Smart Customers, Stupid Companies: Why Only Intelligent Companies Will Thrive, and How To Be One of Them

Four Disruptive Forces Changing the Rules of Business

• Social Influence
• Pervasive Memory
• Digital Sensors
• The Physical Web

"The networked economy knows more than companies do about their own products. And Whether the news is good or bad, they tell everyone." - The Cluetrain Manifesto

"Social Influence inserts other people and their opinions between a company and its customers, radically disrupting traditional notions of customer relationship lifecycles."

"Pervasive Memory is the data that accumulate in huge volumes as we interact through digital devices. It delivers competitive advantages to firms that leverage this data to benefit customers. Companies that don't collect, analyze, and utilize this data - or that mishandle it - will fail."

"Digital Sensors are the trillions of devices that see, hear, and feel what is happening in our world. They bring intelligence to everything that surrounds us. Smart companies must have smart products and services. Sensors are what make products smart, and sensors will change business competition more than computers did."

"The Physical Web is emerging, allowing us to browse, bookmark, tag, and manipulate the physical world much as we do on the Web. This shift encompasses the Internet of Things, but goes far beyond it. We're not just linking devices to devices. We are linking people, places, ideas, and things; doing so will change the very definitions of corporations, innovation, and competition."

"Companies can't be competitive if they can't stay ahead of their customers."

The rise of smart customers is still in it's infancy.

There are still opportunities to grow from smarter customers.

"Smarter interactions turn complaints into upsells, reveal customer needs, drive loyalty, create new revenue streams, and power innovation."

"Your customers are getting less patient - and your younger customers never had much patience to begin with."

The rise of smartphones, and other connected devices have helped to make customers smarter.

Smart Customers - Key takeaways:

• Digital devices will increasingly give individuals "super" powers to sense, remember, analyze, understand, and share insights from the world around them.
• Companies must use customer information to benefit the customer.
• Disruptive forces will require massive changes in your company's strategy.
• Your company must be able to act smarter than its customers, or it will cease to exist.

"Innovators look through the eyes of their customers"

"Your customers want sophisticated Technologies to remove - not add - complexity from their lives"

Intelligence is Everywhere - Key takeaways:

• Individuals will use digital devices to identify and differentiate any one thing in the universe from everything else.
• Understanding how individuals (and everything else) differ from each other will help your company develop profitable new services.
• Everything from your garden to your glasses is going to get smart, and smart objects will create new business models.
• The more powerful a product is, the more intuitive it should be to use.

"Don't think of Social Influence as a website or a place to advertise. Think of it as an unrelenting mirror reflecting the way your firm touches individual customers and your stakeholders in general. It's a mirror that will force changes within your culture and your processes, and it is in your interest to make such changes before the Social Influence mirror reveals your firm's flaws publicly."

A Perfect Storm of Disruptive Innovation - Key takeaways:

• Social Influence means companies will have less control over what customers think of their offerings, service, and reputation - because third parties will always be present in the relationship, even when firms sell direct.
• Pervasive Memory means that memory is everywhere, creating a marketplace (and society) in which the truth is nearly impossible to escape.
• Digital Sensors make possible "sense and respond" business models, in which companies respond intelligently to changes around both their customer and the world.
• The Physical Web is evolving as the real world gets linked much like the virtual world has, and the result is that we will browse, tag, and connect nearly everything.
• Together, these four disruptive forces create new business opportunities as they also undercut existing business models.

"After all, your company doesn't define customer experience. Customers do. Customer experience is based on how your customers perceive your organization and how well you meet their needs when they interact with, hear about, and do business with your company."

"Understand all your touchpoints and their value. Control the touchpoints you can, and influence those touchpoints you cannot control."

"Effective touchpoints move customers closer to a company, ineffective touchpoints push customers away."

"Change before you have to." - Jack Welch, Former CEO of General Electric

Stupid Companies - Key takeaways

• In large numbers, customers perceive that many companies are inflexible, unresponsive, and/or generally unhelpful.
• CRM hasn't helped, because most CRM projects still look at things from the company's perspective, not the customers'.
• In many firms, employees are not rewarded for fostering customer loyalty.
• Smart companies will require smart touchpoints, which are interactive rather than static.
• Smart touchpoints have the potential to create highly profitable new services, and competitive advantages, for your company.

Five Step System for Acting Smart and Growing Faster

1. Segment your customers by needs and value.
2. Modularize products, services, processes, and capabilities to increase flexibility and responsiveness.
3. Anticipate customer needs.
4. Reward your employees for win/win behaviors.
5. Transform touchpoints by making them smart.

Critical Steps

1. Build wireless sensors into your products.
2. Totally eliminate your industry's persistent customer pain points.
3. Dramatically reduce complexity.
4. Cut prices 90 percent (or more).
5. Make stupid objects smart.
6. Teach your company talk.
7. Be utterly transparent.
8. Let customers make or assemble their own products.
9. Make loyalty dramatically easier than disloyalty.
10. Sell an ongoing service, not just a product.

Critical Steps - Key Takeaways

• Be the first established firm to disrupt your own industry, because it's going to happen anyway and it's more profitable (and fun) to be disruptor than the victim of disruption.
• Eliminate common problems and hassles that drive customers crazy.
• Use the four disruptive forces to drive innovation and include people from outside your firm when doing so.
• Make it dramatically more convenient for customers to be loyal than disloyal.
• The race is on to make everything smart. It has already started.