July 26, 2005

More Info May Not Be More Knowledge

By Evan Schuman, Ziff Davis Internet

Opinion: Customers today have access to more information than ever before, but is it credible? The CIO is left to sort out the mess.

In the Information Age that we're in, quality of information trumps quantity every time. And for CIOs, that's good news.

But there's a big piece of bad news, too. The flood of information at the command of customers is both good and bad, and many customers—especially consumers—rarely can tell the difference.

Consider a consumer who wants to purchase a new toaster oven.

A visit to, for example, Amazon.com, supplies lots of brands and models to choose from. But those options are accompanied by unofficial comments—pro and con—ostensibly from other consumers.

Those comments can be helpful, when consumers describe what the products can and can't do and whether or not they are happy. This would, at first glance, seem to be a good thing.

But are the identities of those making the comments verified in any way?

How do know we that the person who said the GE product was "excellent except that it got a little too hot on the outside" was not in reality a clever GE salesperson who knew that a dash of criticism would make the praise far more credible?

It's somewhat of an academic discussion, because the reality is that consumers and other customers now have access to this type of information, and that's not likely to change any time soon. Traditional advertising still lives, but viral marketing is gaining strength.

I bring this up because CIO Insight recently did a survey of CIOs and found that Web impressions represented the overwhelming majority of contacts with customers, representing some 84 percent of companies with $1 billion or more in annual revenue, 86 percent of those with revenues between $100 million and $999 million, and a staggering 92 percent for companies with less than $100 million in revenue, which is where the bulk of U.S. companies sit.

Even if we limit those Web contacts to the CIO's own site—which this survey did—more and more sites are providing external links, search engines that go beyond the site and areas for site visitors to make public comments.

So it's not as though any company is fully control of the content on its own sites, let alone any site in cyberspace that feels like commenting on the company's products or services. (By the way, does anyone use Usenet Newsgroups for purchase research anymore? That's not rhetorical. If anyone still does, I'd love to hear from you at Evan_Schuman@ziffdavis.com.)

But even more alarming was this scary statistic: Most of the CIOs surveyed (57 percent) said they did nothave regular contact with top customers.

The reason that stat is so scary is that it questions so many of the other assumptions and answers in the survey. For example, the CIOs were presented with 10 problem areas (in addition to "other,") giving 33 possible responses (11 problem areas and three company sizes). The areas were: billing/account problems; product/service quality; difficulty in reaching a real person to discuss a problem; dissatisfaction with call center representatives; hard-to-use Web sites; poor inventory management (running out of stock); excessive marketing (sometimes, sarcasm isn't necessary); identity theft/fraud; difficulty returning merchandise; and invasion of privacy.

Of the 290 CIOs that replied, none said that any of those areas had an adverse impact on customer satisfaction with their companies, other than product/service quality, and then only for companies in the $100 million to $999 million range, and, even then, only 53 percent of those CIOs saw it as a factor.

In other words, 78 percent of the CIOs for companies with less than $100 million did not see product/service quality issues as having a negative impact on customer satisfaction. Some 78 percent of the CIOs for midsized companies thought "hard-to-use Web sites" were not a problem and 83 percent of CIOs for midsized companies did not consider "dissatisfaction with call center representatives" to have any adverse impact.

Now you see why it's alarming that 57 percent of CIOs aren't having regular contact with top customers. Do these CIOs' companies truly not have problems in these areas, or are the CIOs—armed with insufficient customer contacts and inadequate CRM (customer relationship management) analysis—operating on bad information passed up through the ranks?

Here's another survey result that troubled me. The question: What is the primary reason your company is investing in self-service technologies? The majority (75 percent in smaller firms, but clear majorities in all categories) said it's to improve service quality, and very few (25 percent of those smaller firms) said it's to save money.

Of those CIOs who said they were indeed doing it to improve service, an overwhelming majority (85 percent) said they were not seeing a customer backlash against self-service.

Is it that their customers are happy about the transition—and are truly seeing faster and better service by doing it themselves—or is it that they were not seeing the backlash.

That's truly the problem with insufficient customer contact and CRM analysis: Just like a consumer debating whether to trust an anonymous online review, the CIO is never going to be sure.