Study: Replying to Customer Reviews Results in Better Ratings

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hbr staff/john swope/life/Getty Images

Every now and then, firms make mistakes that leave their customers unsatisfied: a restaurant misplaces an order, a hotel’s air conditioning breaks down, or a dry cleaner damages a garment. With increasing frequency, disappointed customers share these negative experiences by writing online reviews, and many potential customers take these reviews into account when making choices about which firms to frequent. Because of this, even small service failures can have a lasting negative impact on a firm’s reputation — and financial performance.

In the age of consumer reviews and digital word-of-mouth, how can a firm participate in shaping its online reputation? There are standard service recovery strategies, such as offering perks and discounts to disappointed customers. Many managers have also started publicly responding to consumer reviews as a way to apologize and outline steps the firm has taken to avoid future service failures. Review platforms claim that

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Study: Replying to Customer Reviews Results in Better Ratings

feb18-14-tlp918866-john-swope-life.jpg
hbr staff/john swope/life/Getty Images

Every now and then, firms make mistakes that leave their customers unsatisfied: a restaurant misplaces an order, a hotel’s air conditioning breaks down, or a dry cleaner damages a garment. With increasing frequency, disappointed customers share these negative experiences by writing online reviews, and many potential customers take these reviews into account when making choices about which firms to frequent. Because of this, even small service failures can have a lasting negative impact on a firm’s reputation — and financial performance.

In the age of consumer reviews and digital word-of-mouth, how can a firm participate in shaping its online reputation? There are standard service recovery strategies, such as offering perks and discounts to disappointed customers. Many managers have also started publicly responding to consumer reviews as a way to apologize and outline steps the firm has taken to avoid future service failures. Review platforms claim that

Continue reading "Study: Replying to Customer Reviews Results in Better Ratings"

Why Every Company Should Consider Creating a “Cyber No-Fly List”

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Luerat Satichob/Getty Images

We’ve all heard of the No-Fly List. Managed by the FBI’s Terrorist Screening Center, the list bans people on it from boarding commercial aircraft within, into, or out of the United States. The No-Fly List is only one tactic that the U.S. uses in its fight against terrorism, but since its inception there haven’t been any plane-based attacks within U.S. borders. Although the list is certainly not perfect — it has been criticized for profiling and false positives, among other things — its effectiveness makes this type of intelligence-based defense worthy of consideration by all organizations that are regularly targeted by cyberthreats.

The Transportation Security Administration’s machines, checkpoints, and rules are analogous to many of the security devices that enterprises use, which include network monitoring tools, firewalls, and endpoint management systems. Like air travel, enterprise networks play host to millions of “passengers” each day, in

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Can Anyone Stop Amazon from Winning the Industrial Internet?

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Alfred Eisenstaedt/Hayon Thapaliya/Getty Images

Just the announcement that Jeff Bezos, Warren Buffett, and Jaime Dimon will be entering the health care space has sent shock waves for industry incumbents such as CVS, Cigna, and UnitedHealth. It also puts a fundamental question back on the agendas of CEOs in other industries: Will software eat the world, as Marc Andreessen famously quipped? Is this a warning shot that signals that other legacy industrial companies, such as Ford, Deere, and Rolls Royce are also at increased risk of being disrupted?

To start to answer that question, let’s tally up the score. There are three types of products today. Digital natives (Amazon, Google, Facebook, Microsoft, IBM) have gained competitive advantage in the first two, and the jury is still out on the third:

Data Can Enhance Creative Projects — Just Look at Netflix

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Neasden Control Centre for hbr

Nearly five years ago, a show that followed the lives of inmates in a women’s prison shook up television. Orange Is the New Black became an unexpected hit, helping to put Netflix on the map as a creator of innovative original entertainment. The show pushed boundaries with its dark humor and diverse cast, becoming Netflix’s most-watched original series. Uzo Aduba has won two Emmys for her nuanced, empathetic portrayal of a black lesbian woman struggling with mental illness, a character rarely seen on mainstream television.

Orange Is the New Black isn’t just great television — it’s also an example of data-driven creativity in action. With the recent explosion of shows produced by Silicon Valley companies like Amazon, Hulu, and Netflix comes a fear that entertainment will increasingly be shaped by analysts crunching numbers rather than creatives following their artistic vision. Five years in, Netflix’s foray into original

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Research: How Customers Decide Whether to Buy from Your Website

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Caroline Stirling/Getty Images

Sally’s finger hovered over the “Purchase” button. After hours of online sleuthing, she was pretty sure the green chair would complete her living room. It was the style and color she wanted, home delivery was guaranteed within three days, she had money in the bank to pay for it, and both the website and this particular chair appeared to be highly rated by customers. But Sally hesitated. Maybe she would take one more look at the local furniture outlet…

This fictional example is all too common. Global e-commerce sales exceeded $2 trillion in 2017, and are on pace to more than double by 2021. Yet average online conversion rates have remained doggedly low: Fewer than 4% of consumers arriving from desktop browsers buy, and the number is lower still for tablet and smartphone users (3% and 1%, respectively). These are a far cry from offline retail conversion

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“Customer First” Healthcare

The subject of the “consumerization of healthcare” has been around for many years. Most frequently people use this phrase in association with personal technology devices (heart-monitors, exercise accessories, sleep monitors, etc) that allow consumers to take direct control of their health information. There is however, a more important trend that relates alternatively to the consumerization of the “business” of healthcare. While other industries often speak of being “customer centric” or “putting the customer first,” the U.S. healthcare system rarely thinks of the patient as a customer. One could go even farther, and suggest that the U.S. healthcare market is the least customer centric of any customer service industry.

David Goldhill, in his enlightening book Catastrophic Care, declared:

“…a guiding principle of any reform should be to put the consumer, not the insurer or the government, at the center of the system. I believe if the government took on the goal of better supporting consumers-by bringing greater transparency and competition to the health-care industry, and by directly subsidizing those who can’t afford care-we’d find that consumers could buy much more of their care directly than we might initially think, and that over time we’d see better care and better service, at lower cost, as a result.”

David makes a powerful assertion — allowing the patient to rise to the forefront and to be truly be seen as a customer — will lead to not only more satisfied patients, but patients with better medical results and much lower costs. This would be a remarkable three-way victory. The good news is we are already headed down this path. The combination of new technologies, data availability, information transparency, shifts in insurance coverage, regulatory reform, and consumer frustration has set the stage for a new era of healthcare service in the U.S. where the patient truly comes first. This powerful trend will gain momentum as it builds, will reshape the current landscape, and will result in the launch of many new and exciting companies.

One overt sign of a lack of traditional market forces is any industry where basic customer service is not a requirement to stay in business. If you asked 100 people to name a place where you frequently wait, even when you are on time for your appointment, how many would say the doctor’s office? The consumer has come to accept waiting at the doctor. We are so numb to the pain, that we rarely object or complain, and the doctor’s indifference to the consumer’s time is so common and widespread, that it is a frequent meme in jokes and cartoons.
Other U.S. industries, once subject to far less competition, have been forced by the market

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What Small Businesses Stand to Lose in a Net Neutrality Rollback

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Jorg Greuel/Getty Images

Deep in the golden corn fields of Iowa, technology is transforming life on the farm. For decades, the production of corn has been led by family-based businesses who operate their farms with a time-tested mix of traditional agriculture tools. But now many of them have added something new to their arsenal: a mobile app called FarmLogs.

FarmLogs is a simple way for a family farm to move its fields from the pre-internet age to the cutting edge. Farmers who used to trudge down long rows of cornstalk are now using FarmLogs’ satellite imagery and algorithms to turn raw agricultural data into powerful insights. Instead of jotting down notes about plant dates, weather conditions, soil nutrients, and crop yields, farmers are crunching big data sets to better forecast profits, track expenses, and schedule operations.

These “connected farms” are not just making life easier for those who run them,

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How Digital Tools and Behavioral Economics Will Save Retirement

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ryccio/Getty Images

In my work as a behavioral economist, I’ve thought a lot about how nudges can drive lasting behavior change. In the domain of retirement savings, Nobel laureate Richard Thaler and I devised a program called Save More Tomorrow back in the mid-1990s that used nudges to help people make better decisions about their long-term financial future. That program invites employees to gradually increase their savings rate over time, and it has been a success: according to my latest estimates, it has boosted the savings rates of as many as 15 million Americans.

Unfortunately, it took us 20 years to help that many people. The slow pace of this process has led me to become increasingly interested in digital nudging, which seeks to identify online designs that help people make smarter choices. The advantages of digital nudging are two-fold. First, the digital space allows us to conduct research much faster, as

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The Ezra Klein Show: VC Bill Gurley on Transforming Health Care

In November of 2015, I posted a tweet that declared Benchmark was interested in discovering Internet healthcare investments. Our firm has had the good fortune to invest in many two-sided networks that used information aggregation, supplier aggregation, and user generated content to attract and inform consumers and resultantly disrupt and change different industries. Examples of such companies include Yelp, OpenTable, GrubHub, 1stDibs, DogVacay/Rover, Zillow, and Uber. It only seemed logical to us that the same opportunity should exist in healthcare. Most people are aware that healthcare spending in the U.S. has risen to 17-18% of GDP and is grossly out of line with other comparable nations. Additionally, all of us that have been consumers of the U.S. system are blindingly aware that numerous inefficiencies exist in the system. Simply put, there is amble room for improvement. So if Internet and mobile technologies can be used to change real estate or transportation, why not healthcare?

Over the next two years, I looked at many healthcare IT investment opportunities – I went “all in.” It’s worth noting that our primary focus was on technologies that aided and improved primary care, which is about half of the U.S. market in terms of revenue dollars (there is no question that digital tools will successfully impact specific acute diseases/disorders, but it’s our intuition these are best left to 100% focused HC investors). At first, this deep dive proved frustrating. The more we learned, the more we realized how much we did not really understand. The U.S. healthcare system is confusing and complex. Eventually, however, we gained our footing and developed a mental model for the industry and a framework for where opportunities do exist. We also discovered what we believe is a large and investible trend/theme. In May of this year, Ezra Klien, who is remarkably informed and intelligent on the topic of healthcare, was kind enough to include me on his podcast to discuss and debate my learnings. That podcast is included here along with a transcript.

 

 

Ezra Klein:  Hello and welcome to the Ezra Klein Show, a podcast on Vox Media Podcast Network. I am Ezra Klein and my guest this week is Bill Gurley. Bill is a general partner at Benchmark, one of Silicon Valley’s really legendary venture capital firms. He is one of Silicon Valley’s legendary venture capitalists. He was named the venture capitalist of the year in 2016 at the TechCrunch’s annual Crunchy awards. He’s been an early investor in Grubhub, OpenTable,Uber, and Zillow and all kinds of things. A very, very smart guy, a very thoughtful guy. We’ve been talking recently because he’s been thinking a lot about healthcare.

They’ve recently made Continue reading "The Ezra Klein Show: VC Bill Gurley on Transforming Health Care"

How Consumer Brands Can Connect with Customers in a Changing Retail Landscape

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When news broke earlier this year about Amazon’s courtship of some of the world’s biggest consumer packaged goods (CPG) brands, it touched off a wave of speculation. Was the e-commerce giant engaged in a long game to alter the relationships between consumer goods makers and their brick-and-mortar retail partners? However it plays out, Amazon’s outreach exposed a digital divide in the consumer products world. On one side is the growing interest of brands in direct-to-consumer (D2C) models. On the other side are persistent worries about conflict — not just with traditional distribution channels but also with retailers carrying the brand. To bridge this gap, we’ve identified seven tactics that pioneering brands have used to arrive at an effective digital strategy: Understand how digital serves different consumer segments. Brands can deepen engagement by bringing people together for shared experiences. Kimberly-Clark, for example, specifically designed its Huggies rewards club to attract and educate new
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Book: The Red Web: The Struggle Between Russia’s Digital Dictators and the New Online Revolutionaries

The Red Web: The Struggle Between Russia’s Digital Dictators and the New Online Revolutionaries was one of two books I read this weekend (the other was Brain on Fire: My Month of Madness). It was outstanding. I made it the August book club book for my dad and my brother. And then, this morning, I woke up to the following headlines. This shouldn’t be a surprise to anyone who is paying attention. There is now a long history of governments trying to control the Internet. One approach over government is censoring the Internet; another is weaponizing it. The Red Web covers Russia’s history around the Internet starting during the Cold War with a focus on the last twenty years. While Russia had a slow start, the Internet played a big
Continue reading "Book: The Red Web: The Struggle Between Russia’s Digital Dictators and the New Online Revolutionaries"

Book: The Red Web: The Struggle Between Russia’s Digital Dictators and the New Online Revolutionaries

The Red Web: The Struggle Between Russia’s Digital Dictators and the New Online Revolutionaries was one of two books I read this weekend (the other was Brain on Fire: My Month of Madness). It was outstanding. I made it the August book club book for my dad and my brother. And then, this morning, I woke up to the following headlines. This shouldn’t be a surprise to anyone who is paying attention. There is now a long history of governments trying to control the Internet. One approach over government is censoring the Internet; another is weaponizing it. The Red Web covers Russia’s history around the Internet starting during the Cold War with a focus on the last twenty years. While Russia had a slow start, the Internet played a big
Continue reading "Book: The Red Web: The Struggle Between Russia’s Digital Dictators and the New Online Revolutionaries"

How Retail Can Thrive in a World Without Stores

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Kenneth Andersson for HBR
Historically, shopping has been a sensory experience. Store associates served as personal shoppers, helping customers pick out items. Shoppers gauged quality by the look and feel of a product. They asked for sales associates’ opinions when they tried on clothes. It was as much an emotional experience as it was a physical, tactile one. That traditional “personal touch” shopping experience is hard to replicate online. As more companies struggle to find their niche with the modern consumer, they’re turning to new technologies to recreate this sensory experience. What’s emerging is what I call the “StoreHouse” — a hybrid model that merges the physical benefits of a real-world store with the convenience of home. To embrace this market shift, retailers will need to experiment with a range of technologies and strategies across marketing, supply chain, and merchandising. Here’s how some brands are already doing this:

Making the bedroom the
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The Next Battle in Antitrust Will Be About Whether One Company Knows Everything About You

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Vincent Tsui for HBR
Google’s battle with the European Union has come to a head. On June 27 this year the EU fined Google $2.7 billion for alleged monopolistic or unfair trade practices. Google has appealed and is now preparing its defense. The EU’s case asserts, among other things, that Google unfairly exploits its dominance in search engines and smartphone operating systems to restrict competition in shopping services, ad placement services, and smartphone app store markets. In an earlier article, two of us (Bala and Srinivasa) provided a context to understand the respective argument of the EU and Google using the lens of digital-age markets. We highlighted how antitrust, the underpinnings of which are based on industrial-age economic theories, needs new thinking in the digital age to ensure that antitrust policies continue to remain effective guardians of consumer welfare without inadvertently impeding economic progress. But as important as
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Why Companies Shouldn’t Try to Hack Their Hackers

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During a recent cybersecurity competition, teams of students conducting a mock exercise unintentionally caused the U.S. to start a (fake) war. The students were given a variety of options, including diplomatic ones, for responding to a cyberattack by China. The majority of them took an aggressive approach, known as “hack back,” with disastrous consequences. The mock exercise shows how tempting it is to launch a counterstrike in response to a cyberattack — and the potential for significant unintended consequences. As the CEO of a publicly traded security company, I would like to urge businesses and individuals to beware those very same dangers. In the United States, the Computer Fraud and Abuse Act (CFAA) prohibits private parties from accessing or damaging computer systems, even if they’re being used to attack you or your business. But legislation in Congress would change that, giving private-sector businesses and individuals the right to strike back and
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