Chipotle Scarecrow: Pure Imagination or Pure Manipulation?

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It is funny how easily great advertising can be twisted, just a tad, to change the message and say something negative about the brand. That is one of the challenges of our digital and social world. At one time large brands could produce advertising that remained unmolested because others did not have the ability to produce their own high-quality retort, nor did they have the means of distribution to get their response in front of a sizable audience. Today, Funny or Die required just one week to take Chipotle's new and remarkable video, add its own soundtrack, tweak the visuals and distribute their version to hundreds of thousands of consumers.

After winning the 2012 Cannes Grand Prix with their emotional campaign, "Back To The Start," Chipotle has returned with another beautifully produced ad campaign. "The Scarecrow" is a three-minute animation that almost rivals the film "Up" in its ability to garner attention, gain empathy and engage emotion rapidly. The video is set to a haunting Fiona Apple version of Willie Wonka's "Imagination!" (one of my all-time favorite songs!), and it culminates with an invitation to download a game at ScarecrowGame.com.

In the affecting ad, a scarecrow worker arrives to work at a large factory farm and proceeds to witness the mistreatment of animals, mass production of synthetic food and manipulation of messages about healthy, natural farming. Upon returning home to his small farm, he is struck with the organic nature of his own produce and arrives at an idea to bring healthier, more natural food to the people. While the Chipotle brand is largely absent until the end, there are small hints of the firm's trademark pepper at several points in the short film.

It seems hard to fault the message or delivery. The whole thing seems so authentic and wholesome--at least, that is, until I saw Funny or Die's response. They have taken the same visuals, rewritten the lyrics for the song, and produced something subversive. The remake essentially accuses Chipotle of the same sorts of manipulation that the brand levels at corporate conglomerate food producers.

Is the remake fair in casting Chipotle in the same light as those they criticize? Salon accuses Chipotle of a "A vegetarian 'bait-and-switch,'" and others have maintained that Chipotle's commitment to GMO-free foods has been a bit tenuous. The brand has responded to the remake, with Chipotle Communications Director Chris Arnold noting, "You know you've captured peoples' attention when you're the subject of parody."

In this case, I'm going to have to side with Chipotle. While the remake can poke fun at Chipotle's advertising acumen and scale (the company is a $12.8-billion, 1,230-outlet chain of restaurants, after all), you still have to give credit to Chipotle for its commitment to reducing GMO products and being absolutely transparent about how they source their ingredients. The company's site even lists which of its ingredients are local, responsibly-raised meats, organic, pasture-based dairy or, under the heading "Always Room for Improvement," GMOs.

The remake may score some points, but Chipotle is doing what a brand should in the social era--being transparent, engaging in a dialog about its efforts to "improve each ingredient we prepare and serve," addressing criticism in a speedy and open manner and producing content that engages the emotions and sparks dialog.

What say you? Are either of these version fair? Or are both?

Remake ("In a world of pure manipulation"):

Original ("In a world of pure imagination"): 

Teens' New Sharing Options Should Concern Parents and Marketers

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As we explored in yesterday's blog post, despite the loud and frequent claims to the contrary, all evidence thus far suggests teens are still using Facebook. There is, however, a new teen trend that will be of interest to marketers and parents alike: Kids are broadening the services and applications they use to communicate. If you thought sharing on Facebook might be dangerous for kids, then you really will not like some of the reports about this new breed of mobile sharing and communication tools.

To see the potential marketing issues with these new and untested platforms, let's first start with some information that may raise a few alarms with parents. I keep hearing from people who think their kids are abandoning Facebook for Twitter, Tumblr and Instagram. This may be true to some extent, but kids are also spending time with newer sharing services of which, I suspect, many parents are unaware. Last weekend, I saw a series of unsettling news reports involving platforms such as Whatsapp, Snapchat, ask.fm, Kik, Voxer and Pheed. If most of these applications are new to you, read on (but be prepared for some disturbing information). 

Source: Radio Free Europe

The first news item, while not specifically related to teens, demonstrates just how much sharing is happening away from the big social networks. A video is being circulated on Whatsapp of a gay Russian man being brutally sexually assaulted, and Radio Free Europe reports, "Viewers on WhatsApp overwhelmingly praised the violence as a well-deserved punishment." If you assume WhatsApp is some tiny, niche service, you will be surprised to learn it has more users than Twitter. WhatsApp already has 300 million monthly active users who send 11 billion messages and receive 20 billion messages per day. Although it is most popular in Latin America and Asia, WhatsApp is approaching Facebook Messenger in popularity here in the US--Onavo Insights reports the reach of WhatsApp among iPhone users in the US is 9% compared to Facebook Messenger's 12%.

The second sad news report this past weekend was about a beating that occurred over explicit photos shared with a teen girl via Snapchat. Chances are most parents know about Snapchat, which has gained infamy in recent years for sexting. The service allows users to share photos and videos which (theoretically) can be permanently deleted from recipients' phones and Snapchat servers after a predetermined period of time. In the latest of a series of disturbing news stories about Snapchat, a 15-year-old boy was beaten confronting a fellow 15-year-old boy who sent an explicit photo to his 13-year-old sister.

Source: Brian Blanco for The New York Times

The most heartbreaking news report I saw last weekend was about a 12-year-old girl who committed suicide after being cyberbullied. The bullying started at Rebecca Ann Sedwick's school and on Facebook, but when her mother shut down Rebecca's Facebook page, the girl gravitated to new social and mobile apps such as ask.fm, Kik and Voxer. It is there she received messages such as “Why are you still alive?,” “You’re ugly,” and “Can u die please?” Rebecca's mother thought she had taken the steps necessary to monitor and protect her daughter, but the girl jumped to her death from an abandoned cement plant near her home in Florida.

Rebecca is tragically not an isolated case--cyberbullying on Ask.fm has been associated with the suicides of at least four other teens. Meanwhile, children's use of Kik has become so common and troublesome that the Indianapolis Metro Police has issued a warning about the application and school districts are banning Kik from kids' iPads. 

Many parents may feel secure that they can monitor their children on Facebook, but it is possible kids are interacting with others on applications that have far fewer controls and safeguards. I am a social business professional, not a parenting expert, so I will not offer advice; instead, I will caution parents about the growth of teen sharing using new apps and furnish some helpful links with guidance for parents on monitoring and talking with your kids about their digital and social behaviors:

• Keeping Kids Safe on Social Media Sites
    
• Sexting, Snapchat, and risky teen behavior online
    
• FBI's Parent's Guide to Internet Safety
   
• Parenting Guides to Instagram, Snapchat and Facebook
   
• Childnet International Guide for Parents
   
• Cyberbullying Research Center Guide for Parents
   

As for marketers, there is good reason to proceed into these new platforms with great caution. Some brands have launched marketing campaigns on Ask.fm, but several, including Vodafone, Laura Ashley and Save the Children, pulled ads from the service in response to the suicides and cyberbullying. Snapchat has also seen some marketing experiments, although Adweek recently noted, "It’s too soon to tell if the pitches are working." Early adopters include Taco Bell, which is using the platform to launch new products, and clothing company Karmaloop, which is embracing Snapchat's reputation with risque photos of its own.

Time will tell if Ask.fm, Snapchat and other similar services are appropriate and successful channels for marketing, but most brands ought to stay on the sideline for the time being. It will be very easy for parents, educators and child advocates to associate brands on these services with bullying, sexting and predators, and I predict more calls for boycotts and brand shaming will occur in the coming year or two.

While the anything-goes nature of these new services is part of their appeal, watch for these companies to start cleaning up their act to attract more brand dollars. Ask.fm has already committed to taking steps to increase safety on the service and recently launched a button to report bullying. In time, Ask.fm and other mobile apps could prove themselves a reliable and safe place for reputable brands, but that time is not now.

Safe socializing, everyone! 

Teens Are Not Leaving Facebook

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Kids are leaving Facebook. You know it, your kids know it, marketers know it. So, let me present all of the evidence as of September 2013 that teens are abandoning Facebook:


That was it. There is no evidence. None.

Source: Pew Internet

This may change in the future, but to date there has not been a shred of objective evidence of this frequently repeated and well-known "fact." The latest data from Pew, based on Q3 2012 research, demonstrates that the percentage of teens using Facebook has been steady, increasing from 93% to 94% in the year prior. In addition, Facebook was the social network used most often by 81% of the teens active in social media (and no other social network was even in the double digits!)

While this year's research from firms like Pew, Nielsen and Forrester could furnish the evidence many people anticipate, Facebook has warned us not to expect any significant shifts in teen behavior this year. Mark Zuckerberg, on the company's second quarter earnings call, flatly rejected the assertion that teens are abandoning the platform: "Based on our data, that just isn't true." Zuckerberg added that activity for teens has been steady over the past year and a half, not including Instagram.

If there is no evidence of teens flowing off Facebook, why do so many take this as fact? Every blog post and article on this topic seems to cite one or both of two clues:

• A Pew Research report: In its May 2013 report, "Teens, Social Media, and Privacy," Pew Research Center noted that teens "have waning enthusiasm for Facebook, disliking the increasing adult presence, people sharing excessively, and stressful 'drama.'" Case closed, or is it? "Waning enthusiasm" is hardly the same as abandonment--people have not been "enthused" about email since around 2002, but how many have eliminated their inbox? We may find using email to be more of a chore than an exercise in fun, but we still do it because email is essential (and today, so is Facebook).
   
  Another interesting thing about that quote from the Pew Research report is that the excerpt above is not the complete sentence from the publication. Most people do not seem to read or share the second part of the sentence, which is, "...but they keep using it because participation is an important part of overall teenage socializing." In fact, the Pew report has been cited in so many "teens are fleeing Facebook" blog posts that the research organization clarified its data on its own blog, unambiguously titled, "Teens Haven't Abandoned Facebook (Yet)."
   
• 
  Anecdotal evidence: "My child/niece/nephew tells me they have stopped using Facebook." I swear I hear this at least once a week, but this is not evidence; it is an observation, and not a very reliable one at that. Neither is it substantiation of a Facebook exodus when a single teen writes an article on Mashable entitled, "I'm 13 and None of My Friends Use Facebook." It goes a long way to show people's bias about Facebook's future that this article was shared 1350% more often than the Mashable post two days later, "I'm 15 and All My Friends Use Facebook." (I wonder if anyone has yet studied the relationship between cognitive dissonance and social sharing.)
  
  There are at least three reasons why children's anecdotal evidence might be less than reliable. First, teens (like everyone else) are poor observers of their own habits. Second, teens (like everyone else) are not eager to admit how much time they spend on Facebook, and this may lead them to under-report their Facebook usage. Finally--and hold on to your hats for this--teens lie. Some have learned how to use Facebook's lists to continue social networking away from the prying eyes of their parents, and they are fine encouraging adults to believe they have abandoned or reduced their use of the platform. To be honest, there is not hard evidence of this; Pew Research found that just 5% of teen Facebook users say they limit what they permit their parents to see. That said, I suspect this number is quite possibly under-reported and very likely to be growing. 

While there is little evidence to support the idea that kids are abandoning Facebook, that doesn't mean that teens' social and mobile behavior is not changing. Teens are broadening the tools they use for communications, and some of their options should give both marketers and parents concern. Tomorrow, we will explore the new breed of mobile communications services that are probably much more popular (and treacherous) than you think.  

Customer Experience Crisis: Will Facebook's User Experience Be Its Undoing?

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This is the final installment of my series on the customer experience crisis among some of today's most popular digital services. The series began with a review of studies on the importance of customer experience and then examined how Groupon and Yelp could and should be doing more to improve customer experience. (No one objected to my criticisms of Groupon, but my Yelp critique generated a few contrary opinions on Twitter.)

Today I will make my riskiest prediction: The world's largest and most popular website, Facebook, is nearing an important inflection point due to growing frustration about its user experience. If consumers do not soon see Facebook demonstrating as much care for users as for advertisers, Facebook's growth could stagnate and reverse. If that seems unlikely, just consider Myspace, which used to rule the social media world. Its leaders could have prevented the shift away from the platform, but once consumers began their migration, Myspace was powerless to recapture the trust and stem the bleeding.

photo credit: aaron_anderer via photopin cc

I know that predicting the demise of Facebook is about as unique as criticizing Miley Cyrus's VMA performance, but if you are a long-time reader of this blog, you may appreciate a shift in my opinion of Facebook's future. I have long criticized those who too-easily predict an exodus after each change of Facebook news feed or stumble on privacy; in fact, some have labeled me a Facebook apologist. Increasingly, however, I detect the seeds of trouble for Facebook, and I wonder if there might soon be some serious new competition for social networking dominance. 

The first piece of evidence is the oft-repeated claim that kids are leaving Facebook. I have my doubts that teens are abandoning the platform to the extent many believe (this will be the subject of my next blog post), but to me the more telling aspect is not the reports themselves but how quickly many want to believe this as gospel.

The eagerness with which the reports of a teen exodus have been welcomed is a situation that should give Facebook's leaders pause. There is a worrisome trend among existing Facebook users who seem hungry for any indication of the social network's decline. Brands can succeed even when large numbers of customers root for them to fail--just look at cable, mobile and airline companies--but those firms are in highly regulated industries with significant barriers to entry while Facebook is not. 

The promised but still largely undelivered new news feed

Facebook is on top now, but there are growing signs of serious discontent, both in terms of trust and user experience. Despite almost constant tinkering with the news feed, most users still complain about seeing stuff they don't want while missing the things they do. In addition, six months after Facebook announced a huge change to its news feed to make it more useful and less cluttered, almost no one I know has this new feature. The promise of a better experience that remains undelivered is doing nothing to improve the social network's reputation among those in the know. 

While improving the news feed is vital , there is no bigger threat to Facebook's user experience than brand advertising and promotion. Everyone complains about it, but more advertising is on its way. Facebook is readying a new video ad product that will autorun (thankfully without sound) inside of users' news feeds. 

photo credit: Lynn Friedman via photopin cc

Brand presence is likely to increase not just because of new ad products but also because of important changes Facebook has made to its promotion guidelines. In a move that will degrade the usability of the news feed and the value of the "like," Facebook now allows brands to run sweepstakes and contests that collect consumers' entries by having them message a page or like or comment on a post. This is not a change demanded by users (because no one signs on to Facebook hoping to see friends desperately trying to win sweepstakes); in the face of declining brand page PTAT (People Talking About This), Facebook has altered its policy to reward brands not for furnishing quality content but for cheap tricks to farm more likes and comments. 

Meanwhile, Facebook is giving little reason for critics of its laborious privacy tools to back off. As the New York Times noted just last week, "Facebook is also doing nothing to simplify its maze of privacy settings... Privacy controls are still buried in at least six different menus. To plunge down the rabbit hole, click on the little lock icon next to your name in the top-left column of your news feed page. You will find privacy settings in the tabs for Privacy, Timeline and Tagging, Blocking, Followers, Apps and Ads."

The declining customer experience on Facebook is not lost on the social network's users as privacy and advertising concerns continue to suppress customer satisfaction with Facebook. The 2013 ForeSee and American Customer Satisfaction Index, much like in prior years, revealed that Facebook has among the lowest customer satisfaction of any company in any industry. Over one in four respondents said advertising on Facebook interferes with their experience on the site, the highest among social networks, and when it comes to users’ confidence that their personal information is protected, Facebook earned scores of four out of 10 or lower at a rate double those of other social networks. Facebook's ACSI rating places it in the company of the lowest-rated firms, including Time Warner Cable, Comcast, United and US Airways.

Could concerns about privacy and advertiser access to data lead consumers to stop tying their web surfing activities to Facebook? As a method for signing into third-party sites, Facebook may still be king but its share is shrinking. In 2011, Gigya found that 62% of users identified Facebook as their preferred identity provider and 27% preferred Yahoo or Google. A year later, 52% preferred Facebook, while the portion choosing Yahoo or Google grew to 41%. 

Do I think that Facebook will fail in the next five years? No, much like email, which at one time was hip and exciting and then became dull but essential, I think Facebook will last. That doesn't mean, however, that Facebook can continue to command a growing share of advertisers dollars' or consumers' time. Trends have been great for Facebook for several years now, but they cannot continue unabated. If data from Nielsen, Pew, Forrester or others begins to validate teen abandonment or growing Facebook fatigue among all users, the party could quickly come to a stop. 

While Facebook deserves to reap the rewards of building and maintaining the most powerful communication platform in human history, there is an alternative for Facebook other than the single-minded reliance on advertising. The Web 1.0 period was not won by companies like Excite and Prodigy that relied primarily on ad revenue; it was won by companies such as Amazon, eBay, Ancestry.com, Netflix and others that furnished consumers with services for which they gladly pay. (Google is a notable exception, but it didn't merely trade eyeballs for ads--Google changed the face of advertising via search.)

photo credit: Telstar Logistics
via photopin cc

Even those providing high-volume, high-value online content like the NewYorkTimes.com are finding it hard to make a go with just advertising. The New York Times website is already making more money from subscriptions than advertising even though we are in the very early days of online subscriptions becoming a working business model.

Facebook could offer an ad-free subscription option--if every one of Facebook's 1.15 billion active users paid just $6.50 annually, Facebook could exceed the current flow of advertising dollars. Of course, not every user will pay, and Facebook is unlikely to alienate advertisers by offering an ad-free version (but Facebook, if you're listening, you can count on me for $29.95 a year for my ad-free version. You'd make in excess of 400% more revenue from my subscription than from serving ads to me!)

Even better than a subscription model, Facebook could embrace the largely untapped market for value-added services. Facebook made an attempt at this with Facebook Gifts, but while you can still send gift cards to Facebook friends, you no longer can send physical gifts. Some claim physical gifts didn't work because Facebook users don't want to send physical gifts to their virtual friends, but they are incorrect; physical gifts failed on Facebook because consumers found they could get better recommendations from throwing darts at a catalog than from Facebook. Had Facebook shown as much care and interest in helping people to discover truly interesting gifts for friends as they do helping advertisers discover prospects, the gift program could have been a value to users and a revenue driver for Facebook.

photo credit: Shockingly Tasty via photopin cc

This shift away from physical gifts is a lost opportunity for Facebook, and it does not stop there. One only needs to look at the growth of the sharing economy to see that Facebook could be increasing revenue by facilitating the peer-to-peer economy rather than supporting old-fashioned interruption advertising. Facebook led the world into the social era, but now the most interesting business models of the social era are succeeding with little to no support from Facebook. RelayRides, Airbnb, Lending Club and others are growing rapidly by giving consumers new ways to share and collectively consume goods and services, and the fact they can do this without tapping today's most popular social network is another warning sign for the future of Facebook.

Don't get me wrong, advertising has a place on Facebook, but the social network's total reliance on paid media threatens to undermine customer experience, loyalty and usage. I have long predicted that Facebook would be the Amazon of the Web 2.0 era--the company that stands the test of time--but Facebook still has a chance to snatch defeat from the jaws of victory. If it continues to place as much focus on increasing advertising revenues as on how to improve the customer experience, Facebook's future status update could be more "feeling sad " than "feeling happy ."

What do you think? Is Facebook secure? Do you and the people you know have concerns about Facebook's user experience, advertising or privacy? Your input would be much appreciated!

Customer Experience Crisis: Yelp is Riding High, but Could It Be the Next Myspace?

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Earlier this week, we explored the undeniable value of customer experience to the bottom line and studied how Groupon's mediocre user experience is causing lost usage and customers. Today it is Yelp's turn. Is this site's lack of innovation and troubled customer experience undermining Yelp's future? 

Pundit Peter Shankman is always good for a colorful observation (and a bit of self promotion). He has loudly predicted that Yelp will fail in the next two years, and Peter is putting his money where his mouth is with a public $5,000 bet for charity if Yelp is still operating on August 21, 2015. His reasoning is based on trust--people trust the opinions of friends and family rather than the complete strangers on Yelp, and Yelp has faced a series of accusations that the company suppresses positive reviews to extort businesses to buy premium services. 

Shankman will lose his bet (and I suspect he knows this--his $5,000 investment will do good for charity and be very cheap public relations for Shankman's new customer service consultancy, Shankman|Honig). I agree with Peter that Yelp is skating on increasingly thin ice, but it seem very unlikely Yelp could fail as quickly as Shankman predicts. It still is the number one rating service in the land, with others such as Google Local, Urbanspoon and Foursquare way, way behind. (Plus, unlike Groupon, which we studied yesterday, Yelp's revenue is trending upward, and the company came as close to breaking even last quarter as it ever has). 

photo credit: Josh Bancroft
via photopin cc

I agree trust is a huge issue for Yelp, but I see an even bigger problem (or perhaps it is just two sides of the same coin): User experience. Can you name a significant upgrade or feature Yelp has launched in recent years? Neither can I. The last major upgrade I can recall is Monocle, Yelp's augmented reality feature for smartphones, but that was more than three years ago and it is basically an unusable toy--something that looks cool but not a feature many use to locate a nearby business. 

The biggest issue that Yelp faces is that the service continues to offer completely undifferentiated and unpersonalized recommendations. You may love sushi, I may love Greek and our friend may adore burgers, but we all get the same results. Why? Yelp certainly knows what we love (and what we do not). Moreover, why can't we tell Yelp who we are dining with and find the restaurants that best suit all of our tastes? Plus, as Shankman notes, where is the value of our trusted social graph in the recommendations offered up by Yelp? Do you want to know what restaurant your friends love or do you care that a bunch of people unlike you recommend the Olive Garden for great Italian cuisine? 

Offering personalized services like these is vital for Yelp's future. If Yelp doesn't get it right, someone else will. While any competitive new ratings service will face an uphill battle against Yelp to get a critical mass of users and reviews, someone is going to do it right if Yelp does not. (Are you paying attention Google, or are you satisfied with the success of your social efforts to date?) 

To be fair, Yelp is showing no signs of weakening. The site continues to report growing traffic, and a recent survey conducted by Nielsen on Yelp's behalf demonstrated the company's firm hold of local discovery and advice. Nielsen found that an impressive 93% of people said their use of Yelp at least occasionally led to a local purchase. 

Yelp's Unique Monthly Visitors

There is no evidence Yelp is yet facing any serious competition, but that should not stop the company from doing more to enhance its customer experience. After all, in June 2006 Myspace surpassed Google as the most visited website in the US, but just 22 months later Facebook surpassed Myspace and never looked back. If voices like Shankman's grow louder, it will not take much for a more customer-focused service to reverse Yelp's momentum just as Facebook did to Myspace. 

As a word of caution to Yelp, I offer myself as an example of a seemingly loyal Yelp customer who could be quickly lost. I use Yelp a lot--at least once every week or two--and I have been a Yelp Elite since 2010. But my commitment is not to Yelp but to others who read my reviews and share their own. If a service comes along that offers better customer experience and more personalized ratings, I will gladly leave behind my 373 reviews to embrace something better. It is only a matter of time before a more innovative rating-and-review site gains attention, and if Yelp gets Myspaced, it will be its own fault. 

Do you agree? Do you share Peter's lack of trust in Yelp's platform?  Would you prefer more customized recommendations, as I do?  And do you see any risk to Yelp in the future? I'd welcome your comments and criticisms below. 

Customer Experience Crisis: Will Groupon Pay an Even Higher Price for Its Poor Customer Experience?

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Yesterday, I suggested that some of today's top digital and social services are at risk due to poor customer experience, and I shared recent data demonstrating why customer experience matters. Today, I want to explore one popular service that has missed the boat on customer experience from day one and seems intent on repeating the same mistake. How much longer will consumers wait as Groupon focuses on revenue growth and cost reduction rather than enhancing its customer experience? 

If you bought Groupon at the time of its November 2011 IPO, you have lost almost two-thirds of your money (and I have no tears for you, since it seemed wildly overvalued from the start, as I wrote in my June 2011 blog post, "How You Can Prepare for the Coming Social Media Bubble Burst.") The stock has been rising again in 2012, but not because Groupon's business is growing--third-quarter revenue was down from Q1 but operating costs decreased even more, leading to an improved bottom line. Still, Groupon has not seen an after-tax profit since the middle of last year.

The reason for Groupon's struggles should be evident to anyone who uses (or more likely used to use) Groupon. I recently attended a conference where the always-entertaining Gary Vaynerchuk asked the audience how many people used to open every Groupon email, and most hands went up; he then asked how many people pay any attention to their Groupon emails any longer, and perhaps 3% of the hands remained in the air. Why? As Gary says, "Groupon ruined their business by offering people things they do not want." 

I visited my Groupon page today, and despite the fact I have never claimed a Groupon Deal for or posted about spas, massages, botox or hair removal, these deals comprise a huge portion of my Groupon offers. Is it any wonder why I ignore my Groupon messages?

Where is the personalization and customization we have come to expect from other sites and services? Amazon lets me know about new books and music that I might love, Spotify Discover has introduced me to great new artists and American Express is leveraging customers' "spend graph" to match retailer deals to customer interests; by contrast; Groupon's discounts look no more relevant to me than those in a Sunday circular.

Apparently, I am not alone. Business Insider notes that "Groupon's so-called 'third-party' revenue, which measures its daily deal business, has peaked and now appears to be in a decline." And while Groupon.com's site traffic has been recovering after hitting a dip earlier this year, Compete says that the site's rank in terms of unique visitors has dropped from from #74 to #90 in the past year. These trends are not lost on others, of course; late last year, readers of the Silicon Valley Business Journal ranked Zynga and Groupon as the most likely companies to fail this year. The jury is still out on Zynga, but there is no question Groupon will still be with us into 2014; nevertheless, this survey is just one more piece of evidence of the waning enthusiasm for Groupon.

Groupon is dedicated to proving the naysayers wrong, but it seems to be repeating the same mistakes. Recently, Groupon deployed the most worthwhile new feature since it first launched, Groupon Reserve. The new service allows you to simultaneously make a reservation with a restaurant and get a discount, and best of all there is no voucher to print and present. I used it for the first time last weekend, and it worked pretty well (although at first the restaurant host said they do not use Groupon but later realized the discount was through Savored, a service Groupon acquired in 2012.) 

My gripe with Groupon Reserve is that the service fails to offer any of the best-of-breed features we have come to expect elsewhere: The site offers no way to sort or filter restaurant results, no method to add reservations to calendars and no buttons to share your savings (and thus promote Groupon Reserve) into social networks. It is as if Groupon launched this site in 2005 and has never seen Yelp, OpenTable, Eventbrite or thousands of other sites with far superior customer experience. 

Groupon is ailing and badly needs to hit a home run (or at least a triple), but the company is putting its great Reserve concept at a disadvantage due to poor digital customer experience. This is simply inexcusable on Groupon's part, particularly because some of these features are almost literally cut-and-paste operations using standard coding. I cannot imagine why a major site would choose to hamstring itself by attempting to debut a new program in 2013 without these sorts of obvious, essential and simple features. 

Will Groupon's stock performance continue upward, or will customer experience again be the company's Achilles' Heal? It would not take much for Groupon to bring Reserve up to par, and for now the company is enjoying the opportunity created by a lack of innovation at competitors such as Open Table and Yelp (which ironically is the subject of tomorrow's blog post on the customer experience crisis).

What say you? Are you paying as much attention or getting as much value from Groupon as in the past? Will it sink or swim in the coming year? Do you share my frustrations with the site's user experience? Please share your thoughts in the comments.
  

Customer Experience Crisis: Waning Customer Experience Will Bring Wave of Change

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If there’s one reason we have done better than of our peers in the Internet space over the last six years, it is because we have focused like a laser on customer experience, and that really does matter, I think, in any business. It certainly matters online, where word of mouth is so very, very powerful.
                                                         Jeff Bezos

photo credit: niallkennedy via photopin cc

This quote from Amazon founder and CEO Jeff Bezos represents a sort of "north star" for me--user experience is a guiding principle upon which I set my professional compass. Give people what they want and make it easy, and you succeed. At least, that's the theory, but in the last few years, I have come to feel my compass does not always align to the actions of today's most popular online services. Some have lost the customer experience religion, and I predict a few of our top digital services may soon have "come to Jesus moments" with their increasingly annoyed and neglected customer bases.

The user experience of many top sites and services has become mediocre, and this is happening at a time when the tools of competition have never been more available or less expensive. The growth of social and mobile technology, advent of wearable tech, arrival of the sharing economy, rise of cloud services and ever-lowering cost of developing scalable digital products will bring new and better alternatives. I have been lucky to attend many of the New York Tech Meetups in the past year, and the creativity, power and polish of these tiny startups demonstrate that there are many capable Davids looking to defeat today's overly confident Goliaths.

I predict a wave of change in the next several years. Either the functionality and usability of the sites and tools we all love and use will evolve rapidly, or consumers will soon adopt new sites and tools to love and use. Some will argue the companies I cite as examples have grown too big and have too much traffic and too many users to fail, and to them I say this: Monster.com, Myspace, Goecities, Prodigy, AOL and Excite. This last site is an excellent example, because many people today would be hard pressed to recall Excite, but the company reached a peak market valuation of $35 billion in 1999, more than LinkedIn's or Yahoo's market cap today. No one is safe--even the most popular online services can lose loyal customers to competitors offering better customer experience.

It is hard to understand why some businesses need to relearn the importance of customer experience when the lessons are still so fresh. Bezos' observation tells the story of why some online firms succeeded and others failed, both in the halcyon days of the dot-com boom and the distressing years following the bust. Prodigy and Excite, with their pages full of blinking and distracting ads, are gone, while Google's clean, white interface lives on. A thousand e-tailers went bust, but the transparent consumer ratings and one-click purchasing of Amazon earns ever more customers and retail dollars.

But even if one is not familiar with recent history, the importance of customer experience is evidenced by a constant barrage of studies and surveys:

• The Temkin Group studied the attitudes of 10,000 US consumers and found that "Customer experience leaders have more than a 16 percentage point advantage over customer experience laggards in consumers’ willingness to buy more, their reluctance to switch business away, and their likelihood to recommend."
    
• In the Business Impact of Customer Experience, Forrester estimates that moving from below-average customer experience to above average would yield more than $3 billion of annual revenue benefit for wireless carriers, more than $1 billion for hotels, $262 million for insurers and $227 million for retailers. Forrester further finds that brands are not performing well in this regard--its 2013 Customer Experience Index found that 61% of brands rank okay, poor or very poor in customer experience compared to just 8% that rank excellent.
    
• The 2013 Edelman Trust Barometer found that consumers value companies that "listen to customer needs and feedback"--this attribute ranked a mere one percentage point behind "quality products and services," and the gap between consumer expectations and company performance was much larger.
    
• According to the 2011 Customer Experience Impact (CEI) Report, commissioned by RightNow and conducted by Harris Interactive, 86% of buyers will pay more for a better customer experience, but only 1% of customers feel that vendors consistently meet their expectations. The same study found that 89% of consumers began doing business with a competitor following a poor customer experience and 79% of consumers who shared complaints about poor customer experience online had their complaints ignored.
  
• Accenture recently found that the performance of digital orientation in high-growth companies is 21% greater than in negative sales growth companies. CMOs in high-growth companies have found a less turbulent path by working across the organization to infuse a digital focus in all business processes and functions and improving the digital customer experience.
    
• Avaya released a 2013 study that found 63% of consumers say they would be extremely likely to continue spending money as a result of an exceptional customer experience, while almost half are extremely likely to stop spending money with companies as a result of a bad customer experience.

It is obvious customer experience is paramount, but someone needs to remind today's most popular web sites and digital services. I think three services are on the bubble in the next three to five years, and the rest of this week I will explore how Groupon, Yelp and Facebook may be facing customer experience crises that could hurt their bottom line and limit future growth potential.

These three are hardly alone--in recent months I've had frustrating experiences with the web sites and customer service processes with a variety of firms, from giants like Sprint and Comcast to tiny upstarts like Pebble. Still, Groupon, Yelp and Facebook are good companies to focus on because all have risen quickly and have much to lose if the companies do not rapidly improve customer experience.

In the next few days, I hope the lessons learned about these three companies may provide you with some guidance and ideas to implement at your own organizations. As always, I welcome your input about the companies you see as being at risk due to disappointing customer experience and the ways you feel customer experience will affect business in the coming years.