In last month's article, I introduced you to coproduction experiences—a model for how companies form a competitive advantage through customer performance. The four elements of the model are vision, access, incentive, and expertise. In this month's article, I'll explore how vision, specifically customer feedback, helps shape and improve customer performance.
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In the late 1980s, two researchers from the Netherlands teamed with a Dutch power company to change the behavior of the power company's customers. As part of a nationwide effort to conserve energy, the power company wanted to discover the ideal method that would cause customers to independently reduce their energy consumption. Obvious customer education methods such as advertising and flyers included in customers' bills weren't driving the change that the power company desired.
The research team decided to take a different approach. Instead of focusing only on methods that simply told the customer what to do (reduce energy consumption by some amount), they decided to enhance it by providing information about how the customer was doing toward achieving that goal. In other words, the team wanted to provide customers feedback on their energy consumption behaviors.
The team considered several options for providing this kind of feedback to customers. In the end, the team selected three methods. One method was a real-time energy consumption indicator installed in customers' homes; this device would enable customers to observe energy consumption information in real time. A second method was energy consumption information included in the customer's monthly bill. A third method was customer self-monitoring of the electric meter.
In all, 325 homes in the Netherlands took part in the study. The team gave all homes the same goal: reduce energy consumption by 10%. Homes were then randomly assigned to one of four treatment conditions:
- Real-time energy monitor
- Monthly bill energy usage report
- Self-monitoring of the meter
- Control group (which received no feedback regarding energy use)
As shown in the following graph, the treatments that included both goal and feedback resulted in stronger customer performance than the control group. However, only one of the groups exceeded the goal set by the team: Homes that had the real-time indicator experienced the greatest reduction (12.3%), surpassing the researcher's goal by 2.3% percentage points. The monthly statement group experienced a 7.7% reduction, the self-monitoring group experienced a 5.1% reduction, and the control group experienced a 4.3% reduction.
These results show that vision, in the form of clear goals and active, real-time feedback devices, contributes to a coproduction experience that enables customers to deliver sophisticated performance. Customers are able to unlock greater value in the form of reduced energy costs.
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As marketers, we are continually investing in strategies that set customer expectations about how our goods and services will perform. Through advertising, sales meetings, product demonstrations, and so on, we craft a message that we think clearly sets a compelling vision. However, more often than not, that vision focuses only on the goals and expectations of the customer relationship (the control group described in the study). You also need to think about the feedback component, letting your customers know how they are doing as they use your goods and services.
One example of increasing feedback to customers is found in OnStar, the GM service that provides information services to GM vehicle owners. It has recently introduced a service that enhances customer performance. It is called OnStar Vehicle Diagnostics. This service provides owners of GM vehicles a monthly email that contains a diagnostic report about their vehicle. The report assesses the engine, air bag, brakes, oil life, and mileage, and makes recommendations when these items should be checked or serviced.
Numerous customer loyalty programs are also beefing up the feedback they provide to customers. When you book a hotel room from Hilton Hotels, you get an email that confirms your reservation. This is expected. But what is not expected (and which is very pleasing) is that you get another email a week before your trip confirming that your reservation is still in place, with additional information about your stay. Such feedback puts your mind at ease and eliminates the need for you, the customer, to take responsibility for confirming the reservation.
As you begin to think about the feedback you can integrate into your coproduction experiences, you will find the following model helpful. It describes five levels of customer feedback. Each level is additive, meaning that the previous level must be communicated before the next level will have an impact on customer performance.
- Operational state. The lowest level of feedback a customer needs to know is the operational state of any device or system. This enables the customer to know whether the system is ready for use. For example, a green light indicating a device is turned on.
- Knowledge of results. Immediately after performing an action, a customer wants to know the result of the action. Did it work or didn't it? For example, if a customer is assembling a product, he might hear an audible "click" when the part is correctly put into place.
- Correct action. If a specific customer action didn't work, the customer might need to see the correct action. For example, the auto-spell feature in Microsoft Word automatically fixes a misspelled word that one types.
- Rationale. If the task is complex and the customer is frustrated, feedback might include rationale, which describes why the task needs to be done a certain way. For example, an error dialog box displayed on a computer screen reads, "Could not save the file because the name you entered already exists."
- Corrective teaching. If the customer's actions, plans, expectations, or goals are significantly flawed, then the feedback must include corrective teaching. For example, a customer service representative might say to a customer, "Let's go look in the instruction manual; it says right here you need to deactivate the safety lock-out."
When designing coproduction experiences, the absence of feedback is a significant barrier in creating experiences that drive high levels of customer satisfaction and value.
The ideas I've discussed will help you identify the need for feedback as well as integrate feedback into your coproduction experiences. Next month, I'll continue the discussion about customer vision by discussing how enhanced goals can drive greater customer performance and satisfaction.
Take the first step (it's free).
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