|Of course companies still do market research -- but it's still possible to talk to the wrong people, and in an age of social media "megaphones," results can be unpredictable.|
"The Netflix example is very clear because subscribers exercised their right to go somewhere else," Capuano says "They left the business and the fact that price increases equated to a significant decrease in shareholder value gave them no choice. They had to bow to the pressure. Would you have thought 10 years ago you would ever see a story on a fee increase at Bank of America last on CNN for two days? You just wouldn't see it." "That's why you see the rise in things like titles of companies creating positions of things in charge of customer insights and customer loyalty," he adds. "They are trying to set up the infrastructure and operations to be able to uncover these leading indicators they are seeing in their business and react to them in a swift manner, reacting to something negative in your business and knowing when they have done something positive and can sell on that success. For a business, it is all about the bottom line. They want to drive revenue, they want to drive margin and they want to drive shareholder value. In today's world, if you are not engaged with your customers on a regular basis, you are at a very big disadvantage." When unpopular corporate decisions are made, they can be the product of bad data, of surveys that either gamed responses or asked too few people or the "wrong" ones. A teenage shopper might have given a very different review of the failed Gap logo than the Internet army of disbelieving graphic designers. (Does the average mall shopper really care about Helvetica one way or the other?) Yes-men or a strong-willed CEO may be to blame and market research may have been rigged, even in subtle ways, to support a chosen path rather than offer a critical assessment. Business imperatives can also often run afoul of customer expectations, creating a no-win stalemate. "I'm sure the Netflix decision wasn't made on a whim," Dias says. "It was a very big decision to split the company into two. I'm sure they agonized for months over this decision. I think the miscalculation was an assumption, for example, that perhaps 5% of the customers would quit and they did the math and said that was acceptable. I don't think they thought that 5% could become 25%. The power of the social media megaphone is changing the math that has been done by the bean counters." In a university publication, Kapil Jain, a senior lecturer at the McCombs School of Business and academic director of the Center for Customer Insight and Marketing Solutions, said that Netflix "didn't really expect their brand image to be affected negatively."
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