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Archive for March, 2010

A few years ago I was a business analyst at a software company.  One of the magazines I subscribed to was Pragmatic Marketing.  I always enjoyed reading this magazine because I found the things they talked about could easily be applied to my job.  One day I received a package from Amazon.com, and inside was this book.  The writers from the magazine got together and wrote the book, and lucky for me I got it for free.

Summary

Tuned In is about focusing on your customers and potential customers in a unique way that creates memorable experiences.  A common quote said throughout the book, “Your opinion, although interesting, is irrelevant.”  It doesn’t matter what you think.  You need to tailor your products and services toward your customer.  They use examples throughout the book that further explain this, and the one that stands out easily is the iPod.  Other companies made MP3 players but they didn’t listen to their customers to find out what they really wanted.  Apple got it right, and now they own the majority of the MP3 player market.  At the other end of the spectrum are companies that are “Tuned Out, such as the former Circuit City.  In order to save money, they decided to fire their experienced employees and hire cheaper replacements.  Look at what is currently  happening to Blockbuster.  They can’t seem to find a way to win over customers, and chains are closing all over the country.  Companies need to connect with their customers if they want to stay in the game, and this book offers a great strategy on how to achieve that goal.

Chapter 1: Why Didn’t We Think of That

This chapter sets the stage for the rest of the book.  The authors explain their reason for coming together to write the book.  One major point I took from this chapter is that innovation isn’t always the answer, focusing on revenue often leads to failure, and listening to your customers creates dangerous false signals.  This is explained in more detail in Chapter 2.

In the past, I’ve had my own concerns with companies that use revenue as their driving factor.  These companies believe “We need to create more revenue so we can survive.  Therefore, we’ll focus on generating more sales, and that will allow us to hire more support reps.  Having more support reps will shed a better light on our product, create more referrals, and generate more sales.”  The problem I have with that approach is you lack service early on, and you can never get good referrals if you don’t have good service to back up your early sales.  The book refers to this tuned-out approach as ‘inside-out’ thinking.  If companies were tuned in, they would develop a better product from the start, and strike a balance between sales and support.  Customers would like the product, refer it to others, and new sales would be generated.  The book refers to this tuned-in approach as ‘outside-in’ thinking. Tuned in companies listen to what the market demands, understands their problems, and creates products and services that buyers want to pay to solve.

The chapter also summarizes the steps in the Tuned In Process, which become chapters later on in the book.  They are:

Step 1: Find Unresolved Problems – How do we know what market and product to focus on?

Step 2: Understand Buyer Personas – How do we identify who will buy our offering?

Step 3: Quantify the Impact – How do we know if we have a potential winner?

Step 4: Create Breakthrough Experiences – How do we build a competitive advantage?

Step 5: Articulate Powerful Ideas – How do we establish memorable concepts that speak to the problems buyers have?

Step 6: Establish Authentic Connections – How do we tell our buyers that we’ve solved their problems so they buy from us?

Another concept used throughout the book is the creation of a ‘resonator’.  The idea is to create a product or service that buyers want to talk about, want to buy, and will recommend to others.

The leaders at organizations need to be able to answer the following questions:

  • What business are we in?
  • What business are we not in?
  • Who are our buyers?
  • What’s unique about our offering?
  • What’s our positioning strategy?
  • How can we compete?
  • Why do the other guys seem to win more often?
  • How can we turn a profit?

One of the bullets in the chapter summary that I really liked says, “Organizations make the same common mistakes again and again: guessing at what the market wants, basing products and services on what current customers request, and trying to create a need in the market by relying on expensive advertising or an army of salespeople.”

Chapter 2: Tuned Out…and Just Guessing

Some companies don’t understand their customers.  They think a newer product is better than the existing product because it is newer.  Some examples:

  • A company in the 60’s designed a better mousetrap than the regular wooden ones.  It was a total flop and the company reverted back to the older product.
  • The U.S. Government issued dollar coins and no one used them.  What is ironic is they tested the coins before putting them in circulation and the results of the study said it would fail.  They chose to ignore the study.  (This reminds me of putting Jay Leno on at 10pm.)
  • A refrigerator that was connected to the internet.  It included a screen with an LCD display, MP3 playback,  and a webcam among other features.  Did anyone stop to ask if people wanted all this on the fridge?  What problem did this solve?

There is a really  nice graph in the book that shows how Tuned In companies can be successful.  On the Y axis is Unit Sales Growth.  On the X axis is customer satisfaction.  There are 4 quadrants in this graph.

  • Low Sales & Low Customer Satisfaction = Innovation is Everything
  • Low Sales & High Customer Satisfaction = Customers Know Best
  • High Sales & Low Customer Satisfaction = Revenue Cures All
  • High Sales & High Customer Satisfaction = Tuned In

In my experience, companies often get stuck in High Sales & Low Customer Satisfaction, followed by Low Sales & High Customer Satisfaction.  With the former, they believe revenue fixes all problems but get caught in a vicious circle and customers are never happy.  With the latter, they try to keep current customers happy that they lose focus of the other areas of running a business, such as developing new products and features that would bring in new customers.  A company needs to strike the balance between keeping current customers happy and generating new sales.

The only time a company should innovate a product is when the new features solves new problems of current customers or problems for a different type of customer.  If it’s not broken, don’t fix it.  Companies can’t worry about the competition if they aren’t focused on what the real problem is: what the market problems are that buyers encounter.  Companies that solve this problem will be successful.

The authors ask some really good questions to these points mentioned above.  A couple that I liked are, “How often do you participate in internal meetings to discuss ‘strategy’ or ‘positioning’ or ‘messaging’ and then the entire discussion is based on the opinions of the people in the room and not the facts?” and “How often does the person with the loudest voice in your conference room (or the executive with the biggest title) win an argument?” and lastly my personal favorite, “How often are your organization’s internal problems (to get a product to the market, reduce costs, or impress the board and shareholders) more urgent to you than your buyers problems?”

Chapter 3: Get Tuned In

This chapter discusses the steps that should be taken prior to starting the Tuned In process.  One thing they mention is that listening to your existing customers is not enough.  The reason is because then you are only solving current problems.  You are not innovating and creating new things which would allow you to grow.  An example they use in the book is with the car sharing service Zipcar.  Zipcar allows you to live in a big city but still travel short distances by renting a car for a few hours.  You can rent a car to go to the grocery store and return it when you’re done.  It seems like such a great idea, yet none of the existing car rental companies thought of it for over 50 years.  The authors say that the reason this hasn’t happened is because many successful companies tend to tune out after their first success.  They don’t go into the marketplace to discover new problems and opportunities.  (At first I thought, “Wait didn’t the mousetrap people in the previous chapter do this?” but I realized they were separate issues, they had a product that worked great and didn’t need improvement, and if they wanted to expand, perhaps they could have looked into traps for other kinds of rodents.)

Think of Apple.  They could have stopped at the computer.  But where would it have gotten them?  Instead they decided to branch out in the music world, create a fantastic audio player, design a marketplace from scratch for obtaining new music and podcasts and revolutionize the way we use our phones.

The following chapters explain the six steps in the Tuned In process in detail.

Chapter 4: Step 1 – Find Unresolved Problems

This chapter focuses on what problems exist that (prior to someone coming forward to solve it) still do not have a solution.  Some examples used in the chapter are:

  • a Magnavox television with a power button that sends a signal to the missing remote control to start beeping for 30 seconds so it is easier to find
  • Quicken was created when the founder’s wife was complaining about balancing her checkbook

Sometimes you can figure out what problems need to be solved just by asking customers.  However they won’t always give you a direct answer, and you have to figure out a solution based on their comments.  The book refers to this as “expressed” and “unexpressed” problems and “stated” and “silent” needs.  This is how Magnavox was able to figure out a solution to the ‘missing remote’ problem customers were mentioning.

When the founder of Quicken, Scott Cook, first built Quicken, he went directly into people’s homes and studied how they paid bills and managed their money.  He didn’t assume his problems were their problems.  He observed the problems they had and built the product to better serve them.  The book mentions that the best way to collect unresolved market problems is to visit buyers in a non-selling situation (preferably on their home turf) and get their feedback.  I think this is invaluable. The best way to find out what your customers needs are is to meet them in the same place where they use your product.  Observe what they do during the day and how it relates to your product.  How can your product make what they do better?  Is there anything about your product that slows them down that could be improved?

People like talking about their problems, they will open up if you are willing to listen.  They think their ideas will help a good organization make a product that will make their lives easier.  They have nothing to lose by talking to you.

The chapter then describes the different types of customers.

  • Customers are existing customers who already use your product or service.  You evaluate their problems in a rearview mirror, and make small improvements to your existing product.  Customers can distract you from discovering unresolved problems that might exist in a new market, which would prevent you from obtaining new customers.  The book recommends listening to your customers, but they should be a smaller part of the Tuned In Process.
  • Evaluators are people who are actively thinking about purchasing your product or service.  Evaluators can be tricky to deal with because they are actively searching for something to solve their problems.  Your product has to offer solutions to their current problems.  If you cannot provide a solution to their current problems they will look somewhere else.  If you don’t win the sale with evaluators, it is good to do a win-loss analysis to see why they didn’t choose you.  The book also recommends that they be a small but important audience during the Tuned In Process.  They actually recommend leaving them alone during the sales process (from a marketing/product standpoint), and conducting the in-depth win-loss analysis after they have made their decision.
  • Potential Customers are people who are not yet your customers but have problems that your product or service could or could potentially solve.  The examples mentioned above with Magnavox and Intuit involved meeting with potential customers and developing a product to meet their unresolved problems.  The book says this is the most important category of people to spend time with.  This is the best way to create breakthrough experiences that resonate.

Why not just send the salesperson to find out the customer’s problems and offer products?  Because salespeople need to balance the task of keeping the customer happy and offering new products that customers don’t want.  Evaluators will do anything to avoid the sales process.  The book says that sending a salesperson to learn about a buyer’s problems can turn a relationship bad before the conversation even starts.

Chapter 5: Step 2: Understand Buyer Personas

This chapter discusses the different types of potential customers.  An example used early in the book is the water bottle company Nalgene.  The bottles were originally sold to labs because they were lighter than glass and more durable.  Scientists started using them for a different purpose and were them outdoors for drinking.  Nalgene picked up on the trend and started offering them to different types of customers.  In addition, they started showing up on college campuses, a third ‘buyer persona’.  They solved a problem, and created a market in many different areas.

It is important for companies to understand the different types of buyers because it opens up additional possibilities.  Another example used in the book deals with the hotel industry, and how there are many different types of buyer personas that they could cater to.  Examples are:

  • business travelers who require wireless internet and hotels closer to business districts
  • hotels with large conference rooms for seminars
  • vacation travelers who want a fun experience
  • entertainers who need a place to stay after a concert
  • couples planning a wedding reception

In the examples above, one hotel can’t solve all the different needs.  But a chain of hotels under the same family can.  Hilton has the Hampton Inn for the cheaper business traveler, Hilton Garden Inn for the more comfortable business traveler, and the Hilton resorts for families, weddings, and conferences.

Buyer personas were also used in the 2004 and 2008 elections.  In 2004 politicians reached out to NASCAR dads and security moms.  In 2008 it was Joe the Plumber and soccer moms.

The authors borrow a term from Strangers in a Strange Land and talk about grokking customers.  To fully understand your customer, you need to put yourself in their world as much as you can.  You need to understand them so deeply that you can ascertain the market problems they aren’t able to describe on their own.  The Magnavox television remote in a previous chapter is a good example.

Lastly, they recommend you name your buyer personas.  Naming them allows you to become comfortable with them and better tailor to their needs.

Chapter 6: Step 3 – Quantify the Impact

The Tuned In example used at the beginning of this chapter described the advent of StubHub.  Prior to StubHub, if people wanted to get rid of their sporting event or concert tickets, they had to scalp them.  StubHub was able to identify this market problem and quickly become the largest ticket marketplace in the world.  What makes this quantifiable is that buyers and sellers have prices in mind with what they’re willing to sell or pay for the tickets.  In addition, StubHub allows sellers to get rid of tickets they no longer want, even if it’s at a loss.  Something is better than nothing.

There are 3 questions that must be answered when considering the potential of your product or service.

  • Is the problem urgent?
  • Is it pervasive in the market?
  • Are buyers willing to pay to have this problem solved?

The authors suggest we run our ideas through these three criteria filters and that the answer must be “yes” being before we try to implement the product/service.

Is the problem urgent? Do people really care about the problem you are trying to solve?  (Apparently no one needs wi-fi on the fridge, but a television that finds a remote appears to be useful.)

Is the problem pervasive? How many people have this problem?  Do the people that share this problem have unifying characteristics?

Are people willing to pay to solve the problem? The grocery delivery service PeaPod is a good example.  They’ve found a niche of people who do not like to go to the supermarket to shop for groceries, but don’t mind paying a surcharge to have them delivered to their doorstep.

The authors recommend surveying potential markets as a measurement tool.  They don’t recommend surveying existing customers to find unresolved problems.  Rather, they think visiting potential customers in-person allows you to see what their real life activities are like, and your observations may better answer any questions you may have had.

Absent any real data, conference rooms are just full of opinions.” How often do you hear someone say, “We’re hearing there are a lot of problems around ‘xyz’” but then the person has no data to back it up?  If you’re going to say something is a problem, have the data to back it up.

Another point in this chapter I liked is to make sure you fully solve a market problem.  If you only partially solve a  market problem, you open the door for competitors to sweep in with a better solution.  (The e-Reader battle is a good example.)

If you’re going to use metrics, measure what matters.  Many managers deliver numbers such as calls answered, or calls resolved within 24 hours, etc.  All that means is that they’re working hard but not smart.  The authors suggest measuring how many meetings with buyers the team conducts, how often do employees meet with actual people, how does your product resonate with current customers.  Measure what matters.  From a previous blog post about a Seth Godin book, be a thermostat, not a thermometer.

Chapter 7: Step 4 – Create Breakthrough Experiences

This chapter describes what companies can do that make them stand out amongst the crowd.  One experience that pops in my head is the old iPod commercials that had silhouette backgrounds with the white headphones.  After seeing it for the first time, you knew exactly what that commercial was and looked forward to watching it each time because the songs changed.

The authors describe a breakthrough experience as occurring when each experience stage (evaluation, purchase, use, and after-sale service) are all working successfully.  The experience stages are described below.

Discovery: Buyers need information prior to making informed decisions.  Tuned In companies create material that people want to read.  An example used in the book suggests a company running a blog where real people describe how they solved a problem.  They suggest using experiences that are simple, nonthreatening, and useful.

Packaging: Edible Arrangements does this well.  The fruit, wooden sticks, and chocolate probably costs a quarter of what people pay for it, but because of their packaging and ‘arrangement’ of the fruit, people are willing to pay a premium.

Using: The product should be simple to understand and implement.  It should be intuitive to help consumers engage your product.  An example used in the book dealt with one of the authors taking a car to a repair shop.  They needed a loaner car, and the dealership tuned the radio in the loaner car to the same station as the car they were dropping off.  A local valet company by my airport does a similar thing when you call to be picked up from the airport.  When you arrive at the valet station they’ve turned your heat on in cold weather, and have the radio on.

Service: Tuned Out companies outsource their after-sale support.  Tuned In companies realize that customers will talk to family and friends (or other businesses) about their experience.  You want a good reputation.

The authors talk about companies finding their distinctive competence. The authors say that buyers choose your product because your company has unique abilities that allow you to solve their problem better than anyone else.  They make a point that this differs from core competency. Core competency says what your company is good at, where distinctive competence says what you excel at better than anyone else.

They provide a list of ideas and say the distinctive competence could be one of the following:

  • An important feature. The example describes how Volvo focuses on safety.
  • Another possibility of ergonomics. The example describes a special remote used for giving presentations.  The Wii Remote would also be a good example.
  • A distinctive business model. The example describes streamlining processes to keep costs down, such as Zipcar has done.  When Dell first came out they also streamlined customizing PC’s.
  • A deep understanding of one particular buyer persona. The example describes a car repair shop that focuses on Land Rovers.  People from a large radius will drive to this dealership to get their car serviced.

I really liked this part about distinctive competence.  I think successful companies need to evaluate what is they currently do, or need to do, that makes them better than the competition.

Chapter 8: Step 5 – Articulate Powerful Ideas

Inc.com’s book review said if you read nothing else, read this chapter.  I personally thought Chapter 7 should take that prize, but I’m not the professional book reviewer.

This chapter focuses on how to create memorable concepts that speak to problems that buyers have.  The example used in the book dealt with a colleague looking to build a new home.  Money was not an issue, so the colleague interviewed the best architect first.  In the book they refer this architect as the ‘rock star’ of architecture.  The ‘rock star’ showed up late for the appointment, and recommended options that he thought he would like to explore, instead of options that the colleague was interested in.  The colleague decided to interview other candidates to see what else was out there.  The lesser credentialed architect showed up on time.  He spoke with the colleague for several hours to find out their lifestyle and preferred living situation.  The choice was obvious, and they went with the second architect.

I’ve had similar situations recently with meeting vendors for my wedding.  We met with a couple of DJ’s, but we went with the one that we related to the best.  The first couple we met with told us how great they are and how they get the audience on the dance floor.  The one we went with showed us a portfolio that was 5 inches thick of thank you letters from previous customers.  We went with the videographer that showed us his previous work while he met us for coffee at Starbucks.  We chose the tux shop that gave us a personal touch, made us try on different tuxes and colors instead of the first place we went to where the employee was arguing with his co-worker in the middle of working with us, didn’t have us try anything on, and didn’t offer any suggestions.

In all the scenarios mentioned in the two paragraphs above, the right vendors resonated with their customer.  They became likable.   They took the time to find out what compelled us and used that to keep us interested in them.  A couple examples used in the book to do this are:

  • Affinity Mapping:  Find out the different problems buyer personas have and how you can solve them.  The example used in the book mentioned how Zipcar solved problems for many different types of buyers.  Examples are:  buyers who don’t want to pay for car insurance; buyers who don’t want to locate a spot for downtown parking; buyers who don’t need a car most of the time.
  • The Elevator Speech:  You have to get your message across is about the time you would typically spend in an elevator, aka a sentence or two.  I’ve seen this recommended as career advice where you need to state who you are in less than 15 seconds.  I talk about this in a little more detail here.  They recommend that the best elevator speech is in your buyers words, not your own.  Because of this, it is essential you complete your affinity map first before developing your elevator speech.
  • The Acid Test:  They recommend locating people who fit the buyer personas you used in the examples above and run your elevator speech by them.  Then gauge their response.  See if you would be interested if you heard it from someone else.  Would you want to move to the next step?
  • Refining the Resonator:  The elevator speech is the starting point.  The final step is to make it into a memorable concept.  Examples used are slogans from famous companies such as Burger King’s “Have it your way,” or Bounty’s “The quicker picker-upper.”.  Not only are they catchy, but they’re rooted in a set of problems that these products solve for their customers.

The next section discusses poorly written mission statements.  Tuned Out organizations are all over the place with their mission statements instead of articulating on a core set of values.  This causes buyers to turn away because they will want to work with an organization that understands their problems.

They recommend having different messages for each of your buyer personas.  Each type of buyer will require something different from your organization because each has a different problem for your organization.  The authors say that your ideas are more likely to resonate if you develop them for each buyer persona instead of relying on a generic set of broad messages for everyone.

Chapter 9: Step 6 – Establish Authentic Connections

This chapter discusses establishing connections with your buyers so they buy your products to solve their problems.  During this chapter they reiterate the importance of understanding the problems of your various buyer personas.  We must first understand our buyers before we can try to solve their problems.  By understanding your buyers and relating to their problems you will develop empathy with them as people instead of trying to relate to them as data.

A part I found interesting is when the authors mention how marketing companies are paying tons of money to TV and radio spots, as well as other media outlets, in interruption marketing.  These types of companies are tuned out, and are forcing us to pay attention to their message.  When they fail understand how to connect with us, they spend even more money on more aggressive marketing messages which makes people ignore them even more.

They refer to these types of companies as getting their name out in one of two ways, either ‘buying their way in’ or ‘begging their way in’.  Either way, they say it won’t work.  They recommend establishing connections by targeting specific buyer personas with content that you create especially for them, rather than trying to take a one-size-fits-all approach.

A test they refer to mentions looking at your company’s marketing materials.  Count the number of times you see the words “we” “us” “our” or the company’s name compared to the number of times you see “you” and “your”.  If you see more of the latter, you are establishing connections with your buyers.  You need to focus on what the buyers need to hear rather than what you want to say.  Successful companies focus on buyers and the best ways to reach out to them.

Another part of the chapter I liked involved telling us we need to ‘unlearn’ what we have learned in the past.  We need to unlearn the marketing habits we were taught of constantly pitching our product.  They go back to the point of creating information that helps our buyer personas answer their questions.  All of your marketing materials should be created from the buyer’s perspective.  Rather than pitching products and services, you should work from the buyers point of view, and paint a picture of how your organization can solve their problems.

Chapter 10: Cultivate a Tuned In Culture

This chapter discusses how to bring the six steps of the Tuned In process together.  The authors say that in order for companies to stand out they need to follow each of the six steps.

They describe a couple examples where companies did not utilize all 6 steps, and then failed to resonate with customers and be successful.  The Segway was a prime example.  There was a ton of hype leading up to the release of the Segway.  However, they failed to examine their buyer personas in detail.  They originally designed their product for city people to get around town; the product was too expensive for this type of buyer.  However, a different buyer persona they didn’t originally think of started scooping them up at that price point.  How often do  you go to the airport and see security guards whizzing by on these devices?  If Segway did more research they could have targeted this audience from the start and saved themselves a lot of time and money.

To launch your product you need a winning sales team and distribution strategy.  Train your sales staff to describe the problem your product solves to to potential customers.  One of the “Top Ten Actions to Create a Tuned In Culture” that stood out to me was #7:  “Don’t talk about what your product or service does.  Tell customers which of their problems the product or service will solve.”

Chapter 11:  Unleash Your Resonator

Chapter 11 summarizes success stories of people or companies who have used the Tuned In Process.  Some examples are:

  • Thomas Edison enhancing the light bulb for consumers (even though he wasn’t the one who originally invented it.  Enter “Joseph Swan” in Google for more information.)
  • Cell phone lots in airports
  • The USPS “Forever” stamps
  • Dutch Boy making easy to open paint containers

An example of a company switching from thinking inside-out to outside-in was when Apple went from making the Newton to the iPod.  They authors state that “companies are ineffective because their field groups and customer-facing organizations spend more time postulating and  pontificating around scenarios that support their offerings than listening and learning about problems their customers actually  have (and are willing to spend money to solve.)”  That comment pushes what they’ve said in previous chapters about finding out what customers problems are, and creating products that solve them.

They describe what makes a Tuned In leader.  They say a Tuned In leader doesn’t obsess about the competition; instead they obsess about market problems.  They understand the market problems completely before they create a product experience.  They follow the steps in the Tuned In process that results in a breakthrough experience that resonate with customers.

Final Thoughts

When I first received this book, it sat on my shelf before I read it.  When I finished a previous book, I gave this one a shot.  I am really glad I did.  I think this book forces you to think, “What can I do differently?”  It allows you to evaluate yourself or your company to see where you might be lacking.  I think it’s a great book that should be read by anyone working in product management.  The whole concept of researching and defining “buyer personas” is something I think companies fail to do.  If done well, doing the proper research will make those companies stand out from the crowd and become a market leader.

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