The customer sword in the stone

Sam Ladner, one of the best minds in real, actual, consumer ethnographic research, and author of one of the most influential theses on how we think of time in digital agencies, wrote an excellent comment on a previous post “Business Intelligence is not Data Science“.

Sam wrote:

“Curious and curiouser! You have taken up the sword “of the customer,” just as many other disciplines have claimed to do in the past (e.g., design, marketing, market research, “social” business).

I find it quite interesting that everyone is clamouring all over each other to claim that no REALLY they CARE about the “customer” and those other disciplines do not.

What is going on here? Why don’t we just say that capitalism has an immanent flaw, which is to say, it puts profit before people, and we must fight this all the way. I for one have no problem saying profit is fine, but it’s not the only reason I’m in business.

Instead, we are all collectively arguing that we “speak for the customer” (not “people.”)

What’s going on with this?”

Yes.

It’s a business meme to state that customers increasingly have an asymmetrical information advantage against businesses. I could never tell if anybody really believed what they were saying, because I didn’t see many people really adjusting their behavior.

I believe it. Auction sites, reverse auction sites, review aggregators, social couponing, social media, and the search engine are causing smarter customers.

It gets worse for businesses. Tech-optimism, income, and adoption of new technologies are linked. I make absolutely no causal inference about that. It’s just enough enough to state that, in segmentation after segmentation, the group that’s thriving in a global economy have crazy tech-optimism. 

Speaking only for myself:

• I was inspired by Zappos and the application of smart customer service policy.

• I was relatively repulsed by several large enterprises that were using business rules logic to boost yields while at the same time damaging my experience with them.

• I’m very inspired by Netflix, LinkedIn, Amazon, and Apple – all three of whom use data to make my experience better, while they’re out boosting their yields (less churn, more pageviews, more kindle book buys, more iTunes purchases).

This is about the hunt for pareto optimality. If I wanted to maximize customer sat and make no money, then I’d give everybody a porshe. If I wanted to minimize customer sat and maximize money, I’d bribe Parliament, and then I’d rob everybody blind. (That’s still a popular business model!)

There’s a balance somewhere in the middle here that is difficult to reach, and, even harder to make sustainable.

I think it’s relatively hard to execute an intelligent BI system that identifies the 25% of a customer base least likely to churn and then hit them with a $3.95 fee we just invented. That’s very hard. That’s loads of technology and insight coming together to maximize quarterly earnings with the least immediate churn.

I think it’s so much harder to execute an intelligent product that generates a better experience for both the firm and the customer, and that persists and makes a difference. If we truly accept the business meme that customers are getting smarter and are better able to arbitrate amongst suppliers, then the old BI system game becomes harder.

Just to question an assumption then: isn’t superior user experience supposed to generate some sort of lock-in and sustainable competitive advantage? Isn’t that the core insight that underpins all of digital systems design?