Are You Interpreting Your Customer Data the Right Way?

People commonly agree that Joseph Pine and James Gilmore’s 1999 book, The Experience Economy (Harvard Business School Press), foreshadowed today’s customer environment. Yankelovich’s J. Walker Smith, in a speech at the 13th Annual CRMC conference in June 2007, called today’s consumers the “choice generation,” with the customer in control and value (to the customer) existing in the experience.

This new Web 2.0, choice-generation world creates a number of difficult issues for traditional companies (and for those of us who were not early adopters of the ideas in The Experience Economy), including:

• Desires: what the customer wants
• Power issues: who decides what we do and offer
• Budget constraints: who decides priorities (for most, funds are not limitless)

This means, as a business leader, I need to clearly understand the wants, needs and desires of my current (and future) customers and, at a minimum, accommodate their input into the products and services I do, or will, provide and the order in which I work to provide them.

Actually, talking and listening to customers is a critical step in this process. Implicit is that, by doing so, we correctly interpret and understand their desires.

Let me give you a classic example from my own experience. In 1992, when I first joined Kay-Bee Toys, the company had just completed a major research study to find out what customers wanted from a toy store. The president of the company had begun an initiative to redesign and re-merchandise the stores to implement as many of the customers’ top 10 desires, based on the research, as possible.

A number of these were experience- or environment-related desires. For instance, two of the top three were “wider aisles to permit two strollers to pass” and “lower shelf heights for a less claustrophobic feeling and less fear of things falling from the higher shelves.” Implementing these particular customer wishes, however, meant reducing the total shelf space in the store, and thus, the total inventory. But this issue was being addressed by the merchants, who were focused on top desire No. 5: “selection of the hottest toys.”

Remodel

Kay-Bee remodeled a large number of stores with these factors in mind. The result of the initiative? A drop in sales nearly identical to the reduction in inventory in 95 percent of the stores that were converted. What the initiative ignored was the No. 1 desire of customers: that stores “have the toy they were looking for.”

Fast-forward to more recent times and my current employer, David’s Bridal. In 2005, the CEO created the Customer Value Review Committee. He hand-picked seven people—those he deemed to be the most customer-centric in the organization, regardless of level—and named me cochair. Our mission was to define the customer-centric business model of the future and, through communications, change the culture of the company to one that would support this model.

After we’d held months of meetings involving our own ideas and opinions of what the customer wanted, I was insistent that we get the real customers’ opinions to verify and prioritize those recommendations. Because we had two “process” people on the committee, I felt the process of customer-experience mapping would resonate as the most appropriate exercise for the group. I also felt it was critical for them to actually interview customers, themselves, especially given that four members did not have any actual customer interaction in their day-to-day business. This would help them gain, first hand, an understanding of what customers wanted; what they liked and disliked; and where the pain points were.

My team and I developed the questionnaire, which was designed to be conversational, beginning with questions about what the customers remembered and what they liked and disliked before delving into deeper areas we wanted their opinions on. These had not been brought up in the initial conversations.

Whom we talked to was also important. We talked not only to the bride but also to each of the bridesmaids in her bridal party (after obtaining the bride’s permission to do so). Although the bride usually is the decision maker as far as where her bridesmaids shop and what they buy, the bridesmaids are also our customers. And because on average, three of four bridesmaids are single, they are potentially future customers as brides and decision makers for their bridesmaids. So understanding their needs, wants and desires were just as important.

The customer-mapping experience was certainly eye-opening for the committee and especially the “process” people. As an example, the two process people felt that registering at the front desk upon arrival was a critical pain point and that an IT solution to this was a high priority. After we had conducted the interviews, though, they clearly understood that it was not a pain point for the customer, and although an IT solution was important, it was no longer a “high priority” item.

As a follow up to the mapping project, we performed a larger conjoint analysis study, which requires participants to make a series of trade-offs. This helped us to better understand the relative importance of different attributes and prioritize our efforts toward giving the customer what they want. Had Kay-Bee Toys done this, executives probably would have had enough knowledge to think twice about any store redesign that would mean cutting down on inventory.

Giving the customer the products, services and the experience they want is critical to survival for any business today. It is equally important, though—unless we are willing to cede complete control to the customer—that we clearly understand and correctly interpret what customers are telling us they want.