.g., a weekly module-session); (2) Insert break-ups in the questionnaire that let respondents loosen attention from the task and rest their minds for a few moments — an intermezzo may serve for a message of appreciation and encouragement to respondents or a short gaming activity.

A different approach, mentioned earlier, aims to facilitate the conduct of many more lifestyle-application studies by (a) building once a core segmentation model in a comprehensive study; (b) performing future application studies for particular products or services using a reduced set of question items for segmentation according to the original core model. This approach is indeed not new. It allows to lower the burden on the core modelling study from questions on product categories and release space for such questions in future studies dedicated to specific products and brands. One type of technique is to derive a fixed subset of questions from the original study that are statistically the best predictors of segment membership. However, a more sophisticated technique that implements tailored (adaptive) interviewing was developed back in the 1990s by the researchers Kamakura and Wedel (2).

  • The original model was built as a latent class model; the tailored “real-time” process selected items for each respondent given his or her previous responses. In a simulated test, the majority of respondents were “presented” with less than ten items; the average was 16 items (22% of the original calibration set).

Lifestyle segmentation studies are likely to require paying greater rewards to participants. But that may not be enough to keep them in the survey. Computer-based “gamification” tools and techniques (e.g., conditioning rewards on progress in the questionnaire, embedding animation on response scales) may help to some extent but they may also raise greater concerns for quality of responses (e.g., answering less seriously, rushing through to collect “prizes”).

The contemporary challenges of conducting lifestyle segmentation research are clear. Nonetheless so should be the advantages and benefits of applying information on consumer lifestyle patterns in marketing and retailing. Lifestyle segmentation is a strategic tool and effort should persist to resolve the methodological problems that surface, combining where necessary and possible psychographic measures with information from other sources.

Ron Ventura, Ph.D. (Marketing)

Notes:

(1) Consumers and Their Brands: Developing Relationship Theory in Consumer Research; Susan Fournier, 1998; Journal of Consumer Research, 34 (March), pp. 343-373

(2) Lifestyle Segmentation With Tailored Interviewing; Wagner A. Kamakura and Michel Wedel, 1995; Journal of Marketing Research, 32 (Aug.), pp. 308-317.

Read Full Post »

Older Posts »