This is the time of the year when there is a lot of looking forward and backward, or perhaps it is better to say that there is a lot of reflecting and forecasting. It happens at the end of every calendar year, but it gets more attention during the so-called decade years. What struck this writer about such lists this year is how similar the trends and ideas are whether looking over one’s shoulder or over the horizon ahead. A Harvard Business Review blot discussing management trends of the past decade and Trendwatching.com’s “10 Crucial Consumer Trends for 2010” serve as a good example.
“The Decade in Management Ideas,” a blot by Julia Kelly on the Harvard Business Review online site, is an excellent piece about the “most influential management ideas of the millennium (so far).” Topping the list is the pursuit of shareholder value as a strategy. Jack Welch, who produced quite a bit of value for his shareholders as GE chairman, probably would not like that idea as a strategy. He is quoted as saying, “”Shareholder value is a result, not a strategy. Your main constituencies are your employees, your customers and your products.”
“The Customer Chorus” was number three on Kelly’s list. It refers to the ways, mostly technical, that customers’ voices grew louder, and companies found ways to listen. She identifies it as a true megatrend. This is similar to number three, “Real-time Reviews, ” on the Trendwatching.com list. Because this trend/idea is so big and because many managers were caught off-guard, it bears further discussion.
To understand the power of the customer review, one only has to go online to amazon.com. There, one can see reviews of books by customers as well as professional critics. When amazon.com later started selling merchandise and became a giant online retailer it continued the practice of posting customer reviews. Customers were now influencing sales not only by their purchases, but by their comments about the products. And it obviously had an effect. According to an April 2009 Neilsen Online report, “when making purchase decisions, North American Internet users trust recommendations from people they know and opinions posted by unknown consumers online more than advertisements on television, on the radio, in magazines and newspapers or in other traditional media.” On top of that, more consumers were using online reviews. A survey by Brand Reputation, which was reported in the Oct. 2009 “Retail Bulletin,” revealed that 84 percent of consumers said they were more likely to check online for reviews prior to making a purchase compared to 12 months ago. Amazon.com started something that has spread like wildfire. There is now hardly a product or service that is not reviewed somewhere online. It has literally changed the way that management is doing business.
So how is management dealing with this customer review phenomenon? Some fight it, some ignore and some embrace it. Those who fight it do things like posting phony positive reviews of their products and services and negative reviews of their competition. They also expose phony reviews when they catch them. They also up their advertising budgets in the belief that advertisements will trump customer reviews.
Management that attempts to ignore customer reviews are doing so at their own peril. For example, a friend recently related an experience in which he received a double billing on his credit card for a service that he had purchased. After the company refused to even respond to his complaint, he did more than just dispute the credit card charge. He made several posts on Internet customer review sites and even mentioned the name of the hotel that had referred him to the company in the first place. It seems that the company had placed a brochure in the hotel’s lobby rack. Once the hotel got wind of his online reviews, it contacted the company and asked them to remove the brochures from the hotel. The company then decided it might be wise to make the customer happy.
And then there are companies that embrace the phenomenon of customer reviews. They know how to use social networking sites such as Facebook and notification technology such as Twitter. Take Dell Computers as an example. In 2007, it started using Twitter in connection with DellOutlet. Dell now attributes over $6.5 million in revenue at the DellOutlet site directly to its Twitter activity. Some companies, Toolfarm.com for example, use Twitter to have unannounced sales that are not even posted on its Web site. To learn about the sales, which are limited in time, one must “follow” the company on Twitter.
Meanwhile, back to the trends surveys. Both the management trends lists and the consumer trendwatching list mentioned sustainability, or the “green” trend. Efforts by companies to not only go green, but be seen as going green, increased dramatically during the past decade. That will continue in the coming decade. The Trendwatching.com list offers a couple of interesting examples of how far the trend may go. Consider the town of Bundaboon, New South Wales, Australia. It has banned the sale of bottled water. The community voted to replace branded water bottles with empty bottles labeled “Bundy on tap” that can be filled and refilled with water from taps and fountains on the main street. It now bills itself as “Australia’s first bottled water free town.” Mexico City recently banned the sale of non-biodegradable plastic bags.
In conclusion, does your company understand and utilize trends and ideas to its advantage?
Phil Hardwick is coordinator of capacity development at the John C. Stennis Institute of Government. Contact him at email@example.com.