Feedback is a huge part of a consumer’s experience. There is no reason to believe it won’t be one of the major factors in consumerization of corporate IT
A decade or so ago, I paid a then-pretty-hefty £100 to stay in a suburban London hotel, close to the venue of a friend’s wedding. It was in a handy location, had a nice-hotel name, and a reassuringly weighty price-tag. In fact, I was looking forward to seeing what my hundred pounds bought in the suburbs.
To this day, that hotel trip remains a firmly-etched and very unpleasant memory. It was, simply, awful. By that, I don’t mean that familiar complacently-mediocre standard that we all encounter once in a while as consumers, but properly, mouldily, thinplasterboardally obnoxious in its awfulness. I would have been scared of a fiery death, except it was too damp. With insufficient time available to turn around and walk away, I had little choice but to hold my breath and stick with it.
Like many of you in ITSM, I am no stranger to hotels. Working for a number of years as a field consultant, travelling most weeks, I began to notice a new trend: the hotels coming up cheapest on the price comparison sites also had the worst reviews on TripAdvisor. Today, it’s easy to see this effect: try searching for three-star hotels in a city like London, sorting by ascending price (the impact is particularly obvious on the late availability clearing sites). Simply, the rubbish hotels are seeing their prices forced to the lowest levels.
Why? Because now, everyone is informed.
TripAdvisor has changed hotel choice forever, providing a wealth of opinion and reviews, detailed photos, and real experiences. Proprietors live in fear of harsh reviews: a study in 2011 by Cone Research concluded that 80% of potential customers would change their mind after reading a bad online review. And, because angry customers tend to seek an outlet for their frustration more often than happy ones, poor service gets disproportionately highlighted.
Today, establishments like suburban London’s Hotel Streptococcus (not its real name, more’s the pity) can’t get away with it any more. They improve, or they die.
In addition to informing consumers, feedback has become a valuable product in its own right. It has pushed aside the old classified directory model, in which an individual business’s profile against its peers was driven by advertising (evidenced by the hurried acquisition of review services by some of the “traditional” yellow-pages-style directories). The key players in the feedback market now benefit from a classic virtuous circle: the more feedback they collect, the more useful their service becomes, and hence the more people begin to both consume and produce their content.
Interestingly, both small and large businesses are benefitting. In the restaurant sector, for example, review sites like Yelp have led to a boost in trade for many independent businesses, while having a less obvious effect on brand-name chains. Michael Luca, in a study for Harvard Business School, observed that for these independents…
“A one-star increase in Yelp rating leads to a 5-9 percent increase in revenue”
We recently renovated our house. One tradesperson in particular, our plasterer, was superb, and I offered to act as a reference for his business. Instead, he asked me to leave a good online review. For small businesses, the online feedback IS the brand.
Reviews Have Driven the Dominance of a few Service Brokers
However, while the impact may be less significant for chain hotels and restaurants (where the reassurance of brand familiarity persists), it has arguably been a huge factor in entrenching dominant brokers of other people’s products and services, such as retailers and online marketplaces.
Amazon is a prime example. The recent 20th anniversary edition of Wired magazine looks back at the rise of online retail, and the almost universal early assumption that consumers would be driven almost entirely by the cheapest prices: comparison sites would be king. As the magazine points out, this has not been the case. The big winners, like Amazon and eBay, have dominated. In each case, reviews (whether of products or of vendors) are a central feature. They draw people to the site. A five star product review backed by a large number of previous customers gives solid confidence to make that purchase. And each buyers may complete the virtuous circle by adding to the ever-increasing pool of feedback.
Feedback will be Huge in IT
For IT, the huge rise of feedback teaches us some very relevant lessons:
- Positive reviews can break customer habits, shifting them from a familiar and established provider to an upstart alternative
IT has been the “branded chain restaurant” for decades… The familiar choice, offering a degree of certainty if not perfection (Ray Kroc, founder of McDonalds, advocated that customers didn’t want a perfect burger as much as they wanted burgers that always taste the same). But just as reviews have boosted independent restaurants, they will bolster be best upstart IT providers. Suddenly, the uncertainty is within: how can I be confident in my IT department’s new, unrated cloud storage service, over a five-star-rated public service?
- A service provider with a review mechanism for services differentiates itself from equivalent providers without one
IT departments are evolving into “brokers of services”, some self-provided, others bought in. Our customers expect to self-select service offerings, and IT even needs to justify its role in being the front-end for that solution. External providers will increasingly provide reviews and feedback, driving engagement and confidence with our customers. IT needs to do the same.
- Feedback is a huge part of a consumer’s experience. There is no reason to believe it won’t be one of the major factors in consumerization of corporate IT.