Fall 2017 — Week 07 Process Journal

Barlow and Møller: A Complaint Is A Gift

Barlow and Møller cover a somewhat controversial topic: Customer complaints in retail should be highly praised by organizations or companies that provide a product or service to customers. Although the article centers highly around services and retail, the insights are valuable in a wide gamut of businesses.

Research demonstrated that customers that express their feedback as complaints are doing an effort to express dissatisfaction, which should be valued by the business, and on the long term they tend to be loyal customers. Embedding policies that consider complaints as an asset in businesses or organizations will most likely incur into a cost (“cost of doing business”). Nordstrom is a notable example of a business that values customer feedback and leverages the feedback itself to quickly solve the dissatisfaction and convert it into a positive experience (as much as possible).

As the overall topic for the week, customer satisfaction is a typical metric that business/organizations use to measure their performance over time. In this case, for retail businesses, it is viable to see metrics such as product returns, supplier returns, customer loyalty, and other metrics that can identify larger patterns of customer behavior, and even segment them by geographies or regions.

Questions:

  • For smaller business that depend on thin margins, how can the cost of business not cut into the profits to the extend where the business loses money? What kind of processes/policies should come into play to ensure this?
  • For retail, customer complaints are a fairly straight forward — even scripted — situation. How does this change for a B2B business or organizations? How can the complaint be leveraged in a B2B context?

Kellogg Business Case: Mobile Care Chicago Metrics

In this case study, the Mobile C.A.R.E. Foundation form Chicago is presented in a point in time when the donors are requesting details around the impact that the organization has in the communities it serves. This is not an unreasonable ask, since people that are willing to invest or donate money typically expect a large ROI in terms of money or some sort of benefit (recognition of the impact of their donations, most likely here).

In this case study, besides the operational details, it is possible to find some basic metrics that the foundation uses to operate. One huge gap from the case study is the lack of metrics that address the root issues that the foundation is working towards: Increase the levels of awareness about asthma among parents, and the healthcare delivery effectiveness.

Evaluating the operational effectiveness is useful and necessary, but if there is a disconnect between the strategy and tactical actions, the broader challenges will not be addressed — in this specific case: Are the families being properly educated on the impact of asthma in their families, and the benefits of taking advantage of the services provided by the C.A.R.E. Foundation? Better patient scheduling will not work towards that goal!! In fact, without the proper education, awareness, and empathy, operational excellence are useless in this context.

Questions:

  • What questions/metrics adequately fill the gap between operational metrics and strategy execution in this context?

Suggestions:

  • Is enough awareness being raised in the target families?
  • Is the value of the services being adequately understood and leveraged?
  • What is the overall reduction in healthcare costs for the benefited families/students?

Mauri and Minazzi: Web Reviews’ Influence on Expectations

In this paper, Mauri and Minazzi present the outcomes of studying a specific audience to measure the purchasing intentions and expectations in hotel reservations. The outcomes are quite interesting, since it highlights the importance of reviews when potential hotel customers are researching hotels for a trip, and the fine balance that are the responses from hotel management to negative reviews.

Due to the easy access to research tools like the internet, and travel information sites (such as TripAdvisor), it is extremely easy to obtain recommendations from other people that have stayed in a hotel. This model applies to much more than the hospitality business — online shopping, movies, services, etc. Reviews that include positive and negative aspects are more trusted than those who only have negative content. In the cases where the business responds to the feedback, it needs to carefully operate by acknowledging the feedback as a valuable insight shared by customers, and act according to the expectations and values of the business.

The overall messaging of the research paper can be applied in a fairly straight forward way when analyzing performance metrics — both from the internal business processes perspective, to the customer-facing processes. Examples of these would be: What is the Net Promoter Score of the guests by geography/region/etc, and how soon can the businesses react and implement the necessary changes to address the negative experience from customers.

Questions:

  • How can organizations design the right incentive systems that help them act to improve negative reviews?
  • What are necessary culture changes that an organization needs to adequately address changes to improve implementation of fixes to negative feedback?

Business Model Generation — Selected Readings

Unbundling for companies at scale is challenging — as an organization grows to expand their activities/goals three main differentiated businesses compete for resources and culture needs:

  • Operational Excellence
  • Product Leadership
  • Customer Intimacy

Smaller companies can easily adapt to solve one of the above business types, but as companies grow into a massive scale, they should cover more in order to remain competitive. Amazon can be seen through this lens:

  • Operational excellence: It needs to have extremely efficient operational processes to optimize and reduce cost and infrastructure spend.
  • Product leadership: Given their scale and reach, they’ve developed their own products and services (from end-user Kindle devices, to cloud-computing infrastructure).
  • Customer Intimacy: Given that they are the everything store, they must be able to adequately recommend products in a proactive way to their customers, leveraging insights that need to produce extremely accurate results.

The chapter also focuses on unbundling a business using four lenses:

  • Key Trends
  • Market Forces
  • Industry Forces
  • Macro-Economic Forces

These can be segmented by the type of business they address and evaluated through time.

Non-Class Reading: Podcast — Masters of Scale 01 — AirBnB’s Brian Chesky

Reid Hoffman interviews the CEO of AirBnB, who explains that while visiting one of their earliest hosts, they decide to be hands-on and help improve the experience by photographing the apartment professionally. While chatting, they eventually realize that the host has a wealth of information that he shares with visitors, which then Chesky and the AirBnB team leverage to the benefit of the entire company:

We walk up to the apartment and we went there to photograph the home. And we’re like, “I’ll upload your photos to the website. Do you have any other feedback?” He comes back with a book, it’s a binder and he’s got dozens of pages of notes. He ends up creating a product roadmap for us, we should have this, this, this, this and this, and we’re like, “Oh my god this is our roadmap because he’s the customer.” I think that always stuck in our mind as, the roadmap often exists in the minds of the users you’re designing things for.