Episode 056 : Customer Research – Insights on Increased Profitability with Alex Genov

 

Alexander Genov but will be affectionately refer to him as Alex for the purpose of this interview. Alex is an experienced Customer Research Professional who applies his Experimental Social Psychology background and his passion for research, design and innovation to solving important customer and business problems. His professional goal is to help teams create remarkable products and services which make people’s lives easier and more enjoyable. Currently, Alex is Leading Customer Research for the Zappos Family of Companies. In previous positions, he was responsible for research and usability of the products and services for companies like Turbo Tax also known as Intuit, State Farm Insurance and the Active Network, he has over 15 years of relevant experience, 5 years of academic research and over 10 years of customer research in the software industry. Alex received his Ph.D. in Experimental Social Psychology from Clark University and his areas of research include defining and measuring emotions, individual differences, usability and consumer segmentation.

 

Questions

  • Tell us a little bit about yourself and your journey
  • What is does Social Psychology mean and how does that connect to customer experience?
  • Talk a little about your research that you have found, what works, what doesn’t as you pointed out individual differences and that customers are the same.
  • Why do you think it’s important to invest in research to help you grow your business and become more customer centric?
  • What is one online resource, website, tool or app that you absolutely cannot live without in your business?
  • What are some of the books that have had the biggest impact on you?
  • What is the one thing in your life right now that you are really excited about – something that you are working on to develop yourself or people?
  • Where can our listeners find you online?
  • What is one quote or saying that you live by or that inspires you in times of adversity?

 

Highlights

  • Alex Genov pointed as it says in his bio that his background is in psychology, that his passion is understanding people. And more specifically his specialization is understanding emotions and how we define emotions, how we measure emotions, how people experience emotions, the area of emotions is not as simple as it sounds. On the face of it we all experience emotions, we all talk about it but what I found through many years of deep research and study of emotions is that it differs not only how we talk about emotions but how we experience them and measuring them is a tricky thing. That’s his specialty and also another area of expertise he brought from said psychology was individual differences and that’s something he believe deeply in which is that not everybody not all people are different. And by the same token not all customers are different. In his career, he has been trying to help companies understand customers as people and understand the individual differences that are important for each specific industry and in each specific product. He was initially headed to be a Professor but soon gave up the idea because he didn’t want to be poor for many many years. He kind of sold out to the software industry but he has no regrets. It’s been an interesting challenge and a lot of fun experiences trying to bring rigor to research in the industry but also to make it practical. So, that’s been the biggest challenge for him all along is to make it to kind of walk that fine line, keeping that balance and keeping the organization honest in terms of research but also being practical and not being too academic and kind of obstructionist in that way.

 

  • Alex Genov stated that there are many areas of psychology when you start specializing in it. So, one area for example is, Social Psychology and other area is Personality Psychology which is a bit more focused on the individual and other area is Clinical Psychology so these are people who help people with mental problems and so on. He picked Social Psychology because it was the most interesting to him and when he was studying it all the really fun experiments from the 50’s and 60’s that really kind of make jaws drop nowadays but they were all designed to understand people in the sense that how is our behavior determined and motivated by the real or imagined presence of others. That’s the definition of social psychology. The methods that he brought with him to the industry or essentially the methods of scientific psychology which are based on the empirical method of research. And the most kind of defining feature of that is the question “How do you know?” When we talk about something and we say, “I believe this and that to be true” some people may be fine by saying, “I feel it in my gut and that’s what I believe” or they say. “I know from experience and I know it to be true” but an empiricist will say, “Well how do you know?” “Do you have the data to look at and to measure?” An empiricism is basically this belief that we all have to have some kind of shared experience to be able to determine that something is the case. So, for example, if he asked you what the temperature is and you tell him 72 degrees then you can both look at the thermometer and agree that that’s the case. When it comes to emotions you can see how becomes tricky to say ok how do you feel and then you feel happy but many times we don’t have direct access to our emotions or we cannot articulate them or we don’t want to share them. So that’s where it gets tricky how do you measure, how you define emotions. For example, you can define them by the facial expressions which is a behavioral indicator, you can define it by overt behavior, are people jumping with joy literally right or are they running away? Also, you can always ask them how do you feel but again one of the principles of research that brought that led him to the industry was to measure the same thing using different methods and to triangulate the results so that we have a higher degree of confidence that what we’re saying when measuring is exactly what we intended to measure. He doesn’t want to get too technical but that’s basically the background.

 

Yanique mentioned that we talk about Zappos all the time in workshops and people think about Zappos as the Customer Experience guru in the Retail Market especially in the online space. They basically came in and they transformed how retail business is done online. The fact that they have a 365 day return policy, if you call them somebody is going to answer the phone even when you go on their website, unlike other websites, every single page on their website has their telephone number at the top. So, at the end of the day when somebody has an issue or when a customer has an issue whether it is to make a request or it is to query a product or service that they have already engaged you for a lot of times they want to speak with a live human being and sometimes it’s so hard navigating on these organizations websites some of them don’t have a phone number, they have this contact us page where you have to type out your entire request or issue and then wait for somebody from their company to respond to you. So, the fact that Zappos actually makes themselves available by providing a telephone number on all their pages really sets them apart.

 

  • Alex Genov agreed and stated that he joined Zappos about 4 years ago and he can take absolutely no credit in it’s incredible success over the years. He has contributed something in the past 4 years but indeed the company was formed early on based on the belief that it will be successful only if they make their customers happy, employees happy and the vendors happy. That was the focus. When Tony Tsheish started investing in the company, basically he was intensely focused on the customer experience and on making this very new behaviour which is buying shoes online as easy as possible. We’re talking about 15 – 16 years ago. They realized that in that kind of business things usually will sometimes go wrong and you cannot prevent that but what you can do is to do everything to make it right by the customer. So, one of the initial defining moments was one day something went wrong with an order and a customer was not happy but then they went out of their way to make it right and then that person wrote an e-mail and in the subject matter, she started by using the word, “WOW.” Bear in mind, this is 15 – 16 years ago. Now everybody’s talking about wowing customers. But that was so long ago and then at that point they realized this is going to be our defining characteristic, is going to be customer service and at a time when everybody is considering service a cost to be cut. Zappos said, “That’s who we are and we’re going to invest in that.” That’s really counter-intuitive in a way thinking has let it success because the whole belief is that we’re selling shoes that are also available in other stores or in other places. And if we do all the same things that other retailers do and if we compete on price and we can be done on cutting costs then we’re just going to be another retailer. And you know what’s happening with retail nowadays, this was decided so many years ago. Sometimes it’s really because he’s a proponent of the online experience. Sometimes there’s intense focus on customer service is going to be a point of frustration because he’s thinking can we focus a bit more on the website. But then you’ll realize what the roots are and also, we have a saying at Zappos that “Zappos is a customer service company that just happens to sell shoes right now.”

 

Yanique mentioned that if businesses looked at their companies like that, “I’m just an airline” or “I’m a customer service company that just happens to be in the airline business transporting people from one location to the next for all different reasons, weddings, business, vacation.” And they realize that their focus is on service because without these customers we have no business. I think it would really change the mindset and propel, it would be like a paradigm shift in how we as customers experience business.

 

Alex agreed and stated that it will help to have some competition, some industries are more much more like monopolies right. And they have less choice than there is much less pressure to not be customer centric in general. One question in the outline about what business owners can think of and what’s going to make them successful – it’s very simple, it’s just focus on the customer and of course you have to have your business plan and you have to have your operations to be excellent. You cannot be focusing on the customer and giving away free product and you know you’re going to be in business for maybe 3 days, you will have very happy customers but very short-lived success. You need to have your financials work but beyond, he loves Zappos because it’s a company that’s focused on purpose before profit. And it’s a very subtle but very important difference, if you say that you’re in there for the profit then you’ll be making all those decisions that ultimately end up hurting customers. If you are saying that you’re here for that purpose then but also make sure that you are making profit. Ultimately, if you’re making customers happy they will be loyal customers and they will be telling others about your business. Alex stated that another thing that sets them apart is that they don’t do a traditional advertising. They don’t pour billions into TV ads for example, but people know about Zappos from word of mouth, from things that they do that benefit the community. And they have a very strong Social Media Presence. So that’s another lesson for entrepreneurs and for business folks. Focus on the customer, focus on the community, do good things for the community and for the customer and then you’re going to have those customers that are not only customers but they’re going to be your ambassadors they are going to spread the word about you. So, it’s going to be saving a lot of money on advertising essentially and marketing.

 

  • Alex stated that if you’re a small company you cannot really afford PHD’s and specialist to do this for you but you can do it yourself to a large degree and then why is it important? If you want to make some customers happy, now we talk a lot about personalization, a lot about meeting the customer needs or the jobs supposed to be done then you don’t know your customers. You’re probably going to be basing decisions on your own experience and if you are lucky to have a lot of customers just like yourself, so be it then you have to do any research. If you want to differentiate yourself you need to understand a little bit of the competition but mostly the customer. There are different types of businesses, for example, we are a corner coffee shop, then you’re going to be providing the staples, you may walk around the neighborhood see what the other coffee shops charge and you’re going to price your offering accordingly and then there’s not much to research about, what people need is coffee, pastries. Alex stated that one of the books he read recently that influence him is one from Harvard professor called Clayton Christiansen and he’s been talking about jobs to be done for a long time, customer jobs to be done and it’s a variation of user needs or wants but it’s much more specific in the sense that he’s saying customers are hiring you and your product to do specific jobs and if you do the jobs, they’ll continue hiring you, if not they are going to fire you and your product. So, the example he gives is a big breakfast chain here that they wanted to grow their milkshake business. They were getting a hard time selling more milkshakes so they hired this company to really observe people and how they buy milkshakes and then they talk to people and all they found was that the same person stopping by in the morning and stopping by in the afternoon had different needs when it comes to milkshakes. So, in the morning they were on their way to work, pretty long commute and they needed a little bit of nourishment like breakfast but also, they needed something to keep them occupied in the car sitting there bored. And so, they designed these milkshakes with something to do with nutritional value but also with some chunks of stuff in the milkshake so that you know people would just drink the milkshake and have something like some more sensation in their mouth. In the afternoon, when the people stopped by after picking up their kids from daycare and so we had kids in the backseat making noise and shouting, angry and so So, they are buying milkshakes for them and the job to be done was to give them some nutrition but also to keep them quiet back there. They were designed not only the milkshakes but also the straws so that they’re thinner so the milkshake last longer. And you understand the whole point of this is that if you didn’t observe people in action and didn’t talk to them about why are you buying this and what are you trying to achieve with that milkshake, then you will be in the dark. Some things are pretty straightforward like opening a coffee shop with the staples but even then, if you’re really customer focused then you’ll know your customers and when they come in you know that this person, they have their usual and you offer them that. Or maybe they’re upset, talk to them about what’s bothering them, bartenders are great at that. They solve these emotional jobs to be done like a friend for somebody who is a little bit down maybe or doesn’t get anybody to talk to at the moment. The point is all of this is based on knowing people understanding people and if you’re just focused on your business and your numbers and you don’t see your customers as people but just as walking wallets then ultimately, they’ll find another place that treats them better. So, you have those basic needs and wants. When he was talking about individual differences is when it gets to be bigger businesses that now start serving millions of people or different types of customers for example, if you are a B2B business and you’re selling something to a company, you have different interactions, for example the CEO who is going to be signing the cheque ultimately. And interacting with some procurement person who is responsible for implementing the system. And then you may or may not interact with the end user but they’re all different user groups and they all have different mindsets and they’re going to have different interactions with the system. So that’s a very simple form of segmentation based on role in a company. For Zappos for example, to some extent gender plays a role of course because all men’s shoes are different from women’s shoes, clothing. They dress somewhat differently. When he was working for Turbo Tax for example and it’s a financial, Do-It-Yourself financial product. Gender made no difference in terms of how finances are kept, if anything women are much better at keeping finances than men but when it came to how we understand the product you think about finances there was no different so for each business it’s going to be a bit different. Just to finish the coffee shop example and maybe some of the audience have some customers that are vegan now so you have the vegan customers and you have the ones that are not. So that will be kind of a surprise and delight for your customers to say, “Do you want regular milk? or you want soy milk?” But that’s another example of maybe your segment based on taste and health preferences and so on.
  • Alex shared that in his tools of the trade like analytics programme. He uses SPSS too because everybody at Zappos does hands on work. And there’s no more managers there now and it’s a different self-organization kind of environment. A lot of his work is hands on work. They have a really powerful survey tool, they do a lot of surveys with our customers and with prospects – general population, US shoppers. They collect information that way and then he uses an analytics tool called SPSS to do the analysis. They also collect a lot of text data and it’s very challenging to analyze sentiment and he’s talking about large volume. Like 600,000 reviews on the website or even they do a survey when they get to 2,000/3,000 verbatim comments from customers in text form. It’s very difficult to analyze, now they’re starting to explore a tool that is a very powerful text analytics tool developed on technology from the MIT media lab and so you have the best scientists there working to develop this kind of artificial intelligence to extract meaning for example from text. And it’s not as simple as just counting the number of times a word appears. That’s extracting meaning what the word is connected to water. He mentioned that Google is amazing, Google is like this really powerful software company if you have to find anything you Google it and find it right away.

 

  • Alex shared that one of the key influences for me is this Italian designer called Roberto Verganti. He wrote several books but one of his key books is called Design Driven Innovation: Changing the Rules of Competition by Radically Innovating What Things Mean and his main idea is that you need to understand customers as people and that’s been his kind of mission in the past couple of years as don’t really just study customers as shoppers in the process of shopping or in the process of calling but understand them holistically as people. He has been advocating for this sort of radical innovation which is that a dual meaning of what things mean for people and that’s very hard to do but it’s going to guarantee the biggest success. One of his examples is this company that was the leader in candles, a few centuries ago. A couple of centuries ago they were there for a hundred years, they were the best, made candles and then electricity came along. And instead of them changing the meaning of what they were doing they continued to focus on the light, how long does the candle was lasting, how safe it is. And then of course they disappeared, they went out of business. Alex asked – “Can you guess one Candle company that is thriving right now?” Yanique replied – “I cannot…” A candle company that is thriving now is called the Yankee Candle Company, it’s very big in the United States but the reason why they’re so successful is that because they change the meaning of what a candle means, it’s not used for light but it’s used for mood and they made it smell good but you see how they changed the meaning because the other company was focused on safety and they didn’t want the candle to smell right and then it lost its purpose. That’s all he talks about, understanding what things mean for people. Another example is this kettle for boiling water and they made this kettle that looks pretty cool but also was emitting the sound when it was ready, it kind of whistle and the meaning there was not only was it a tool for boiling water but it’s a signal for the family to gather around the table. You would think it’s a simple object and then people pay US $500.00 for this. It’s the shape, the meaning. A good question for all the listeners is the business they’re in, are they innovating on that level versus just making things better the way they are, keeping the same meaning but making it better. “Are you innovating or are you making things better the way they are?” [Question to ask yourself as a business owner]

 

  • Alex stated that at work he is excited about a couple of big programs they are doing which is the Voice of the Customer, they are enabling their customers that go on their website and don’t call on the phones to give them feedback and for the organization to be able to consume that feedback, so they are working hard on that. Again, exploring text analytics, it’s going to open their eyes, it’s just a ton of data that has been left unexplored. In his personal life, he went back to a passion of his which is Martial Arts after many years of not doing much and in Las Vegas there are Shaolin Monks teaching and that’s super exciting for him. There is one authentic Shaolin Monk visiting to hold a seminar and he’ll be taking some time off work to do that.

 

  • Alex shared listeners can find him at –

LinkedIn – @alexgenov

 

  • Alex shared that what inspires him in times of adversity in his professional life is thinking about the customer and Zappos is a part of Amazon and Jeff Bezos is talking about customer obsession and then in his personal life, is this idea of no hacks, it’s just perseverance and hard work.

Links

 

Online Course for Business Owners, Leaders, Managers and SupervisorsMastering Customer Experience and Increasing Your Revenue

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