Consumer Behaviour in the Information Age
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1 The Evolution of Customer Experience: 10 Trends You Can t Afford to Miss Professor Donna L. Hoffman Chancellor s Chair and Co-Director, Sloan Center for Internet Retailing A. Gary Anderson Graduate School of Management University it of California, i Riverside id MSI Conference on Leveraging Online Media and Online Marketing Miramonte Resort and UCR Palm Desert Campus February 6-8, 2008
2 Overview The Internet is Unique The Evolution of Customer Experience How to Future-Proof Against Change Q&A 2
3 Web 1.0, 2.0, 3.0 Web 1.0 Web as a conduit for data. Text and image. Basic infrastructure built. Static sites, then some dynamic content and interactivity. Web 2.0 Web as an operating system. Facilitates sharing and participation. Seamless connection of applications (i.e. geographic mapping) and services (i.e. photo-sharing). The mash-up. Lego phase, with parts that connect. Web 3.0 Semantic Web. Web can understand itself. Web less of a catalog and more of a guide. World Wide Database. Artificial intelligence. Truly useful recommendations and answers to questions like: I m looking for a warm place to vacation and I have a budget of $3,000. Oh, and I have an 11-year-old child. Source: 3
4 Web 1.0 vs. 2.0 Web 1.0: AOL buys Time Warner. Web 2.0: Google buys YouTube. Web 1.0: New media company buys old media company. Web 2.0: New media company buys new media company. Web 1.0: Users create the content (Slashdot). Web 2.0: Users create the content (Flickr). Web 1.0: Crap sites on Geocities. Web 2.0: Crap sites on MySpace. Web 1.0: Writing. Web 2.0: Rating. Web 1.0: Cool Site of the Day. Web 2.0: Technorati.com. Web 1.0: Bookmarking. Web 2.0: Bookmark sharing. Web 1.0: Pointless Flash widgets. Web 2.0: Pointless Ajax widgets. Source: 4
5 Web 2.0 Puts Consumers in Control Web 2.0 allows consumers to CONTROL their experience It gives them the freedom to do WHAT THEY WANT 5
6 Web 3.0 Augments That Control del.icio.us Web 3.0 integrates AI with human intervention 6
7 For Some, Web 2.0 is Not Pretty! "When people say to me it's a Web 2.0 application, I want to puke." Guy Kawasaki, in Newsweek, 4/3/06 7
8 Web 2.0 Embodies Some Important Ideas Consumers are both the producers and consumers of their own content t and online services Enables markets as conversations Watchwords are collaboration, sharing, and community What the Internet was meant to be What does this mean for Online Marketers? 8
9 Focus on the Consumer Behaviors, Not the Buzz An Alphabet Soup of Technologies Ajax (Asynchronous Javascript + XML), Flash RSS, Atom JSON, XML Feed readers/aggregators RIA (Rich Internet Applications) Web as platform REST, SOAP APIs, P2P, SOA Social Applications Blogs, Vlogs, Photo-blogs, Mob blogs Wikis Social bookmarking & tagging Social networks Video sharing (photos, videos) Podcasting (aka audio blogging) Vidcasts, vodcasts (video casting) Content syndication (RSS) Mash-ups Why do consumers use these applications? What behaviors do the technologies enable? Marketers need to focus on the consumer behaviors i.e. what people do with the applications; why they use them and how. That is what counts. 9
10 What s in Store for Customer Experience in Web 2.0+? Examine the evolution of customer experience in the context of ten important trends These follow from Web 2.0+ (going into Web 3.0). We need some kind of analysis framework to organize ideas. A reasonable framework starts with how the Internet is different. 10
11 The Internet is Unique 1. Networked 2. Digital 3. Interactive 4. Measurable 5. Limitless Content 6. Addressable 7. Consumers in Control 8. Vulnerable 9. Convergent 10. Augmentable Source: Hoffman and Novak (2004), A Conceptual Framework for Considering Web-Based Business Models and Potential Revenue Streams 11
12 The Internet is Changing Customer Experience A typical home in 1975: Source:
13 The Internet is Changing Customer Experience A typical home today in 2007: Source:
14 The Internet is Changing Customer Experience More mobile More multitasking Active roles in content creation The Internet is changing their expectations 14
15 These Changes Are Expected To Accelerate Over Time The four laws of technology operate exponentially ( better, faster and cheaper ): Moore s Law processing power doubles every 24 months Gilder s Law communications power doubles every 8 months Kryder s Law storage power doubles every 13 months Metcalfe s Law the value of a network is proportional to the square of the number of users 15
16 Think About the Impact of Better, Faster, Cheaper Exponential growth in Computing power Communications power Storage power Network usefulness Affecting each of the following 10 years from now Search engines Web browsers Product merchandising Online retail spaces Online community and communication Entertainment Who and what consumers trust 16
17 Important Trends 1. Networked Social marketplaces 2. Digital ABBA 3. Interactive Consumer-generated media 4. Measurable Social media optimization i 5. Limitless Content Help me find it 6. Addressable Do it for me 7. Control I ll do it myself 8. Vulnerable Brandjacking 9. Convergent Digital convergence 10.Augmentable Augmented reality Source: Hoffman and Novak (2004), A Conceptual Framework for Considering Web-Based Business Models and Potential Revenue Streams 17
18 Social Networks Are the Web s Fastest Growing Sites 18
19 1. Networked Social Marketplaces Web 1.0 looked at social networking sites from the perspective of eyeballs Web 2.0 will monetize the phenomenon by recognizing that social networks are the world s largest (digital) marketplaces Web 3.0 will integrate agent technology to help people find what they are looking for, possibly in virtual worlds 19
20 Web 2.0: Social Shopping Social networking sites are rapidly morphing into social marketplaces thanks to widgets. These social media applications let consumers create their own Web experiences the ones they want, not the ones you think they want! Applications bring the store to the buyer this kind of distributed shopping is one step on the path of the evolution into social marketplaces 20
21 2. Digital ABBA Atoms to Bits and Back to Atoms 21
22 Product Merchandising: Olfactory and Haptic Interfaces Input Translation atoms to bits and back to atoms Scent Dome CyberTouch Source: Customer Customer Experience Experience Trends Trends Professor Professor Donna Donna L. L. Hoffman, Hoffman, Sloan Sloan Center Center for for Internet Internet Retailing, Retailing, UC Riverside UC Riverside
23 3D Printing Will Soon Be in Reach for Consumers Consumers will be able to print customized products in the privacy of their own homes 23
24 3. Interactive Consumer-Generated Media User-generated content (video and photosharing, blogging) has come a long way in a short period of time: Unsolicited product reviews/commentary (text) unsolicited video commentary solicited media ( co-creation or participatory advertising ) Consumer-generated t d media is gaining i in importance because of social networks word-of-mouth is elevated because consumers in the network have known reputations and are trusted. 24
25 Consumers Are Passionate About Their Favorite Brands 25
26 User-Created Content 26
27 The new bar at the Tramway needs furniture! 27
28 Videopinions Enhance Word of Mouth 28
29 Kimberly-Clark Encourages Consumers to Let It Out 29
30 Co-Creation Generates Consumer Insights 30
31 4. Measurable Social Media Optimization Just when you thought you d mastered SEO, here comes SMO Turn consumers into brand ambassadors that share their brand experiences with the friends in their social networks and help spread the word about your brand Some key aspects of SMO: Make it easier for consumers to link to you and tag your content Encourage consumers to use your content Beware the dark side. 31
32 5. Limitless Content Help Me Find It The Internet is an endless frontier, but those billions and billions of web pages come with a cost. It is at once becoming both easier and harder to find things We know that consumers do not expend that much effort when searching and that they get very frustrated very quickly when they can t find what they are looking for. 32
33 Human-Filtered Search Web 1.0 Directories and Guides (remember the original Yahoo?) June 30, 1998 Web 2.0 Web 2.0+ Browse the Yahoo! Shoposphere Web 3.0 AI integrated with human intervention to improve search 33
34 6. Addressable Do It For Me (Personalization) Google s personalized search based upon your history Note is this a good thing? It limits you. Eliminates the serendipity factor. What if you want something unexpected? But you can engineer serendipity. You want personalized search to be practical (relevant to you) but you also don t want to rule out serendipitous findings. Nothing really puts these together, yet 34
35 7. Control I ll Do It Myself (Customization) Two visions Company controlled 1:1 individually tailor or personalize the Websitetomeetthecustomer s to the s needs. Customer controlled 1:1 hijack a Web site and customize it to make it your own! The Web was designed to be hackable a company s Web site isn t static. Why shouldn t consumers be able to modify it to suit their own tastes? QEDWiki 35
36 Greasemonkey: Froogalize Amazon BEFORE AFTER 36
37 How will Customization and Personalization Trends Play Out? Customization has the advantage of being easier to implement and benefits consumer control motives. But personalization may play a strong role in the future as information increasingly taxes consumers abilities to process and integrate it in meaningful ways. Long run, the four technology laws suggest strongly that personalization will play a dominant role in the future. 37
38 8. Vulnerable Brandjacking Consumers are not very good at determining when they are being scammed Online scammers are using increasingly sophisticated direct and online marketing techniques to execute their crimes. Online retailers need to stay informed and keep vigilant! 38
39 9. Convergence Digital Convergence Digital convergence is a key characteristic of Web 2.0 it provides for the (hopefully) smooth integration among various content sources and technologies into one seamless customer experience. Some of the trends we ve already looked at provide examples of this. Online retailers need to expand their view of what constitutes the best channel to reach customers. 39
40 Apple: Convergence of Computing, Communications, and Digital Content 40
41 10. Augmentable Convergent Augmentation Augmented reality Augmented consumers Augmented products 41
42 Digital Environments: Augmented Reality Current Applications: Possible Future Applications: Insert additional information into field of view (for example, mechanic sees labels l and instructions). ti Wearable maps for military and emergency applications. Virtual objects in museums and theme parks (Disney s Haunted Mansion an early example). Expand a PC screen into the real environment as a virtual image that can be interacted t with (special glasses or holograms). Virtual holographic plants, artwork, wallpaper and pets. Replace car navigation systems with guiding lines and directions shown direction on the road. 42
43 Google Maps Street View 43
44 Window Shopping 44
45 Social Retailing 45
46 Web Browser Evolution Mosaic 3.0 (1993) Internet Explorer 6 (2001) Internet Explorer 7 (2006) Netscape 1.22 (1994) SphereXplorer 3D Browser (2007) Internet Explorer 4 (1997) 46
47 Future Web Browsers? Not so far to get from here (today). to here (in the future). Source:
48 How to Future Proof Against Exponential Effects Stay on top of trends and developments. They re your window into what the future might look like. Always assume the digital environment will change. (And fast!) Focus on fundamental aspects of online consumer behavior, not just current best practice. Customers can create and are in control. They aren t going back to the farm (or passive TV viewing ) Customers now interact with machines in addition to salespeople and products. Do managers understand these machines? Customers can satisfy other customers needs. Marketers can be replaced. The online experience is a consumption event in itself. It may be much more interesting than anything a company has on the Web. 48
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