5 Key Aspects of Observational Research

I discussed in my previous post how understanding the ways in which your customers engage with your products and services is a great way to draw out improvements and opportunities for innovation. Watching them engage with your offerings in their natural environment is the key, and Dave Pollard has identified 5 things to look for when carrying out observational research; otherwise known as 'ethnography' or even 'customer anthropology'.

1. Workarounds - things people do that the existing product, process, tool or facility was never designed to accommodate, but which helps them to get the job done that they need to do.
2. User torture - Evidence of obvious customer discomfort, either physical or psychological
3. Obstacles and barriers - Signs that people can't do their job because of a physical or procedural barrier.
4. Repurposed objects - Tools designed for one thing have been appropriated to do something else.
5. Wear patterns - Evidence of stress or overuse in the product

3 Reasons Why Ethnography Is Better Than Focus Groups

Ethnography is the process of doing observational research (often involving discrete video capture) on how consumers use and engage with your products out in the real world environment (in-store and/or at home). Focus Groups, on the other hand involve getting potential customers together and then quizzing them about the product in retrospective. Ethnography is a great way of drawing out improvements and opportunities for innovation, particularly around newly launched products. The trick is to ensure that product developers and designers get personally involved in the activity.

Anyway here are 3 reasons why Ethnography is better than using Focus Groups

1. Consumers often can't remember much about products when questioned about them in retrospective and outside the normal context.
2. Observing consumer use the product in its normal context yields much more useful data and often unexpected behaviour
3. Recording the behaviour gives the product development team valuable footage that they can show to senior management to justify investments in product and packaging improvements

The inspiration for this post came from the Innovation Tools blog and they recommend three useful articles around ethnography

• How "applied ethnography" can improve your NPD research process
• Understanding customer need during new product development
• The consumer anthropologist

The Key to Success in the Next Generation High-Street

The key is customer experience. Branding online is primarily about the experience, and it is making the passive, push marketing approach we've lived with since the start of capitalism obsolete. With price and quality becoming more and more homogenous on the high street, retailers must start moving towards experience focused outlets that are built around impressing and engaging their customers, rather than the traditional model of simply cataloguing or showcasing the products or services they can offer.

I feel there is significant scope to achieve this by making the in-store customer experience richer and more fulfilling by learning from the web experience.

Like Web 2.0 web-sites, the next generation high street store must demonstrate a better appreciation of the target consumer as a person rather than a product buyer. In other words it must make the shopping experience person-centric by providing space, comfort, information and social engagement, with easy points to call for help, and valid reasons to come in and enjoy the in-store experience for browsers; whilst also providing efficient entry and exit routes for shoppers who know what they want.

Retailers must conversely also appreciate the elements of the shopping experience that make store customers uncomfortable and look for avenues to cut them out, for e.g. not enough browsing space; product overcrowding; help not unavailable at the right time and place; and lengthy purchase queues.

So what could the High Street 2.0 physically look like? Well, one route might be where large stores evolve into experience-focused social spaces with products as a backdrop, while small stores leverage user computing and web technology to shift towards becoming product information hubs where consumers use touch screens to choose what they want to see, try, and buy.

Channel Symbiosis and the Next Generation Customer Experience

I believe that at some point in the near future, forward thinking retailers must recognise the fact that the existing model of shops as one-dimensional rooms for showcasing products by category is fast becoming outdated by consumer familiarity with the online shopping experience. On the internet, consumers can access related products, accessories, comparative price options, product information, reviews, simplified purchasing, delivery, and bargains, while also being able to feedback to others about the experience. What they cannot do is try out products for fit, look, appropriateness or ease of use before buying, or even benefit from the immediacy of collecting the item at time of purchase; so it is clear that both channels are not just relevant but highly complementary, and should be treated as such.

However, as far as I'm aware no one has made this leap towards a truly symbiotic, holistic online-offline customer experience. There is absolutely no reason why customers shouldn't be able to shop in-store with the same benefits as online. It just needs a little lateral thinking, starting with recognising that while the Web started out as a separate and independent commerce stream in order that companies could minimise risk while still learning about its capabilities and user models, it is now a well established and experience-driven business and usability model that can and should be leveraged to improve customer experience across channels in the physical world.

What is the High Street 2.0 and Why should you care?

In some of my previous posts I discussed the reasons why people browse offline and buy online. By highlighting the drivers behind the trend of customers browsing in stores but then going online to purchase their items, what I was alluding to is the need for cross-channel symbiosis rather than revenue cannibalisation as we currently have it, achieved by improving the offline experience to provide customers with in-store access to the benefits of buying online.

In other words, a shift towards physical stores offering the customer access to the benefits of browsing and purchasing online, and vice-versa, rather than developing more avenues for making each channel independently attractive to the consumer in ways that simply result in cross-channel competition.

Jargon and twee titles aside, this is primarily a focus on cross-channel symbiosis, and the evolution of high street stores from one-dimensional product pushers into broader experience focused outlets. Somewhat in the way that the static ‘dial-up generation’ websites are now evolving along the rich experience web 2.0 route.

Some are doing this already, but more from the web-space into the offline world, like Etsy, who have just opened a real world store in Brooklyn; or ZoZa who tried a physical store for customers to try before buying online only (and failed); or former cosmetics pure play Bluemercury.com who've now set up physical outlets for customers who want to sample before buying. This shift of bringing the online experience offline is what I believe could be the start of the next generation high street – or as I call it, the High Street 2.0

3 Controversial Reasons Why MySpace Dominates in America, but Facebook Rules Everywhere Else

Facebook went past MySpace in the UK last September, and has now officially equalled MySpace globally in monthly unique visitors. MySpace still dominates in the US though - their unique visitor count still doubles that of Facebook - 76m vs. 32m. This means that Facebook has way more unique hits outside America and is dominating heavily, while MySpace is struggling with the global audience.

Here's 3 probably controversial reasons why I think MySpace is dominating America while Facebook is dominating the world, and why I think it'll probably stay that way

1. MySpace is inclusive while Facebook is exclusive:
   MySpace is an open network. You can become friends with anyone and it's perfectly acceptable to do so. There is scope to make new friends and connections. Facebook is completely gated. Connectivity with new people over the web is more important in the US because distances are more isolating. Europeans, Asians etc don't suffer the same social or familial isolation and the social networking is more about existing friends and connections.
2. Facebook blows MySpace away in instant gratification, but MySpace pays off in profile uniqueness:
   Americans have had ubiquitous Internet for much longer than Europe and their interactive engagement with the web started firmly in the Web 1.0 era. Putting effort into developing their web experience is something that is perfectly normal for the US audience, especially if the payoff is individuality and your goal is to showcase you. Everywhere else, broadband came much later and web interaction norms developed with Web 2.0. Ease of experience is everything and anything that isn't absolutely effortless is going nowhere. Individuality is not enough of a payoff when your goal is to know what everyone else is up to.
3. MySpace accepts everyone... the Oldies too, while Facebook is elitist... for the hip generation only:
   It's perfectly OK for your parents to have a MySpace page but there's something so wrong about your mum or dad being on Facebook. A much broader age demographic uses the web for fun, interaction and learning in America; but in Europe social networking is only just taking off and it is really only Gen Y and a bit of Gen X that uses the web for anything other than work. Facebook has all we need, but America however needs more, and MySpace caters to the long tail of users, well beyond Gen Y.

What this means is that if you're based in the US or your primary audience is US based, stop worrying about Facebook so much and take MySpace seriously!

4 Experiential Reasons for Buying Online

Apart from the functional reasons for buying online, there are some other compelling reasons for buying online rather than in-store, related to usability and social interaction. These are the new behaviours that consumers are taking for granted as an integral part of the shopping experience and one that offline stores are completely failing to replicate

1. Easier payment through one-click accounts (e.g. Amazon)
   Who wants go through the whole business of queuing, waiting for someone else to scan and pack your product, handing cards over and waiting for it to register chip and pin and so on, when you can simply select the item, click once and then sit back and wait for it to turn up? Why don't stores have this facility?
2. Accessories for product listings I find this very useful online.
   If I buy a camera in-store at PC World, I get a camera, but absolutely no information to help me consider useful accessories. If I buy the same product on their website I get a list of accessories that supplement that product – appropriate lenses, cases, leads, cards etc
3. Related product listings and “Other people bought this” type information
   Similar to above, I like shopping for things in spaces where I'm provided with ideas for complementary items. If I'm buying a badminton racket, then what about related bags, shoes, apparel, shuttles etc. I don't want to have to walk around some sports super-store to find the matching bag in the bag section, or shoes in the shoe section etc. If I'm buying jeans I want to see shoes or t-shirts that might go well – ok so I personally am not enough of a shopper to care about this on a clothes front, but I can imagine a whole bunch of people who do, and sometimes knowing what other people bought is excellent fodder for shopping ideas.
4. Auto-history of purchases – leading to seller recommendations
   The problem with buying in-store, even from the same store, is that there is no history of what you bought. What if you wanted the same item you bought two years ago, but can't remember what it's called? What if you don't really know what you want to buy, but just feel like a quick bit of retail therapy? Isn't it great to be able to go onto your Amazon store and see lists of items that might just be interesting based on things you've bought before? Buying on website like this is like walking into a shop to buy an iPod, and the shop floor assistant suggesting an iRiver because it's more compatible with the speaker system you bought last week, and then handing you a selection of music that you just might like. How convenient, and how much more of an incentive to check the product out online after seeing it in-store.

6 Functional Reasons for Buying Online

Following on from my previous post, let’s look a little closer at the reasons that drive customers to browse offline, only to then buy online (usually somewhere else) instead of in-store. This is hugely relevant to retailers whose primary revenue channels are their real world high street shops, not just because of the impact on conversion rates, but because the trend implies that their offline customer experience needs to be improved to provide customers with in-store access to the benefits of buying online.

1. Bargains and cheaper prices (through general search and via shopping bots): If you just want to consider one primary driver for this trend, then I'd suggest this is it. Consumers want to know not just that they're getting the best deal, but also that they aren't being ripped off in any way. The proliferation of shopping bots (price comparison sites) like Bizrate and Kelkoo are making this so much easier that it is a real threat to any retailer whose customer goes online. It probably outweighs all the others to the point of making them little more than value-add considerations. For any product that is sold by multiple retailers, this is a major risk to consider, especially now that consumers have the internet on their mobiles and can pretty compare products while actually in-store.
2. Validate product quality and function (via online information and reviews before buying):
   For functional products, particularly electronics, I prefer to be sure I'm not wasting my money, particularly on items I can't really test out. I want to know the realities behind the sales blurb and the knockdown price, and right now there's no way of finding this or comparing against equivalents, except online at review sites like CNET.
3. Avoid in-store cashier queues:
   I hate queuing and unless I absolutely need the product then and there, am very likely to just go back home and order it online from somewhere.
4. Delivery rather than carry home on buses or trains (convenience):
   If it's a hot day, or I've already got things with me, or I'm on my way to somewhere else, or I just generally am not feeling like trekking around laden with shopping bags, I'm very likely to head home and make the order online. Ideally from somewhere with free or cheap delivery/postage, or even somewhere that lets me pick-up in store at some later more convenient time.
5. Search for variant availability in other stores:
   If the store doesn't have my size, or the colour I want, or the specific variant of the product that's customised the way I want it, I'm most likely going to leave the store and go online to see if any other branches have it, or if another shop stocks it instead. As with all the other drivers to online browsing, the problem is that I may never actually bother with the product any further, or even bother to go that particular retailer's website instead of someone else's.
6. Leverage online promotions / vouchers:
   I know that retailers set these up to encourage people to go online, but essentially all this does is cannibalise offline sales, because the vouchers are not redeemable in-store. Personally I feel this is a major inhibitor to developing symbiotic revenue channels.

10 Reasons why we Browse Offline but Buy Online

In one of my earlier posts on The Virtual High Street, I mentioned that depending on what I'm shopping for, like many users I sometimes identify the product offline and then look for a bargain online, but as that wouldn't be limited to high street retailers I felt it was better explored in another post. Anyway to take that topic further, I'm going to look a little closer at the reasons that drive customers to browse offline without buying, only to then buy online (usually somewhere else) instead of in-store.

Here's my 10 reasons for buying online

1. Bargains / cheaper prices (through general search and via shopping bots)
2. Validate product/item quality and function (via online information and reviews before buying)
3. Avoid in-store/cashier queues
4. Delivery rather than carry home on buses / trains (convenience)
5. Search for variant availability in other stores
6. Leverage online promotions / vouchers
7. Easier payment through one-click accounts (e.g. Amazon)
8. Accessories for product listings
9. Related product listings and "Other people bought this" type information
10. Auto-history of purchases - leading to seller recommendations

The first 6 are more functional and the next 4 are more experiential. The functional drivers probably have greater impact at the moment, with point number 1 easily being the most important. I'll explore these further in my next few posts.

Multi-Channel Retail - White paper for download

I've collated my posts on multi-channel retailing into a white paper for you to download. Bit easier to digest or use as reference. Enjoy!

Social Gaming - 20 Social Networks and Online Communities for Gamers

I recently had a conversation around developing next generation interaction for leisure industry clients, and the discussion turned to the development of social networks around media and gaming in particular. I did a bit of research to see what's out there and here's a summary of what's hot in the world of social interaction around online and offline gaming.

1. Boonty - Social Casual Gaming. Creators of Cafe.com
2. Conduit Labs - Social networking through gaming
3. Doof.com - Integrating casual gaming with social networks
4. Eurogamer - Largest independent gaming website and forum in Europe
5. Cafe.com - Casual gaming site with enhanced social networking capabilities
6. Gamervision - Gamer Community By Gamers, For Gamers
7. GAX - The Gamers Social Network
8. GuildCafe - Network for online gamers
9. Koinup - Join up your lives in different virtual worlds
10. Mytopia - First online social gaming community
11. Wiitube - Nintendo Wii community with videos and news
12. Nonoba.com - Multi-player online games forum
13. PlayerHousing - Show off your virtual self and meet others who share your interests in games and virtual worlds
14. Rupture - Connecting gamers around the world
15. SGN (Social Gaming Network) - Games and a social gaming platform that leverages people’s social connections
16. Sparter - Gamer to Gamer Marketplace
17. UGAME - Social Network for Gamers (still in closed Beta)
18. WarcraftSocial.com - Social network for Warcraft players
19. Steam - PC Gaming Community
20. Zynga - Network of gaming applications built off of classic games like Poker, Battleship, and Attack! that live on social networks like Facebook and Bebo

10 Behavioural Trends that will affect Business in 2008

1. Customer centricity will drive business transformation
2. Business innovation will become more based on creativity and design - Design Thinking
3. Disruptive innovation from other industries will continue to emerge as new competition - unexpected entrants like the iPhone and Google adsense
4. "Peer-to-peer lending" - Facilitation of loans between complete strangers will impact banking
5. Buyer niches – Gender, age, Generations 'Y' and ‘Z’
6. "Premiumisation" – Particularly air travel premium and business classes
7. "See hear buy" – eg. Music on websites, Books on kindle, Midomi (sound recognition search engine)
8. Crowdsourcing will become normal in both decision making and purchasing behaviour
9. Social Entrepreneurship will redefine the third sector
10. Personal Social Responsibility will begin to supplement Corporate Social Responsibility

10 Ecommerce Trends for 2008 and beyond

1. Leveraging social networking for business return - Oldish news, but it's going to more than just about Facebook this year
2. Group buying - Crowdstorm, Yub.com
3. Social Shopping - Kaboodle, Wists, ThisNext
4. Network Analysis for marketing and customer relationship management - See my post on Natural Networks
5. Increasing digital/internet marketing - Rapidly growing Internet advertising market is expected to rake in US$27.5 billion in 2008, according to eMarketer.
6. Revenue sharing advertising models
7. Virtual payments - Paypal Secure Card, Google Checkout
8. Branded prepaid payment cards - Payoneer
9. Revenue based social networking - Dada, MeYouWorld etc. .. yes we're talking the dreaded pyramid schemes for the web
10. 3D shopping in virtual worlds like Secondlife