- Why retail should buy into Big Data 26-Apr-2013
Welcome to the Consumer Power Economy Analyst site written by Dr Wallace.
This site will be dedicated to articles, research, discussions, blogs and postings related to the emerging Consumer Power Economy.
The big idea is this.
Currently we in the Customer Service Analyst community are observing and researching the changing shift in power between businesses and consumers.
This is happening via consumers being empowered using technology, compelling content, crowd sourcing, crowd funding, social media, mobile apps and disruptive models of consumer and business interaction. But it is no longer just in the domain of consumers being able to demand price points, consumers are now extending their power to demand levels of customer service and other relationship factors in addition to price.
And indeed it has perhaps been too long that businesses have dictated how consumers behave, feel, interact, purchase and are served. We are now witnessing consumers dictate how businesses act. After all it is the consumer who has the money and the advocacy, so doesn’t that mean they actually have the power in the relationship? We Analysts reckon so.
In considering where the power lies between businesses and consumers, when consumers have a need, for a product, service or to be serviced in a way that is best for them - why don’t they post it up on a site and then invite businesses to vie to win their business or simply their service?
In academia, Doc Searls writes about the ‘Intention Economy’, which suggests that businesses re no longer about gaining customers’ attention but are focused on understanding customers’ intentions.
(http://cyber.law.harvard.edu/events/luncheon/2009/03/searls). We Customer Service Analysts regard what is happening as much more than customer intention, rather we are observing customers with real power to dictate terms to businesses. Hence we call it the ‘Consumer Power Economy’.
Although there are existing businesses/sites that focus on empowering consumers in purchasing products, our area of category or domain expertise is in customer service – i.e., what happens after the sale. This is where we are seeing the next shift in consumer power happening – consumers specifying and demanding how they want to be serviced.
So, how will consumers become powerful enough to force businesses to bend over backwards to serve them? By:
- making the world of service transparent via social media, mobile apps and other online solutions
- providing negotiating power at individual or aggregated levels to consumers
- consumers owning their own data and using it to create what they want and need
The Antecedent to the Consumer Power Economy: The Customer Intention Economy
The antecedent construct for the Consumer Power Economy is Doc Searl’s Customer Intention Economy. Searls states, “The Intention Economy grows buyers, not sellers. It leverages the simple fact that buyers are the first source of money, and that they come ready-made. You don't need advertising to make them."
However, businesses are still seller oriented. Searls describes the current condition as a series of silos. The only option a buyer has is merely moving from silo to silo.
Searls notes that some sites have similar characteristics of an Intention Economy. For example flight booking services Priceline.com, lets users name their price for an airline ticket although Searls argues this site still functions like a "silo." In a true Intention Economy Searls suggests a site like Priceline might serve as an intermediary with the airline coordinating new flight dates and times that correspond around the buyers intentions.
Searls concludes that companies need to be able to respond to a customer’s precise needs. "Mass customization, in a lot of areas it is no longer inherently necessary that I get the exact same thing as a million other people. A computer manufacturer can be geared for assembling a computer just for me, to my specifications. A travel agency can construct a travel plan particularly for me."
Searls gives an example of intention economy scenario: "A car rental customer should be able to say to the car rental market, 'I'll be skiing in Park City from March 20-25. I want to rent a 4-wheel drive SUV. I belong to Avis Wizard, Budget FastBreak and Hertz 1 Club. I don't want to pay up front for gas or get any insurance. What can any of you companies do for me?' — and have the sellers compete for the buyer's business."
Why is the Consumer Power Economy important?
The rise of power in consumers with regard not only to purchasing decisions but to customer service experience is important because: For consumers:
- Service experiences are 60-70% emotional and account for between 30-50% of a customer’s advocacy or likelihood to recommend an organisation and about 30-40% of a customer’s likelihood to consider this organisation as first choice for next purchase. Other factors include: price, quality, product features, brand and fees (Source: Fifth Quadrant Global Consumer Service Study, 2011).Thus, the provision of good service by organisations and consumers being able to navigate a service interaction effectively and efficiently are significantly important to customers and subsequently to businesses.
- Consumers are now actively using the internet and social media to research and seek the best deals on products and services prior to engaging with businesses. They want to know from reviews and peer ratings which organisation to interact with.
- The landscape of consumer experience and channel choice and usage is changing at an unprecedented rate and consumers are looking to learn better ways of obtaining what they want and need.
- Many consumers are not satisfied with the resolution or complaints management processes of organisations and require other avenues to vent or to obtain resolution.
- Very good or very poor service experiences are highly emotionally charged and people like to talk about them and share their experience. Everyone has a story.
- Aggregated consumer sentiment can fundamentally change the way a business does business.
- Organisations still struggle to provide good customer service particularly through voice (call centre) and online channels. Providing customer service in traditional ways is expensive for businesses and they are constantly looking to reduce this cost.
- At least 14% (4 million) of all consumer interactions on a given day (27 million) in Australia are complaints with customers seeking resolution of product and service issues.
- Compared to other countries such as our Asian neighbours, Australian consumers have a very negative disposition towards organisations being able to provide effective service. By way of example, currently the Australian Communication & Media Authority has launched a public inquiry into the poor service levels of the Australian telecommunication sector, due to the high level of Ombudsman complaints. Next to UK and US based consumers, Australia has the most unhappy consumer base with regard to customer service (Source: Fifth Quadrant Global Consumer Service Study, 2011).
- Mature enterprise-wide Service Strategy is statistically significantly linked to customer engagement and to increased revenues and overall stronger business performance. (Source: Fifth Quadrant & IBM Service Strategy Maturity Index, 2011).
- Customer complaint resolution is an expensive and poorly handled process in organisations. Organisations are constantly seeking ways to reduce service based costs.
- Businesses are struggling to understand the rapidly changing consumer landscape and deploying new media service channels such as social media in poor ways resulting in greater customer issues and media backlash.
Why is Customer Service complicated?
Customer service today is highly complicated and sophisticated however Boards, C-Level executives and senior teams still regard it as an operational cost centre rather than a strategic priority. Complication can come from the vast number of ways that a consumer can interact with an organisation. There are at least 6 major categories of customer service channels available to customers. These include:
- Voice (call and contact centre)
- Face to Face (store, branch)
- Online (web)
- Correspondence (email, letter, fax)
- Social Media (web based interactive dialogue)
- Mobile (apps, SMS)
Specifically there are at least 24 potential customer service channels:
- Branch face to face
- Store face to face
- Field Sales force face to face
- Kiosk face to face
- Door to door face to face
- Voice : caller to live attendant (person answering phone)
- Voice : caller to IVR (interactive voice response or automated touch tone phone)
- Voice : caller to Speech Recognition (automated computerised voice)
- Voice : click to talk (click on web site button to talk via internet to a live attendant)
- Voice: caller using VOIP (e.g. Skype)
- Web-Self-Service (online forms, applications)
- Video: caller using video (caller interacting and viewing customer service agent via video and internet)
- Video streaming (video pushed to consumer to assist with query)
- Web Chat
- Virtual Web Chat (automated web chat including ‘canned’ responses
- Instant Messaging (e.g. skype, windows, MSN messaging, other)
- Remote Assist (service agent takes pushes content or interaction to customers computer or takes over customer’s computer)
- Co-browsing (service agent and customer can view customer’s computer screen or sites visited)
- SMS (text messaging)
- Email (may be automated or interactive with a service agent)
- Social Media (consumers have interactive dialogue with service agents via internet; may include sites such as FaceBook, Twitter, organisation’s own sites)
- Mobile Apps (customers interact with organisation through mobile applications on their smart phone)
To effectively deliver customer service organisations must consider the following dimensions:
- Customer query type
- Consumer demographics
- Customer location
- Customer time
- Customer channel preference
- Consumer segmentation (e.g. high value customer)
- Organisation brand
- Organisational strategic and operational objectives and goals
- Organisational capabililty (culture, HR, operations and technology) to deliver service
Organisations are currently in general failing to deliver effective service levels hence consumers are now being empowered to create and demand their own service experiences.