Research Tidbits

Learn to use AI now… before the competition

Artificial intelligence (AI) has been in the news lately because a recent advance in the technology now makes AI both significantly more advanced and more accessible to businesses. While in the past, companies needed big budgets and teams of developers to utilize AI, current tools have opened the technology to medium and even small companies.

Marketing is one area where companies are benefitting from AI.  A few examples:

  • Companies are using AI to analyze data on customer behavior, demographics, and purchase history to create personalized marketing campaigns that are more likely to resonate with individual customers.
  • Retailers are using AI-powered chatbots to provide personalized product recommendations to customers based on their browsing history and purchase history.
  • Restaurants are using AI-powered predictive analytics to analyze customer data and make predictions about which menu items are likely to be popular, allowing them to optimize their menu and improve their sales.

And there are many benefits beyond marketing, such as:

  • Companies are uncovering new business opportunities by using AI to analyze customer behavior and preferences.
  • Banks and other businesses are using AI to detect and prevent fraud.
  • Manufacturers are using AI-powered predictive maintenance systems to predict when equipment is likely to fail, so that maintenance can be scheduled before a breakdown occurs.

And that’s just a small sample of the ways AI is being used.  To be fair, many people have concerns about AI, such as job losses and potential abuse of AI systems.  But like it or not, these advances are coming and companies that don’t get involved may find themselves at a competitive disadvantage.

I’m starting a mastermind group for those interested in discussing how to utilize AI to benefit their companies.  Please let me know if you’d like to participate.  Email me at info at bureauwest.com.

Sources: Bureau West research; ChatGPT; “How AI could empower any business,” Andrew Ng, TED2022; Graphic: Designed by pikisuperstar / Freepik

Posted on by Jay Zaltzman

Consumers planning to spend less

We’ve all heard about the pent-up demand that has led to increased spending lately and which is a major factor in the inflation we’re experiencing currently.  That increased spending has been particularly noticeable in the travel category.  Flights have been full and prices for transportation and accommodations have risen sharply.

In recent focus groups about travel, we asked frequent travelers if they intend to continue the increased pace of travel.  The answer was a resounding “no.”  Almost all participants had postponed travel plans during the pandemic and finally made those trips this year.  Now that those trips have been made, they are planning to go back to their normal travel frequency.

In other research, we’ve been talking to consumers about inflation and the impact on their spending.  While many talked about accepting higher prices and adding higher tips during the pandemic, now consumers are being more careful and looking to spend less.  My own personal experience: I was going to order a pizza online from a local restaurant, which I planned to pick up myself, until I noticed they added a “pickup fee.”  For me, that just crossed a line, and I decided to order somewhere else.  A few weeks later, I ordered from that restaurant again, and the pickup fee had disappeared.

What does this mean for marketers?  It may be time to return to emphasizing value and offering promotional deals.  Let’s find out how your customers feel about spending.  Email me at info at bureauwest.com.

Source: Bureau West research

Posted on by Jay Zaltzman

Customer delight creates big ROI

Many companies’ approach to customer experience focuses on eliminating negatives (“was your customer service rep knowledgeable?  Was your hold time acceptable?) rather than increasing positives or “delighting” the customer.

Of course, it’s important to ensure customers don’t have a terrible experience.  But a great deal of research has shown that focusing on customer delight has significantly greater return on investment than eliminating negatives.

  • In their book “The Power of Moments: Why Certain Experiences Have Extraordinary Impact,” Chip Heath and Dan Heath examined data from Forrester and found that elevating positive experiences creates nine times more revenue than eliminating negative experiences.
  • Another Forrester study found companies that prioritize customer experience grow their revenue 1.7 times faster than companies that don’t, and they also increase their customer lifetime value by 2.3 times more.
  • Watermark Consulting looked at thirteen years of stock performance of companies that are customer experience leaders and found that customer experience leaders outperformed the broader market, generating a total return that was 108 points higher than the S&P 500 Index and they generated a total cumulative return that was 3.4 times greater than that of customer experience laggards.

In “The Power of Moments,” the Heath brothers provide two great examples of companies who have profited significantly from customer delight:

  • You know the funny safety announcements that sometimes happen on Southwest Airlines?  (E.g., “the smoking section on this airplane is on the wing.”)  The company was able to calculate the impact of hearing a funny flight announcement on customers’ likelihood of flying Southwest: they flew an average of half a flight more over the next year than did similar customers who hadn’t heard one.  They calculated that if Southwest could double the number of customers hearing a funny flight safety announcement, the result would be more than $140 million in revenue per year.
  • Sharp Healthcare made a significant investment to improve the patient experience.  Beyond the medical care patients received, they wanted to improve the service experience.  For example, caregivers stopped talking over patients and actually introduce themselves and explain their roles.  In the five years since starting the effort, net revenue increased by half a billion dollars.

Figuring out how to elevate the customer experience requires investing some resources and some creative thinking – but the result is clearly worth the investment.

How can you delight your customers?  Let’s talk to them and find out!  Email me at info at bureauwest.com.

Sources: “The Power of Moments: Why Certain Experiences Have Extraordinary Impact,” Chip Heath and Dan Heath, 2017; “The Business Impact Of Investing In Experience,” Forrester, June, 2021; “2021 Customer Experience ROI Study,” Watermark Consulting, 2021

Posted on by Jay Zaltzman

Customer experience – the secret to success

We are currently conducting research on the topic of luxury travel and have been asking people about what elevates an experience to the level of luxury.  I’ve been struck by the fact that their answers can all be boiled down to one thing: superior customer experience.

But here’s the “secret:” providing superior customer experience isn’t limited to the luxury category; mainstream companies can do it, too!  To do so, many companies need to shift their focus.  Rather than just focusing on getting good scores in customer experience surveys, they need to look beyond that and figure out how to improve the customer experience. 

https://www.stockvault.net/photo/254886/customer-satisfaction-survey

Let me give you an example: our website and email stopped working recently, so I called our web host’s tech support.  It turned out there was a technical issue, and they didn’t know when it would be fixed.  Afterward, I received a customer experience survey asking me about the rep I talked to.  She was polite and pleasant, so I gave a rating of five out of five.  The technical problem certainly wasn’t her fault.  But does that mean I was happy?  No!  One thing that would have made me happier: if I could have found the information about the technical problem on the host’s website, rather than having to make a call.  Or imagine if the rep had told me that she would move our website to a different server, so that we could be back up and running immediately.  I don’t know if that’s technically feasible, but if it were, I would have been ecstatic and would have told everyone I know!  But I wasn’t asked about what could be improved.

Our luxury travel research provides some clues about where companies can look when it comes to improving the customer experience:

  • People love personalization.  A guest at the Ritz in Bali received specific flowers in her room with a note saying the staff saw her admiring the flowers in the lobby.  While mainstream companies don’t have the staffing for that level of personalization, they can use digital tools to keep track of customer preferences.  Or it can be even simpler: United Airlines flight attendants recognize passengers in Premium Economy by name.  Customers are surprised and gratified (since that usually only happens in business class), but it’s relatively simple for flight attendants to do, since they have passenger names on the manifest.
  • People hate waiting.  Luxury providers find ways to change the experience of waiting.  For example, a cruise provider might take passengers’ registration information while they’re waiting to check in, or a restaurant might provide drinks and hors d’oeuvres while diners wait for their table.  Mainstream companies can look for ways to occupy customers while they wait… and may even discover additional selling opportunities!
  • People want their problems solved.  High-end providers empower their employees to fix customers’ problems.  The Ritz Carlton is known for allowing employees to spend up to $2,000 to solve a customer’s problem without manager approval (note: they rarely spend that much).  While mainstream companies usually can’t spend that kind of money, they can empower employees to solve problems and make exceptions to rules when appropriate.

We encourage our clients to go beyond asking their customers to score their customer experience and instead research the experience itself and look for opportunities to make customers happier.  Email me at info at bureauwest.com and let’s discuss how to do that!

Sources: “Treat Them Like Royalty: Customer Experience Lessons From Luxury Brands,” Forbes, 4/12/22; Bureau West research

Posted on by Jay Zaltzman