eBook - ePub
Blind Spot
Illuminating the Hidden Value In Business
This is a test
- 248 pages
- English
- ePUB (mobile friendly)
- Available on iOS & Android
eBook - ePub
Book details
Book preview
Table of contents
Citations
About This Book
Distracted by traditional metrics and mounting access to data, leaders are blinded to what it actually takes to create greater value for their businesses: meaningful, long-term relationships with their customers. In Blind Spot, you'll learn how exceptional organizations—from Disney to Instagram—innovate and sustain valuable, productive customer relationships. Blind Spot's lessons deliver a groundbreaking perspective shift and win-win approach for your customers, your business—and even your shareholders.
Frequently asked questions
At the moment all of our mobile-responsive ePub books are available to download via the app. Most of our PDFs are also available to download and we're working on making the final remaining ones downloadable now. Learn more here.
Both plans give you full access to the library and all of Perlegoâs features. The only differences are the price and subscription period: With the annual plan youâll save around 30% compared to 12 months on the monthly plan.
We are an online textbook subscription service, where you can get access to an entire online library for less than the price of a single book per month. With over 1 million books across 1000+ topics, weâve got you covered! Learn more here.
Look out for the read-aloud symbol on your next book to see if you can listen to it. The read-aloud tool reads text aloud for you, highlighting the text as it is being read. You can pause it, speed it up and slow it down. Learn more here.
Yes, you can access Blind Spot by Steve Diller, Nathan Shedroff, Sean Sauber in PDF and/or ePUB format, as well as other popular books in Business & Marketing. We have over one million books available in our catalogue for you to explore.
CHAPTER
1
A World of Hidden Value
On July 14, 2014, an Engadget editor named Ryan Block and his wife called to cancel their Comcast cable and Internet service. During an 18-minute phone call (only 8 of which were recorded), a Comcast customer service representative badgered them with questions and refused to do the simple task they asked. The entire conversation consisted of exchanges like the following:
Block: âIâd like to disconnect.â
Service rep: âHelp me understand why you donât want faster Internet.â
Block: âHelp me understand why you just canât disconnect us.â
Service rep: âBecause my job is to have a conversation with youâŚabout keeping your service.â
This went on until the bemused Block wondered aloud, âAm I being punked?â
For those of you outside of North America, Comcast is a cable TV and Internet company that frequently tops the lists of the worst companies on the continent. Its most obvious problem is the terrible relationships it has with its customers. Many people simply hate dealing with the company.
Part of the blame falls on the industry: almost all cable and Internet companies in the United States fare poorly in customer surveys. Still, part of the blame has to fall on the company itself. Comcast offers an array of conflicting and confusing promotions. The deals routinely end 12 months after they begin, triggering huge increases in prices that surprise customers. Then, if you try to disconnect, the company makes you cancel over the phone, where youâll find a customer service rep trained to do nearly anything to keep you as a customer. And after you cancel their services, the company often doesnât stop billing your account until you physically return equipment to the nearest store, which may not be nearby.
Worse still, customer service reps often act like Blockâs did. He may as well have been a robotâhe had a script, and he stuck to it. His compensation was likely based on how many customers he could prevent from discontinuing service. In an ordinary interaction, people respond to one another. If a person seems upset, you donât start telling jokes. If theyâre happy, youâre happy for them. You build relationships using empathy, not by stubbornly saying the same thing over and over, regardless of what the other person says.
Over time, emotional experiences add up. If you have one interaction after another that leaves you feeling worse, it will result in a bad relationship. When that happens, you talk about the company in the same way that you talk about a person you canât stand: obtuse, frustrating, and annoying. You can actually come to hate a business. And when you get a chance to get rid of its services, you dump it, just as you might dump a friend or romantic partner. (The same is true in the positive, too: you might love and admire a company based on the kinds of interactions you have with them.)
That said, you might ask why Comcast is still in business. Because itâs lucky. It has a virtual monopoly in some regions and competes with only one or two rivals in the rest of the regions. Its competitors all engage in the same unpleasant practices, so consumers have to pick their poison. But most companies have no such luxury. If Comcast were a neighborhood restaurant, it wouldnât last more than a few months. Within days of opening, anyone who went there would tell everyone else to stay away.
In fact, most small businesses understand that their customers have a series of experiences that turn into a relationship. They know that developing positive relationships is critical to their success. They have to learn their customersâ names, understand their preferences, and know what their customers want before they say so. Their business has to be positive, upbeat, and sensitive. Being good at what they do simply isnât enough. They have to know how to give and take in a two-way conversation. They have to care.
Blind Spots and Opportunities
Youâll find that this is just one of many blind spots that businesses have. In Comcastâs case, short-term profit is much more important than long-term relationships, and holding customers prisoner is the only acceptable corporate strategy. Comcast prefers to incentivize management and front-line employee alike to make it nearly impossible for customers to leave (although, ultimately, itâs no more difficult than a call to their credit card company to cancel the account) than to give its customers a reason to want to be customers for the long term.
This is just one way in which traditional business thinking has blinded its practitioners to reality. Relationships are the source of long-term value, not merely because itâs easier to keep an existing customer than to acquire a new one, but because satisfied customers help a business acquire new ones.
Itâs really no different than personal relationships. While the healthy relationships you forge with friends and family are built more on emotional and meaningful value, the same is still true of relationships built on financial and functional value. For some strange reason, businesspeople have been told that only the short-term, financial value is worth building, but any wise businessperson knows this isnât the case. Still, traditional business literature is rife with this contradiction.
Broadly speaking, everyone has at least some blind spots. This reference indicates an area of the retina (the inside back of your eyeballs), which has no light-sensitive rods and cones because itâs where all of the other optic nerves flow out of the eye and into the brain. This creates a small disc in your field of view that has no actual information, although your brains are facile in filling in the missing signals with assumed data that makes it seem like youâre getting a complete, seamless picture of our surroundings. You donât really notice that youâre not really seeing some of the data around you.
Likewise, organizations often have blind spots that they donât notice because their managements âfill inâ whatâs missing with alternative perspectives, or they ignore missing data because they canât make sense of it themselves. Unfortunately, this process is often filled in with dogma and not experience. Unlike what our brains are capable of doing, these blind spots cause companies to miss important cues, obscure lucrative opportunities, and assume they have the complete picture when theyâre leaving dollars on the table, because they never see what they donât look for.
The blind spot weâre most interested in here has to do with what contributes to companiesâ total value, namely, the building of relationships with customers Without seeing relationships for what they areâa mutual appreciation built on sequences of pleasing customer experiences over timeâorganizations miss what is often the single most important opportunity to build their total value (see Chapter 2, âDefining a Business Relationship,â for more information).
Relationships and Opportunities
What defines a relationship with a company instead of another person? Put simply, itâs a connection with a company that someone values. You can use a product to do a task, but for many of the things you own and use, you donât value them beyond their functions. A relationship is different. It grows out of the customerâs interactions with your company. It can be quite strong and even have human dimensions, and itâs an opportunity for a company to create a long-term customer.
Such a definition may seem strange or overstated, but research has shown that people see and react to brands and businesses much as they do to other people. In the 1990s, for example, Stanford researchers Cliff Nass and Byron Reeves found that users of devices such as computers and microwave ovens often treated these objects as if they were human. In other words, they used a shorthand with these objects that granted them a kind of âvirtual personhood.â1 Everyone knows that a microwave isnât a person, nor a computer, but itâs much easier to treat it as if it wereâand to expect the same treatment, in kind. This grants the device (or company) the permission to have and express emotions, personalities, and even agencyâbut only as long as it acts like like a decent human being. The moment the company crosses the social boundaries of acceptable behavior (like ignoring your pleas to cancel your service), the same power that builds brand value allows it to be destroyedâeven faster. That colleague you trust at work, that you treat with respect? Once you find him to be a purposeful impediment to your own tasks, heâs no longer an ally but an adversaryâor even an enemy. This is the nature of human relationships, and itâs the same with how you expect devices, services, and organizations to behave. The value you grant them (or revoke) is entirely built on the relationships you build.
In a ground-breaking study in 1998, Susan Fournier (a noted management scholar and researcher on brand value) argued that brands and customers do forge meaningful relationships. The reason is fairly simple. Weâre human, and as humans, itâs what we do. We grow up learning how to forge relationships with other people. When we interact with products or companies, we default to what comes naturally.
Of course, products and companies arenât people. It may not make sense to love Disney, or you may be disappointed that the creator of a mobile device espouses a cause you dislike, but it happens. You might get angry and frustrated at a vending machine. You possibly love shoes or one of your home appliances. You may feel like youâre greeting an old friend returning from a trip abroad when you crack open your favorite soda. Itâs how humans make sense of the complex world around them. Itâs just how we are.
Unfortunately, most companies donât understand this tactic and donât invest in relationships, at least not in a continuous, strategic way. Itâs easy to understand why. Relationships are fuzzy, not easily measured, and they mean different things to different people. Marketers talk about them, but few businesses treat them as strategic assets. Walk into a boardroom, and you can get a long way talking about income statements, P&L, CapEx, and ROI. Talk about relationships, and few people want to listen, especially if the business isnât doing well. When challenged, thereâs not yet any way to point to the value of relationships in an organizationâs financials because the value is spread throughout all of the statements. It doesnât feel real, but itâs encapsulated everywhere a company does business. Relationships donât seem real or concrete enough to act upon. Theyâre seen as a byproduct of other activities, something that happens on their own as long as you take care of other things.
For most businesses, relationships are a major factor in building whatâs known as premium value. Premium value indicates how much more a customer would pay for one product or service over an equivalent replacement. A relationship-conscious company like Disney can charge much more per visit to its parks than Six Flags. Coke sells for more than generic soda. And Apple can charge much more than its rivals for products that do much the same thing.
You might think weâre merely talking about one product being better than another. Thatâs not the entire story, though, as good relationships start with products that work. But functionality is table stakes these days, and premium brands donât stress functional attributes. Almost any company can build products that do what theyâre supposed to do, or it can offer unique features that donât really matter. However, most companies have to compete on price, and relatively few understand how to create the kinds of experiences that build a durable relationship that customers value and that transcend price.
Five Types of Premium Value
Functional value is usually easy to quantify. Anytime a company stresses a particular feature of its offering (or how many there are), or the performance of the product or service as a whole, it is communicating about functional value. This is the first consideration customers usually make, and itâs a great differentiatorâunless some other company offers a slightly better feature or just one more. Functional value is usually easy to communicate, but it almost never engenders loyalty because itâs the shallowest kind of value that can be provided to someone.
Financial value is the second kind, and itâs a little more involved, creating a slightly deeper connection between a customer and a company (though not by much). When the number of choices is narrowed by various options, consumers turn to issues of money: how much are buyers really willing to spend for certain function or performance? Everyone has a different answer, which is why there are so many options for cars, computers, types of hand soap, and everything in betweenâat all price levels.
Because theyâre easy to measure quantitatively, both functional and financial values are pretty easy to see and understand. Either a product or service has the function a consumer wants or not. Either itâs within a set budget or not. Most see the process of deciding what to buy or use as rational. These types of value, because theyâre quantifiable and, in a sense, visibleâsince they operate at a material levelâare the least significant for consumers and provide the least sustainable source of differentiation for companies. Theyâre about as basic as value gets, so buyers refer to them as, wellâŚbasic.
The other three forms of value are entirely different, however. This makes them complicated and difficult to work with. Ironically, these forms of value are just where the greatest opportunities to differentiate in the market reside. Theyâre also the most important source of stock valuation. Havas Media, for instance, has determined that companies that consistently offer these types of value are, on average, valued significantly higher by the markets. Because of this, and because they offer so much greater benefits to customers, which leads to sustainable competitive advantage, these are thought of as the source of premium value.
The third kind of value is emotional value. Everyone acknowledges that emotions exist, yet some in business are still unable to see their impact on customer decisions. A âjust-the-facts-maâamâ approach doesnât allow room for emotions to enter the equation. Yet, emotions are not only deeper in the relationships between customers and companies (and between individuals, too), but theyâre also very much a type of value that gets exchanged, even if they feel invisible. Itâs also easy to explain: consumers are willing to pay more for those experiences that provide them with the emotions they seek. Thatâs all there is to it, but it flies in the face of traditionalists who insist that âpeople wonât pay more for things than they have to.â
Of course, every good salesperson knows that theyâre selling on the basis of emotions more than on price or performance. Itâs why consumers end up with a choice thatâs often over their budget or doesnât meet all of the functional needs theyâve specified. What drives decisions, in these cases, is that the choice makes the buyer feel greater, younger, happier, thinner, more accomplished, sexierâsomething. Thatâs incredibly powerful and starts to explain the discrepancy between the book value of a company (the simple tally of its assets and liabilities) and its brand value (which is usually many times higher). This isnât a nefarious thing, by the way. Weâre usually after satisfaction more than features or price, in the first place.
Contrary to being irrational, emotions often arenât. You may not have realized you had a deep need to feel younger, more active, more successful, but if you respond positively to offerings that make you feel those things, thatâs a pretty rational response. The difference is that the decision driv...
Table of contents
- Cover Page
- Title Page
- Copyright Page
- Dedication Page
- Contents at a Glance
- Contents and Executive Summary
- Foreword by Douglas Rushkoff
- Chapter 1. A World of Hidden Value
- Chapter 2. Defining a Business Relationship
- Chapter 3. Visualizing Relationships
- Chapter 4. Finding Opportunities in Relationships
- Chapter 5. Becoming by Doing
- Chapter 6. Distancing and Team Structure
- Chapter 7. Discovering
- Chapter 8. Deciding
- Chapter 9. Declaring
- Chapter 10. Designing
- Chapter 11. Delivering
- Chapter 12. A World of Premium Value
- Index
- Acknowledgments
- About the Authors