Entries in consumer behavior (11)
In case you missed yesterday's headlines about Facebook's effort to redefine the relationship it has with their consumers - and the product they assume they are using - here is a sampling for you to review.
These headlines about a previous year's research study sit eerily next to stories like this one from last winter.
And this one from around the same time, when the short days of winter and the holidays loom large.
In addition to the ethics questions this research raises, these stories made me want to go back and see what other things I have allowed Facebook to do in that ridiculous terms of service agreement I consented to before using the site. And it's not just the Facebook ToS, I want to go back and read the ToS of every cloud based service I use. The trouble is that even if I do read them, I still won't understand what defines some of the most essential terms, like "research" or "promotion", within them. Why? Because it is up to the individual brands to fill them with meaning, based upon how they are executed.
Another Facebook brand, Instagram, had its own controversy about its terms of service in late 2012 and early 2013, not long after Facebook researchers manipulated the feeds to test their theories on positive and negative posts. (Although Facebook's study occured in 2012, the results did not make it to a broadly published forum at the Proceedings of the National Academy of Sciences in June of this year.) Instagram's new policies, reported by the NY Times Bits Blog, state:
“You agree that a business or other entity may pay us to display your username, likeness, photos (along with any associated metadata), and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you,” the new terms say. This means that photographs uploaded to Instagram could end up in an advertisement on the service or on Facebook.
The key takeaway here is that a brand chooses to define itself by accepting some boundaries and ignoring others. The more we use a brand's products or services, even in the wake of this kind of revelation, the more we provide them our tacit approval to continue to gerrymander our relationship.
UPDATE on 7/1/14:
Watch this related NBC Nightly News Report on the topic of Terms of Service policies across our online services.
More Related Links:
It's been a while since I posted any tweets that captured my attention. Here now is an eclectic group of ideas to ponder for a Monday AM.
RT @mindful_living “I am a very old man and have suffered a great many misfortunes, most of which never happened.” ~ Mark Twain
RT @eMarketer: Consumers Spent Less Time With All Media Except Mobile in 2009 [Stats] - http://bit.ly/d93XSA
RT @themarknews Why Neuromarketing's Time Hasn't Come - April Dunford — THE MARK http://bit.ly/9r2lCO
RT @gigaom The State of the Internet: Now Bigger, Faster & Mobile http://bit.ly/caFgZB
Despite the cartoonish example that appears to be co-opted from a children's public television show, this short video is worth a few minutes of your time. If you are a product manager, product marketer or product designer, the simple theory about consumer behavior which is illustrated here is pretty compelling.
US News and World Report posted a great list of 17 ways consumer behavior has changed in the wake of the enduring changes in the economy. In cautionary times, it is an imperative read for marketers who need consumer behavior to drive recurring revenue.
Since consumers are more thoughtful when parting with their money these days, companies will need to recognize that the tricks of the past won't necessarily work any more. In the days of increasing wealth, it was easy to slip a $5 recurring fee onto a consumer's bill and have it go unnoticed as long as the consumer could make that minimum monthly payment. I'd say that practice is now prey to their "greater suspicion" and their need to reduce their monthly overhead.
In the old economy, status could be bought with premium brands. Today, however, displaying glitzy luxury brands doesn't feel so good when the world is full of so many have-nots.
For rich and poor, that means quality matters more than ever before. Products need to stand when the label isn't screaming their luxury price. As the report mentions, they'll be less waste, and the average consumer won't be replacing or upgrading goods quickly, because it feels wasteful to retire things that still function effectively. That means product lifecycles will change, and not necessarily be led by innovative technologies. Companies will struggle to introduce new technology platforms when consumers are busy trying to get more out of the technologies they have already invested in and are using successfully. And cheap products that fail to meet expectations can be exposed quickly through social media, which can build or dilute a brand's loyal base.
In a rental economy, when credit is tight, commitments are hard to make, and consumers are fearful of what happens if they can't meet them. Consequently, it will be more important for consumers to evaluate the benefit of low upfront costs against the risk of long range contracts, especially if the penalties for breaking the contracts are severe.
Indeed the new economy's consumer is more informed, more defensive, and more alert than ever before. Those that understand this well will lead the economic recovery.
And right on cue, Verizon announces its plans to double fees for early termination of FiOS service. "The company is offering discounts for those who sign up for long-term contracts and said it needed to raise cancellation fees to recover potential losses from those discounts."
It does make you wonder whether the discounts were the right acquisition strategy in the first place. If the consumer thinks there is the slightest risk they may want or need to cancel the service, won't this affect their appetite to buy on a long term contract?
I recently bought a Verizon broadband data USB data stick and paid full retail price for it without a contract. After being informed of the contract penalties the rep suggested I should still take the contract because even with the penalites for cancellation I would have a net savings of $15 if I broke the contract. As a customer, should I have to sign a two year contract, just to net $15 savings?
I have been a longtime fan of Rob Walker's Consumed column in the New York Times Magazine because I am a life long consumer, and I have also become a student of consumer behavior. In addition, Walker was interviewed for one of my favorite documentaries, "Objectified." Recently, he has been a co-conspirator on the "Significant Objects Project", a real world lab study in consumer behavior. By inventing stories of meaning around objects in every day life and then selling them on eBay, Significant Objects auctioned off 100 items - $128.74 worth - that were otherwise insignificant "doodads and dinguses", netting $3,612.51 for the contributing authors and charities in four and a half months of 2009.
I've added his book, "Buying In", to my favorite reads collection below and below is a talk Walker gave at Google about the book, because I appreciate his perspective about the meaning of brands and products. As I have said before, I believe that great products can and should tell great stories which will create loyal, committed fanatics. Stories often give the most insignificant object meaning.
And, as a separate connection, Walker also wrote about the Blu Dot chair video, another experiement in consumer behavior which I posted thoughts on earlier this month as well.
With the breadth of information available through our Internet-connected PC, being an informed consumer seems easier than ever before. Add that to the real-time access to all kinds of data via apps stores and the mobile web on your smartphone, and consumers may actually have too much information to cross reference and research all of their choices. Enter the next new thing in service value being created for consumers - the "Trusted Advisor."
Trusted Advisors can appear in many flavors. They may be the people like you on your social networks who create community ratings for sites like TripAdvisor or Yelp. Or they may actually be businesses sourcing products or recommending offers for you based on data you opt in to provide. From "decision engines" like Billshrink.com to deal of the day mobile apps like AAA discounts to social Commerce sites like woot.com, there is a burgeoning industry of service providers hoping to help consumers convert from impulse shoppers to educated buyers.
But are these services helping consumers to discover and select the right products that optimize price/value? How does a consumer ultimately know in whom they should place their trust - the retailer or the advisor? Advisors that aggregate content and then apply algorithms and customer profile data may provide a useful information filtering service that lets a consumer remove some of the marketing noise from their evaluation process. Trusted Advisor services use a continuous flow of information to support the consumer's inquiry, however, the consumer doesn't always know if the business model that underlies the service offering emphasizes particular inputs from advertisers or business partners.
Free information may be worth what the business or consumer pays for it. To build trust in a brand that it can curate valuable information and make useful recommendations that fit each individual's needs takes time. More importantly, though, it takes relevance. Brands that attempt to provide a Trusted Advisor benefit to consumers cannot assume blind faith in the results they produce. To earn the loyalty that underlies any business model for these types of services, product designers will have to first ensure the consumer can clearly evaluate the utility these kinds of sherpa services provide.
This is a very graphical and visual four and a half minute video summary of an article in the California Management Review Fall 2007 issue, "Innovation as a Learning Process: Embedding Design Thinking". The link to the full article is below the video reference in italics.
The portion of the article that continues to be timely, especially in tough economic times, is buried on page 48.
Many engineering-driven organizations start with solutions and then in classic technology push-fashion, place those solutions in the market to see whether or not there is a need. Today, in fact, it has become quite popular to engage in the “express test cycle”, iterating rapidly between observation and solutions, but remaining in the concrete realm of the innovation process. Unfortunately, while this approach may well uncover many use and usability needs, it often fails to discover the higher level meaning-based needs that can be crucial to the success of an innovation.
The authors go on to point out that innovation doesn't only have to be born with the launch of new products and services. Simplifying the complex process a consumer must go through to execute a desired outcome may be the most important innovation for a business. Process innovation may ultimately revolutionize the way a consumer behaves such that new profit or revenue opportunities may be enabled. This video and the full article are great reminders of what power lies in innovation of an enterprise's existing businesses and customer touchpoints.
There is so much talk about the importance of apps and smartphones, but my focus group of family and friends would tell you that is mostly what it is...talk. They don't live and die by the number of apps available once they get the handful of games, news and sports they like. If they even have a smartphone. And the agitation to download apps seems to diminish. I have often heard, "There are just so many of them it's hard for me to take the time to discover and try the ones I might like. Who has the time?
I often worry about the way we as technology innovators try to lead customers to new behaviors. What we think is the "next new thing", many consumers talk about doing, but sometimes are not motivated enough to ACTUALLY do. To see where other folks may fall on this topic, I'm broadening the sample size by formalizing the poll below. So please vote and see are there more downloaders or a talkers. And feel free to add any additional comments around your vote below the poll.