Excerpt smart customers

WHY
ONLY INTELLIGENT
COMPANIES WILL
MICHAEL HINSHAW BRUCE KASANOFF
“Read it and heed it, folks, because it just doesn’t
come any more direct or compelling than this!”
— Don Peppers and Martha Rogers,
authors of EXTREME TRUST: Honesty as a Competitive Advantage
STUPID
COCUSTOMERS
SMART
THRIVE, AND HOW
TO BE ONE OF THEM
AIES

INTRODUCTION |
Over the past decade…
…portable computers became ubiquitous, then morphed into
ever smaller, more powerful, and cheaper phones and tablets…
…painfully slow connections gave way to omnipresent
broadband wireless…
…control of information shifted from the media to the forum of
public opinion…
…computer programming went from something IT
departments did very slowly and mysteriously to something
nearly anyone can do…
…it became as cheap, easy, and common to video chat with
someone on the other side of the world as to call a friend
across town…
…mass production and consumption of news, entertainment,
products, services, and ideas have lost the battle, giving way
to personalization and customization.
All along the way, successful and even venerable companies
have managed to hide their heads in the sand or let inertia
and other internal obstacles get the better of them.
Databases of customer information remain in silos, their
divisions don’t cooperate, employees aren’t paid to focus
on customer needs, and systems and processes that were
never intended to be flexible…well, they remain that way.
Introduction WE ARE NOT TALKING
ABOUT TRIVIAL CHANGE

PAGE 3| SMART CUSTOMERS STUPID COMPANIES
Only the most “intelligent” companies will be able to
respond to – and profit from – these radically greater
customer expectations.
At the same time, everything and everyone has become or
is becoming interconnected. Customers have smartphones
loaded with apps that let them check prices, compare service
agreements, read reviews, and check in with friends (and
strangers) even as they examine your offers and products,
and those of your competitors.
Consumers and businesses alike research, connect, and
purchase online and over their phones without a second thought.
With these tools come radically higher customer expectations.
Higher expectations of experience. Greater demands for
personalization and customization. Lower tolerance for mistakes,
for running through inane hoops, or for interactions that require
mindless repetition (“What is your account number?”).
In short, the world has changed dramatically, but many
companies have not. Forget about innovation, they’re not even
sure how to keep up.
This is the challenge your company needs to confront.
YOUR CUSTOMERS ARE SMARTER
THAN YOU MAY REALIZE
The same disruptive forces driving these changes make it
possible for you to radically improve customer experience.
Among the many disruptive forces that are making it
impossible for firms to survive with outdated strategies, four
in particular are changing the basic ground rules for business
competition, and are the focus of this book: Social Influence,
Pervasive Memory, Digital Sensors, and the Physical Web.
INTRODUCTION |
Did Polaroid
see change
coming?

PAGE 4 | SMART CUSTOMERS STUPID COMPANIES
“THE NETWORKED ECONOMY KNOWS MORE THAN COMPANIES DO
ABOUT THEIR OWN PRODUCTS. AND WHETHER THE NEWS IS GOOD
OR BAD, THEY TELL EVERYONE.” — THE CLUETRAIN MANIFESTO
▪ Social Influence inserts other people and their opinions
between a company and its customers, radically disrupting
traditional notions of customer relationship lifecycles.
▪ Pervasive Memory is the data that accumulate in huge
volumes as we interact through digital devices. It delivers
competitive advantages to firms that leverage this data to
benefit customers. Companies that don’t collect, analyze,
and utilize this data – or that mishandle it – will fail.
▪ Digital Sensors are the trillions of devices that see,
hear, and feel what is happening in our world. They
bring intelligence to everything that surrounds us. Smart
companies must have smart products and services.
Sensors are what make products smart, and sensors will
change business competition more than computers did.
▪ The Physical Web is emerging, allowing us to browse,
bookmark, tag, and manipulate the physical world much
as we do on the Web. This shift encompasses the Internet
of Things, but goes far beyond it. We’re not just linking
devices to devices. We are linking people, places, ideas,
and things; doing so will change the very definitions of
corporations, innovation, and competition.
Together, these forces will bring customers more choices,
better information, and stunning new services.
They are already providing individuals with tools more
advanced, in many cases, than the most sophisticated
commercial enterprises had just five years ago.
Put another way, they’ll continue to make your customers even
smarter. And they can make your company more intelligent, too.
This book will help you profit from disruptive innovation –
rather than falling victim to it.
For reasons that will become crystal clear as you read on,
established firms will need to reinvent themselves and
disrupt their own industries to stay alive. With thousands
upon thousands of very bright developers and entrepreneurs
working around the globe to provide your customers with
ever better, ever more disruptive tools, it’s a certainty that
innovation will be coming to your industry if it hasn’t already.
Those companies that react slowly or tentatively will be
increasingly marginalized, until finally, they’ll wither away.
It may take 5, 10, or even 15 years, but eventually, these
companies will be smothered by the competition and the
growing demands of their ever-smarter customers.
We wrote this book to make sure you’re not one of them.
Michael Hinshaw
Bruce Kasanoff
May 2012
INTRODUCTION |

| SMART CUSTOMERS STUPID COMPANIESPAGE 6
NO FUTURE BRIGHT FUTURE
WHAT HAPPENED HERE IS HAPPENING EVERYWHERE.
The list of companies — and industries — that have been
disrupted by these changes is a long one. Companies
like Blockbuster and Borders. Industries such as music,
publishing, and retail. Here’s what’s happening:
Unable or
unwilling to
change, failing,
marginalized,
uncompetitive
Empowered,
demanding,
self-directed, and
choosing to do
business with
smart companies
Intelligent,
innovative,
thriving, designed
to do business
with smart
customers
STUPID
COMPANIES
SMART
CUSTOMERS
SMART
COMPANIES
DISRUPTIVE CHANGES
▪ Capabilities
▪ Expectations
▪ Perceptions
▪ Functionality
▪ Accessibility
▪ Habits
DISRUPTIVE TECHNOLOGIES

| SMART CUSTOMERS STUPID COMPANIES PAGE 9SECTION 1: SMART CUSTOMERS |
DIGITAL INNOVATION IS LEAVING
COMPANIES BEHIND
Today, customers can see, learn about, or purchase almost
anything from almost anywhere.
In the midst of the Christmas season, Tri Tang spotted
a Garmin GPS unit while visiting his local Best Buy store in
Sunnyvale, California. He took out his Android phone and
checked the price. The unit was $184.85 in the store, but
$106.75 on Amazon, with no shipping or tax charges. Still
standing in the store, he bought the GPS from Amazon.1
We hope he doesn’t mind us saying so, but Tri is an early
example of a new breed of customers. We call them smart
customers.
Business executives get numb to the flood of buzzwords that
proliferate these days, and as a result many tend to discount
predictions. But the scope of intelligence now being handed
to customers is unprecedented.
You can experience the results in a rapidly growing variety of
fashions: see data overlays on a map or camera image,
watch a video demonstration, or even have an explanation
read to you.
One:
Smart
Customers

PAGE 10| SMART CUSTOMERS STUPID COMPANIES
“TO STAY AHEAD OF THE COMMODITIZATION STEAMROLLER
SEEKING TO SQUEEZE MARGINS AND FLATTEN PROFITS, A
COMPANY MUST ATTUNE ITSELF TO THE GREATEST SOURCE OF
OFFERING INNOVATION EVER DEVISED: DIGITAL TECHNOLOGY.”
— B. JOSEPH PINE II, CO-AUTHOR, INFINITE POSSIBILITY: CREATING
CUSTOMER VALUE ON THE DIGITAL FRONTIER
EVERY DIGITAL DEVICE CREATES
THE POTENTIAL TO SENSE WHAT’S
HAPPENING – AND REMEMBER IT.
What you (and your customers) want, when you want it.
Buying a used car? Via CARFAX or AutoCheck, you can get its
complete history, revealing whether it has been treated better
or worse than the owner claims. Shopping for a gift, you can
analyze whether the product recommended by the salesperson
really is the best choice for your aunt, whether the store really
does offer the lowest prices on that item, and whether a better-
priced item is available within ten miles. Traveling at the last
minute on business? Hotel Tonight can find you a great deal on
a room that meets your personal preferences.
Why is this happening now?
Computers are so portable, powerful, and pervasive that they
are our constant companions. For most of us, they are always
connected. The iPhone opened the floodgates of innovation by
independent developers who now have the hope of selling
anything they can build, and a growing number of smartphones
and tablets are pouring onto the market.
All of these factors combine to let people behave in a far
smarter and better-informed manner. Yes, we know that lots
of time is wasted watching dumb videos, making dumb videos,
and texting your friends about dumb videos. But when it comes
to money, to actual transactions, companies have to face a
new reality.
It’s the rise of smart customers.
We’re not saying customers can leap tall buildings, but they
can outwit your salesperson, easily spot misstatements by
customer service reps, and have near instant access to the
accumulated knowledge of human civilization. The trend is only
just beginning, and you’ll see it accelerate in the months ahead.
By the way, customers don’t have to be on the go to have
access to intelligence. Good old-fashioned laptops and
desktops also provide access to increasingly powerful tools.
Google’s search refines your terms as you type them – the
results shift as you make revisions – and it can find the
information you need in mere seconds.
One of the key shifts is that you no longer have to be at your
desk to have access to information. Smartphones and tablets
now power data historically housed in mainframe computers
whenever and wherever you want it.
SECTION 1: SMART CUSTOMERS |

PAGE 12 | SMART CUSTOMERS STUPID COMPANIES
CUSTOMERS START GAINING
SUPERHERO POWERS
Any customer with a portable digital device (there will be
many varieties) and the right combination of free or low-
priced applications can now be something close to:
▪ All-knowing, having instant access not just to facts, figures,
prices, and product specifications, but also billions of
sensors around the world that help them better understand
everything that happens in their lives;
▪ Multilingual, able to communicate in any language;
▪ Omnipresent, able to respond instantly as products and
opportunities become available that match pre-set triggers
they have instructed their applications to watch for;
▪ Incredibly insightful, spotting patterns in data and
emerging trends because they have immense computing
power at their fingertips and because they can immerse
themselves in this data in dozens of different ways;
▪ Ultra-aware, using devices to augment what they see, hear,
and smell so that they can deepen their experiences and
better pursue their goals;
▪ Supersensitive, noticing sights, sounds, and changes that
happen far away – on far larger (and smaller) scales than
they could ever have noticed before, thanks to the sensors
described above.
“USE DIGITAL TOOLS TO HELP CUSTOMERS
SOLVE PROBLEMS FOR THEMSELVES.”
— BILL GATES, BUSINESS @ THE SPEED OF THOUGHT
Smart customers are right here, right now.
We’re not talking about sometime a decade out. Right now,
smart customers can “see” traffic jams two miles ahead – and
avoid them. They can “sniff out” delicious food being prepared
5.4 miles away – and reserve a table at that top-ranked
restaurant in an instant. They can “hear” the falsehoods in
the voice of a pushy, unethical salesperson and recognize the
precise factual errors he has stated – and locate elsewhere
exactly the price, features, and delivery they require.
You haven’t seen anything yet.
At present, most customers are content to leave a trail of
personal data behind them. They give Facebook permission to
not only store but also broadcast vast amounts of data in their
personal profiles.
They give online merchants permission to remember their
credit card number, transactions, and Web browsing activity.
They don’t remove cookies from their browsers, making it
possible for advertisers to track their movements online and
target them with specific advertisements.
But what happens when customers take control of their data?
This is inevitable, because there is a huge (Google/Amazon
huge) opportunity for a new entity to be 100 percent on the
side of customers, making it possible for them to share – and
take back – all of the data related to their activities.

WILL CUSTOMERS GET THEIR OWN VERSION OF
CRM TO MANAGE THEIR RELATIONSHIPS WITH YOU?
IT’S YOUR LIFE. ISN’T IT YOUR DATA?
Customers leave ever-larger digital footprints across
markets, channels, and media.
In a world in which memory is everywhere, it is inevitable that
human beings will resist having their lives reduced to a series of
data points under the control of – and mismanaged by – others.
Smart customers are awakening to the fact that companies are
using the data they generate for financial gain, and they wish to
reclaim ownership. In other words, you should be able to access,
manage, and earn money from the data that describes your life
and activities and - if you choose - forbid others from using it.
“We are not seats or eyeballs or end users or consumers.
We are human beings, and our reach exceeds your grasp.
Deal with it.”
Chris Locke wrote these words for the 1999 book, The Cluetrain
Manifesto, and Doc Searls – one of the book’s co-authors –
uses them to explain ProjectVRM, a research and development
project of the Berkman Center for Internet & Society at Harvard
University, which intends to spur the development of tools that
help individuals take control of their data in the marketplace.
Doc believes that customer reach will only exceed vendor grasp
when customers acquire tools for the job. Vendor Relationship
Management (VRM) or Personal Identity Management (PIDM)
give power to individuals who recognize their value as customers
– and wish to better define the terms of their relationships with
organizations – with the tools, software, and ability to do so.
Imagine selling a $100 item to a customer online, but being
prohibited by both the customer and the law from storing any
information about that transaction. Your firm will be flying in
the dark, having to start each quarter from scratch, not
remembering what you sold to whom last quarter.
A perfect storm is approaching.
The technology exists to make data portable. The profit
incentive exists for venture capitalists to fund aggressive start-
ups who see the immense potential of giving customers full
control over their data. Most importantly, the majority of
established companies don’t use customer data to benefit
their customers. It’s all sell and no serve.
When this storm hits, numerous companies will be
disintermediated. Entire industries will be transformed. Some
companies will go from having superficial relationships with
their customers to having no relationships at all. For them,
“loyalty” will be a thing of the past.
Since it is easier to establish a culture from scratch than
reinvent the culture of a large organization, new competitors
will surface that possess truly customer-focused cultures.
These cultures will invent new services that no inward facing,
self-absorbed, siloed enterprise could imagine.
Since this is a book for business executives, customer
experience professionals, and entrepreneurs, let’s get right
to the bottom line…
SECTION 1: SMART CUSTOMERS || SMART CUSTOMERS STUPID COMPANIESPAGE 14

| SMART CUSTOMERS STUPID COMPANIESPAGE 16 PAGE 17
COMPANIES CAN’T BE COMPETITIVE
IF THEY CAN’T STAY AHEAD OF
THEIR CUSTOMERS
Smart customers can spot a lie. They won’t tolerate wasted
time. For at least the next few years, as companies struggle to
get as smart as the customers they serve, smart customers
will have better access to information than many of your
employees.
They also will have more choices, more flexibility, and more
negotiating power.
If you run a successful and established business,
this might be a terrifying proposition.
It can put your margins under pressure. This is even
happening at Apple, which is rumored to have 40 percent
profit margins on its Mac line, but just 25 percent margins on
iPads.3
Just before the March 2012 launch of the new iPad, the
Washington Post reported that Apple’s total sales of iPads had
reached 55 million.4
But Apple has an ace in the hole.
Each iPad creates a revenue stream after it is sold because
customers download dozens of apps. Some are free, but an
increasing percentage of these provide Apple with
incremental revenue.
“The iPad is not just a product that Apple makes and throws
out there in the market. It’s a platform,” according to Michael
Cusumano, Professor of Management and Engineering
Systems at the Massachusetts Institute of Technology Sloan
School of Management.
“AN INNOVATION IS ONE OF THOSE THINGS THAT SOCIETY LOOKS
AT AND SAYS, IF WE MAKE THIS PART OF THE WAY WE LIVE AND
WORK, IT WILL CHANGE THE WAY WE LIVE AND WORK.”
— DEAN KAMEN, INVENTOR AND SERIAL ENTREPRENEUR
It can put loyalty under pressure. Already the rise of smart
customers is undercutting loyalty: people download price
comparison apps to find the lowest price, which implies
constant switching and disloyalty. It threatens to dissolve –
perhaps in 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.
Each day, firms such as Groupon and LivingSocial blast out
emails that offer 50 percent off of retail items, restaurants, and
personal services. Google has been testing a similar service
called Google Offers. Countless other services ask consumers
to tell them the brands and products they prefer, and then send
customized offers. All of these are teaching customers to expect
and respond to personalized deals.
It’s easier for customers to get smarter than for companies.
To get smarter, a customer merely signs up for such a service,
or downloads an app. As we’ll discuss later, large businesses
are dependent on enterprise software, complex processes, and
inflexible organizational structures — all of which are very slow
and expensive to change.
Pretty much everything we have mentioned so far has already
happened. The 2010 holiday season was the first in which
customers in large numbers stood in retail stores, scanned
product barcodes into their phones, and ordered that same
item online because they could save $10, $20, or $100.

DISRUPTIVE FORCES + SMART CUSTOMERS
MEANS THAT COMPANIES MUST
SHIFT THEIR STRATEGIES.
| SMART CUSTOMERS STUPID COMPANIES PAGE 19PAGE 18
make
touchpoints
smart
make
loyalty
convenient
invest in
products,
not ads
stress
values over
rules
win/win
instead of
“we win”
earn trust
and respect
link
everything
embrace
transparency
PHYSICAL
WEB
PERVASIVE
MEMORY
SOCIAL
INFLUENCE
get more
granular
sense and
respond
customize
routinely
DIGITAL
SENSORS
recognize
patterns

The rise of smart customers has started,
but this trend is in its infancy.
The velocity of change and expansion this represents is
staggering. The disruptive forces being unleashed now are
changing customer experience forever.
As brand loyalty continues to erode, staying ahead of these
changing customer expectations means that everywhere a
company interacts with or “touches” a customer, those
interactions need to be smarter, faster, and better.
Smarter interactions turn complaints into upsells, reveal
customer needs, drive loyalty, create new revenue streams,
and power innovation.
Yet many companies don’t fully understand these forces,
much less the changes that will be wrought on their
industries. They continue to treat customers the same as
ever, with little understanding or concern for the growing
discontent their ever-empowered customer base is feeling.
Today, even the youngest, most modest consumer has
broadband Internet access at home, and many carry
powerful, interconnected mobile devices everywhere they go.
This gives them access to products, services, and information
from anywhere, at anytime – on their terms and their schedule.
“FOR TOO LONG WE HAVE BEEN LEADING OUR COMPANIES AND
OPERATING OUR BUSINESSES BASED ON 19TH AND 20TH CENTURY
APPROACHES THAT DON’T RESONATE IN THIS NEW WORLD.”
— DOV SEIDMAN, AUTHOR OF
HOW: WHY HOW WE DO ANYTHING MEANS EVERYTHING
Leveraging these devices from home, school, and work,
today’s customers quickly access myriad databases and
technological tools from dozens of different sources. As a
result, the average customer (whether business or consumer)
often knows more about pricing, availability, and market
demand than the companies from which they buy.
This is increasingly true around the globe.
Your customers are getting less patient – and your
younger customers never had much patience to begin with.
Then there are the adults who have grown up with the Web
and text messaging. Anyone 20 or younger has never known a
world without the Web. The oldest of this generation are now
adults, soon to graduate from college and start households of
their own. They are already potent consumers, buying music,
games, clothing, and other items in large numbers.
To generalize just a little, these people have seldom
experienced the maddening, inexplicable customer service
disappointments most grownups have come to accept. Why?
Because often their parents took care of these “money” issues.
So now as they enter the world as adults, they expect everything
to be connected, to be digital, and to be instant.
Importantly, the economic clout they represent is increasing.

But you know most of this already. The tough part is thinking
through the implications for your business, for the types of
new products and services you can offer, and for your industry
as a whole.
Yes, this is being driven by smartphones.
There’s little doubt that these forces are being driven in large
part by the adoption of smartphones. There are now 1.2 billion
active mobile broadband subscriptions in the world, representing
17 percent of the world population.5
In the United States, mobile users are using their phones to
shop and buy from wherever they are. As an example,
60 percent of mobile buyers do so from home,6
and 70 percent
of iPhone owners use apps while shopping in-store.7
Add this to
the fact that the majority of shoppers believe that smartphones
make shopping more enjoyable, and you see why we say that
customers increasingly expect 24/7 attention from smart
companies.
This isn’t just a North American trend; this is happening
everywhere, all at once.
According to a recent Nielsen report, Chinese youth lead in
mobile Internet usage; nearly three-quarters of those aged
15 to 24 have used the mobile Internet in the past 30 days.
The next highest levels of usage were in the United States at
nearly 50 percent and Russia at nearly 40 percent.8
While the forces we describe in this book go far beyond any
single telecommunications device, the rapid adoption of
smartphones and tablets certainly give customers instant
and ever-present access to intelligence.
When half the people with mobile phones have smartphones,9
it’s safe to say that at least half your customers today are
far smarter than your customers used to be.
But it’s not just smartphones: the rise of machines, and
other connected devices.
As ubiquitous as mobile phones may be, they’re simply the
leading device in an always-on, fully connected, data-hungry
world. As projected by Cisco in its “Global Mobile Data Traffic
Forecast Update, 2010-2015,” global mobile data traffic will
increase 26-fold between 2010 and 2015.10
While smartphones, laptops, and netbooks continue to
generate a disproportionate amount of traffic, new categories
of devices will account for a significant portion by 2015.
These include tablets, gaming consoles, sensors, eReaders,
televisions, and even our cars, as well as Machine-to-Machine
(M2M) devices that include wireless and wired sensors or
meters that capture and relay information and data about
events like temperature, inventory levels, and more.
There are trillions of digital sensors and devices out there
today, with millions more being deployed every month.

Connected customers and the Internet of Things.
We’re quickly moving towards the Internet of Things (IOT), when
most objects in the world can be identified, and physical objects
will seamlessly integrate into the global information network.
In this world, people and services will interact with these devices
over the Internet, queries will be answered automatically and
information will be distributed (and action taken) based on pre-
determined rules, requirements, and conditions.
Smart touchpoints, products, services, and objects will work
together so businesses almost always know when, where, and
what people buy and consume, and customers will almost
always know where to find what they need, exactly when
they need it.
As these trends – which until recently could be labeled science
fiction – continue to become mainstream, customers can tap
into, organize, and leverage the incredible insights collected
by social networks, the data that accumulates through
pervasive memory, and the knowledge and insight being
gathered by digital sensors…and get to it anytime, from
almost anywhere.
This means that wherever your customers are, it’s not simply
that they can access the products, services, or information in
which they are interested. They actively are accessing it – from
your company, your competitors, and each other.
WHAT CAN
YOUR BUSINESS
ACCOMPLISH WITH
THIS FLOOD OF
INSIGHTS?
Every month, millions of
free workers (like us) are
taking and sharing photos
and videos tagged with
their physical location.
The result is a physical
record of our world that
is growing in leaps and
bounds.
Likewise, our cars can
gather traffic information,
our phones can document
how much time we spend
in elevators, and our Web
searches reveal where
an earthquake was felt,
and how many people are
coming down with the flu.
PAGE 25SECTION 1: SMART CUSTOMERS |

SMART CUSTOMERS EXPECT
SMART CUSTOMER EXPERIENCES
Smart customers want to talk to, access, interact with, and
ask questions of your company. Right now. From wherever
they may be.
We live in a world in which whether you are out in the woods,
at a client’s business, or in your living room, you can connect
information and processing power with people and devices
that need it right here and right now.
This is a giant departure for everything that has come before
in business, life, and the world. Today, unless there’s
something wrong with our phones or computer, we are almost
never without access to guidance, to others, to ideas, and to
possibilities.
None of this is to suggest that data silos are a thing of the
past, or that every company has made their products,
services or data available remotely 24/7. To the contrary,
most companies still bury vast quantities of data where it
is inaccessible and often unusable.
How smart are your employees?
Ironically, smart customers have the ability to access
information in this “anytime, anywhere” manner. But
when these individuals are acting as employees, the story
often changes.
“PEOPLE SHOP AND LEARN IN A WHOLE NEW WAY
COMPARED TO JUST A FEW YEARS AGO...
MARKETERS NEED TO ADAPT OR RISK EXTINCTION.”
— BRIAN HALLIGAN AND DHARMESH SHAH, FOUNDERS, HUBSPOT
A Motorola Solutions annual holiday shopping survey revealed
that 55 percent of surveyed retailers cite shoppers
as better connected to information than store associates.11
“Retailers have put their associates at a significant
disadvantage to connected consumers,” said Frank Riso,
Senior Director of Retail Solutions for Motorola Solutions.
“With 87 percent of surveyed retail associates noting that
shoppers can easily find a better deal,12
offering the best
customer experience is more important than ever. Retailers
need to arm their mobile associates with access to real-time
information to level the shopping playing field.”
This doesn’t mean your firm will act smart, only that
it should.
Some companies have the technology, willpower, and funding
to provide remote access to vital data. These companies are
using data to drive innovation.
They are successfully using remote access to data and services
to revolutionize their industries, and this trend is accelerating.
Even so, there are many firms that are unwilling or slow to react.
For every technology-enabled UPS or FedEx driver, there are
dozens if not hundreds of employees at other firms who are
forced to sit at desks and use internal systems that are slow,
unreliable, and inaccurate – or wander the aisles of their
stores, calling for price checks and inventory availability over
the PA system.

“EVERYTHING TALKS, MOMMY. TOASTER TALKS.
FRIDGE TALKS. GARAGE TALKS. WHY WON’T TV TALK?”
CASE STUDY, CIRCA 2015
“Mommy, why won’t the TV answer me?”
Julia stood in front of the television set, wailing. Her mom
rushed down the basement stairs to see what was troubling
the little girl. “What’s wrong, baby?”
Her daughter gave her a look of confusion and hurt. “She
won’t answer me, Mommy. Why won’t she answer me?”
Katie smiled. Julia was standing in front of their old TV, which
Bill last night decided to pull out of the garage and set up in
front of the treadmill.
“She won’t play Sesame Street! She won’t turn up the music!”
Katie crouched and put her arms around the little girl. “This TV
is old, Julia. It doesn’t talk. It doesn’t listen.”
Julia rubbed her eyes. “Everything talks, Mommy. Toaster
talks. Fridge talks. Garage talks. Why won’t TV talk?”
“No, honey, just a few years ago nothing but people talked.
None of the things around our house used to talk. So
anything that’s older than you probably can’t talk.”
Julia tilted her head. “But that’s stupid, Mommy. How do things
know what you want if they can’t talk and they can’t hear?”
Katie smiled. “We used to have to push buttons, twist knobs
and type on keyboards. Everything had controls you touched
with your hands.”
“Yuck,” said Julia with a grimace. “Dirty.”
“Maybe a little bit, yes.” It certainly was easier to keep
appliances and electronics clean, now that you barely
touched them.
Julia looked back at the TV. “Old TV is stupid. Old toasters are
stupid, too. Everything old is stupid.”
Katie looked her daughter in the eye. “I’m sort of old. Am I
stupid?”
Julia shook her head aggressively. “No, Mommy. You can talk.
You listen to me. You’re not stupid. Only things that don’t listen
are stupid.”
Wow, thought Katie, Julia’s generation will only know intelligent
devices. Her daughter still had trouble holding a crayon
properly, but she was creating stories just by talking to the
bulletin board next to her bed. At night, Julia would chat happily
with “Sarah,” and Sarah would record every word the little girl
said – unless Julia told her to “forget that last part.”
Katie had to admit it was an unsettling change when the first
few companies made the transition from horrific voicemail
systems to Talking Company. Now you could just call Best Buy
and a gentle female voice knew every detail about every
product; she even remembered your previous call.
“Mommy,” said Julia, trying to get her Mom to focus on what
is really important. “Please make the stupid TV play
Sesame Street.”
SECTION 1: SMART CUSTOMERS | PAGE 29| SMART CUSTOMERS STUPID COMPANIESPAGE 28

We used to watch TV when TV networks told us the show was
on, or to do our banking between 9 a.m. and 3 p.m., when
banks preferred to do business. No more.
One of our kids recently walked into a room where his family
members were watching a television show as it was being
initially aired. In other words, we couldn’t fast forward through
the commercials.
“What, are you stupid?” he asked bluntly. “Why would you do
that?” He was genuinely stumped.
“CHANGE IS THE LAW OF LIFE. AND THOSE WHO LOOK ONLY
TO THE PAST OR PRESENT ARE CERTAIN TO MISS THE FUTURE.”
— PRESIDENT JOHN F. KENNEDY
Why “sorry, we’re closed” means you may be closed forever.
There are still many businesses where customer service and
support is provided only during certain hours: if you call after,
say, 7 p.m. Pacific Time, technical support is closed.
Seriously? Does the firm really expect that none of their
products are installed or used after 7 p.m.?
These sort of time-based restrictions are going to disappear
for companies that successfully embrace the changed notion
of customer service and customer experience.
Not because it suddenly becomes profitable to stay open
24/7. But because when you compete with firms like Zappos,
which operates their warehouse 24/7 even though it’s not the
most efficient way to do so, the notion of being “closed” will
become suicidal from a competitive perspective.
Competitors like these recognize that the value of delighting
customers who order after midnight with a shipment that
shows up on their doorsteps literally hours after being ordered
can’t be measured by “maximized picking efficiency.”
They’re measuring the value of providing “a wow experience,
which (their) customers remember for a very long time and
tell their friends and family about.”13
The accelerometer is one of
many sensors routinely
included in smartphones,
revealing how the phone – and
you – are moving through and
interacting with the physical
world. Soon, altimeters,
heart-rate monitors, and
environmental sensors will join
a rapidly growing list, allowing
your phone to sense you, and
the world around you.

These trends and forces have combined
to alter customer expectations.
Customers expect to do anything they want, from anywhere and
at any time. Why? Because they can – and they already do.
In some industries, this tremendously changes the
expectations for what comprises good customer service.
We are living in a world in which customers can shift time and
space at will to meet their needs. Resisting these trends is a
dangerous thing for a company to do.
This doesn’t just mean that more people are going to be
working the night shift. It also means that companies will
leverage technology to diagnose problems, train customers,
upsell services, and gather feedback.
The question that we’re helping your company answer is this:
How can you leverage these trends to not only catch up to, but
stay ahead of, your competition and your customers?
KEY TAKEAWAYS:
▪ Digital devices will increasingly give individuals “super”
powers to sense, remember, analyze, understand, and
share insights from the world around them.
▪ Companies must use customer information to benefit
the customer.
▪ Disruptive forces will require massive changes in your
company’s strategy.
▪ Your company must be able to act smarter than its
customers, or it will cease to exist.
PAGE 33SECTION 1: SMART CUSTOMERS |

More Praise for SMART CUSTOMERS, STUPID COMPANIES:
“It's a fact: Technology-enabled customers are getting smarter every day,
while companies mired in the same old ways of doing business just come
off as stupider and stupider. Do not let that happen to you.”
-- B. Joseph Pine II, co-author, The Experience Economy and
Infinite Possibility: Creating Customer Value on the Digital Frontier
“This is a real page turner! Hinshaw and Kasanoff provide a
quick and thrilling tour of the immediate future of business!
-- Don Peppers and Martha Rogers, Ph.D., authors of EXTREME TRUST: Honesty as a Competitive Advantage
“So energizing it actually made my skin tingle and my pulse race.
I'm fortunate I had the opportunity to read this before my competitors.”
– Chris Zane, Founder & President, Zane's Cycles, author REINVENTING THE WHEEL: The Science of Creating Lifetime Customers
“This is a very insightful book, and one that provides a really different (smarter)
perspective on customer centric value co-creation! Hinshaw & Kasanoff... provide
a number of coherent frameworks... to create actionable ideas for change.”
-- Dr. Frank T. Piller, Professor of Management , RWTH Aachen University, Technology & Innovation Management Group
and Massachusetts Institute of Technology, MIT Smart Customization Group
Available now at
Buy: www.amazon.com/dp/0985133910
Learn More: www.smartcustomers.com
Participate: www.smartcustomers.com/blog
“Entrepreneurs looking
for the next big thing
need to grab a copy
of our book and this
one, and fast.”
– Bob Dorf, co-author with Steve Blank of THE START UP OWNER’S
MANUAL: The Step-by- Step Guide for Building a Great Company
“A must-read for every
business executive.”
– Jocelyn Smith, Managing Partner, CEO, infinitee Communications

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