Today's "Puzzling" Consumer

This week I was chatting with a client, explaining how today's consumer has more power than ever before: More information, more choices, more flexibility for exercising preferences, and most especially, less risk associated with changing their behaviors. It's a theme people are already bought into -- Forrester calls it the age of the customer -- but it's also a theme that people are too quick to believe they understand without grasping the kinds of changes this requires for a business to serve such an empowered customer. To get to that extra level of awareness, during my conversation this week, I came up with a way to describe it that I call the puzzling consumer.

Back in the day, a company designed a puzzle for you and saw you as a missing piece. They defined a hole with a certain shape, one that was convenient to them based on the analog tools they had, the historic mindset of their industry and so on. Then the company invited you to reshape yourself to fit that hole.

Read more

YouTube Is The First Digital Platform To Take On Live TV

Watch out, cable TV. Today YouTube shared it's newest subscription service -- YouTube TV -- with a hundred or so journalists at a live event at the company's headquarters. This is different from YouTube Red, the subscription version of YouTube enjoyed by at least 1.5 million people and focuses mostly on ad-free access to short-form videos along with a few exclusives. Instead, this new service is aimed squarely at pay TV. It does so by offering three things that cable TV has previously been best at:

  1. Live TV. YouTube announced deals with the major broadcasters -- CBS, NBC, ABC, Fox -- as well as a slew of cable programmers. Like with earlier over-the-top (OTT) TV providers Sling TV and PlayStation Vue, the content can be watched live, on an Android or Chrome device, or on a TV via a Chromecast and one assumes other devices soon enough.
  2. Cloud DVR. This is the new thing that all OTT TV services specialize in and some traditional cable packages -- like Xfinity from Comcast -- also offer. YouTube's DVR is unlimited and can record multiple shows at the same time.
  3. Sports. Yep, ESPN is one of the main reasons people still pay for TV and to succeed any OTT TV service has to have it. That ice was already broken by Sling TV, giving YouTube TV a way in to what used to be the most closely guarded part of the pay TV business.
Read more

Spotify Loves Me; Spotify Hates Me: Serving Today's Demanding Customer

Welcome to the age of the customer, a time where consumers can get what they want, when, where, and how they want to. Or at least they expect to because that's how their life is panning out more often than not. But what happens when they don't get something that seems obvious? An example: Five years ago this month, a Spotify user posted a request on the company's Live Ideas feature request, titled, "Explicit Button." The request was simple, at least from a digital customer's point of view:

Now five years later, the request has yet to be implemented, despite having achieved 7,463 upvotes from the Spotify member community. This makes it the most upvoted, unimplemented idea in the community. Yet there it sits. Search for explicit lyrics & Spotify and you'll get at least dozens, probably hundreds (I won't take time to count but you are welcome to) of complaints. Lots of people claim to have left Spotify over it. Others continue to listen but are angry about it. Spotify did respond in 2016 by saying:

This is wonderful: We have heard you, we agree with you. But we haven't yet done anything about it nor do we have plans to do so. What's up, Spotify?

Read more

Do You Dread, Tolerate, or Embrace Change?

Last November I sat down with Chevrolet CMO Tim Mahoney on stage at Forrester's Age of the Customer summit. We had a wide-ranging talk about disruption, change, and what Chevy executives are doing to anticipate and deal with that change. I just published a summary that conversation, what I might call Mahoney's top recommendations for CMOs in 2017. In that short summary, I quoted Mahoney and then added what follows:

"Our CEO talks a lot about how in the next five years, it's going to change more than it has in the last 100 years when you think about what's going on with car sharing, ridesharing, autonomous. It's a really interesting time to be in an industry that's over 100 years old. Think about your car: Where is it now? It's parked. Next to your home, it's the second-most important investment people make. It's parked 94% of the time. Many younger people are starting to ask, why do I even need a car?" - Tim Mahoney

General Motors is not alone in this ominous premonition. A full 42% of companies we surveyed recently in the US, Germany, and the UK agree that "in the next five years, my organization will have significantly altered its product and/or services.

Read more

Amazon Spends Big To Deepen Its Customer Relationships

Wall Street followers found much to be concerned about in Amazon's quarterly earnings. Shipping costs went up 43%, operating costs are up 29% overall and the company's operating margin fell to a ghastly 1.8% (down from 4.2% the quarter previous). In light of all this, the stock is down 6% in after-hours trading.

Which makes the stock a buy, in my book. (Disclosure: I'm not a financial analyst, I'm a consumer market analyst, so don't take my investment advice. Oh, and I don't own any Amazon stock outside of mutual funds.)

Amazon's margin went down precisely because the right costs went up. Amazon continues to add millions of Prime customers and investing in those customers costs money. Specifically, Amazon has opened 23 warehouses since July. Those warehouses will be in position in the crucial holiday rush to ensure not just two-day delivery, but one-day delivery more and more. And in some cities, one-hour delivery.

As the Wall Street Journal quoted Amazon CFO Brian Olsavsky: “We acknowledge that’s expensive,[but] customers love it.”

Read more

Amazon's Customer Relationship is King: Will Yours Be a Prince or a Jester?

In 2010, I wrote:

"There's a critical lesson to learn from the most recent changes in the media industry. ... while most have been distracted by the form, price, and user experience of their new digital products, a few companies have quietly overhauled the media business by focusing on something else entirely; instead of digitizing the product, these companies have digitized the customer relationship, creating a relationship that can survive the transition from traditional analog media to digital."

I was talking about Netflix, which in 2010 doubled its stock price from under $10 a share to over $20. It now hovers around $100. Back in 2010, I made it clear that this transition to relationships wasn't just about media companies, which were simply canaries in a digital coal mine:

Read more

European Marketers Are More Likely To Model And Measure Customer-Obsessed Leadership

It's the age of the customer, and only the leaders who know how to lead their organizations to increased customer obsession will be able to keep up with hyperadoptive consumers. Those consumers already expect to get what they want, when, where, and how they want it. The only question will be who will give it to them? Will it be you?

It's a question I asked today on stage at Forrester's Marketing Europe 2016 forum in London. I shared with them an overview of my recent report, "Leadership In The Age Of The Customer," a months-long project that revealed the five things that customer-obsessed leaders must do. I then asked the attendees to answer five questions. Just more than 40 executives took my short five-question survey, allowing me to compare the marketers in the UK and from across Europe with their counterparts in the US, where I asked the same questions just a few weeks ago. See the chart below to see how they compared.

As you can tell, our UK colleagues are more confident in how effectively they measure customer obsession. That's a tremendous thing. In a few key areas, however, they fall slightly behind, such as in recognizing and rewarding customer obsession in others and especially in providing the resources that are needed to achieve customer obsession. 

What to do next? You can measure yourself in more detail than these five questions — in a survey that still takes fewer than 10 minutes to complete. Just go to http://bit.ly/AoCLeadershipStudy to participate in and learn more about the full study.

Also, sign up for our upcoming webinar, "Adapting Leadership To The Customer-Led Market." See the link below, and click to register. See you there.

Read more

Customer-Obsessed Leaders Do These Five Things: Do You?

Five years into the age of the customer and it's clear that we're just getting started. More technology is coming — Amazon Echo, anyone? — and that doesn't even begin to touch on the stuff that will hit closer to 2020 and beyond: virtual reality, augmented reality, self-driving cars, and robot assistants.

I'm pleased to introduce my latest report: "Leadership in the Age of the Customer." This project is the result of months of work to update our view of the age of the customer, a 20-year business cycle in which power is shifting from businesses and institutions to end consumers. Technology, information, and connectivity are combining to instill in people a belief that they can have what they want, when, where, and how they want it. 

The key to emerging triumphant through all of this will be customer obsession. Organizations that put the customer at the center of their process, policies, and practices will successfully develop and deliver the experiences that hyperadoptive customers are ready to embrace. That will mean changing the operating model of the organization to be more customer-obsessed. It will also require that executives consciously lead the organization to customer obsession.

Read more

Why More Is More

"Thank you for coming to this urgent, last-minute meeting today," I say to you and seven of our mutual colleagues. Pointing to a plate of 10 cookies on the table between us, I explain, "We're in luck, though. As a reward for your willingness to squeeze this meeting in, I have managed to sneak some cookies out of the executive meeting next door!"

We all smile, and that look on your face tells me that you already feel better about this meeting than you did just minutes ago. As I drone on about the urgent topic of the meeting, your mind does the math. Counting you and me, there are nine of us. It doesn't take much to figure out that there is at least one cookie for everyone in the room. Your brain signals a salivary response and depending on your current blood sugar levels, possibly a preemptive insulin release from the pancreas.

In other words, you begin to act like that cookie is yours. If I were to survey you at that moment about how appetizing the cookies seem and how much you expect to enjoy yours, you and the others might collectively estimate the cookies at 6.5 on a scale from 1 to 10. Good cookies, to be sure.

That's when a knock is heard at the door and someone enters — a confederate of mine, though you don't know this — who explains that they made a mistake in letting me take the cookies. In fact, the executives ran out of cookies, and they need eight of them back. I apologize, take two cookies from the plate and put them on a napkin for us to keep. My confederate leaves the room with the eight other cookies.

If I survey you now and ask you how appetizing the two cookies left on the table appear, what do you think happens to your estimate? If you guessed that your desire for the cookies goes up, you are in tune with human nature. Indeed, the average score for the cookies will be higher, coming in at more like 7.5, even though the cookies did not change.

Read more

By 2025, 50% Of Adults Under Age 32 Will Not Pay For TV

Title got your attention? It should. In a report I just published this week, I use our Forrester Consumer Technographics® data to identify the 7% of adults who are digital cord-nevers — measured as people who have never paid for TV and who are under age 32. This is the worrisome group whose arrival TV-industry pros have nervously anticipated. As we show in the report, they are officially now larger than the entire adult population of cord cutters, who come in at 6% of all adults. Put them together, and you have 15% of adults who are not paying for TV while still getting all the TV value they need from a combination of Netflix, Amazon Prime Video, and other tools. 

Don't jump out of any Times Square windows just yet. TV is still massively popular and will continue to be. I wrote that report earlier this year, and Forrester clients can read it here. These defector groups are going to grow over time, true. And as the title of this post suggests, if we model this behavior out over the next 10 years, we expect that 50% of adults under age 32 will not pay for TV, at least not the way we think of it today. That compares to 35% of that age group that doesn't pay for TV today. (That's right, a third of them are already out of the pay TV game.) 

Read more