I was invited by Digital Marketing Summit 2024 to introduce and ask questions to Thales Teixeira. He is the founder of Decoupling.co and Professor at University of California San Diego.
Thales has reminded us of the importance of customer orientation. He introduced that customer activities will differ across industries. Then, he showed from his data that companies in different industries scored low in different customer activities. For instance, Hyundai scores low in the activity where customers compare cars, whereas Sephora scores low in the activity where customers are greeted. This suggests that every single company in different industries should fix different customer activities.
I was recently invited by Professor Aguinaldo Santos to give a lecture to his design students at Universidade Federal do Paraná (UFPR). In this lecture, I introduced my collaborative project experience with a team of Digital Appliance (DA) Business Divisionan at Samsung Electronics. They develope washers, dryers, and refrigerators, to name a few.
Although their effort in comprehensively collecting VoC was impressive, the way they interpret VoC was not rigorous sufficiently. They could not help but rely on intuition or expertise, interpreting VoC in a biased way.
To debias VoC interpretation, we employed the Goal Systems Theory. Since this theory illustrates why people behave in such a way (e.g., I choose rucola because I want to lose 10 pounds), it enabled them to understand VoC from the writer’s viewpoint.
Then, we developed a guideline about how to interpret VoC from a customer’s perspecitve, and examined its effectiveness by testing 3,500 VoC. One lesson we have learned is that frequently reported VoC was not always the right source of innovation. Instead, the VoC connected with an important goal, though not frequently reported, pointed to the right direction.
In recent years, many U.S. and Japanese firms have adopted Quality Function Deployment (QFD). QFD is a total-quality-management process in which the “voice of the customer” is deployed throughout the R&D, engineering, and manufacturing stages of product development. For example, in the first “house” of QFD, customer needs are linked to design attributes thus encouraging the joint consideration of marketing issues and engineering issues. This paper focuses on the “Voice-of-the-Customer’ component of QFD, that is, the tasks of identifying customer needs, structuring customer needs, and providing priorities for customer needs. In the identification stage, we address the questions of ( 1 ) how many customers need be interviewed, (2) how many analysts need to read the transcripts, (3) how many customer needs do we miss, and (4) are focus groups or one-on-one interviews superior? In the structuring stage the customer needs are arrayed into a hierarchy of primary, secondary, and tertiary needs. We compare group consensus (affinity) charts, a technique which accounts for most industry applications, with a technique based on customer-sort data. In the stage which provides priorities we present new data in which product concepts were created by product-development experts such that each concept stressed the fulfillment of one primary customer need. Customer interest in and preference for these concepts are compared to measured and estimated importances. We also address the question of whether frequency of mention can be used as a surrogate for importance. Finally, we examine the stated goal of QFD, customer satisfaction. Our data demonstrate a self-selection bias in satisfaction measures that are used commonly for QFD and for corporate incentive programs. We close with a brief application to illustrate
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Reference 2
Kruglanski, A. W., Shah, J. Y., Fishbach, A., Friedman, R., Chun, W. Y., & Sleeth-Keppler, D. (2018). A theory of goal systems. In M. P. Zanna (Ed.), Advances in Experimental Social Psychology (Department, Vol. 34, pp. 331–378). Waterloo, Ontario, Canada: Academic Press.
The theory outlined in the present chapter adopts a cognitive approach to motivation. In the pages that follow we describe a research program premised on the notion that the cognitive treatment affords conceptual and methodological advantages enabling new insights into problems of motivated action, self-regulation, and self-control. We begin by placing our work in the broader historical context of social psychological theorizing about motivation and cognition. We then present our theoretical notions and trace their implications for a variety of psychological issues, including activity experience, goal commitment, choice, and substitution. The gist of the chapter that follows describes our empirical research concerning a broad range of phenomena informed by the goal-systemic analysis.
I recently gave a lecture at Ecobee, a smart home product company in Canada. In this lecture, I compared two different approaches when bundling multiple smart home products.
One is product-centered bundling; they can select a hero product or a product that contributes to their sales significantly and then attach additional products randomly. The other is human-centered (service-centered) bundling; they can select multiple products to form a service which helps consumers achieve their goals.
The product-centered bundling was previously employed among Samsung designers; they selected Galaxy mobile phone or Samsung TV and then added smart door lock or smart plug to create Multi Device Experience. However, we proposed them to adopt the human-centered (service-centered) approach.
The more I become interested in cognitive interventions, the more I delve into motivational goals. This is because we are able to change their behaviors if we know why consumers do what they do. I wish Ecobee designers apply goal to solve their business problems.
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Reference 1
Kruglanski, A. W., Shah, J. Y., Fishbach, A., Friedman, R., Chun, W. Y., & Sleeth-Keppler, D. (2018). A theory of goal systems. In M. P. Zanna (Ed.), Advances in Experimental Social Psychology (Department, Vol. 34, pp. 331–378). Waterloo, Ontario, Canada: Academic Press.
The theory outlined in the present chapter adopts a cognitive approach to motivation. In the pages that follow we describe a research program premised on the notion that the cognitive treatment affords conceptual and methodological ad- vantages enabling new insights into problems of motivated action, self-regulation, and self-control. We begin by placing our work in the broader historical context of social psychological theorizing about motivation and cognition. We then present our theoretical notions and trace their implications for a variety of psychological issues, including activity experience, goal commitment, choice, and substitution. The gist of the chapter that follows describes our empirical research concerning a broad range of phenomena informed by the goal-systemic analysis.
Contemporary electronic manufacturers struggle with how to develop attractive bundles by combining their existing smart products. In the present work, we propose Goal Based Bundling (GBB) by drawing on the academic research of goal systems theory (Kruglanski et al. 2018) and shed light on two previously ignored aspects of bundling strategy: service and glue product. We applied our GBB to a collaborative project with Samsung Electronics, whose goal was to develop new product bundles for kids by combining multiple smart home products. We constructed a framework of Samsung Electronics’ smart products and then visualized it on its sales website. A UI design conveying the value of smart products bundle was developed based on GBB structure. We discuss the process and the result of our project to provide insights into the product managers who combine existing smart products to develop a bundle.
Through the years, the Duncan Anderson Design Lecture Series has invited top professionals to share their knowledge and experience with design students at CSULB. This coming year marks the expansion of that series to a bi-monthly event. Thanks to Cecelia Anderson-Malcolm and the Duncan Anderson Endowment, CSULB now has an ongoing design lecture series to rival those at private design schools. The CSULB Industrial Design Program is working closely with IDSA-LA, and its student chapters, to schedule an exciting line-up of speakers. Please let your chapter officers know of professionals you want to meet and hear at future events.
In this lecture, I introduced why designers have to adopt behavioral science to understand customer experience deeply. For instance, prospect theory neatly elucidates why once people have a single extraordinary experience, they can no longer revert to previously satisfactory mundane experiences. It is because the extraordinary experience can become a reference point, while the mundane experiences transform into sources of negative affect. Since loss looms larger than gain, people avoid mundane experiences.
This paper presents a critique of expected utility theory as a descriptive model of decision making under risk, and develops an alternative model, called prospect theory. Choices among risky prospects exhibit several pervasive effects that are inconsistent with the basic tenets of utility theory. In particular, people underweight outcomes that are merely probable in comparison with outcomes that are obtained with certainty. This tendency, called the certainty effect, contributes to risk aversion in choices involving sure gains and to risk seeking in choices involving sure losses. In addition, people generally discard components that are shared by all prospects under consideration. This tendency, called the isolation effect, leads to inconsistent preferences when the same choice is presented in different forms. An alternative theory of choice is developed, in which value is assigned to gains and losses rather than to final assets and in which probabilities are replaced by decision weights. The value function is normally concave for gains, commonly convex for losses, and is generally steeper for losses than for gains. Decision weights are generally lower than the corresponding probabilities, except in the range of low probabilities. Overweighting of low probabilities may contribute to the attractiveness of both insurance and gambling.
Many design practitioners aim to enhance the beauty of an existing product or develop novel products and services. However, market does not always pay off their effort. Carefully designed products often fail to attract consumers. What should designers do to enhance sales?
One solution is to borrow insights from behavioral economics. Studies show that behavioral economics can increase the adoption rate of newly designed products because it overcomes consumer resistance.
I was once invited by Palermo University in Argentina to share findings about the commercial impact of behavioral economics in the context of design. I shared my experimental findings about three Korean companies.
(1) Samsung’s printer would sell more if its ugly version is placed next to it because joint evaluation helps consumers consider aesthetics importantly,
(2) LG’s Styler would sell more if the clock in the store presents time in analog not in digital because doing so encourages consumers to think abstractly and creatively to appreciate the value of something new, and
(3) SK Telecom’s AI speaker would be used more often if it has a human feature and viewed as a foreigner or child because people become more tolerant about the mistakes of the AI speaker.
I was invited by Digital Marketing Summit 2023 to moderate a fireside chat between two customer experience professionals. They are Jonah Hong, Corporate Vice President and Head of Digital Customer Experience at the Hyundai Motor Group and Dan Gingiss, the author of the Experience Maker.
Digital Marketing Summit 2023
Jonah Hong highlighted bitter patience. He introduced the challenges that Hyundai Motor Group faces. “To address different customers with different tastes and preferences, we have to create tens of millions, or even hundreds of millions of personalized content for a vehicle. To do this globally, organizations have to exchange data each other in the short term and we have to go beyond functional organizations in the long term. To do this work dynamically, automatically, and in real time, investments had to be made in technology.”
Digital Marketing Summit 2023
Dan Gingiss emphasized sweet fruit. In the conversation, he elaborated a wide variety of real life examples in which people spent more and they recommended a company more strongly when the company delivered superior experience to customers. His examples clarifies that having a positive customer experience values more than consuming a high-performing product.
Seth Godin gave a speech on the topic of innovation strategy in low growth economy at the Dong-A Business Forum 2015. I was invited to moderate his speech in December, 2015.
Seth Godin is an Author, Entrepreneur and Most of All, A teacher. Seth is an entrepreneur, best-selling author, and speaker. In addition to launching one of the most popular blogs in the world, he has written 20 best-selling books, including The Dip, Linchpin, Purple Cow, Tribes, and What To Do When It’s Your Turn (And It’s Always Your Turn). His book, This is Marketing, was an instant bestseller in countries around the world. The latest book is The Practice, and creatives everywhere have made it a bestseller. Though renowned for his writing and speaking, Seth also founded two companies, Squidoo and Yoyodyne (acquired by Yahoo!). By focusing on everything from effective marketing and leadership, to the spread of ideas and changing everything, Seth has been able to motivate and inspire countless people around the world.
In our conversation, he asked us to be artists and be hubris. In his words, artists are the people who challenge conventional rules with brevity, insights, and determination. Only those who fail constatntly will become artists.
He made it clear that mass production, mass distribution, and mass marketing do not work any more. In the past, average products appealed. However, only ultimate products or “art” appeal in the new, connected world.
While emphasizing the value of constant failures, he separated ready from preparedness. Ready means that people are ready to embrace failure. Since many Koreans are not ready but prepared to be perfect, he suggested them to be Salto Mortale, a desperate jump translated into Italian.
Coming January 3rd to 6th of 2022, EBS Business Review will broadcast “Behavioral Economics for Dummies.”
The world-renowned bestseller book, Nudge, by Richard H. Thaler, winner of the 2017 Nobel Prize in Economics, is well known for its coverage of behavioral economics. The term nudge which has an idiomatic meaning of nudging with an elbow refers to guiding people’s choices through gentle intervention instead of compulsion or coercion. Different from normative economics and descriptive psychology, prescriptive behavioral economics intervenes and guides people’s choices by closing the gap between behavior and mind.
What is the hidden key of behavioral economics? You will learn its various cases which show the power that moves the world.
The secret of 99% adoption of organ donation (January 3rd)
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As medical dramas suggest, hospitals need more organ doners. In order to solve the supply-demand problem of organ donation in Korea, a policy was implemented in 2007 which inserts a statement regarding donation into the driver’s license upon issuance or renewal. However, the survey result in 2018 showed that the actual number of those who wish to donate is only about 3%.
What about other countries? If we look into the organ donation rate in European countries in the early 2000s, Denmark had a rate of about 5%, Germany had a rate of about 12%. However, there are many other countries boasting a rate of 99%, such as Portugal and France. What is the secret behind these countries with a high donation rate? We will explore successful uses of behavioral economics that change people’s behavior.
Public institutions can be smarter (January 4th)
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In 2020, an experiment was conducted in US to find out how to increase the vaccination rate for the flu. As a result of sending 20 messages that encouraged people to get vaccinated, the most effective one was the combination of messages sent three days before vaccination saying “a flu vaccine is available for you” and one day before vaccination saying “a flu vaccine has been reserved for your appointment.” For those who received these messages, they made a promise to themselves to get vaccinated, resulting in an increased vaccination rate of about 5%.
Since behavioral economics brings great results with little cost, it is actively applied in many public institutions. Let’s listen to other cases of public policy which solve tough social problems.
When tech giants meet behavioral economics (January 5th)
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Marketing is a key area in which behavioral economics is actively applied. Various mechanisms can be used to target customers, which can lead to an increase in revenue and market share. Lyft, a ride-sharing company once conducted an experiment to encourage users to drive during peak demand times, Friday nights, instead of quiet mornings on Wednesdays.
They divided drivers into two groups randomly. One group was given information that their income would increase if they worked on Friday night. The other group was given information that their income would decrease if they did not work on Friday night. More people in the latter group chose to drive Friday night because people tended to avoid loss, helping Lyft mobilize the drivers’ behavior. What are the other special secrets of behavioral economics that change peoples’ choices and help companies increase profits?
Nudge yourself (January 6th)
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Self control is a process of paying the small pain in the present to obtain a greater gain in the future. But when the pain in the present is overwhelming to bear, people lose their motivation to control themselves. To solve this problem, we have to go beyond the present bias and go back to the past self.
Imagine that alarm wakes you up in the early morning. If you want to overcome the thought of having sleep for one more hour, you need to go back to the ‘me’ last night who set the alarm. To make a rational decision, you have to remember your own attitude of yesterday when getting up early eventually leads to a greater benefit than oversleep. We will introduce the secret of behavioral economics that makes a better ‘me’ based on deep understanding of human.
Jaewoo Joo is a field researcher who applies academic insights to solve real world problems. He received a Ph.D. in Marketing from the University of Toronto after obtaining a Bachelor degree and a Master degree from Seoul National University. Jaewoo is interested in developing customer experience by utilizing empathic design thinking and counter-intuitive behavioral economics. He is an associate professor of marketing and participating professor of experience design at Kookmin University.
References
Johnson, E. J., & Goldstein, D. (2003). Do defaults save lives? Science, 302(5649), 1338–1339.
Milkman, K. L., Patel, M. S., Gandhi, L., Graci, H. N., Gromet, D. M., Ho, H., … Duckworth, A. L. (2021). A megastudy of text-based nudges encouraging patients to get vaccinated at an upcoming doctor’s appointment. Proceedings of the National Academy of Sciences of the United States of America (Vol. 118).
Scheiber, N. (2017). How Uber uses psychological tricks to push its drivers’ buttons, The New York Times, April 2, https://www.nytimes.com/interactive/2017/04/02/technology/uber-drivers-psychological-tricks.html.
Soman, D., & Shi, M. (2003). Virtual progress: The effect of path characteristics on perceptions of progress and choice. Management Science, 49(9), 1229–1250.
I was invited by Contents Marketing Summit 2022 to help two professionals share their insights about marketing trends and activities in the age of customer experience. The two professionals are Hyewon Oh, Director of Brand Communication at HE Division, LG Electronics and Ginny Lee, Head of Sports Marketing and Key City Brand Activation at Adidas. They both have 20+ year work experience in the marketing field.
Customer eXperience (CX) matters significantly in Korea because product-based differentiation is challenging more than ever and people strive to experience something new. The invited two professionals introduced several interesting projects and provided participants with fresh insights.
First, LG Electronics is now running a pop-up store called “Geumseong (Goldstar) Recreational Room.” People could play video games with the high-end OLED TVs, having gaming experience. It is also collaborating with world-class artists such as Damien Hirst and Anish Kapoor at the Freeze Art Fair in London and LA, Saatchi Gallery, and Venice Biennale at the same time. While introducing these activities, Director Oh highlighted that only persistent activities work out.
Second, Adidas Korea is running various activities to directly participating in numerous customers, from city tours with Son Heung-min to CSR running events all over the city. Marketer Oh emphasized that in order to engage customers, activities should be designed to give chances for customers to participate in special experience.
They both concluded that commercial impact of marketing activities in the CX era is difficult to be measured in a short run. CX marketers need to be persistent and participatory.
Professor Steve Blank gave a speech on the topic of innovation and entrepreneurship at the Dong-A Business Forum 2021. I was invited to moderate his speech in December, 2021.
Steve is a serial startup founder and entrepreneur educator. He founded 8 startups in 1980s and then developed the concept of Customer Development. In 2011, Steve designed a class of Lean LaunchPad by combining his Customer Development with Agile Engineering and Business Model Canvas. His Customer Development is known to inspire Eric Ries and the basis of Lean Startup. His curriculum has been adopted by multiple universities and NSF Innovation Corps, in particular, the departments of defense and diplomacy. Steve is currently working as a researcher and teacher at Stanford University, UC Berkeley, and Coumbia University.
In our conversation, he mentioned that “Don’t just come up with a business plan in your head.” Instead “go to the field, meet customers in person, and verify hypothesis quickly.” This is a so-called Lean Startup. He advised large corporations in Korea to “separate the teams who implement existing business models and the teams who are free to experiment with innovation.”
While he stressed Voice Of Customers (VOC), he highlighted pivot particularly in the post-COVID era. “If you meet a piece of information which tells you that the concept is wrong, you need to revise your business model quickly. In the 20th century, doing so was impossible. However, doing so saves money and time now. It prevents you from going to the wrong direction.”
He claimed that pivot is more than a methodology. “A culture where everyone including executives can openly communicate about what went wrong with the initial plan. No business plan can survive if it is reprimanded for pointing out something is wrong. So I think pivot is a cultural issue not a methodological one.”
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