Tech Check: Is Facial Recognition the Next Frontier?

Affectiva, an MIT-linked SaaS startup, uses technology to observe and analyze physical responses to determine emotional states. Positioned for media testing, Affectiva’s Affdex product uses webcams and facial recognition technology to test advertising spots for large clients. Gone are expensive and inconvenient test labs agencies use to evaluate TV ads—participants just watch from their computers while Affdex records their reactions. The company uses sophisticated algorithms to interpret expressions and head movements, ascertaining emotions and their level of intensity in real-time.

Sounds like Madison Avenue marketing hooey, right? It turns out greater emotional response leads to better business results, and the science backs it up. In a 6-week case study, AOL used Affective technology to test a new online media advertising format (IAB portrait) versus traditional online advertising formats. The results were impressive in how the audience reacted:

·         Portrait format attracted attention 35 percent faster than competing formats, created 81 percent more attention, and 95 percent more fixation time

·         Live media metrics showed interaction rates rose 4.5x – 7x

·         Facial recognition analysis showed Portrait format lowered negative emotions by almost 40 percent, with less user frustration, and fewer frowns

And in business results:

·         Users indicated they would visit the Brand site/Facebook Fan page 49 percent more often

·         Users indicated they would recommend the brand or product 46 percent more often

·         Purchase intent rose 263 percent

What does this have to do with cloud computing? Researchers have proven emotions are a primary driver in customer loyalty and retention, so new emotional response measurement approaches may be critically important. Many cloud computing companies already collect information on what customers think (via satisfaction surveys), what they say (via text analysis on social media sites), and how they behave (via application monitoring tools), so understanding how they feel may not be far away. All of these attributes, especially used in combination, can create powerful customer churn prediction models. When lowering churn even a few percentage points dramatically increases customer lifetime value and per-customer profitability, understanding and addressing the causes of churn depends on good measurements.

A practical application may be using Affdex as a training tool with willing new customers enabling their webcams during the onboarding process. Imagine recording new customer orientation sessions with Customer Success Managers to provide feedback on how to improve their critical first customer interactions (see “What Starts Right, Stays Right”). Managers and staff could then optimize customer engagement and ensure they begin the relationship on a very positive note.

What Starts Right, Stays Right

More cloud computing organizations are “onboarding,” implementing processes to ensure customers experience a smooth transition to their technology product or managed services right after the sale. Managers intuitively recognize the need to begin new customer relationships on a positive note.

Their instincts are well-founded. Research shows creating and maintaining positive customer experiences, especially at the very beginning, pays dividends. Ruth Bolton studied customer satisfaction and churn in the cellular phone industry¹ and found:

·         Negative experiences in the beginning are a major factor in short-term customer exits

·         The longer people have satisfactory experiences, the less likely they are to churn

·         Customers who have many months of positive experiences weigh cumulative satisfaction more heavily than any occasional, negative experiences that occur later

Researcher Ho Huy Tuu confirmed that specific factors affect the satisfaction–loyalty relationship in a combined and interactive way: ²

·         Involvement: an individual’s long-term evaluation of importance and significance consuming a product

·         Ambivalence: an individual’s emotions towards consuming a product (Tuu proved ambivalence was negatively correlated, i.e. Caring is the factor in satisfaction)

·         Knowledge: a person’s evaluation of their familiarity, expertise performing a task, and consumption of a product in a specific transaction

·         Certainty: the consumer’s confidence evaluating their satisfaction with a product

Tuu also verified that actively mitigating customer’s perception of risk is essential. Fear, he demonstrated, trumps positive loyalty gained from high satisfaction.

What’s more, along with Svein Ottar Olsen,³ Tuu confirmed the effects between satisfaction and loyalty are nonlinear—at high levels, small increases in satisfaction have a disproportionate impact on customer loyalty. That means there’s no point of “diminishing returns” when it comes to continuous improvement; above certain levels, loyalty impact from customer satisfaction multiplies. They suggested offering ‘delight’ or ‘exceeding expectations’ explains these nonlinear loyalty behavior effects.  

Research shows cloud computing companies are on the right track; onboarding is indeed an important strategy for reducing customer churn. An effective process engages the customer, increases their knowledge, and gives customers reasons to care about the product and the people behind it. Orientation should not simply be a “data dump” of technologies and product features—feelings matter! Companies should pay close attention to allaying customer fears, such as emphasizing data security, privacy, system reliability, and responsive support. To put the customer experience into orbit, companies should surprise customers, showing them extra benefits in exceptionally positive, personal interactions. First impressions linger, and maintaining and improving service increases customer certainty, reducing the potential for customer churn down the road.  

Footnotes:

1.       Bolton, Ruth. “A Dynamic Model of the Duration of the Customers’ Relationship with a Continuous Service Provider: The Role of Satisfaction.” Marketing Science, Volume 17, No. 1, 1998

2.       Tuu, Ho Huy. “Moderators in the Relationship between Satisfaction and Loyalty of Vietnamese Fish Product Consumers,” a thesis for the degree of philosophiae doctor, University of Tromsø, February 2011.

3.       Tuu, Ho Huy, and  Olsen, Svein Ottar. “Nonlinear Effects between Satisfaction and Loyalty: An Empirical Study of Different Conceptual Relationships,” Journal of Targeting, Measurement and Analysis for Marketing Vol. 18, 3/4, 239–251. 2010 Macmillan Publishers Ltd. 0967-3237

Three Essential Elements for Successful Change

All organizations face periodic turning points due to sagging profits, aggressive competitors, disruptive technologies, or beckoning markets. Yet, if leaders do not enact changes swiftly, they can watch their enterprises spiral downward.

Change is never easy, and surprisingly, strategy itself is not the problem. According to Fortune, approximately 70% of CEOs who lost their jobs did so not because they had a bad plan, but because they failed to execute. Figuring out what to do is relatively easy, but few organizations are good at the hard stuff—following through. When change is complex and so much hinges on the outcome, CEOs can’t afford missteps.

There are three essential elements to executing successful change (in this order):

1.    The CEO’s total personal commitment. It all starts in the corner office. CEOs must actively participate, delegating tasks but not their ultimate responsibility for success. Larry Bossidy, former CEO of AlliedSignal and co-author of Execution: The Discipline of Getting Things Done says, “The leader has to be engaged personally and deeply in the business… and only the leader can make execution happen, through his or her deep personal involvement in the substance and even the details of execution.” The chief executive must do whatever it takes—make unpopular decisions, terminate non-performing managers, even overcome personal shortcomings—to push forward and get results. Jim Collins, author of Good to Great, says top leaders who successfully transformed their organizations demonstrated a quiet, but “fierce resolve to do whatever was needed to be done.” Without this level of personal commitment on the part of the CEO, few enterprise-wide initiatives stand a chance.

2.    Emotional engagement of the right people in the right numbers. CEOs can’t do it alone. They must build solid coalitions of executives with the right skills, knowledge, and leadership to affect change. John Kotter, a leading expert and author of Leading Change says the first step is to mobilize people by creating a sense of urgency. His secret ingredient? Appeal to emotions rather than logic. People must personally experience a truth, feel it rather than think about it, to want to change. Kotter studied hundreds of initiatives and discovered that the “see-feel-change” progression was far more effective than the usual “analyze-think-change.” By forming the right, emotionally motivated team, the senior leader creates a juggernaut with the capabilities, size, and momentum to overcome obstacles.

3.    A systematic approach. Organizational transformation always involves tackling tough, far-ranging issues. For example, a defense company re-purposing itself to capitalize on growing commercial markets requires a major shift that affects people, systems, and processes in every department. When an organization deals with challenges haphazardly or fails to create early wins, the change initiative quickly loses steam. However, a project replete with good analysis, prioritization, planning, investment, coordination, communication, deployment, and review becomes ripe for success. The real trick is achieving balance; organizations must limit turmoil and remain healthy while in transition. Those adept at execution use strategic management systems to incorporate enterprise-wide initiatives into day-to-day operations, minimizing disruptions and protecting their bottom line throughout. These managers skillfully harmonize their strategic planning, scorecards, product and process improvements, and performance evaluation systems to balance both short-term and long-term objectives.

Worse than a waste of time, change initiatives devoid of these three essential elements can cost companies progress, revenue, and profit. In today’s world, failing to adapt and execute change can quickly put companies in decline. And, as Fortune points out, that makes CEO’s lose their livelihoods.