2011: when every customer is Albert Einstein…

by Bruce Kasanoff on December 17, 2010

Every business has a few customers who are so smart, well-connected, and knowledgeable that they know more about your business than you do. But imagine doing business when all of your customers are this smart.

Welcome to 2011.

About a month ago, Michael Hinshaw and I were putting the final touches on a webinar about the six disruptive forces impacting customer experience. To illustrate the speed with which innovation from empowered individuals is pressuring established firms, we cited the number of iPhone Apps developed in three years: 283,586.

I just checked back. The number is now: 296,364.

My guess is that of the almost 13,000 new Apps offered in the past month – just like the ones that preceded them – quite a number are turning average customers into Albert Einsteins who can…

- Check competitors’ prices while they are standing in your store, and order the lower-priced products while still talking to your sales person.

- Take a virtual tour of a house for sale, explore its neighborhood via Google Earth, check the taxes and recent comparables, and even research the owners and their possible reasons for selling (are they under pressure?) before calling your firm’s realtor — who is likely to not know half of this information at the time of the call.

- Create their own television network which features Tuesday night programs on Sunday, Saturday morning cartoons in primetime, and Web-based “amateur” fare instead of Law & Order. Oh, yeah, and skip the ads.

- Check the weather forecast, the fact that your hotel has open rooms available on discount websites, and your financial statements before calling and negotiating a further discount on the rooms they have already booked at your hotel.

But – for all those executives who get a headache at the prospect of rethinking their business model – you ain’t seem nothing yet. Combine the six forces we’ve highlighted and the result are customers who are getting smarter and smarter. Smarter in many ways than your firm.

What happens when you try to do business with people who are far smarter than you? Yep – it gets ugly fast.

For example, the rise of the Physical Web means that customers are increasingly using smart devices to identify almost anything in the physical world and instantly use data from around the world to get an instant briefing: what is this… how is it used… is it a good fit with my needs… do experts like it… what do my friends think… who has the best price… who has the best guarantee?

This puts your margins under pressure. It undercuts the goal of cultivating loyal customers. It threatens to dissolve – perhaps in mere months – the advantages your business may have gained by investing millions in bricks and mortar. Most importantly, it can turn size and scale into disadvantages. To get smarter, a customer often merely has to download an App, which they can install in less than a minute. But large businesses are often dependent on enterprise software, complex processes and inflexible organizational structures — all of which are very slow to change.

You may have noticed that the answers to my questions will also be impacted by the other disruptive forces we highlight

I’ve been in situations before where my role was to try and peer into the future and help business execs understand changes that might emerge in a few years. The difference now is that these changes are already happening all around us, but many execs are slow to recognize the new reality for customer experience and business competition: this changes everything.

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